HQDA ELDERLY LIFE NETWORK CORP. - Quarter Report: 2018 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended September 30, 2018

or

For the transition period from ___________________to __________________

Commission File Number: 333-119823

HQDA ELDERLY LIFE NETWORK CORP.

(Exact name of registrant as specified in its charter)

8780 Valley Blvd., Suite J

Rosemead, California 91770

(Address of principal executive offices)(Zip code)

(626) 703-4228

(Registrant’s telephone number, including area code)

None

(Former name, former address, and former fiscal year, if changed since last report)

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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

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.

If an emerging growth company, indicate by checkmark 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 Act). Yes [  ] No [X]

The number of shares of Common Stock, $0.001 par value, of the registrant outstanding at November 16, 2018, was 137,128,013.

HQDA ELDERLY LIFE NETWORK CORP.

(formerly HARTFORD RETIREMENT NETWORK CORP.)

FORM 10-Q

TABLE OF CONTENTS

PART 1. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED INTERIM FINANCIAL STATEMENTS

HQDA Elderly Life Network Corp.

(formerly Hartford Retirement Network Corp.)

Consolidated Interim Balance Sheets

(Expressed in U.S. Dollars)

Nature and Continuance of Operations (Note 1), and Subsequent Event (Note 10)

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

HQDA Elderly Life Network Corp.

(formerly Hartford Retirement Network Corp.)

Consolidated Interim Statements of Operations

(Expressed in U.S. Dollars)

(Unaudited)

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

HQDA Elderly Life Network Corp.

(formerly Hartford Retirement Network Corp.)

Consolidated Interim Statements of Cash Flows

(Expressed in U.S. Dollars)

(Unaudited)

Supplemental Disclosures with Respect to Cash Flows (Note 9)

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

HQDA Elderly Life Network Corp.

(formerly Hartford Retirement Network Corp.)

Consolidated Interim Statements of Changes in Stockholders’ Deficit

(Expressed in U.S. Dollars)

(Unaudited)

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

HQDA Elderly Life Network Corp.

(formerly Hartford Retirement Network Corp.)

Notes to the Consolidated Interim Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

30 September 2018

HQDA Elderly Life Network Corp. (formerly Hartford Retirement Network Corp.) (the “Company”) was incorporated under the laws of the State of Nevada on 21 January 2004.

Effective 26 June 2017, the Company changed its name to Hartford Retirement Network Corp. and increased its authorized shares of common stock, par value $0.001 per share from 75,000,000 to 200,000,000 and authorized 10,000,000 preferred stock, par value $0.001 per share, with such rights, preferences and limitations as may be set from time to time by resolution of the Board of Directors (Note 6).

These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company was in the business of acquiring and exploring mineral properties. In May 2017, the Company shifted its focus to senior housing and retirement services and products. The Company is devoting all of its present efforts in establishing a new business.

These consolidated interim financial statements do not include all information and footnotes required by GAAP for complete financial statements. Except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended 30 June 2018 included in the Company’s Annual Report on Form 10-K, filed with the SEC. The interim unaudited financial statements should be read in conjunction with those financial statements for the year ended 30 June 2018 included in the Company’s Annual Report on Form 10-K. In the opinion of management, all adjustments considered necessary for fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three months ended September 30, 2018, are not necessarily indicative of the results that may be expected for the year ending 30 June 2019.

The Company’s consolidated interim financial statements as at 30 September 2018 and for the three months then ended have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company reported a net loss of $27,636,672 for the three months ended 30 September 2018 and has a working deficit of $3,120,558 at 30 September 2018.

Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. Management believes that the Company’s capital resources will not be adequate to continue operating and maintaining its business strategy for the next 12 months. If the Company is unable to raise additional capital in the near future, management expects that the Company will need to curtail operations, seek additional capital on less favorable terms and/or pursue other remedial measures. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

At 30 September 2018, the Company had an accumulated deficit of $29,166,141 and cash of $165,054. Although management is currently attempting to implement its new business plan, and is seeking additional sources of equity or debt financing, there is no assurance these activities will be successful. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Hartford Retirement Network Corp.

Notes to the Consolidated Interim Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

30 September 2018

Principles of Consolidation

The Company’s consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Shanghai Hartford Health Management Ltd., a company incorporated in the People’s Republic of China from 9 November 2017.All inter-company balances have been eliminated upon consolidation.

In February 2016, the FASB issued ASU No. 2016-02 (Topic 842) “Leases.” Topic 842 supersedes the lease recognition requirements in Accounting Standards Codification (“ASC”) Topic 840 “Leases.” Under Topic 842, lessees are required to recognize assets and liabilities on the balance sheet for most leases and provide enhanced disclosures. Leases will continue to be classified as either finance or operating. Topic 842 is effective for annual reporting periods and interim periods within those years beginning after 15 December 2018. Early adoption by public entities is permitted. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements, and there are certain optional practical expedients that an entity may elect to apply. Full retrospective application is prohibited. The Company does not anticipate this amendment to have a significant impact on the financial statements.

In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years beginning after 15 December 2019. The Company does not anticipate this amendment to have a significant impact on the consolidated financial statements.

Revenue consist primarily of hotel rental income. We apply the five-step model outlined in Accounting Standards Codification Topic 606, Revenue from Contracts from Customers (ASC 606). Revenue is recognized when control of the promised products or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services (the transaction price). We Adopted ASC 606 effective July 1, 2018. As a result, we have changed our accounting for revenue recognition. We applied ASC 606 using the modified retrospective method and there was no material impact to our consolidated financial statements related to the adoption of ASC 606

During the year ended 30 June 2018, the Company loaned $1,576,921 (RMB 10,437,800) to Shanghai Qiao Garden Group (“Shanghai Qiao Garden”). The loan was unsecured, bears interest at 8% per annum and due on demand. During the year ended 30 June 2018, the Company received $1,524,044 (RMB 10,087,800).

During the year ended 30 June 2018, the Company waived $51,299, the full amount of accrued interest as the Company demanded the payment prematurely (2017 - $Nil).

During the three-month period ended 30 September 2018, the Company loaned $4,360,971 (RMB 30,000,000) to Zhonghuaai Wufu (Shanghai) Hotel Management Ltd. The loan was unsecured, bears interest at 4.35% per annum and due in one year (Note 7).

Hartford Retirement Network Corp.

Notes to the Consolidated Interim Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

30 September 2018

On 2 April 2018, the Company entered into an Asset Purchase Agreement (the “APA”) whereby the Company will purchase land, buildings, and right to use, construction use rights and other property rights located in Shanghai from Shanghai Qiao Garden (Note 11). Properties are split into two groups:

The Company has agreed to pay the purchase price totaling of RMB 233,000,000 in instalments over the next 20 months as follows:

As at 30 June 2018, the Company has paid $18,233,403 (RMB 115,682,000) as deposits. During the three months ended 30 September 2018, the Company has paid $5,131,000 (RMB 35,000,000).

On 1 September 2018, the Company has obtained the full management and operation rights of the hotel property and all other assets of Property A. The cost of $34,625,790 including the remaining balance of the purchase prices has been transferred to properties and equipment.

On 8 August 2018, the Company has entered into a share purchase agreement to acquire Property B by acquiring 100% outstanding shares of the Transferor for $731,968 (RMB 5,000,000). The total  payments has been included in the deposits paid by the Company and shares will be transferred when all current and potential liabilities are settled by the Transferor.

Hartford Retirement Network Corp.

Notes to the Consolidated Interim Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

30 September 2018

Authorized

The total authorized capital is 200,000,000 common shares with a par value of $0.001 and 10,000,000 preferred shares with a par value of $0.001.

On 26 June 2017, the Company increased the authorized shares of common stock of the Company from 75,000,000 shares to 200,000,000 shares and authorized the issuance of up to 10,000,000 shares of preferred stock, with such rights, preferences and limitations as may be set from time to time by resolution of the Board of Directors (Note 1).

Issued and outstanding

At 30 September 2018, the total issued and outstanding capital stock is 137,128,013 common shares with a par value of $0.001 per common share (30 June 2018 – 79,925,000).

On 4 September 2018, the Company completed a private placement of 41,731,867 common shares for total proceeds of $6,259,780. A stock based compensation of $27,125,714 has been recognized during the issuance of shares (Note 6).

On 11 July 2018, the Company completed a private placement of 15,471,146 common shares for total proceeds of $12,413,618.

Hartford Retirement Network Corp.

Notes to the Consolidated Interim Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

30 September 2018

On 7 April 2018, the Company completed a private placement of 47,500,000 common shares for total proceeds of $7,124,109.

On 2 March 2018, the Company completed a private placement of 2,920,000 common shares for total proceeds of $146,000.

On 5 October 2017, the Company completed a private placement of 5,000,000 common shares for total proceeds of $250,000.

On 8 September 2017, the Company completed a private placement of 1,950,000 common shares for total proceeds of $97,500.

On 8 August 2017, the Company completed a private placement of 19,910,000 common shares for total proceeds of $995,500

On 4 August 2017, the Company completed a private placement of 5,750,000 common shares for total proceeds of $287,500.

During the year ended 30 June 2018, the Company cancelled 13,050,000 common shares for total proceeds of $652,500 which was not received.

As at 30 June 2018, the Company received $1,982,911 in subscription funds that will be returned to investors due to overpayments in subscription.

During the three months ended 30 September 2018, the Company paid management fee of $24,000 to the Company’s Chief Financial Officer (2017 - $22,500).

During the three months ended 30 September 2018, the Company issued 41,731,867 shares with total proceeds of $6,259,780. A stock based compensation of $27,125,714 has been recognized during the issuance of shares (Note 6).

Included in accounts payable and accrued liabilities was $2,566 (30 June 2018 - $3,160) due to the Company’s Chief Financial Officer. The amount is non-interest bearing, unsecured and due on demand.

During the three-month period ended 30 September 2018, the Company loaned $4,360,971 (RMB 30,000,000) to Zhonghuaai Wufu (Shanghai) Hotel Management Ltd. which has common directors and officers with the Company. The loan was unsecured, bears interest at 4.35% per annum, unsecured and due in one year (Note 4).

Hartford Retirement Network Corp.

Notes to the Consolidated Interim Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

30 September 2018

Subsequent to 30 September 2018, the Company cancelled 2,478,639 of its common stock due to no payments were received from subscribers.

The Company entered into the APA to purchase two properties in Shanghai totaling RMB 233,000,000. Payments of $23,364,403 (RMB 150,682,000) has been made and remainder of $11,966,217 (RMB 82,318,000) are due in 18 months (Note 4).

On 15 June 2018, the Company entered into a conference consultancy service agreement whereas the consultant will provide consulting service and assistance to the Company to hold 30 conferences in China within a two-year period for a total purchase price of $794,000 (RMB 5,250,000).

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The terms “HQDA”, “Company”, “we”, “our”, and “us” refer to HQDA Elderly Life Network Corp. (formerly Hartford Retirement Network Corp.) unless the context suggests otherwise.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes “forward-looking statements” as defined by the Securities and Exchange Commission, or SEC. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this Form 10-Q that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. These forward-looking statements are based on assumptions which we believe are reasonable based on current expectations and projections about future events and industry conditions and trends affecting our business. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties that, among other things, could cause actual results to differ materially from those contained in the forward-looking statements, including without limitation the Risk Factors set forth in our Annual Report on Form 10-K for the year ended June 30, 2018 including the following:

General

We were an exploration stage company until May 2017, at which time we transitioned to a senior retirement solutions company focusing on senior housing and retirement services and products.

On January 20, 2008, the Company allowed its interest in the Sobeski Lake Gold Property Claims to expire. The Sobeski Lake Gold property consisted of three mineral claims located in the Red Lake Mining District, in the province of Ontario, Canada. We had originally acquired our interest in the property by making a cash payment of $3,500 on June 16, 2004 to Dan Patrie Exploration Ltd. the registered owners of the property.

On January 8, 2008, we acquired, through our wholly owned subsidiary, Dynamic Gravel Holdings Ltd., a 100% interest in two gravel claims called the Northern Gravel Claims and Super Mammoth Gravel Claims (together the “Super Mammoth Gravel Project”) situated on tidewater for $25,000. The Super Mammoth Gravel Project was acquired by way of a purchase agreement. Mr. Farshad Shirvani has been paid CDN$25,000.

On April 27, 2017, the Company dissolved its wholly owned subsidiary, Dynamic Gravel Holdings Ltd. as part of the Stock Purchase Agreement (the “Agreement”) dated April 4, 2017, between Tim Coupland and Brian Game, the Company’s former principal stockholders (the “Sellers”) and Hartford International Retirement Network, Inc. (the “Buyer”), pursuant to which, among other things, the Sellers agreed to sell to the Buyer, and the Buyer agreed to purchase from Sellers, a total of 5,185,000 shares of Common Stock beneficially owned by the Sellers (the “Purchase Shares”). The Purchase Shares represented approximately 52.1% of the Company’s issued and outstanding shares of Common Stock.

In connection with the transactions contemplated by the Agreement, the Board appointed Lianyue Song, Aaron Schottelkorb and Fuming Lin to fill vacancies on the Company’s Board of Directors caused by resignations of Messer’s’ Coupland, Game and Burylo.

On May 11, 2017, the Company entered into a Memorandum of Understanding for Senior Holiday Service Cooperation with Shanghai Qiao Garden International Travel Agency (“Travel Agent”), superseded by a Retirement Vacation Services Agreement executed by the parties on August 25, 2017 (collectively referred to as the “Agreement”). The Company is engaged in the business of providing hotel rooms at favorable rates to travelers to Los Angeles from China.

On May 18, 2017, the Company sold its Northern Gravel Claims and the Super Mammoth Gravel Claims for $1 to the Company’s former officer and a former director to focus its efforts on new business venture in senior retirement services and products in China.

The Senior Living Industry

On August 31, 2018, the Company’s wholly-owned subsidiary entered into an agreement with Shanghai Qiao Hong Real Estate, Ltd. (“SQHR”) to manage an apartment building owned by SQHR located in Pudong New Area District Shanghai, China. The apartment building has 130 one-bedroom apartments and caters to mostly men and women over the age of 50.

The Company intends to enter the business of owning, leasing and/or operating senior living residences that will provide seniors with supportive, home life setting with care and services, including activities of daily living, life enrichment and health and wellness.

The senior living industry encompasses a broad spectrum of senior living service and care options, which include independent living, assisted living and skilled nursing care. We intend to concentrate on the independent living services.

The Company’s operating philosophy is to provide services and care which meet the individual needs of its residents, and to enhance their physical and mental well-being, thereby allowing them to live longer and to “age in place.” These facilities will offer, on a 24-hour basis, personal, supportive and home health care services appropriate for their residents in a home-like setting, which allow residents to maintain their independence and quality of life. We predict that the average of the residents at the Company’s facilities will be between 55 and 70.

The Company’s primary focus will be in China, where is intends to grow and become a leader in assisted living facilities. The Company also will seek to develop or acquire facilities in other Southeast Asian countries. The Company believes that by concentrating or “clustering” its facilities in target areas with desirable demographics, it can increase the efficiency of its management resources and achieve broad economies of scale.

The long-term care industry encompasses a wide continuum of services and residential arrangements for elderly senior citizens. Skilled nursing facilities provide the highest level of care and are designed for elderly senior citizens who need chronic nursing and medical attention and are not able to live on their own. Further, skilled nursing facilities tend to be one of the most expensive alternatives while providing elderly senior citizens with limited independence and a diminished quality of life. On the other end of the continuum is home-based care, which typically is provided in an individual’s private residence. While this alternative allows the elderly individual to “age in place” in his or her home and, in certain instances, can provide most of the services available at a skilled nursing facility, it does not foster any sense of community or the ability to participate in group activities.

Assisted living facilities generally are designed to fill the gap in the middle of this continuum. Assisted living facilities have been described by the Assisted Living Federation of America (“ALFA”) as providing a special combination of housing and personal, supportive and home health care services designed to respond to the individual needs of those who need, or desire help with their activities of daily living, including personal care and household management. Services in an assisted living facility are generally available 24 hours a day to meet the scheduled and unscheduled needs of residents, thereby promoting maximum dignity and independence.

The assisted living industry is highly fragmented. However, the Company believes that substantial industry consolidation is underway. At present, the industry is characterized by participants who operate only a limited number of facilities and who frequently can offer only basic assistance with a limited number of activities of daily living. The Company intends to be characterized by the following: (i) the ability to offer premium accommodations and a comprehensive bundle of standard services for a single inclusive monthly fee; (ii) sophisticated, professional management structures and highly trained employees; (iii) a cost-efficient, user-specific prototype facility; and (iv) experience in providing home health care services.

The Company’s facilities will provide services and care which are designed to meet the individual needs of its residents, enhance their physical and mental well-being and promote a supportive, independent and home-like setting. Most of the Company’s facilities will be primarily designed as premium facilities at which residents receive a comprehensive, bundled package of standard services for a single monthly fee.

The Company will strive to combine in its facilities the best aspects of independent living with the protection and safety of assisted living, with trained staff members who provide 24-hour care and monitoring of every resident. The assisted living facilities will be designed and decorated to have a home-like atmosphere. Residents will be encouraged to furnish their rooms with personal items they have collected during their lifetime.

Our assisted living facilities differ from skilled nursing facilities in that our assisted living facilities will not provide the more extensive, and costly, nursing and medical care found in nursing homes. Assisted living facilities differ from continuing care retirement communities in that, among other things, residents of assisted living facilities are not obligated to purchase frequently expensive lifetime contracts for residential living and care.

The long-term care industry is highly competitive, and the Company expects that the assisted living business in particular will become more competitive in the future. The Company will compete with numerous other companies providing similar long-term care alternatives such as home health agencies, life care at home, community-based service programs, retirement communities and convalescent facilities. Nursing facilities that provide long-term care services are also a potential source of competition for the Company. Providers of assisted living communities compete for residents primarily on the basis of quality of care, price, reputation, physical appearance of the facilities, services offered, family preferences, physical referrals, and locations. Almost all of the Company’s competitors will be significantly larger than the Company and have, or may obtain, greater financial resources than those currently available to the Company.

Results of Operations for the Three Months Ended September 30, 2018

The Company reported a net income for the three months ended September 30, 2018 of $27,676,632 compared to a net loss of $100,611 for the three months ended September 30, 2017, which includes foreign exchange loss of $282,482 on the translation of operations in China.

The Company reported revenues of $41,782 for the quarter ended September 30, 2018 from the property that was recently acquired in Shanghai Pudong New Area.

Legal and accounting fees increased by $11,203 to $35,612 for the three months ended September 30, 2018 from $24,409 for the three months ended September 30, 2017 as a result of finalizing the asset purchase agreement. Consulting fees increased by $40,750 to $73,250 for the three months ended September 30, 2018 from $32,500 for the three months ended September 30, 2017 due to the increased operating activities.

The Company recorded a non-cash depreciation expense of $47,797 on its properties and equipment. A major component of the Company’s properties and equipment was its property located in Shanghai Pudong New Area.

The Company also recorded a non-cash stock based compensation of $27,125,714 related to 41,731,867 common shares issued on September 4, 2018 to a related party.

Removing the two non-cash expenses as described above and the foreign exchange loss for the period, the net loss for the three months ended September 30, 2018 would have been $180,679.

Liquidity and Capital Resources

At September 30, 2018, the Company had cash on hand of $165,054 and liabilities of $13,991,496 consisting of accounts payable and accrued liabilities, which includes $2,566 due to an officer and a director of the Company, share subscription funds to be returned of $1,982,911, unearned revenue of $9,822 and payables for purchase of properties of $11,966,217.

We will require additional funding in order to cover all anticipated administration costs and to proceed with the Retirement Vacation Services Agreement executed on August 25, 2017 and the Asset Purchase Agreement executed on April 2, 2018 and to seek out additional travel agents for similar contracts. The Company also intends to provide management services to retirement homes, commercial properties and apartment buildings in China, which will result in higher administrative costs in the future.

Capital Expenditures

On April 2, 2018, the Company entered into an Asset Purchase Agreement (the “APA”) whereby the Company will purchase land, buildings, and right to use, construction use rights and other property rights located in Shanghai from Shanghai Qiao Garden. Properties are split into two groups:

The Company has agreed to pay the purchase price totaling of (RMB 233,000,000) in instalments over the next 20 months as follows:

As at June 30, 2018, the Company has paid $18,233,403 (RMB 115,682,000) as deposits. During the three months ended 30 September 2018, the Company has paid $5,131,000 (RMB 35,000,000).

On September 1, 2018, the Company has obtained the full management and operation rights of the hotel property and all other assets of Property A. The cost of $34,625,790 including the remaining balances of the purchase prices has been transferred to properties and equipment.

On August 8, 2018, the Company has entered into a share purchase agreement to acquire Property B by acquiring 100% outstanding shares of the Transferor for $731,968 (RMB 5,000,000). The total proceeds has been included in the deposits paid by the Company and shares will be transferred when all current and potential liabilities are settled by the Transferor.

Employees

At present, we have no employees, other than our current officers and directors, who devote their time as required to our business operations.

Off-balance Sheet Arrangements

The Company has no off-balance sheet arrangements that would require disclosure.

Critical Accounting Policies

Our interim financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. Preparing financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet dates, and the recognition of revenues and expenses for the reporting periods. These estimates and assumptions are affected by management’s application of accounting policies.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company does not issue or invest in financial instruments or their derivatives for trading or speculative purposes. The limited operations of the Company were conducted primarily in China,and California, USA, and, are not subject to material foreign currency exchange risk. Although the Company has outstanding debt and related interest expense, market risk of interest rate exposure in the United States is currently not material.

ITEM 4 – CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Based on the management’s evaluation (with the participation of our President and Chief Financial Officer), our President and Chief Financial Officer have concluded that as of September 30, 2018, the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange of 1934 (the “Exchange Act”)) are effective to provide reasonable assurance that the information required to be disclosed in this quarterly report on Form 10-Q is recorded, processed, summarized and reported within the time period specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

(b) Internal control over financial reporting

Management’s annual report on internal control over financial reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting should include those policies and procedures that: pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with applicable GAAP, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Under the supervision and with the participation of our management, including Ms. Ziyun Xu, our Chief Executive Officer, and Mr. Jimmy Zhou, our Chief Financial Officer, we have evaluated the effectiveness of our internal control over financial reporting and preparation of our quarterly consolidated financial statements as of September 30, 2018 and believe they are effective.

Based upon their evaluation of our controls, Ms. Ziyun Xu, our Chief Executive Officer, and Mr. Jimmy Zhou, our Interim Chief Financial Officer, has concluded that, there were no significant changes in our internal control over financial reporting or in other factors during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Attestation report of the registered public accounting firm

This quarterly report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this report.

Changes in internal control over financial reporting

There were no changes in our internal controls that occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls.

Changes in Internal Controls

Based on the evaluation as of September 30, 2018, Ms. Ziyun Xu, our Chief Executive Officer, and Mr. Jimmy Zhou, our Chief Financial Officer have concluded that there were no significant changes in our internal controls over financial reporting or in any other areas that could significantly affect our internal controls subsequent to the date of his most recent evaluation, including corrective actions with regard to significant deficiencies and material weaknesses.

PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

The Company is not a party to any pending legal proceeding. Management is not aware of any threatened litigation, claims or assessments.

ITEM 1A. RISK FACTORS

Not Applicable

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Between July 1 and August 28, 2017, the Company sold 27,610,000 shares of its common stock (the “Shares”) to 48 Chinese investors for $1,380,500.

On August 4, 2017, the Company completed a private placement of 5,750,000 common shares for total proceeds of $287,500.

On August 8, 2017, the Company completed a private placement of 19,910,000 common shares for total proceeds of $995,500

On September 8, 2017, the Company completed a private placement of 1,950,000 common shares for total proceeds of $97,500.

On October 5, 2017, the Company completed a private placement of 5,000,000 common shares for total proceeds of $250,000.

As at March 31, 2018, the Company received $886,540 out of $1,630,500 related to the private placements from April 2017 to October 2017. As a result, the Company has subscriptions receivable of $743,960 as at 31 March 2018.

As at March 31, 2018, the Company received subscriptions of $1,113,700 in advance related to the private placement that completed on April 7, 2018

On April 7, 2018, the Company completed a private placement of 47,500,000 common shares for total proceeds of $7,124,109

On July 12, 2018 the Company sold 10,903,933 shares of its common stock to 37 Chinese investors for total proceeds of $8,737,189.

On August 15, 2018, the Company sold 4,567,213 shares of its common stock to 16 Chinese investors for total proceeds of $3,676,429.

On September 4, 2018, the Company completed the sale transaction from April 2018 and issued 41,731,867 shares of its common stock to HQDA International Investment Holdings Ltd. (“HQDA International”) for total proceeds of $6,259,735. Ms. Xu, the Company’s CEO and a director, is a principal owner and officer and d director of HQDA International.

The Shares were sold by the officers and directors of the Company and no commissions were paid for such sales. All of the investors are residents of China and all offers, and sales were conducted in China. The Shares were sold in a private placement pursuant to an exemption under the Securities Act of 1933, as amended (the “Act), in accordance with Regulation S of the Act. All stock certificates will be affixed with the appropriate Regulation S legend restricting sales and transfers.

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4 – SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5 – OTHER INFORMATION

None

ITEM 6 – EXHIBITS

The following exhibits are furnished as required by Item 601 of Regulation S-B.

SIGNATURE

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.