Hong Yuan Holding Group 10-Q for FY2026 Q1
Hong Yuan Holding Group (HGYN)
About this 10-Q
Hong Yuan Holding Group filed this 10-Q on June 22, 2026, covering the quarter ended March 31, 2026 (FY2026 Q1).
Headline figures
Quarter ended March 31, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $43.7K
- down 76.3% from $184.49K a year earlier
- Net loss
- $93.35K
- compared with net income of $37.5K a year earlier
- Diluted EPS
- -$0.00
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
| 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.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
(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 | ||
| 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.
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 ☐
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 ☐ |
| Smaller
reporting company | |
| Emerging
growth company |
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). 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 June 12, 2026 was .
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 | 13 |
| ITEM 3 | Quantitative and Qualitative Disclosures About Market Risk | 17 |
| ITEM 4 | Controls and Procedures | 17 |
| PART II – OTHER INFORMATION | 18 | |
| ITEM 1 | Legal Proceedings | 18 |
| ITEM 1A | Risk Factors | 18 |
| ITEM 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 18 |
| ITEM 3 | Defaults Upon Senior Securities | 18 |
| ITEM 4 | Mine Safety Disclosures | 18 |
| ITEM 5 | Other Information | 18 |
| ITEM 6 | Exhibits | 18 |
| 2 |
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
Consolidated Balance Sheets
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory | ||||||||
| Prepaid expense and other receivable | ||||||||
| Total Current Assets | ||||||||
| Property and equipment, net of accumulated | ||||||||
| Intangible assets, net of accumulated amortization | ||||||||
| Deferred expenses | ||||||||
| Right of use assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Operating lease liabilities - Current | ||||||||
| Deferred revenue | ||||||||
| Tax payable | ||||||||
| Due to related party | ||||||||
| Total Current Liabilities | ||||||||
| Operating lease liabilities - Noncurrent | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ Deficit | ||||||||
| Series A-1 Preferred stock: shares authorized; $ par value | ||||||||
| issued and outstanding at March 31, 2026, and December 31, 2025 | ||||||||
| Series A-1 Preferred stock: 5,000,000 shares authorized; $0.001 par value 5,000,000 issued and outstanding at March 31, 2026, and December 31, 2025 | ||||||||
| Common stock: shares authorized; $ par value | ||||||||
| shares issued and outstanding at March 31, 2026, and December 31, 2025 | ||||||||
| Common stock: 2,000,000,000 shares authorized; $0.001 par value 74,640,766 shares issued and outstanding at March 31, 2026, and December 31, 2025 | ||||||||
| Additional Paid-in Capital | ||||||||
| Statutory surplus reserve | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Hong Yuan Holding Group Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Non-controlling interests | ||||||||
| Total stockholders’ deficit | ( | ) | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 3 |
HONG YUAN HOLDING GROUP
Consolidated Statements of Operations
(Unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | ||||||||
| Gross Profit | ||||||||
| Operating Expenses | ||||||||
| Selling and marketing | ||||||||
| General and administrative | ||||||||
| Professional fees | ||||||||
| Total Operating Expenses | ||||||||
| Operating loss from continuing operations | ( | ) | ||||||
| Other Income and Expense | ||||||||
| Interest income | ||||||||
| Other income | ( | ) | ||||||
| Total other income | ||||||||
| Net (loss) income before taxes | ( | ) | ||||||
| Provision for income taxes | ||||||||
| (Loss) income from continuing operations | ( | ) | ||||||
| Discontinued operations | ||||||||
| Loss from discontinued operation | ( | ) | ||||||
| Loss from discontinued operations, net of tax benefits | ( | ) | ||||||
| Net (loss) income before non-controlling interests | $ | ( | ) | $ | ||||
| Net loss attributable to non-controlling interests | ( | ) | ( | ) | ||||
| Net (loss) income attributable to Hong Yuan Holding Group | ( | ) | ||||||
| Other comprehensive income | ||||||||
| Comprehensive (Loss) Income | $ | ( | ) | $ | ||||
| Basic and dilutive net income (loss) per common share | $ | ) | $ | |||||
| Weighted average number of common shares outstanding - basic and diluted | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
HONG YUAN HOLDING GROUP
Consolidated Statements of Stockholders’ Deficit
(Unaudited)
| Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional | Statutory | Other | Non- | Total | ||||||||||||||||||||||||||||||||||
Number of Shares | Par Value | Number of Shares | Par Value | Paid-in Capital | surplus reserve | Comprehensive Income (Loss) | Accumulated Deficit | controlling Interests | Stockholders’ Deficit | |||||||||||||||||||||||||||||||
| Balance - December 31, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||
| Net income | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Accumulated other comprehensive income | - | - | ||||||||||||||||||||||||||||||||||||||
| Balance - March 31, 2025 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional | Statutory | Other | Non- | Total | ||||||||||||||||||||||||||||||||||
Number of Shares | Par Value | Number of Shares | Par Value | Paid-in Capital | surplus reserve | Comprehensive Income (Loss) | Accumulated Deficit | controlling Interests | Stockholders’ Deficit | |||||||||||||||||||||||||||||||
| Balance - December 31, 2025 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Accumulated other comprehensive income | - | - | ||||||||||||||||||||||||||||||||||||||
| Balance - March 31, 2026 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 5 |
HONG YUAN HOLDING GROUP
Consolidated Statements of Cash Flows
(Unaudited)
| 2026 | 2025 | |||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net Income (loss) | $ | ( | ) | $ | ||||
| Net (loss) from discontinued operations | ( | ) | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Lease expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Prepaid expense and other receivable | ( | ) | ||||||
| Accounts payable and accrued liabilities | ||||||||
| Deferred revenue | ( | ) | ||||||
| Operating lease payment | ( | ) | ( | ) | ||||
| Tax payable | ( | ) | ||||||
| Due to related party | ||||||||
| Net Cash (Used in) Operating Activities from Continuing Operations | ( | ) | ( | ) | ||||
| Net Cash (Used in) Operating Activities from Discontinued Operations | ( | ) | ||||||
| Net Cash (Used in) Operating Activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Intangible assets | ( | ) | ||||||
| Net Cash (Used in) Investing Activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| EFFECT OF EXCHANGE RATE CHANGE ON CASH & CASH EQUIVALENTS | ||||||||
| Net change in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Cash paid for income taxes | $ | $ | ||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Right of use asset and related liability | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 6 |
HONG YUAN HOLDING GROUP
NOTES TO FINANCIAL STATEMENTS
Note 1 – Organization
Hong Yuan Holding Group (“We”, “the Company”, “Hong Yuan”) was incorporated on September 29, 2001 in the State of Nevada under the name of Biocorp North America Inc. On March 18, 2005, the Company filed an amendment to its certificate of incorporation to change its 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
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.
A change of control of the Company was completed on November 3, 2020, control was obtained by the sale of common shares and $ 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 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.
On
October 1, 2024, The Company entered into an agreement to acquire from Xudong Li (the majority shareholder of the Company) % equity
interest of Hongyuan International Holding Group Co., Ltd. (“Hongyuan HK”) in exchange for HK $
Also
on October 1, 2024, Hongyuan HK entered into a series of agreements including a Shareholders’ Voting Rights Entrustment Agreement,
an Exclusive Management Consulting and Service Agreement and a Share Pledge Agreement (collectively the “Agreements”) with
Fengcuiyuan Chang Technology Development Co., Ltd (“Fengcuiyuan”) and its registered owners (the “Transaction”).
Fengcuiyuan is a corporation formed under the laws of the PRC on September 3, 2021, in which Xudong Li (the majority shareholder of the
Company) controls % of its equity interest. Fengcuiyuan owns % of Rongcheng (Sichuan) Supply Chain Management Co., Ltd (“Rongcheng”),
a corporation formed under the laws of the PRC located in Chengdu, Sichuan, China, incorporated on April 17, 2024. On November 12, 2024,
Chongqing Xuchang Qingrong Trading Co., Ltd. (“Xuchang”) located in Chongqing, Sichuan, China, was formed as a
| 7 |
According to the Agreements, Hongyuan HK assumed financial and operating control of Fengcuiyuan. As a result, Hongyuan HK has been determined to have a controlling financial interest in Fengcuiyuan, requiring Hongyuan HK to consolidate the financial statements of Fengcuiyuan and its subsidiaries, and ultimately consolidate with its parent company, Hong Yuan. The Transaction was accounted for as a reorganization of entities under common control. As the combining entities have been under common control since September 2021, the consolidated financial statements of the Company recognized the assets and liabilities received in the reorganization at their historical carrying amounts, as reflected in the historical financial statements of each entity.
The Company, through its subsidiary and the Agreements with Fengcuiyuan, focuses on supply chain management services, is mainly engaged in the wholesale and internet sales of fast-moving consumer goods such as food, daily necessities, and electronic products, covering diversified fields such as pre-packaged food, agricultural and by-products, and household goods.
In
April 2025, the Company changed its business model. Rongcheng relinquished its
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.
Note 2 – Summary of significant accounting policies
Basis of Presentation
This summary of significant accounting policies of the Company (a development stage 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 insignificant 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.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company, its subsidiary and variable interest entity (“VIE”) for which the Company is the primary beneficiary. All inter-company accounts and transactions have been eliminated in consolidation.
In determining Fengcuiyuan is a VIE of Hongyuan HK, the Company considered the following indicators, among others:
| 1. | Hongyuan HK enjoys exclusive and non-competitive rights to intellectual property rights and licensing arising from the performance of the Agreements, and controls and administers the financial affairs and daily operation of Fengcuiyuan. The registered owners of Fengcuiyuan as a group have no right to make any decision about Fengcuiyuan’s activities without the consent of Hongyuan HK. |
| 2. | Hongyuan HK is assigned all voting rights of Fengcuiyuan and has the right to appoint all directors and senior management personnel of Fengcuiyuan. The registered owners of Fengcuiyuan possess no substantive voting rights. |
| 8 |
| 3. | The registered owners of Fengcuiyuan have pledged their shares in Fengcuiyuan as collateral to secure these Agreements. |
| 4. | The Agreements are valid for 10 years. Termination is prohibited by Fengcuiyuan and its registered owners, making termination within the control of the Company. |
| 5. | Hongyuan HK is entitled to a management consulting and service fee based on the workload and commercial value of the technical services provided at a price agreed upon by both parties, has the right to adjust the consulting service fee standards at any time based on the quantity and content of the services provided to Fengcuiyuan. Therefore, Hongyuan HK is the primary beneficiary of Fengcuiyuan. |
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles 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 financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ significantly from those estimates.
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.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Major repairs and betterments that significantly extend original useful lives or improve productivity are capitalized and depreciated over the period benefited. Maintenance and repairs are expensed as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method for substantially all assets with estimated lives as follows:
Schedule of estimated useful lives of property and equipment
| Machinery & equipment | ||||
| Automobile | ||||
| Office equipment |
Lease
ASC Topic 842, “Leases” requires recognition of leases on the balance sheets as right-of-use (“ROU”) assets and lease liabilities. ROU assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities represent the Company’s obligation to make lease payments arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date. The Company’s future minimum lease payments used to determine the Company’s lease liabilities mainly include minimum lease rent payments. Leases with a lease term of 12 months or less at inception are not recorded on the Company’s balance sheet and are expensed on a straight-line basis over the lease term in the Company’s statement of operations. As most of the Company’s leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be.
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.
| 9 |
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 income and loss per share is the same as the basic income and loss per share for the three months ended March 31, 2026 and 2025, as there are no potential shares outstanding that would have a dilutive effect.
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 March 31, 2026 and December 31, 2025.
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.
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.
Note 4 - Property and equipment
Property and equipment consist of:
Schedule of property and equipment
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Office Equipment | $ | $ | ||||||
| Total | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
| 10 |
Note 5 – Intangible assets
Intangible assets consist of:
Schedule of intangible assets
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Software | $ | $ | ||||||
| Less: Accumulated amortization | ||||||||
| Intangible assets, net | $ | $ | ||||||
Note 6 – Leases
On
April 10, 2024, Fengcuiyuan entered into an operating lease agreement to rent an office. The lease has an original term of
On
December 18, 2025, Rongcheng entered into an operating lease agreement to rent a storefront. The lease has an original term of
Balance sheet information related to the Company’s leases is presented below:
Schedule of balance sheet information related to company’s leases
| March 31, 2026 | ||||
| Operating Leases | ||||
| Operating lease right-of-use assets | $ | |||
| Operating lease liabilities - current | ||||
| Operating lease liability – non-current | ||||
| Total operating lease liabilities | $ | |||
The following provides details of the Company’s lease expenses:
Schedule of company’s lease expenses
| 2026 | 2025 | |||||||
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Operating lease expense | $ | $ | ||||||
Other information related to leases is presented below:
Schedule of other information related to leases
| Three Months Ended | ||||
| March 31, 2026 | ||||
| Cash Paid For Amounts Included In Measurement of Liabilities: | ||||
| Operating cash flows from operating leases | $ | |||
| Weighted Average Remaining Lease Term: | ||||
| Operating leases | ||||
| Weighted Average Discount Rate: | ||||
| Operating leases | % | |||
Maturities of lease liabilities were as follows:
Schedule of maturities of lease liabilities
| For the 12 months ending December 31: | ||||
| 2026 (9 months remaining) | $ | |||
| 2027 | ||||
| Total lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Total lease liabilities | ||||
| Less: current portion | ( | ) | ||
| Lease liabilities – non-current portion | $ | |||
| 11 |
Note 7 – Related party transaction
During
the three months ended March 31, 2026, the Company’s current majority shareholder advanced $ to the Company as working capital.
As of March 31, 2026 and December 31, 2025, the Company owed its current majority shareholder of $ and $, respectively,
including $
Note 8 – Common stock
At March 31, 2026, the Company is authorized to issue shares of $ par value common stock.
As of March 31, 2026, a total of shares of common stock with par value $ remain outstanding.
Note 9 – Preferred stock
As of March 31, 2026, a total of shares of Series A-1 preferred stock with par value $ remain outstanding.
Note 10 – Income taxes
The Company is subject to taxation in the United States (USA) and its subsidiaries were incorporated in China and are governed by the Income Tax Law of China.
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 March 31, 2026, 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 three months ended March 31, 2026 and 2025, the Company had
Note 11 – 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.
| 12 |
Item 2. Management’s 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 March 18, 2005, it changed its name to Cereplast, Inc. In the summer of 2014, the Company ceased all operations.
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.
On October 1, 2024, The Company entered into an agreement to acquire from Xudong Li (the majority shareholder of the Company) 100% equity interest of Hongyuan International Holding Group Co., Ltd. (“Hongyuan HK”) in exchange for HK $500,000 (approximately $64,103) or issuing the equivalent value of the Company’s common stocks, payable upon the completion of changing registered owner with the Administration for Industrial and Commerce. Hongyuan HK was established in Hong Kong on July 28, 2021.
Also on October 1, 2024, Hongyuan HK entered into a series of agreements including a Shareholders’ Voting Rights Entrustment Agreement, an Exclusive Management Consulting and Service Agreement and a Share Pledge Agreement (collectively the “Agreements”) with Fengcuiyuan Chang Technology Development Co., Ltd (“Fengcuiyuan”) and its registered owners (the “Transaction”). Fengcuiyuan is a corporation formed under the laws of the PRC on September 3, 2021, in which Xudong Li (the majority shareholder of the Company) controls 95% of its equity interest. Fengcuiyuan owns 98% of Rongcheng (Sichuan) Supply Chain Management Co., Ltd (“Rongcheng”), a corporation formed under the laws of the PRC located in Chengdu, Sichuan, China, incorporated on April 17, 2024. On November 12, 2024, Chongqing Xuchang Qingrong Trading Co., Ltd. (“Xuchang”) located in Chongqing, Sichuan, China, was formed as a 55% subsidiary of Rongcheng.
According to the Agreements, Hongyuan HK assumed financial and operating control of Fengcuiyuan. As a result, Hongyuan HK has been determined to have a controlling financial interest in Fengcuiyuan, requiring Hongyuan HK to consolidate the financial statements of Fengcuiyuan and its subsidiaries, and ultimately consolidate with its parent company, Hong Yuan. The Transaction was accounted for as a reorganization of entities under common control. As the combining entities have been under common control since September 2021, the consolidated financial statements of the Company recognized the assets and liabilities received in the reorganization at their historical carrying amounts, as reflected in the historical financial statements of each entity.
| 13 |
The Company, through its subsidiary and the Agreements with Fengcuiyuan, focuses on supply chain management services, is mainly engaged in the wholesale and internet sales of fast-moving consumer goods such as food, daily necessities, and electronic products, covering diversified fields such as pre-packaged food, agricultural and by-products, and household goods.
In April 2025, the Company changed its business model. Rongcheng relinquished its 55% ownership in Xuchang and received its original investment back, but will still fund the opening of stores operated by Xuchang. In the future, the investment funds for stores will be recovered as loans from the stores’ profits. As a result, Xuchang was deconsolidated from the Company’s consolidated financial statements starting in the second quarter of 2025 and Xuchang’s operating results prior to the deconsolidation was accounted for as discontinued operations.
We have not yet generated sustained profits from our prior operations. Our independent accountants have expressed a “going concern” opinion. As of March 31, 2026, we had an accumulated deficit of $97,745,991 and a net working capital deficit of $100,288.
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.
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.
| 14 |
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 allowance for doubtful accounts as of March 31, 2026 and December 31, 2025, respectively.
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.
Results of Operations for the Three Months Ended March 31, 2026 compared to the Three Months Ended March 31, 2025
Revenue was $43,697 in the three months ended March 31, 2026 compared to $184,492 in the same period last year. The decrease in revenue was mainly because the decline in Chinese VIEs revenue.
Cost of goods sold was $21,712 in the three months ended March 31, 2026 compared to $71,780 in the same period last year due to the decrease in revenue.
Operating expenses were $116,552 in the three months ended March 31, 2026 compared to $69,582 in the same period last year, an increase of $46,970 or 40.3%. The increase was mainly due to the increase in professional fees, general and administrative expenses and selling and marketing expenses. The increase in general and administrative expenses in the first quarter of 2026 was mainly due to the increase in personnel expense, and license and regulatory fee related to maintaining the public company, partly offset by the decrease in rent, and office expense.
During the three months ended March 31, 2026, the Company had a net loss of $94,567, compared to a net income of $43,130 in the same period last year, a decrease of $137,697. The decrease in net income in the first quarter of 2026 was primarily due to the decrease in gross profit as a result of the decline in Chinese VIEs revenue and higher operating expenses.
Liquidity and Capital Resources
As of March 31, 2026 and December 31, 2025, we had a cash balance of $6,444 and $16,747 respectively. During the three months ended March 31, 2026 and 2025, the company’s operations are primarily funded by the Company’s CEO and major shareholder and the minority owners of the Chinese VIEs.
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. Mr. Xudong, the CEO and principal shareholder of the Company, would favorably entertain funding, through loans, corporate expenses for approximately 24 months. Any loans by Mr. 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 Mr. Xudong for any such loans from funds furnished by the target. We have no written agreement with Mr. Xudong to advance any further funds for future operating expense, therefore there is no assurance that such funds from Mr. 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
For the three months ended March 31, 2026, net cash used in operating activities was $3,420. This was primarily due to the net loss of $94,471, adjusted by non-cash related expenses of $2,088 which consisted primarily of depreciation and amortization expenses, and then decreased by favorable changes in working capital of $88,963. The favorable changes in working capital mainly resulted from an increase in accounts payable and accrued liabilities of $ 89,925, an increase in due to related party of $14,127, a decrease in accounts receivable of $21,021, and an decrease in inventory of $6,771, partly offset by a decrease in deferred revenue of $34,746, and a decrease in tax payable of $10,803.
For the three months ended March 31, 2025, net cash used in operating activities was $13,234. This was primarily due to the net income of $37,357, adjusted by non-cash related expenses including depreciation of $335, and then decreased by unfavorable changes in working capital of $48,905. The unfavorable changes in working capital mainly resulted from an increase in accounts receivable of $36,483, an increase in inventory of $17,690, and an increase in prepaid expense and other receivable of $37,912, offset by an increase in accounts payable and accrued liabilities of $40,720, and an increase in due to related party of $2,461.
| 15 |
Investing Activities
For the three months ended March 31, 2026, net cash used in investing activities was developing spending of $7,079 on software.
We neither generated nor used cash in investing activities during the three months ended March 31, 2025.
Financing Activities
We neither generated nor used cash in financing activities during the three months ended March 31, 2026 and 2025.
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 had a net loss of $94,471 for the three months ended March 31, 2026 and a net income of $37,357 for the three months ended March 31, 2025, and had a working capital deficit of $100,288 as of March 31, 2026, which raise substantial doubt about the Company’s ability to continue as a going concern.
Management believes the Company may 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 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.
| 16 |
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 March 31, 2026 that have materially affected or are reasonably likely to materially affect our internal controls.
| 17 |
PART II – OTHER 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.
| 18 |
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: June 19, 2026 | By: | /s/ Li Xudong |
| Li Xudong | ||
CEO and Chief Financial Officer (chief financial and accounting officer and duly authorized officer) | ||
| 19 |
EXHIBIT 31.1
CERTIFICATION
I, Li Xudong, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Hong Yuan Holding Group:
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Dated: June 19, 2026 | By: | /s/ Li Xudong |
| Li Xudong | ||
| CEO and Chief Financial Officer (chief financial and accounting officer and duly authorized officer) |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Hong Yuan Holding Group. (the “Company”) on Form 10-Q for the period ending March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Li Xudong, President and Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Dated: June 19, 2026 | By: | /s/ Li Xudong |
| Li Xudong | ||
| CEO and Chief Financial Officer (chief financial and accounting officer and duly authorized officer) |