U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended:
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to __________
Commission File Number
(Exact name of registrant as specified in its charter) |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) |
| Identification No.) |
(Address of principal executive offices and Zip code)
+86 (
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None.
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 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).
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 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
State the number of shares outstanding of each of the issuer’s classes of common equity as of the latest practicable date – August 16, 2024
Class A Common Stock, $0.001 par value |
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Class B Common Stock, $0.001 par value |
| 4,447 |
Class |
| Shares |
YUBO INTERNATIONAL BIOTECH LIMITED
TABLE OF CONTENTS
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– Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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– Quantitative and Qualitative Disclosures about Market Risk |
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– Unregistered Sales of Equity Securities and Use of Proceeds |
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| Table of Contents |
ABOUT THIS QUARTERLY REPORT
In this Quarterly Report on Form 10-Q (this “Quarterly Report”), unless otherwise specified, the terms “we,” “our,” “us,” our “Company,” the “Company,” or the “Registrant” refer to Yubo International Biotech Limited, a U.S. holding company and a New York corporation and its wholly owned subsidiaries, including Platinum International Biotech Co., Ltd., a company organized under the laws of the Cayman Islands (“Platinum”), Platinum International Biotech (Hong Kong) Limited, a company organized under the laws of Hong Kong and a wholly owned subsidiary of Platinum (“Platinum HK”), Yubo International Biotech (Chengdu) Limited, a company organized under the laws of the People’s Republic of China and a wholly owned subsidiary of Platinum HK (“Yubo Chengdu” or the “WFOE”), and Yubo Global Biotechnology (Chengdu) Co., Ltd., a company organized under the laws of the People’s Republic of China (“Yubo Global”). We are a U.S. holding company primarily operating through our wholly owned subsidiary, Platinum. Platinum is not a Chinese operating company but a Cayman Islands holding company, which in turn operates in China through its subsidiaries and contractual arrangements with a variable interest entity (“VIE”), Yubo International Biotech (Beijing) Limited, a company organized under the laws of the People’s Republic of China and, through contractual arrangements with us, the Chinese operating company. None of our Company, Platinum, or Platinum HK, each as a holding company, conducts any day-to-day business operations in China.
The term “Yubo Beijing” refers to Yubo International Biotech (Beijing) Limited, a VIE organized under the laws of the People’s Republic of China, including its wholly-owned subsidiary, Phoenix Club Bio-Medical Technology (Chengdu) Co., Ltd, a company organized under the laws of the People’s Republic of China (“Yubo Phoenix”), and two other PRC subsidiaries, Yubo Jingzhi Biotechnology (Chengdu) Co., Ltd. (“Yubo Jingzhi”) and EpiAis Biomedical Engineering Co., Ltd. (“Yubo Shenzhen”). Yubo Beijing conducts the day-to-day business operations of our Company in China through contractual arrangements with our subsidiaries. We do not own any equity interest in Yubo Beijing or any of its subsidiaries. Investors in our Class A common stock currently do not hold, and may never hold, any equity interest, directly or indirectly, in Yubo Beijing or any of its subsidiaries.
Our corporate structure involving the VIE provides investors with contractual exposure to foreign investment in China-based companies where PRC laws prohibit direct foreign investment in Chinese operating companies in certain industries, such as Yubo Beijing. This structure involves unique risks to investors and is subject to risks relating to our contractual arrangements with Yubo Beijing and its shareholders. Our contractual arrangements with Yubo Beijing have not been tested in a court of law. If the PRC government finds these contractual arrangements non-compliant with the restrictions on direct foreign investment in the relevant industries, or if the relevant PRC laws, regulations, and rules or the interpretation thereof change in the future, we could be subject to severe penalties or be forced to relinquish our interests in Yubo Beijing or forfeit our rights under the contractual arrangements. Further, the Chinese regulatory authorities could disallow our contractual arrangements with Yubo Beijing, which would likely result in a material adverse change in our operations, and, given the resulting inability to consolidate Yubo Beijing’s financial results in our consolidated financial statements, in the value of our Class A common stock, which could significantly decline or become worthless.
| 3 |
| Table of Contents |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements in this Quarterly Report that are not descriptions of historical facts are forward-looking statements that are based on management’s current expectations and assumptions and are subject to risks and uncertainties. If such risks or uncertainties materialize or such assumptions prove incorrect, our business, operating results, financial condition and stock price could be materially negatively affected. In some cases, you can identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” “will,” “would” or the negative of these terms or other comparable terminology. Factors that could cause actual results to differ materially from those currently anticipated include those set forth in “Part I—Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—The VIE and China Operations” and “Part II Other Information—Item 1A. Risk Factors” of this Quarterly Report and “Part I—Item 1A. Risk Factors” in our Annual Report on Form 10-K filed with the SEC on April 12, 2024, including, without limitation, risks relating to:
| • | the results of Yubo Beijing’s research and development activities relating, in particular, to stem cell related technologies; |
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| • | the early stage of Yubo Beijing’s product candidates presently under development; |
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| • | the need for substantial additional funds in order to continue our operations, and the uncertainty of whether we will be able to obtain the funding we need; |
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| • | Yubo Beijing’s ability to obtain and, if obtained, maintain regulatory approval of its current product candidates, and any of its other future product candidates, and any related restrictions, limitations, and/or warnings in the label of any approved product candidate; |
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| • | Yubo Beijing’s ability to retain or hire key scientific or management personnel; |
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| • | Yubo Beijing’s ability to protect its intellectual property rights that are valuable to its business, including patent and other intellectual property rights; |
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| • | Yubo Beijing’s dependence on third-party manufacturers, suppliers, research organizations, testing laboratories and other potential collaborators; |
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| • | Yubo Beijing’s ability to develop successful sales and marketing capabilities in the future as needed; |
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| • | the size and growth of the potential markets for any of Yubo Beijing’s approved product candidates, and the rate and degree of market acceptance of any of its approved product candidates; |
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| • | competition in the industry; and |
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| • | regulatory developments in China. |
We operate in a rapidly changing environment and new risks emerge from time to time. As a result, it is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements included in this Quarterly Report speak only as of the date hereof, and except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report to conform these statements to actual results or to changes in our expectations.
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| Table of Contents |
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
YUBO INTERNATIONAL BIOTECH LIMITED
INDEX TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2024 and 2023
Table of Contents
| F-1 |
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Consolidated Statements of Operations and Comprehensive Loss (Unaudited) |
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Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) |
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| Table of Contents |
YUBO INTERNATIONAL BIOTECH LIMITED
CONSOLIDATED BALANCE SHEETS
(Expressed in US Dollars)
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| June 30, 2024 |
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| December 31, 2023 |
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ASSETS |
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Current assets |
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Cash |
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Prepaid expenses |
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Inventory |
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Due from related parties |
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Total Current Assets |
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Property and equipment, net |
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Intangible assets, net |
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Operating lease right of use asset |
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Lease security deposit |
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Total Assets |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities |
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Accounts payable and accrued expenses (including accounts payable and accrued expenses of VIE without recourse to the Company of $ |
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Advances from prospective customers/distributors (including advances from prospective customers/distributors of VIE without recourse to the Company of $ |
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Due to related parties (including due to related parties without recourse to the Company of $ |
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Operating lease liabilities – current (including operating lease liabilities - current of VIE without recourse to the Company of $ |
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Total Current Liabilities |
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Non-current liabilities |
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Operating lease liabilities - non-current (including operating lease liability – non- current of VIE without recourse to the Company of $ |
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Total Liabilities |
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Commitments and contingencies |
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Shareholders' Deficit: |
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Preferred stock, par value $ |
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Common stock, Class A par value $ |
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Common stock, Class B, par value $ |
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Additional Paid in Capital |
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Accumulated deficit |
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Total deficit attributable to common shareholders |
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Non-controlling interests |
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Total Deficit |
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Total Liabilities and Shareholders' Equity |
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The accompanying notes are an integral part of these consolidated financial statements.
| F-1 |
| Table of Contents |
YUBO INTERNATIONAL BIOTECH LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Expressed in US Dollars)
(Unaudited)
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| For the three months ended June 30, |
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Revenue |
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Sales of products and services |
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Gross Profit |
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Operating expenses: |
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Employee compensation |
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Occupancy |
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Depreciation and amortization of property and equipment |
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Amortization of intangible assets |
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Other operating expenses |
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Total Operating Expenses |
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Income (loss) from operations |
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Other Income (Expenses) |
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Loss on obsolete inventory |
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Interest expenses |
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Total Other Income (Expenses) |
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Loss before Provision for Income Tax |
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Provision for Income Tax |
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Net loss |
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Net loss attributable to non-controlling interest |
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Net loss attributable to common stock holders |
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Net loss per share basic and diluted |
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Weighted average common shares outstanding basic and diluted |
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Comprehensive income (loss) |
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Net loss to the Company |
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Net loss to NCI |
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Foreign currency translation adjustment to the Company |
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Foreign currency translation adjustment to the NCI |
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Total comprehensive income (loss) |
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The accompanying notes are an integral part of these consolidated financial statements.
| F-2 |
| Table of Contents |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(Expressed in US Dollars)
(Unaudited)
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| Other |
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| controlling interests |
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Balance, December 31, 2023 |
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Capital contributions to subsidiary by non-controlling interests |
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Transfer of 27% interest in subsidiary (Yubo Jingzhi) to noncontrolling interest |
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Net loss for the three months ended March 31, 2024 |
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Balance, March 31, 2024 |
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Net loss for the three months ended June 30, 2024 |
|
| — |
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|
| — |
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| ( | ) |
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| ( | ) |
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| ( | ) |
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| ( | ) | ||||
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Capital contributions to subsidiary by non-controlling interests |
|
| — |
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|
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| — |
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Foreign currency translation adjustment |
|
| — |
|
|
|
|
|
| — |
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Balance, June 30, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ |
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| $ | ( | ) | |||||||
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| Common Stock |
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| Accumulated |
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| ||||||||||||||||||||||||
|
| Class A |
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| Class B |
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| Additional |
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| Other |
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| Total |
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| Non- |
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| |||||||||||||||||
|
| Shares |
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| Amount |
|
| Shares |
|
| Amount |
|
| paid in capital |
|
| Accumulated Deficit |
|
| Comprehensive Income (loss) |
|
| Stockholders’ Deficit |
|
| controlling interest |
|
| Total |
| ||||||||||
Balance, December 31, 2022 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ |
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| $ | ( | ) | |||||||
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Net loss for the three months ended March 31, 2023 |
|
| — |
|
|
|
|
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| — |
|
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| ( | ) |
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| ( | ) |
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| ( | ) | |||||
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Foreign currency translation adjustment |
|
| — |
|
|
|
|
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| — |
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Balance, March 31, 2023 |
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| ( | ) |
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Net loss for the three months ended June 30, 2023 |
|
| — |
|
|
|
|
|
| — |
|
|
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| ( | ) |
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| ( | ) |
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Foreign currency translation adjustment |
|
| — |
|
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|
|
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| — |
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Balance, June 30, 2023 |
|
|
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| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ |
|
| $ | ( | ) | |||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-3 |
| Table of Contents |
YUBO INTERNATIONAL BIOTECH LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in US Dollars)
(Unaudited)
|
| For the six months ended June 30, |
| |||||
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| 2024 |
|
| 2023 |
| ||
|
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| ||
Cash flows from operating activities: |
|
|
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|
|
| ||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
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Depreciation and amortization |
|
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| ||
Loss on obsolete inventory |
|
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| |
Changes in operating assets and liabilities: |
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|
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|
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Receivables |
|
| ( | ) |
|
|
| |
Prepaid expenses |
|
| ( | ) |
|
| ( | ) |
Inventory |
|
| ( | ) |
|
|
| |
Due from related parties |
|
|
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|
| ||
Lease security deposit |
|
|
|
|
|
| ||
Accounts payable and accrued expenses |
|
|
|
|
| ( | ) | |
Advances from prospective customers/distributors |
|
| ( | ) |
|
| ( | ) |
Due to related parties |
|
|
|
|
|
| ||
Net cash used in operating activities |
|
| ( | ) |
|
| ( | ) |
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Cash flows from investing activities: |
|
|
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Sale of Equipment |
|
|
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|
| ||
Net cash provided in investing activities |
|
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| ||
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Cash flows from financing activities: |
|
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|
|
Capital contributions to subsidiary (EpiAis) by non-controlling interest |
|
|
|
|
|
| ||
Net cash provided by financing activities |
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| ||
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Effect of exchange rate changes |
|
|
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|
|
| ||
|
|
|
|
|
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|
|
Net increase (decrease) in cash |
|
|
|
|
| ( | ) | |
Cash at beginning of period |
|
|
|
|
|
| ||
Cash at end of period |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information: |
|
|
|
|
|
|
|
|
Income taxes paid |
|
|
|
|
|
| ||
Interest paid |
|
|
|
|
|
| ||
The accompanying notes are an integral part of these consolidated financial statements.
| F-4 |
| Table of Contents |
YUBO INTERNATIONAL BIOTECH LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months and six months ended June 30, 2024 and 2023
(Unaudited)
NOTE 1 – ORGANIZATION
Yubo International Biotech Limited (formerly Magna-Lab Inc.) (the “Company”), a New York corporation, acquired Platinum International Biotech Co. Ltd. (“Platinum”) in a “reverse merger” transaction on January 14, 2021.
On January 14, 2021 (the “Closing Date”), the Company closed a voluntary share exchange transaction with Platinum International Biotech Co., Ltd., a company organized under the laws of the Cayman Islands (“Platinum”), pursuant to that certain Agreement and Plan of Share Exchange, dated January 14, 2021 (the “Exchange Agreement”), by and among the Company, Platinum, Yubo International Biotech (Beijing) Limited, a company organized under the laws of the People’s Republic of China (“PRC”) (“Yubo Beijing”), and certain selling stockholders named therein.
In accordance with the terms of the Exchange Agreement, on the Closing Date, the Company issued a total of
Platinum was incorporated on April 7, 2020 under the laws of the Cayman Islands as a holding company. On May 4, 2020, Platinum incorporated a wholly owned subsidiary Platinum International Biotech (Hong Kong) Limited (“Platinum HK”) in Hong Kong. On September 4, 2020, Platinum HK incorporated a wholly foreign owned enterprise (“WFOE”) Yubo International Biotech (Chengdu) Limited (“Yubo Chengdu”) in Chengdu, China.
On September 11, 2020, Yubo Chengdu entered into a series of Variable Interest Entity (“VIE”) agreements with the owners of Yubo International Biotech (Beijing) Limited (“Yubo Beijing”). Pursuant to the VIE agreements, Yubo Beijing became Yubo Chengdu’s contractually controlled affiliate. The purpose and effect of the VIE Agreements is to provide Yubo Chengdu with all management control and net profits earned by Yubo Beijing.
Yubo Beijing was incorporated on June 14, 2016. For the year ended December 31, 2020 (commencing April 2020), Yubo Beijing sold approximately 850 nebulizers to customers in the People’s Republic of China (“PRC”). In 2021, 2022 and 2023, Yubo Beijing sales also included sales of skincare products, hair care products, healthy beverages, and male and female personal care products. Commencing in the quarterly period ended September 30, 2023, Yubo Beijing started selling health management and health maintenance service agreements to customers.
Upon executing the series of VIE agreements in September 2020, Yubo Beijing has been considered a Variable Interest Entity (“VIE”) of Yubo Chengdu, its primary beneficiary. Accordingly, Yubo Beijing has been consolidated under the guidance of FASB Accounting Standards Codification (“ASC”) 810, Consolidation.
The officers, directors, and controlling beneficial owners of Yubo Beijing from its inception on June 14, 2016 were also officers, directors, and controlling beneficial owners of Platinum. Accordingly, the accompanying consolidated financial statements include Yubo Beijing’s operations from its inception on June 14, 2016.
On January 21, 2021 and December 31, 2020, respectively, the Company formed two new wholly owned subsidiaries: Yubo Jingzhi Biotechnology (Chengdu) Co. Ltd. (“Yubo Jingzhi”) as a subsidiary of Yubo Beijing and Yubo Global Biotechnology (Chengdu) Co. Ltd (“Yubo Global”) as a subsidiary of Platinum HK.
| F-5 |
| Table of Contents |
On October 10, 2023, Yubo Beijing acquired a wholly owned subsidiary Phoenix Club Bio-Medical Technology (Chengdu), Co., Ltd. (“Yubo Phoenix”) , a company incorporated on April 12, 2021. Prior to October 10, 2023, Yubo Phoenix had minimal business operations.
On January 27 2024, the Company acquired a
On February 27, 2024, the Company sold
Yubo International Biotech Limited and its consolidated subsidiaries and VIE are collectively referred to herein as the “Company” unless specific reference is made to an entity.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Principles of Consolidation
The consolidated financial statements include the accounts of the Company, its majority owned subsidiaries, and its consolidated VIE for which the Company is the primary beneficiary.
All transactions and balances among the Company, its subsidiaries and consolidated VIE have been eliminated upon consolidation.
The accompanying consolidated financial statements reflect the activities of the following entities:
Name | Background | Ownership | ||
Yubo International Biotech Limited (“Yubo New York”) | · · Incorporated in | |||
Platinum International Biotech Co. LTD (“Platinum”) | · · Incorporated on · A holding company | |||
Platinum International Biotech (Hong Kong) Limited. (“Platinum HK”) | · · Incorporated on · A holding company | |||
Yubo International Biotech (Chengdu) Limited (“Yubo Chengdu”) | · · Incorporated on · Subscribed capital of $ · A holding company | |||
Yubo International Biotech (Beijing) Limited (“Yubo Beijing”) | · · Incorporated on · Subscribed capital of $ · Stem cell storage and bank |
| F-6 |
| Table of Contents |
Yubo Jingzhi Biotechnology (ChengDu) Co. Ltd. (“Yubo Jingzhi”) |
| ·
|
| |
Yubo Global Biotechnology (Chengdu) Co. Ltd (“Yubo Global”) |
| ·
|
| |
Phoenix Club Bio-Medical Technology (Chengdu) Co., LTD (“Yubo Phoenix”) |
| ·
|
| |
EpiAis Biomedical Engineering Co., Ltd. (“Yubo Shenzhen”) |
| · |
|
On September 11, 2020, our wholly-owned subsidiary, Yubo Chengdu, entered into the following contractual arrangements with Yubo Beijing and the shareholders of Yubo Beijing (the “Yubo Shareholders”), as applicable, each of which is enforceable and valid in accordance with the laws of the PRC:
Exclusive Consulting Services Agreement
Pursuant to the Exclusive Consulting Services Agreement among Yubo Beijing, Yubo WFOE, and the Yubo Shareholders, Yubo WFOE agrees to provide, and Yubo Beijing agrees to accept, exclusive management services provided by Yubo WFOE. Such management services include but are not limited to financial management, business management, marketing management, human resource management and internal control of Yubo Beijing. The Exclusive Consulting Services Agreement will remain in effect until the acquisition of all assets or equity of Yubo Beijing by Yubo WFOE is complete (as more fully described in the Exclusive Purchase Option Agreement below).
Exclusive Purchase Option Agreement
Under the Exclusive Option Agreement among Yubo Beijing, Yubo WFOE, and the Yubo Shareholders, the Yubo Shareholders granted Yubo WFOE an irrevocable and exclusive purchase option to acquire Yubo Beijing’s equity and/or assets at a nominal consideration. Yubo WFOE may exercise the purchase option at any time.
Equity Pledge Agreement
Under the Equity Pledge Agreement among Yubo WFOE and the Yubo Shareholders, the Yubo Shareholders pledged all of their equity interests in Yubo Beijing, including the proceeds thereof, to guarantee all of Yubo WFOE’s rights and benefits under the Exclusive Consulting Services Agreement and the Exclusive Option Agreement. Prior to termination of this Equity Pledge Agreement, the pledged equity interests cannot be transferred without Yubo WFOE’s prior consent. The Yubo Shareholders covenants to Yubo WFOE that among other things, it will only appoint/elect the candidates for the directors of Yubo Beijing nominated by Yubo WFOE.
| F-7 |
| Table of Contents |
Financial Statements of Yubo Beijing (VIE)
The consolidated assets and liabilities of Yubo Beijing (VIE) and its subsidiaries at June 30, 2024 and December 31, 2023 consist of:
|
| June 30, 2024 |
|
| December 31, 2023 |
| ||
|
| (Unaudited) |
|
|
|
| ||
Cash |
| $ |
|
| $ |
| ||
Receivables (net) |
|
|
|
|
|
| ||
Prepaid Expenses |
|
|
|
|
|
| ||
Inventory |
|
|
|
|
|
| ||
Due from related parties |
|
|
|
|
|
| ||
Property and equipment (net) |
|
|
|
|
|
| ||
Intangible assets (net) |
|
|
|
|
|
| ||
Operating lease right of use asset |
|
|
|
|
|
| ||
Lease security deposit |
|
|
|
|
|
| ||
Receivables from other consolidated entities (A) |
|
|
|
|
|
| ||
Total assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
|
|
|
|
| ||
Advances from prospective customers/distributors |
|
|
|
|
|
| ||
Due to related parties |
|
|
|
|
|
| ||
Operating lease liabilities |
|
|
|
|
|
| ||
Payables to other consolidated entities (A) |
|
|
|
|
|
| ||
Total liabilities |
|
|
|
|
|
| ||
Shareholders’ equity |
| $ | ( | ) |
| $ | ( | ) |
(A) Eliminated in consolidation.
See Note 16 for a condensed consolidating balance sheet of the Company at June 30, 2024 and a condensed consolidating statement of operations of the Company for the six month ended June 30, 2024.
Foreign Currency Translation
The accompanying consolidated financial statements are presented in United States dollars (“$”), which is the reporting currency of the Company. The functional currency of Platinum and Platinum HK is the United States dollar. The functional currency of the Company’s subsidiaries and VIE located in the PRC is the Renminbi (“RMB”). For the entities whose functional currencies are the RMB, results of operations and cash flows are translated at average exchange rates during the period ($
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Significant estimates and assumptions by management include, among others, useful lives and impairment of long-lived assets, and income taxes including the valuation allowance for deferred
tax assets. While the Company believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in bank accounts, cash in time deposits, certificates of deposit and all highly liquid instruments with original maturities of three months or less.
| F-8 |
| Table of Contents |
Inventories
Inventories now mainly consisting of beauty care products, are stated at the lower of cost utilizing the weighted average method or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated selling costs.
The valuation of inventory requires the Company to estimate excess and slow-moving inventories. The Company evaluates the recoverability of the inventory based on expected demand and market conditions.
Property and Equipment
Property and equipment consist of leasehold improvements and office equipment. All property and equipment are stated at historical cost net of accumulated depreciation. Repairs and maintenance are expensed as incurred. Property and equipment are depreciated on a straight-line basis over the following periods:
Leasehold improvements |
| Remaining term of lease |
Air conditioning equipment |
| |
Office equipment |
|
Intangible Assets
Intangible assets consist of distribution software and patents and are stated at historical cost less accumulated amortization. Amortization of intangible assets is calculated on a straight-line basis over the shorter of the contractual terms or the expected useful lives of the respective assets. The amortization period by major asset classes is as follows:
Distribution software |
| |
Patents |
|
Impairment of Long-Lived Assets
The Company’s long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of the asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management’s estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial position. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.
Fair Value of Financial Instruments
The Company adopted ASC 820 “Fair Value Measurements,” which defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:
Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liabilities, either directly or indirectly, for substantially the full term of the financial instruments.
Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value.
| F-9 |
| Table of Contents |
Financial instruments include cash, receivables, due from related parties, accounts payable and accrued expenses, advances from prospective customers/distributors and due to related parties. The carrying values of these financial instruments approximate their fair values due to the short-term maturities of these instruments.
For the periods presented, there were no financial assets or liabilities measured at fair value.
Leases
We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities - current, and operating lease liabilities - noncurrent on the balance sheets. The initial lease liability is equal to the future fixed minimum lease payments discounted using the Company’s incremental borrowing rate, on a secured basis. The initial measurement of the right-of-use asset is equal to the initial lease liability plus any initial direct costs.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.
Revenue Recognition
The Company derives its revenue from (1) the sale of health management and health maintenance service agreements (commencing in the quarterly period ended September 30, 2023 and (2) the sale of health and personal care products. The Company adopted ASC 606 requires the use of a five-step model to recognize revenue from contracts with customers. The five-step model requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our contract with performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied.
Allowance for Doubtful Accounts
Trade accounts receivable arise from the sale of products and services on trade credit terms. On a quarterly basis, we review all significant accounts as to their past due balances, as well as collectability of the outstanding trade account receivables for possible write off. It is our policy to write off the account receivable against the allowance account when we deem the receivable to be uncollectible. Additionally, we review orders from dealers that are significantly past due, and we ship product only when our ability to collect payment from our customer for the new order is probable.
Our allowance for doubtful accounts reflects our best estimate for losses inherent in the trade accounts receivable balance. We determine the allowance based on known troubled accounts, weighting probabilities of future conditions and expected outcomes, and other currently available evidence.
Advertising Costs
Advertising costs are expensed as incurred.
Income Taxes
The Company follows the liability method in accounting for income taxes in accordance with ASC topic 740 (“ASC 740”), Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance against deferred tax assets if, based on the weight of available evidence, it is more-likely than not that some portion, or all, of the deferred tax assets will not be realized.
| F-10 |
| Table of Contents |
The Company applies the provisions of ASC 740 to account for uncertainty in income taxes. ASC 740 clarifies the accounting for uncertainty in income taxes by prescribing the recognition threshold a tax position is required to meet before being recognized in the consolidated financial statements.
The Company will classify interest and penalties related to unrecognized tax benefits, if and when required, as part of income tax expense in the consolidated statements of operations.
Net Income (Loss) per Share
Basic net income (loss) per share is computed by dividing net loss by the weighted average number of Class A and Class B common shares outstanding during the period.
Diluted net income (loss) per share reflects the potential dilution that could occur if dilutive securities (such as stock options and convertible securities) were exercised or converted into common shares. For the periods presented, the Company had no dilutive securities outstanding.
Comprehensive Income (Loss)
Comprehensive income (loss) is defined as the increase (decrease) in equity of the Company during a period from transactions and other events and circumstances excluding transactions resulting from investments by owners and distributions to owners. Comprehensive income (loss) is reported in the consolidated statements of operations and comprehensive income (loss), including net income (loss) and foreign currency translation adjustments, presented net of tax.
New Accounting Pronouncements
In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02) “Leases (Topic 842)”. ASU 2016-02 requires a lessee to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. We adopted ASU 2016-02 for interim and annual reporting periods beginning after December 15, 2018.
For finance leases, a lessee is required to do the following:
| · | Recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the balance sheet. |
|
|
|
| · | Recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of comprehensive income. |
|
|
|
| · | Classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows. |
For operating leases, a lessee is required to do the following:
| · | Recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the balance sheet. |
|
|
|
| · | Recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis. |
|
|
|
| · | Classify all cash payments within operating activities in the statement of cash flows. |
Other than increasing assets and liabilities at the inception of the respective leases (See Note 8), ASU 2016-02 has not had a significant effect on the Company’s financial position or results of operations.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material impact on its consolidated financial position, statements of operations or cash flows.
| F-11 |
| Table of Contents |
NOTE 3 – GOING CONCERN
The Company’s financial statements as of June 30, 2024 and December 31, 2023 have been prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues and cash flows sufficient to cover its operating costs and allow it to continue as a going concern. At June 30, 2024, the Company had cash of $
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its operating expenses and seeking third party equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. 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.
NOTE 4 – INVENTORY
Inventory consisted of the following:
|
| June 30, |
|
| December 31, |
| ||
|
| 2024 |
|
| 2023 |
| ||
|
| (Unaudited) |
|
|
| |||
Nebulizers and components |
| $ |
|
| $ |
| ||
Oral liquid health products |
|
|
|
|
|
| ||
Beauty care products |
|
|
|
|
|
| ||
Other |
|
|
|
|
|
| ||
Total Inventory |
| $ |
|
| $ |
| ||
NOTE 5 – DUE FROM RELATED PARTIES
Due from related parties consisted of:
|
| June 30, |
|
| December 31, |
| ||
|
| 2024 |
|
| 2023 |
| ||
|
| (Unaudited) |
|
|
| |||
Beijing Zhenhuikang Biotechnology Co., LTD (“Zhenhuikang”) (1) |
| $ |
|
| $ |
| ||
Total Due from Related Parties |
| $ |
|
| $ |
| ||
| (1) | Zhenhuikang is controlled by Beijing Zhenxigu Medical Research Center LP (“Zhenxigu”). Zhenxigu is controlled by Mr. Yulin Cao, a director and significant stockholder of Yubo Beijing. The due from related parties receivable is non-interest bearing and due on demand. |
| F-12 |
| Table of Contents |
NOTE 6 – PROPERTY AND EQUIPMENT
Property and equipment, net, consisted of the following:
|
| June 30, |
|
| December 31, |
| ||
|
| 2024 |
|
| 2023 |
| ||
|
| (Unaudited) |
|
|
| |||
Leasehold improvements |
| $ |
|
| $ |
| ||
X-Ray equipment |
|
|
|
|
|
| ||
Air conditioning equipment |
|
|
|
|
|
| ||
Office equipment |
|
|
|
|
|
| ||
Total property and equipment |
|
|
|
|
|
| ||
Less accumulated depreciation and amortization |
|
| ( | ) |
|
| ( | ) |
Property and equipment, net |
| $ |
|
| $ |
| ||
For the three months ended June 30, 2024 and 2023, depreciation and amortization of property and equipment was $
For the six months ended June 30, 2024 and 2023, depreciation and amortization of property and equipment was $
NOTE 7 – INTANGIBLE ASSETS
Intangible assets, net, consisted of the following:
|
| June 30, |
|
| December 31, |
| ||
|
| 2024 |
|
| 2023 |
| ||
|
| (Unaudited) |
|
|
| |||
Distribution software |
| $ |
|
| $ |
| ||
Experience center software |
|
|
|
|
|
| ||
Patents acquired from related party |
|
|
|
|
|
| ||
Wechat application |
|
|
|
|
|
| ||
Total intangible assets |
|
|
|
|
|
| ||
Less: Accumulated amortization |
|
| ( | ) |
|
| ( | ) |
Intangible assets, net |
| $ |
|
| $ |
| ||
For the three months ended June 30, 2024 and 2024, amortization of intangible assets expense was $
For the six months ended June, 2024 and 2024, amortization of intangible assets expense was $
At June 30, 2024, the expected future amortization of intangible assets expense was:
Year ending December 31, 2024 |
| $ |
| |
Year ending December 31, 2025 |
|
|
| |
Year ending December 31, 2026 |
|
|
| |
Thereafter |
|
|
| |
Total |
| $ |
|
| F-13 |
| Table of Contents |
NOTE 8 – OPERATING LEASE RIGHT OF USE ASSETS AND OPERATING LEASE LIABILITIES
On August 1, 2019, Yubo Beijing executed a lease agreement with Jiu Si Cheng Investment Management (the “Landlord”) to rent approximately
Effective March 1, 2021, Yubo Global executed a lease agreement with Chengdu Liangkang Investment Co. to rent approximately
Also in the fourth quarter of 2022, effective September 1, 2021, Yubo Jingzhi executed a lease agreement with Sichuan Anyi Hengke Tech Co. to rent approximately
On April 1, 2024, Yubo Shenzhen signed two leases with Shenzhen Material Group Limited
| · | |
|
|
|
| · |
At June 30, 2024, the future undiscounted minimum lease payments under the four noncancellable capitalized operating leases are as follows:
|
| As of June 30, 2024 |
| |
Year ending December 31, 2024 |
|
|
| |
Year ending December 31, 2025 |
|
|
| |
Year ending December 31, 2026 |
|
| 57.335 |
|
Total |
|
|
| |
The operating lease liabilities totaling $
For the three months ended June 30, 2024 and June 30, 2023, occupancy expense attributable to leases was $
For the six months ended June 30, 2024 and June 30, 2023, occupancy expense attributable to leases was $
| F-14 |
| Table of Contents |
NOTE 9 – ADVANCES FROM PROSPECTIVE CUSTOMERS/DISTRIBUTORS
Advances from prospective customers/distributors consists of:
|
| In RMB |
|
| In USD |
| ||||||||||
Source of Advance |
| June 30, 2024 |
|
| December 31, 2023 |
|
| June 30, 2024 |
|
| December 31, 2023 |
| ||||
|
| (Unaudited) |
|
|
|
|
| (Unaudited) |
|
|
|
| ||||
Advancer 1 |
| ¥ | 1,544,748 |
| ¥ |
| 1,544,748 |
|
| $ |
|
| $ |
| ||
Advancer 2 |
|
| 550,000 |
|
|
| 550,000 |
|
|
|
|
|
|
| ||
Advancer 3 |
|
| 500,000 |
|
|
| 500,000 |
|
|
|
|
|
|
| ||
Advancer 4 |
|
| 348,000 |
|
|
| 348,000 |
|
|
|
|
|
|
| ||
Advancer 5 |
|
| 50,000 |
|
|
| 50,000 |
|
|
|
|
|
|
| ||
Advancer 6 |
|
| 50,000 |
|
|
| 50,000 |
|
|
|
|
|
|
| ||
Advancer 7 |
|
| 31,012 |
|
|
| 31,012 |
|
|
|
|
|
|
| ||
Advancer 8 |
|
| 31 |
|
|
| 31 |
|
|
|
|
|
|
| ||
|
| ¥ | 3,073,791 |
|
| ¥ | 3,073,791 |
|
| $ |
|
| $ |
| ||
The related verbal agreements between Yubo Beijing and the eight advancers provide for the eight advancers to purchase inventory from Yubo Beijing or enter into such other arrangements with Yubo Beijing as the parties mutually agree. Pending formal approval of any such arrangements, all of the eight remaining PRC advancers have the right to request the return of their advances.
NOTE 10 – DUE TO RELATED PARTIES
Due to related parties consisted of the following:
|
| June 30, |
|
| December 31, |
| ||
|
| 2024 |
|
| 2023 |
| ||
|
| (Unaudited) |
|
|
| |||
Mr. Yang Wang (1) |
| $ |
|
| $ |
| ||
Mr. Jun Wang (2) |
|
|
|
|
|
| ||
Ms. Huang Li (3) |
|
|
|
|
|
| ||
Mr. Jin Wei (4) |
|
|
|
|
|
| ||
Mr. Yanxi Wang |
|
|
|
|
|
| ||
Ms. Xiuqin Xu |
|
|
|
|
|
| ||
Ms. Lina Fang |
|
|
|
|
|
| ||
Total |
| $ |
|
| $ |
| ||
| (1) | Mr. Yang Wang controls |
| (2) | Mr. Jun Wang controls |
| (3) | Ms. Huang Li is a shareholder of Focus One Technology Group Limited (“Focus One”). Focus One owns |
| (4) | Mr. Jin Wei controls |
The due to related parties payables are noninterest bearing and are due on demand. | ||
| F-15 |
| Table of Contents |
NOTE 11 – SHAREHOLDERS’ EQUITY
Yubo Biotech International Limited
The Company has three types of stocks:
Preferred stock – par value
Common Stock Class A – par value
Common Stock Class B – par value
On January 14, 2021, the Company issued
Name of Selling Shareholder |
| Number of Exchange Shares |
|
| Percentage of Exchange Shares |
| ||
FLYDRAGON INTERNATIONAL LIMITED (controlled by Mr. Jun Wang) |
|
|
|
|
| % | ||
CHINAONE TECHNOLOGY LIMITED (controlled by Mr. Yang Wang) |
|
|
|
|
| % | ||
BOAO BIOTECH LIMITED (controlled by Mr. Yulin Cao) |
|
|
|
|
| % | ||
FOCUS DRAW GROUP LIMITED (controlled by Ms. Lina Liu) |
|
|
|
|
| % | ||
FOCUSONE TECHNOLOGY GROUP LIMITED (controlled by Mr. Jin Wei) |
|
|
|
|
| % | ||
DRAGONCLOUD TECHNOLOGY LIMITED (Controlled by Mr. Yang Wang) |
|
|
|
|
| % | ||
CHEUNG HO SHUN |
|
|
|
|
| % | ||
TOTAL |
|
|
|
|
| % | ||
On September 2, 2022, the Company issued
Platinum International Biotech Co., LTD (Cayman Islands) (“Platinum”)
Platinum has authorized
On April 7, 2020, Platinum issued a total of
Entity |
| Shares |
| |
1. Flydragon International Limited (controlled by Mr. Jun Wang) |
|
|
| |
2. Chinaone Technology Limited (controlled by Mr. Yang Wang) |
|
|
| |
3. Boao Biotech Limited (controlled by Mr. Yulin Cao) |
|
|
| |
4. Dragoncloud Technology Limited (controlled by Mr. Yang Wang) |
|
|
| |
5. Focus Draw Group Limited (controlled by Ms. Lina Liu) |
|
|
| |
6. Focusone Technology Group Limited (controlled by Mr. Jin Wei) |
|
|
| |
Total |
|
|
| |
| F-16 |
| Table of Contents |
On September 11, 2020, Platinum sold
On January 21, 2021, Yubo New York acquired all
Yubo International Biotech (Chengdu) Limited (“Yubo Chengdu”)
Yubo Chengdu has subscribed capital of $
Yubo International Biotech (Beijing) Limited (“Yubo Beijing”)
Yubo Beijing has subscribed capital of $
Restricted net assets
The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiaries or its VIE. Relevant PRC statutory laws and regulations permit payments of dividends by Yubo Beijing, Yubo Chengdu, Yubo Jingzhi, Yubo Global, Yubo Phoenix, and Yubo Shenzhen ( collectively, the “PRC subsidiaries and VIE”) only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations and after it has met the PRC requirements for appropriation to statutory reserves. Paid in capital of the PRC subsidiaries and VIE included in the Company’s consolidated net assets are also non-distributable for dividend purposes. The results of operations reflected in the accompanying consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the PRC subsidiaries and VIE. .
The PRC subsidiaries and VIE are required to set aside at least 10% of their after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, the PRC subsidiaries and VIE may allocate a portion of their after-tax profits based on PRC accounting standards to an enterprise expansion fund and a staff bonus and welfare fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends.
Since inception to June 30, 2024, the PRC subsidiaries and VIE have not generated any profit and had negative retained earnings as of June 30, 2024. As a result, these entities have not accrued statutory reserve funds.
The ability of the Company’s PRC subsidiaries and its VIE to make dividends and other payments to the Company may also be restricted by changes in applicable foreign exchange and other laws and regulations. Foreign currency exchange regulation in China is primarily governed by the following rules:
| · | Foreign Exchange Administration Rules (1996), as amended in August 2008, or the Exchange Rules; |
|
|
|
| · | Administration Rules of the Settlement, Sale and Payment of Foreign Exchange (1996), or the Administration Rules. |
Currently, under the Administration Rules, Renminbi is freely convertible for current account items, including the distribution of dividends, interest payments, trade and service related foreign exchange transactions, but not for capital account items, such as direct investments, loans, repatriation of investments and investments in securities outside of China, unless the prior approval of the State Administration of Foreign Exchange (the “SAFE”) is obtained and prior registration with the SAFE is made. Foreign-invested enterprises that need foreign exchange for the distribution of profits to its shareholders may affect payment from their foreign exchange accounts or purchase and pay foreign exchange rates at the designated foreign exchange banks to their foreign shareholders by producing board resolutions for such profit distribution. Based on their needs, foreign-invested enterprises are permitted to open foreign exchange settlement accounts for current account receipts and payments of foreign exchange along with specialized accounts for capital account receipts and payments of foreign exchange at certain designated foreign exchange banks.
| F-17 |
| Table of Contents |
Although the current Exchange Rules allow the convertibility of Chinese Renminbi into foreign currency for current account items, conversion of Chinese Renminbi into foreign exchange for capital items, such as foreign direct investment, loans or securities, requires the approval of SAFE, which is under the authority of the People’s Bank of China. These approvals, however, do not guarantee the availability of foreign currency conversion. The Company cannot be sure that it will be able to obtain all required conversion approvals for its operations or that the Chinese regulatory authorities will not impose greater restrictions on the convertibility of Chinese Renminbi in the future. Currently, all of the Company’s revenues are generated in Renminbi. Any future restrictions on currency exchanges may limit the Company’s ability to use its retained earnings generated in Renminbi to make dividends or other payments in U.S. dollars or fund possible business activities outside China.
NOTE 12 – RELATED PARTY TRANSACTIONS
On February 27, 2020, Yubo Beijing executed an Entrustment Technical Service Agreement with Beijing Zhenhuikang Biotechnology Co. LTD (“Zhenhuikang”), an entity controlled by Mr. Yulin Cao (who is a director of Platinum and Yubo Beijing). The Agreement provides for Zhenhuikang to, among other things, assist Yubo Beijing in the preparation of 300 sets of endometrial stem cell harvesting packages. As amended July 2, 2020, the Agreement provides for Yubo Beijing to pay Zhenhuikang at the rate of RMB 666 per set or RMB 199,800 total ($
June 30, 2024). As of June 30, 2024, preparation of the stem cell harvesting packages has not yet commenced, no payments to Zhenhuikang have been made, and no expense or liability has been recorded.
On May 11, 2021, World Precision Medicine Technology Inc., a company owned and controlled by Cheung Ho Shun, a shareholder of Yubo International Biotech Limited, provided the Company $
NOTE 13 – INCOME TAX
Cayman Islands
Under the current laws of the Cayman Islands, Platinum is not subject to tax on income or capital gains. In addition, payments of dividends by Platinum to its shareholders are not subject to withholding tax in the Cayman Islands.
Hong Kong
Platinum HK was incorporated under the Hong Kong tax law where the statutory income tax rate is
People’s Republic of China
Yubo International Biotech (Beijing) Limited (“Yubo Beijing”), Yubo International Biotech (Chengdu) Limited (“Yubo Chengdu”), Yubo Jingzhi Biotechnology (Chengdu) Co. LTD. (“Yubo Jingzhi”), Yubo Global Biotechnology (Chengdu) Co. Ltd (“Yubo Global”), Phoenix Club Biomedical Technology, (Chengdu) Co., LTD (“Yubo Phoenix”), and EpiAis Biomedical Engineering (Shenzhen) Co., Ltd. (“Yubo Shenzhen”) were incorporated in the PRC and are subject to PRC Enterprise Income Tax (“EIT”) on their taxable income in accordance with the relevant PRC income tax laws. On March 16, 2007, the National People’s Congress enacted a new enterprise income tax law, which took effect on January 1, 2008. The law applies a uniform
Yubo Chengdu has had no taxable income or loss from September 4, 2020 (inception) to June 30, 2024.
| F-18 |
| Table of Contents |
Yubo Beijing has had net losses of $
The components of deferred tax assets were as follows:
|
| June 30, 2024 |
|
| December 31, 2023 |
| ||
|
| (Unaudited) |
|
| (Unaudited) |
| ||
Net operating losses carry forward |
| $ |
|
| $ |
| ||
Valuation allowance |
|
| ( | ) |
|
| ( | ) |
Deferred tax assets, net |
| $ |
|
| $ |
| ||
The reconciliation of the provisions for (benefits from) income tax by applying the PRC tax rate to income (loss) before provisions for income tax and the actual provisions for income tax is as follows:
|
| For the six months ended June 30, 2024 |
|
| For the six months ended June 30, 2023 |
| ||
|
| (Unaudited) |
|
| (Unaudited) |
| ||
Income tax (benefit) at 25% |
| $ | ( | ) |
| $ | ( | )) |
Net loss of Platinum |
|
|
|
|
|
| ||
Increase in valuation allowance |
|
|
|
|
|
| ||
Provision for income taxes |
| $ |
|
| $ |
| ||
Accounting for Uncertainty in Income Taxes
The tax authority of the PRC government conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC after those enterprises complete their relevant tax filings. Therefore, the Company’s PRC entities’ tax filings results are subject to change and may lead to tax liabilities.
ASC 740 requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. The management evaluated the Company’s tax positions and concluded that no liability for uncertainty in income taxes was necessary as of June 30, 2024 and December 31, 2023.
NOTE 14 – COMMITMENTS AND CONTINGENCIES
Credit risk
Cash deposits with banks are held in financial institutions in the PRC, which are insured with deposit protection up to RMB 500,000 (approximately $
| F-19 |
| Table of Contents |
Risks of Variable Interest Entity Structure
Although the structure the Company has adopted is consistent with longstanding industry practice, and is commonly adopted by comparable companies in China, the PRC government may not agree that these arrangements comply with PRC licensing, registration or other regulatory requirements, with existing policies or with requirements or policies that may be adopted in the future. There are uncertainties regarding the interpretation and application of PRC laws and regulations including those that govern the Company’s contractual arrangements, which could limit the Company’s ability to enforce these contractual arrangements. If the Company or its variable interest entity is found to be in violation of any existing or future PRC laws, rules or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including levying fines, revoking business and other licenses of the Company’s variable interest entity, requiring the Company to discontinue or restrict its operations, restricting its right to collect revenue, requiring the Company to restructure its operations or taking other regulatory or enforcement actions against the Company. In addition, it is unclear what impact the PRC government actions would have on the Company and on its ability to consolidate the financial results of its variable interest entity in the consolidated financial statements, if the PRC government authorities were to find the Company’s legal structure and contractual arrangements to be in violation of PRC laws, rules and regulations. If the imposition of any of these government actions causes the Company to lose its right to direct the activities of Yubo Beijing or the right to receive their economic benefits, the Company would no longer be able to consolidate Yubo Beijing.
NOTE 15 – MAJOR CUSTOMERS
Two customers accounted for
| F-20 |
| Table of Contents |
NOTE 16–CONDENSED CONSOLIDATING BALANCE SHEET AND STATEMENT OF OPERATIONS
A condensed consolidating balance sheet of the Company as of June 30, 2024 follows:
|
| Yubo International Biotech Limited(Parent |
|
| Platinum (Cayman Islands) and |
|
| Yubo |
|
| Yubo Chengdu |
|
| Yubo Beijing (VIE) and |
|
|
|
|
|
|
| |||||||
|
| Company) |
|
| Platinum HK |
|
| Global |
|
| (WFOE) |
|
| Subsidiaries |
|
| Eliminations |
|
| Consolidated |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total Current Assets |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| |||||||
Investment in subsidiaries and variable interest entity (VIE) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Intercompany receivables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||||||
Other assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total Assets |
| $ | ( | ) |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| |||||||
Intercompany payables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||||||
Other liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total Liabilities |
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Shareholders' Deficit: |
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Capital stock and additional paid in capital |
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Accumulated deficit |
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Accumulated other comprehensive income (loss) |
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Non-controlling interests |
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Total Deficit |
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Total Liabilities and Shareholders' Equity |
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| $ |
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| F-21 |
| Table of Contents |
A condensed consolidating statement of operations of the Company for the six months ended June 30, 2024 follows:
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| Yubo International Biotech Limited (Parent |
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| Platinum (Cayman Islands) and |
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| Yubo Chengdu |
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| Yubo Beijing (VIE) and |
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| Company) |
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| Platinum HK |
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| Yubo Global |
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| (WFOE) |
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| Subsidiaries) |
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| Eliminations |
| Consolidated |
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Sales of product and services |
| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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Cost of goods and services sold |
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