UNITED STATES
SECURITIES AND EXCHANGE COMMISION
Washington, D.C. 20549
FORM 10-K
| (Mark One) | ||
| [X] | Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
| For the fiscal year ended: June 30, 2018. | ||
| [ ] | Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
| For the transition period from ______ to _______. | ||
Commission file number: 333-119823
HQDA ELDERLY LIFE NETWORK CORP.
(Name of small business issuer in its charter)
| Nevada | 98-1225287 | |
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification Number) |
8780 Valley Blvd., Suite J
Rosemead, California 91770
(Address of principal executive offices)
| Issuer’s telephone number | (626) 703-4228 |
Securities registered under Section 12(b) of the Exchange Act:
| Title of each class | Name of each exchange on which registered | |
| None | None |
Securities registered under Section 12(g) of the Exchange Act:
Common Stock
(Title of class)
Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act: [ ]
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)
Yes [ ] No [X]
State issuer’s revenues for its most recent fiscal year: $Nil
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange Act.)
$31,541,250 as at October 10, 2018
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.
137,128,013 as at October 10, 2018
Transitional Small Business Disclosure Format (Check One): Yes [X] No [ ]
TABLE OF CONTENTS
| 2 |
FORWARD-LOOKING STATEMENTS
Statements made in this annual report on Form 10-K and the exhibits attached hereto that are not historical or current facts are “forward-looking statements” made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1993 (the “Act”) and section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as “may”, “will”, “expect”, “believe”, “anticipate”, “estimate”, “approximate” or “continue”, or the negative thereof. We intend that such forward-looking statements by subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgments as to what may occur in the future; however, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events. Such forward-looking statements are subject to certain risks and uncertainties, both known and unknown, and assumptions, including, without limitation, risks related to:
| ● | our failure to obtain additional financing; | |
| ● | our inability to continue as a going concern; | |
| ● | the unique difficulties and uncertainties inherent in the business; | |
| ● | our President’s and Secretary/Treasurer’s inability to devote a significant amount of time to our business operations; | |
| ● | local and multi-national economic and political conditions; and | |
| ● | our common stock. |
The preceding bullets outline some of the risks and uncertainties that may affect our forward-looking statements. For a full description of risks and uncertainties, see the sections elsewhere in this Form 10-K entitled “Risk Factors”, “Description of Business” and “Management Discussion and Analysis”. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected.
Our Management has included projections and estimates in this annual report, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the Securities and Exchange Commission or otherwise publicly available. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
ITEM 1 – DESCRIPTION OF BUSINESS
Business Development
HQDA Elderly Life Network Corp. (formerly Hartford Retirement Network Corp.) (“HQDA” or the “Company”) was incorporated in the State of Nevada on January 21, 2004. Our principal offices are located at Suite J, 8780 Valley Blvd., Rosemead, California 91770. Our telephone number is (626) 703-4228.
The Company has not had any bankruptcy, receivership or similar proceeding since incorporation.
There have been no material reclassifications, mergers, consolidations or purchases or sales of any significant amount of assets not in the ordinary course of business since the date of incorporation.
Please note that throughout this Annual Report, and unless otherwise noted, the words “we”, “our”, “us”, the “Company” or “HQDA”, refer to HQDA Elderly Life Network Corp.
| 3 |
Business of Issuer
We were an exploration stage company until May 2017, at which time we transitioned to a senior retirement solutions company focusing on senior housing and retirement services and products.
On January 20, 2008, the Company allowed its interest in the Sobeski Lake Gold Property Claims to expire. The Sobeski Lake Gold property consisted of three mineral claims located in the Red Lake Mining District, in the province of Ontario, Canada. We had originally acquired our interest in the property by making a cash payment of $3,500 on June 16, 2004 to Dan Patrie Exploration Ltd. the registered owners of the property.
On January 8, 2008, we acquired, through our wholly owned subsidiary, Dynamic Gravel Holdings Ltd., a 100% interest in two gravel claims called the Northern Gravel Claims and Super Mammoth Gravel Claims (together the “Super Mammoth Gravel Project”) situated on tidewater for $25,000. The Super Mammoth Gravel Project was acquired by way of a purchase agreement. Mr. Farshad Shirvani has been paid CDN$25,000.
On April 27, 2017, the Company dissolved its wholly owned subsidiary, Dynamic Gravel Holdings Ltd. as part of the Stock Purchase Agreement (the “Agreement”) dated April 4, 2017, between Tim Coupland and Brian Game, the Company’s former principal stockholders (the “Sellers”) and Hartford International Retirement Network, Inc. (the “Buyer”), pursuant to which, among other things, the Sellers agreed to sell to the Buyer, and the Buyer agreed to purchase from Sellers, a total of 5,185,000 shares of Common Stock beneficially owned by the Sellers (the “Purchase Shares”). The Purchase Shares represented approximately 52.1% of the Company’s issued and outstanding shares of Common Stock.
In connection with the transactions contemplated by the Agreement, the Board appointed Lianyue Song, Aaron Schottelkorb and Fuming Lin to fill vacancies on the Company’s Board of Directors caused by resignations of Messer’s’ Coupland, Game and Burylo.
On May 11, 2017, the Company entered into a Memorandum of Understanding for Senior Holiday Service Cooperation with Shanghai Qiao Garden International Travel Agency (“Travel Agent”), superseded by a Retirement Vacation Services Agreement executed by the parties on August 25, 2017 (collectively referred to as the “Agreement”). The Company is engaged in the business of providing hotel rooms at favorable rates to travelers to Los Angeles from China. The Company’s president is a principal owner and CEO of a brand-new hotel in Rosemead, California, and the Company is acting as its agent to procure business from Chinese tourists and business travelers. Under the Agreement with the Travel Agent, the Travel Agent has agreed to provide no less than 300 retirement vacation clients per year for a minimum hotel stay of 3,000 nights. The Agreement also provides for payment of a monthly service fee. The Agreement automatically renews on an annual basis unless otherwise terminated by either party in writing. This Agreement was terminated by the Company as of June 30, 2018 because of lack of any revenues relating to the Agreement.
In addition, the Company intends to provide management services to retirement homes, commercial properties and apartment buildings in the following China cities: Shanghai, Jiangsu, Zhejiang, Hainan and Shenyang.
On May 18, 2017, the Company sold its Northern Gravel Claims and the Super Mammoth Gravel Claims for $1 to the Company’s former officer and a former director to focus its efforts on new business venture in senior retirement services and products in China.
The Senior Living Industry
On August 31, 2018, the Company’s wholly-owned subsidiary entered into an agreement with Shanghai Qiao Hong Real Estate, Ltd. (“SQHR”) to manage an apartment building owned by SQHR located in Pudong New Area District Shanghai, China. The apartment building has 130 one-bedroom apartments and caters to mostly men and women over the age of 50.
The Company intends to enter the business of owning, leasing and/or operating senior living residences that will provide seniors with supportive, home life setting with care and services, including activities of daily living, life enrichment and health and wellness.
The senior living industry encompasses a broad spectrum of senior living service and care options, which include independent living, assisted living and skilled nursing care. We intend to concentrate on the independent living services.
| ● | Independent living is designed to meet the needs of seniors who choose to live in an environment surrounded by their peers where they receive services such as housekeeping, meals and activities, but are not reliant on assistance with activities of daily living (for example, bathing, eating and dressing), although we may offer these services through contracts with third parties. |
| 4 |
The Company’s operating philosophy is to provide services and care which meet the individual needs of its residents, and to enhance their physical and mental well-being, thereby allowing them to live longer and to “age in place.” These facilities will offer, on a 24-hour basis, personal, supportive and home health care services appropriate for their residents in a home-like setting, which allow residents to maintain their independence and quality of life. We predict that the average of the residents at the Company’s facilities will be between 55 and 70.
The Company’s primary focus will be in China, where is intends to grow and become a leader in assisted living facilities. The Company also will seek to develop or acquire facilities in other Southeast Asian countries. The Company believes that by concentrating or “clustering” its facilities in target areas with desirable demographics, it can increase the efficiency of its management resources and achieve broad economies of scale.
The long-term care industry encompasses a wide continuum of services and residential arrangements for elderly senior citizens. Skilled nursing facilities provide the highest level of care and are designed for elderly senior citizens who need chronic nursing and medical attention and are not able to live on their own. Further, skilled nursing facilities tend to be one of the most expensive alternatives while providing elderly senior citizens with limited independence and a diminished quality of life. On the other end of the continuum is home-based care, which typically is provided in an individual’s private residence. While this alternative allows the elderly individual to “age in place” in his or her home and, in certain instances, can provide most of the services available at a skilled nursing facility, it does not foster any sense of community or the ability to participate in group activities.
Assisted living facilities generally are designed to fill the gap in the middle of this continuum. Assisted living facilities have been described by the Assisted Living Federation of America (“ALFA”) as providing a special combination of housing and personal, supportive and home health care services designed to respond to the individual needs of those who need, or desire help with their activities of daily living, including personal care and household management. Services in an assisted living facility are generally available 24 hours a day to meet the scheduled and unscheduled needs of residents, thereby promoting maximum dignity and independence.
The assisted living industry is highly fragmented. However, the Company believes that substantial industry consolidation is underway. At present, the industry is characterized by participants who operate only a limited number of facilities and who frequently can offer only basic assistance with a limited number of activities of daily living. The Company intends to be characterized by the following: (i) the ability to offer premium accommodations and a comprehensive bundle of standard services for a single inclusive monthly fee; (ii) sophisticated, professional management structures and highly trained employees; (iii) a cost-efficient, user-specific prototype facility; and (iv) experience in providing home health care services.
The Company’s facilities will provide services and care which are designed to meet the individual needs of its residents, enhance their physical and mental well-being and promote a supportive, independent and home-like setting. Most of the Company’s facilities will be primarily designed as premium facilities at which residents receive a comprehensive, bundled package of standard services for a single monthly fee.
The Company will strive to combine in its facilities the best aspects of independent living with the protection and safety of assisted living, with trained staff members who provide 24-hour care and monitoring of every resident. The assisted living facilities will be designed and decorated to have a home-like atmosphere. Residents will be encouraged to furnish their rooms with personal items they have collected during their lifetime.
Our assisted living facilities differ from skilled nursing facilities in that our assisted living facilities will not provide the more extensive, and costly, nursing and medical care found in nursing homes. Assisted living facilities differ from continuing care retirement communities in that, among other things, residents of assisted living facilities are not obligated to purchase frequently expensive lifetime contracts for residential living and care.
The long-term care industry is highly competitive, and the Company expects that the assisted living business in particular will become more competitive in the future. The Company will compete with numerous other companies providing similar long-term care alternatives such as home health agencies, life care at home, community-based service programs, retirement communities and convalescent facilities. Nursing facilities that provide long-term care services are also a potential source of competition for the Company. Providers of assisted living communities compete for residents primarily on the basis of quality of care, price, reputation, physical appearance of the facilities, services offered, family preferences, physical referrals, and locations. Almost all of the Company’s competitors will be significantly larger than the Company and have, or may obtain, greater financial resources than those currently available to the Company.
| 5 |
ITEM 1A. RISK FACTORS
Not required because we are a smaller reporting company.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable because we are a smaller reporting company.
Employees
At present, there are no employees, other than the current officers and directors, who devote their time as required to the business operations.
Competition
While the senior retirement services and products business is competitive, management does not anticipate having difficulties retaining customers. The Company is currently marketing its hotel travel service to other travel agencies in China and it is also seeking other hotels in Southern California to sign up for its services.
In the senior retirement services and products sector, our competitive position is insignificant. There are numerous companies with substantially more capital and resources that are capable of securing greater number of customers or contracts with travel agencies overseas. We are not able to compete with such companies. Instead, management has determined that the Company will attempt to focus in its core network, such as Shanghai, Jiangsu, Zhejiang, Hainan and Shenyang.
Patents and Trademarks
We do not own, either legally or beneficially, any patents or trademarks.
ITEM 1A. RISK FACTORS
Not required because we are a smaller reporting company.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable because we are a smaller reporting company.
ITEM 2 – DESCRIPTION OF PROPERTY
Corporate Headquarters, California, USA
Our corporate headquarters are located at 8780 Valley Blvd., Suite J, Rosemead, California 91770. Our current premises are adequate for our existing operations.
Real Estate Investments
On April 2, 2018, the Company entered into an Asset Purchase Agreement whereby the Company will purchase land, buildings, right to use, construction use rights and other property rights located in Shanghai from Shanghai Qiao Garden Group for a purchase price of RMB 233,000,000. The Company has agreed to pay the purchase price in instalments over the next 20 months as follows:
| a. | RMB 7,000,000 before April 9, 2018 (paid); | |
| b. | RMB 43,000,000 before April 10, 2018 (paid); | |
| c. | RMB 20,000,000 before May 10, 2018 (paid); | |
| d. | RMB 20,000,000 before July 31, 2018(paid); | |
| e. | RMB 35,000,000 before 30 October 2018 (RMB 25,682,000 was paid during the year ended 30 June 2018 and RMB 9,318,000 was paid subsequent to 30 June 2018); | |
| f. | RMB 35,000,000 before 30 December 2018 (RMB 25,682,000 was paid subsequent to 30 June 2018); | |
| g. | RMB 30,000,000 before April 30, 2019; | |
| h. | RMB 22,000,000 before August 31, 2019; and | |
| i. | RMB 21,000,000 before December 31, 2019. |
| 6 |
HQDA is not a party to any pending legal proceeding. Management is not aware of any threatened litigation, claims or assessments.
ITEM 4 – SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter of our fiscal year to a vote of security holders, through the solicitation of proxies or otherwise.
ITEM 5 – MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
The Company’s common stock, par value, $0.001 per share (“Common Stock”) began trading on the Over the Counter NASDAQ Electronic Bulletin Board (“OTC:BB”) under the symbol “DYGO” beginning in September 2014. The symbol was changed to “HFRN” in August 2017, when the company changed its name to Hartford Retirement Network Corp. and subsequently changed again to its current symbol of “HQDA” when it changed its name to HQDA Elderly Life Network Corp. Since that time there has been only limited trading. The following table sets forth, for the period indicated, the range of high and low closing “Bid” prices reported by the OTC. Such quotations represent prices between dealers and may not include markups, markdowns, or commissions and may not necessarily represent actual transactions.
| Fiscal Year Ending June 30, 2016 | High Bid | Low Bid | ||||||
| Quarter Ended September 30, 2015 | $ | .75 | $ | .75 | ||||
| Quarter Ended December 31, 2015 | $ | .75 | $ | .75 | ||||
| Quarter Ended March 31, 2016 | $ | .75 | $ | .75 | ||||
| Quarter Ended June 30, 2016 | $ | .75 | $ | .75 | ||||
| Fiscal Year Ending June 30, 2017 | ||||||||
| Quarter Ended September 30, 2016 | $ | 1.00 | $ | .51 | ||||
| Quarter Ended December 31, 2016 | $ | 1.00 | $ | .51 | ||||
| Quarter Ended March 31, 2017 | $ | .25 | $ | .25 | ||||
| Quarter Ended June 30, 2017 | $ | 1.50 | $ | .25 | ||||
| Fiscal Year Ending June 30, 2018 | ||||||||
| Quarter Ended September 30, 2017 | $ | 2.00 | $ | 1.20 | ||||
| Quarter Ended December 31, 2017 | $ | 1.50 | $ | 1.50 | ||||
| Quarter Ended March 31, 2018 | $ | 1.90 | $ | 0.75 | ||||
| Quarter Ended June 30, 2018 | $ | 2.75 | $ | 2.75 | ||||
| Fiscal Year Ending June 30, 2019 | ||||||||
| Quarter Ended September 30, 2018 | $ | 2.75 | $ | 1.95 | ||||
| October 1 thru October 14, 2018 | $ | 1.95 | 1.95 | |||||
On 26 June 2017, the Company increased the authorized shares of common stock of the Company from 75,000,000 shares to 200,000,000 shares and authorized the issuance of up to 10,000,000 shares of preferred stock, with such rights, preferences and limitations as may be set from time to time by resolution of the Board of Directors.
Holders of Common Stock
As of October.10, 2018 we had 154 stockholders of record holding 137,128,013 shares of common stock.
| 7 |
Dividend Policy
There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:
| 1. | we would not be able to pay our debts as they become due in the usual course of business; or |
| 2. | our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution. |
We have not declared any dividends, and we do not plan to declare any dividends in the foreseeable future.
Equity Compensation Plan
We do not have any securities authorized for issuance under any equity compensation plans.
Recent Sales of Unregistered Securities
Between July 1 and August 28, 2017, the Company sold 27,610,000 shares of its common stock (the “Shares”) to 48 Chinese investors for $1,380,500.
On August 4, 2017, the Company completed a private placement of 5,750,000 common shares for total proceeds of $287,500.
On August 8, 2017, the Company completed a private placement of 19,910,000 common shares for total proceeds of $995,500
On September 8, 2017, the Company completed a private placement of 1,950,000 common shares for total proceeds of $97,500.
On October 5, 2017, the Company completed a private placement of 5,000,000 common shares for total proceeds of $250,000.
As at March 31, 2018, the Company received $886,540 out of $1,630,500 related to the private placements from April 2017 to October 2017. As a result, the Company has subscriptions receivable of $743,960 as at 31 March 2018.
As at March 31, 2018, the Company received subscriptions of $1,113,700 in advance related to the private placement that completed on April 7, 2018
On April 7, 2018, the Company completed a private placement of 47,500,000 common shares for total proceeds of $7,124,109
On July 12, 2018 the Company sold 10,903,933 shares of its common stock to 37 Chinese investors for total proceeds of $8,737,189.
On August 15, 2018, the Company sold 4,567,213 shares of its common stock to 16 Chinese investors for total proceeds of $3,676,429.
On September 4, 2018, the Company completed the sale transaction from April 2018 and issued 41,731,867 shares of its common stock to HQDA International Investment Holdings Ltd. (“HQDA International”) for total proceeds of $6,259,735. Ms. Xu, the Company’s CEO and a director, is a principal owner and officer and d director of HQDA International.
The Shares were sold by the officers and directors of the Company and no commissions were paid for such sales. All of the investors are residents of China and all offers, and sales were conducted in China. The Shares were sold in a private placement pursuant to an exemption under the Securities Act of 1933, as amended (the “Act), in accordance with Regulation S of the Act. All stock certificates will be affixed with the appropriate Regulation S legend restricting sales and transfers.
| 8 |
ITEM 6 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION OR PLAN OF OPERATION
Selected Financial Data
The selected financial information presented below as of and for the periods indicated is derived from our consolidated financial statements contained elsewhere in this report and should be read in conjunction with those consolidated financial statements. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this annual report, particularly in the section entitled “Risk Factors” found elsewhere in this report.
| INCOME STATEMENT DATA | Year
Ended 30 June 2018 | Year
Ended 30 June 2017 | Year
Ended 30 June 2016 | |||||||||
| Revenue | $ | Nil | $ | 50,000 | $ | Nil | ||||||
| Operating Expenses | $ | (470,483 | ) | $ | (41,860 | ) | $ | (148,178 | ) | |||
| Net Income (Loss) | $ | (467,482 | ) | $ | 29,464 | $ | (148,178 | ) | ||||
| Net Income (Loss) Per Share | $ | (0.010 | ) | $ | 0.003 | $ | (0.015 | ) | ||||
| Weighted Average Number of Common Shares Outstanding (basic and diluted) | 49,008,178 | 9,928,890 | 9,909,959 | |||||||||
| BALANCE SHEET DATA | As at 30 June 2018 | As at 30 June 2017 | ||||||
| Working Capital | $ | 7,769,148 | $ | 34,213 | ||||
| Total Assets | $ | 27,995,834 | $ | 50,100 | ||||
| Accumulated Deficit | $ | (1,529,469 | ) | $ | (1,061,987 | ) | ||
| Shareholders’ Equity | $ | 26,004,463 | $ | 34,213 | ||||
Historical results of operations may differ materially from future results.
This discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and related notes. The discussion and analysis of the financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an on-going basis the Company reviews its estimates and assumptions. The estimates were based on historical experience and other assumptions that the Company believes to be reasonable under the circumstances. Actual results are likely to differ from those estimates under different assumptions or conditions, but the Company does not believe such differences will materially affect our financial position or results of operations. Critical accounting policies, the policies the Company believes are most important to the presentation of its financial statements and require the most difficult, subjective and complex judgments are outlined below in ― “Critical Accounting Policies”.
Explanatory Note on Consolidated Financial Statements
The audited consolidated financial statements included in this report have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.
| 9 |
Plan of Operations
On May 11, 2017, the Company entered into a Memorandum of Understanding for Senior Holiday Service Cooperation with Shanghai Qiao Garden International Travel Agency (“Travel Agent”), superseded by a Retirement Vacation Services Agreement executed by the parties on August 25, 2017 (collectively referred to as the” Agreement”). Under the Agreement with the Travel Agent, the Travel Agent has agreed to provide no less than 300 retirement vacation clients per year for a minimum hotel stay of 3,000 nights. The Agreement also provides for payment of a monthly service fee. The Agreement automatically renews on an annual basis unless otherwise terminated by either party in writing. However, the Company intends to enter into a more permanent agreement in September 2018. From June 1 through June 30, 2018, the Company has received approximately $Nil in revenues in connection with the Agreement. The Company is currently marketing its hotel travel service to other travel agencies in China and it is also seeking other hotels in Southern California to sign up for its services.
The Company believes that with the execution of the Agreement on May 11, 2017 and the commencement of revenues from its travel service business that it is no longer a “shell” corporation.
In addition, the Company intends to provide management services to retirement homes, commercial properties and apartment buildings in the following China cities: Shanghai, Jiangsu, Zhejiang, Hainan and Shenyang.
Limited Operating History; Need for Additional Capital
In the notes to the Company’s audited consolidated financial statements as of June 30, 2018, included elsewhere in this Form 10-K, the Company’s auditors included an explanatory paragraph stating that, because the Company incurred accumulated losses of $1,529,469 for the period from January 21, 2004 (inception) to June 30, 2018, there was substantial doubt about its ability to continue as a going concern.
There is limited historical financial information about the Company upon which to base an evaluation of its performance. The Company shifted its focus to senior housing and retirement services and products in May 2017. The Company cannot guarantee it will be successful in its business operations. The Company’s business is subject to risks inherent in the establishment of a new resource exploration company, including limited capital resources, unanticipated problems relating to exploration and additional costs and expenses that may exceed current estimates. To become profitable the Company will attempt to implement its plan of operation as detailed above.
Our cash reserves are not sufficient to meet our obligations for the next twelve-month period. As a result, we will need to seek additional funding in the near future. We currently do not have a specific plan of how we will obtain such funding. However, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock. As well, our management is prepared to provide us with short-term loans.
We cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock or through a loan from our directors to meet our obligations over the next twelve months. We do not have any arrangements in place for any future equity financing.
If we are unable to arrange additional financing, our business plan will fail and operations will cease.
Results of Operations for the Year Ending June 30, 2018
The Company’s net loss for the year ended June 30, 2018 was $467,482 compared to a net income of $29,464 for the year ended June 30, 2017. Pursuant to the Agreement with the Travel Agent in May 2017, the Company recorded a revenue of $50,000 for the year ended June 30, 2017. The $50,000 was received in July 2017.
Contributing to the period over period differences were bank charges and interest of $1,054 (2017 - $276), consulting fees of $57,000 (2017 - $Nil), filing and financing fees of $1,665 (2017 - $12,325), legal and accounting fees of $74,333 (2017 - $15,934), management fees of $75,000 (2017 - $45,000), rent of $12,350 (2017 - $2,700), regulatory fees of $22,842 (2017 - $12,258), travel expenses of $13,046 (2017 - $426), and foreign exchange loss of $199,135 (2017 – gain of $1,050). Also, during the year ended June 30, 2017, the Company recognized a reversal of income tax penalties of $50,000 and wrote-off $21,324 in accounts payable mostly due to the former officer and a former director. If not for these non-recurring items, the Company would have reported a loss of $41,860 from the operations.
Liquidity and Capital Resources
At June 30, 2018, we had cash on hand of $9,701,075 (2017 - $Nil) and liabilities of $1,991,371 (2017 - $15,887) consisting of accounts payable and accrued liabilities and share subscription fund to be returned. In 2016, the Company received an assessment for penalties from the Internal Revenue Service (“IRS”) regarding failure to file certain supplementary forms for the tax years 2007 to 2011. In 2017, these penalties were reversed by the IRS.
| 10 |
We will require additional funding in order to cover all anticipated administration costs and to proceed with the Retirement Vacation Services Agreement executed on August 25, 2017 and the Asset Purchase Agreement executed on April 2, 2018 and to seek out additional travel agents for similar contracts. The Company also intends to provide management services to retirement homes, commercial properties and apartment buildings in China, which will result in higher administrative costs in the future.
Capital Expenditures
On April 2, 2018, the Company entered into an Asset Purchase Agreement ( the “APA”) whereby the Company will purchase land, buildings, and right to use, construction use rights and other property rights located in Shanghai from Shanghai Qiao Garden. Properties are split into two groups:
| ● | Property A: land use rights and adhesive substance use rights, right to own, and right to operate of the land located in Shanghai Pudong New Area Zhangjiang Ziwei Rd No. 372 and No. 376. Assets are owned by Shanghai Qiao Garden Real Estate Group, a subsidiary 100% owned by Shanghai Qiao Garden; | |
| ● | Property B: land use right, adhesive substance under construction use rights, right to own, and right to operate of the land located in Shanghai Chongming District San Shuang Gong Lu No. 4797. Assets are owned by Shanghai Qiao Garden Information Technology, Ltd. (“Transferor”), a subsidiary 100% owned by Shanghai Qiao Garden. |
The Company has agreed to pay the purchase price totaling of $36,991,173 (RMB 233,000,000) in instalments over the next 20 months as follows:
| a. | RMB 7,000,000 before April 9, 2018 (paid); | |
| b. | RMB 43,000,000 before April 10, 2018 (paid); | |
| c. | RMB 20,000,000 before May 10, 2018 (paid); | |
| d. | RMB 20,000,000 before July 31, 2018 (paid); | |
| e. | RMB 35,000,000 before October 30, 2018 (RMB 25,682,000 was paid during the year ended June 30, 2018 and RMB 9,318,000 was paid subsequent to June 30, 2018); | |
| f. | RMB 35,000,000 before December 30, 2018 (RMB 25,682,000 was paid subsequent to June 30, 2018); | |
| g. | RMB 30,000,000 before April 30, 2019; | |
| h. | RMB 22,000,000 before August 31, 2019; and | |
| i. | RMB 21,000,000 before December 31, 2019. |
As at June 30, 2018, the Company has paid $18,233,403 (RMB 115,682,000) as deposits. Subsequent to the year-end, the Company has paid $5,131,000 (RMB 35,000,000).
On September 1, 2018, the Company has obtained the full management and operation rights of the hotel property and all other assets of Property A.
On August 8, 2018, the Company has entered into a share purchase agreement to acquire Property B by acquiring 100% outstanding shares of the Transferor for $731,968 (RMB 5,000,000). The total proceeds has been included in the deposits paid by the Company and shares will be transferred when all current and potential liabilities are settled by the Transferor.
Off-balance Sheet Arrangements
The Company has no off-balance sheet arrangements that would require disclosure.
Critical Accounting Policies
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. Preparing financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet dates, and the recognition of revenues and expenses for the reporting periods. These estimates and assumptions are affected by management’s application of accounting policies.
| 11 |
Basis of presentation
The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America applicable to exploration stage enterprises and are expressed in U.S. dollars. The Company’s fiscal year end is June 30.
Principles of consolidation
The Company’s consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Shanghai Hartford Health Management Ltd., a company incorporated in the People’s Republic of China from November 9, 2017. All inter-company balances have been eliminated upon consolidation.
Cash and cash equivalents
Cash and cash equivalents include highly liquid investments with original maturities of three months or less.
Financial instruments
The carrying amounts of cash and accounts payable approximate fair value because of the short maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. The Company does not hold or issue financial instruments for trading purposes, not does it utilize derivative instruments in the management of foreign exchange, commodity price or interest rate market risks.
Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risk arising from these financial instruments.
Derivative financial instruments
The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
Revenue recognition
Revenue includes service and management fees associated with the operation of senior holiday services. Revenue is recognized when the services are rendered.
Property and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. The cost of an item of property, plant and equipment consists of the purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use and an initial estimate of the costs of dismantling and removing the item.
Depreciation is provided at rates calculated to write off the cost of property, plant and equipment, less their estimated residual value, using the straight-line method over the following expected useful lives:
| ● | Computer equipment 2 years |
| ● | Furniture 5 years |
Income taxes
Deferred income taxes are reported for timing difference between items of income or expense reported in the consolidated financial statements and those reported for income tax purposes in accordance with ASC 740, “Income Taxes”, which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax loss and credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not.
| 12 |
Basic and diluted loss per share
The Company computes net loss per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all potentially dilutive shares if their effect is anti-dilutive.
Comprehensive loss
ASC 220, “Comprehensive Income”, establishes standards for the reporting and display of comprehensive loss and its components in the consolidated financial statements. As at June 30, 2018, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the consolidated financial statements.
Segments of an enterprise and related information
ASC 280, “Segment Reporting”, establishes guidance for the way that public companies report information about operating segments in annual consolidated financial statements and requires reporting of selected information about operating segments in interim consolidated financial statements issued to the public. It also establishes standards for disclosures regarding products and services, geographic areas and major customers. ASC 280 defines operating segments as components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.
Foreign currency translation
The Company’s functional and reporting currency is in U.S. dollars. The consolidated financial statements of the Company are translated to U.S. dollars in accordance with ASC 830, “Foreign Currency Matters”. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
Use of estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from these estimates.
Concentration of credit risk
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and accounts receivable. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company’s management also routinely assesses the financial strength and credit worthiness of its customers and any parties to which it extends funds and as such, it believes that any associated credit risk exposures are limited.
| 13 |
Risks and uncertainties
The Company operates in the resource exploration industry that is subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating a resource exploration business, including the potential risk of business failure.
Comparative figures
Certain comparative figures have been adjusted to conform to the current year’s presentation.
Recent Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02 (Topic 842) “Leases.” Topic 842 supersedes the lease recognition requirements in Accounting Standards Codification (“ASC”) Topic 840 “Leases.” Under Topic 842, lessees are required to recognize assets and liabilities on the balance sheet for most leases and provide enhanced disclosures. Leases will continue to be classified as either finance or operating. Topic 842 is effective for annual reporting periods and interim periods within those years beginning after December 15, 2018. Early adoption by public entities is permitted. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements, and there are certain optional practical expedients that an entity may elect to apply. Full retrospective application is prohibited. The Company does not anticipate this amendment to have a significant impact on the consolidated financial statements.
In April 2016, the FASB issued ASU 2016 – 10 “Revenue from Contract with Customers: identifying Performance Obligations and Licensing”. The amendments in this Update clarify the two following aspects (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The amendments in this Update are intended to reduce the degree of judgement necessary to comply with Topic 606. This guidance is effective for reporting periods beginning after December 15, 2017. The Company does not expect the adoption of this guidance to have an impact on the consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years beginning after December 15, 2019. The Company does not anticipate this amendment to have a significant impact on the consolidated financial statements.
Quantitative and Qualitative Disclosures about Market Risk
The Company does not issue or invest in financial instruments or their derivatives for trading or speculative purposes. The limited operations of the Company were conducted primarily in China and are not subject to material foreign currency exchange risk. Although the Company has outstanding debt and related interest expense, market risk of interest rate exposure in the United States is currently not material.
ITEM 7 – CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
As used herein, the terms “Company,” “our,”, “we,” and “us” refer to Hartford Retirement Network Corp. (formerly Dynamic Gold Corp.), a Nevada corporation, unless otherwise indicated. In the opinion of management, the accompanying audited consolidated financial statements included in the Form 10-K reflect all adjustment (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for the period presented. The results of operation for the years presented are not necessarily indicative of the results to be expected for the future years.
| 14 |
HQDA Elderly Life Network Corp.
(formerly Hartford Retirement Network Corp.)
Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2018
| 15 |
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of HQDA Elderly Life Network Corp. (Formerly Hartford Retirement Network Corp.).
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of HQDA Elderly Life Network Corp. (the “Company”) as of 30 June 2018 and 2017, the related consolidated statements of operations and deficit, cash flows and changes in stockholders’ equity for the years then ended, and the related notes and schedules (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of 30 June 2018 and 2017, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has not generated revenues in the fiscal year ended June 30, 2018, has incurred losses in developing its business, and further losses are anticipated. The Company requires additional funds to meet its obligations and the costs of its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting in accordance with the standards of the PCAOB. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion in accordance with the standards of the PCAOB.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/S/ DALE MATHESON CARR-HILTON LABONTE LLP
CHARTERED PROFESSIONAL ACCOUNTANTS
We have served as the Company’s auditor since 2014
Vancouver, Canada
October 12, 2018
| 16 |
HQDA Elderly Life Network Corp.
(formerly Hartford Retirement Network Corp.)
Consolidated Balance Sheets
(Expressed in U.S. Dollars)
As at 30 June 2018 | As at 30 June 2017 | |||||||||||
| Note | $ | $ | ||||||||||
| Assets | ||||||||||||
| Current | ||||||||||||
| Cash | 9,701,075 | - | ||||||||||
| Accounts receivable | 8 | - | 50,000 | |||||||||
| Loan receivable | 3 | 52,877 | ||||||||||
| Prepaid expenses | 6,567 | 100 | ||||||||||
| 9,760,519 | 50,100 | |||||||||||
| Non-current | ||||||||||||
| Deposits | 4 | 18,233,403 | - | |||||||||
| Equipment | 5 | 1,912 | - | |||||||||
| 18,235,315 | - | |||||||||||
| 27,995,834 | 50,100 | |||||||||||
| Liabilities | ||||||||||||
| Current | ||||||||||||
| Accounts payable and accrued liabilities | 7 | 8,460 | 15,887 | |||||||||
| Share subscription funds to be returned | 6 | 1,982,911 | - | |||||||||
| 1,991,371 | 15,887 | |||||||||||
| Shareholders’ equity | ||||||||||||
| Capital stock | 6 | |||||||||||
| Authorized: | ||||||||||||
| 200,000,000 common shares, $0.001 par value | ||||||||||||
| 10,000,000 preferred shares, $0.001 par value | ||||||||||||
| Issued and outstanding: | ||||||||||||
| 30 June 2018 – 79,925,000 common shares | ||||||||||||
| 30 June 2017 – 9,945,000 common shares | 79,925 | 9,945 | ||||||||||
| Additional paid-in capital | 6 | 9,264,384 | 1,086,255 | |||||||||
| Share subscriptions received in advance | 6 | 18,189,623 | - | |||||||||
| Deficit | (1,529,469 | ) | (1,061,987 | ) | ||||||||
| 26,004,463 | 34,213 | |||||||||||
| 27,995,834 | 50,100 | |||||||||||
Nature and Continuance of Operations (Note 1), Subsequent Events (Note 13) and Commitments (Note 14)
The accompanying notes are an integral part of these consolidated financial statements.
| 17 |
HQDA Elderly Life Network Corp.
(formerly Hartford Retirement Network Corp.)
Consolidated Statements of Operations and Deficit
(Expressed in U.S. Dollars)
| Note | For the year ended 30 June 2018 $ | For the year ended 30 June 2017 $ | For the year ended 30 June 2016 $ | |||||||||||||
| Revenues | 8 | - | 50,000 | - | ||||||||||||
| Expenses | ||||||||||||||||
| Bank charges and interest | 1,054 | 276 | 342 | |||||||||||||
| Consulting fees | 7 | 57,000 | - | 1,568 | ||||||||||||
| Depreciation | 5 | 1,245 | - | - | ||||||||||||
| Filing and financing fees | 1,665 | 12,325 | 9,644 | |||||||||||||
| Foreign exchange (gain) loss | 199,135 | (1,050 | ) | 211 | ||||||||||||
| Income tax penalties | 9 | - | - | 50,000 | ||||||||||||
| Legal and accounting | 74,333 | 15,934 | 15,092 | |||||||||||||
| Management fees | 7 | 75,000 | 45,000 | 60,000 | ||||||||||||
| Mineral property exploration expenditure | - | 3,741 | - | |||||||||||||
| Office and miscellaneous | 8,108 | 250 | 221 | |||||||||||||
| Regulatory fees | 22,842 | 12,258 | 7,500 | |||||||||||||
| Rent | 7 | 12,350 | 2,700 | 3,600 | ||||||||||||
| Transfer agent fees | 4,705 | - | - | |||||||||||||
| Travel | 13,046 | 426 | - | |||||||||||||
| (470,483 | ) | (91,860 | ) | (148,178 | ) | |||||||||||
| Net loss before other items | (470,483 | ) | (41,860 | ) | (148,178 | ) | ||||||||||
| Other items | ||||||||||||||||
| Interest income | 3 | 3,001 | - | - | ||||||||||||
| Reversal of income tax penalties | 9 | - | 50,000 | - | ||||||||||||
| Write-off of accounts payable | - | 21,324 | - | |||||||||||||
| Net income (loss) for the year | (467,482 | ) | 29,464 | (148,178 | ) | |||||||||||
| Basic and diluted loss per common share | (0.010 | ) | 0.003 | (0.015 | ) | |||||||||||
| Weighted average number of common shares outstanding | 49,008,178 | 9,928,890 | 9,909,959 | |||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 18 |
HQDA Elderly Life Network Corp.
(formerly Hartford Retirement Network Corp.)
Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars)
For the year ended 30 June 2018 $ | For the year ended 30 June 2017 $ | For the year ended 30 June 2016 $ | ||||||||||
| Cash flows used in operating activities | ||||||||||||
| Net income (loss) for the year | (467,482 | ) | 29,464 | (148,178 | ) | |||||||
| Non-cash items | ||||||||||||
| Contributions to capital by related party – expenses | - | 47,700 | 63,600 | |||||||||
| Depreciation | 1,245 | - | - | |||||||||
| Reversal of income tax penalties | - | (50,000 | ) | - | ||||||||
| Write-off of accounts payable | - | (21,324 | ) | - | ||||||||
| Changes in operating assets and liabilities | ||||||||||||
| Accounts receivable | 50,000 | (50,000 | ) | - | ||||||||
| Prepaid expenses | (6,467 | ) | (100 | ) | - | |||||||
| Loans receivable | (52,877 | ) | - | - | ||||||||
| Accounts payable and accrued liabilities | (7,427 | ) | 21,611 | 6,855 | ||||||||
| Taxes payable | - | - | 50,000 | |||||||||
| (483,008 | ) | (22,649 | ) | (27,723 | ) | |||||||
| Cash flows used in investing activities | ||||||||||||
| Deposits paid for asset purchases | (18,233,403 | ) | - | - | ||||||||
| Purchase of property and equipment | (3,157 | ) | ||||||||||
| (18,236,560 | ) | - | - | |||||||||
| Cash flows from financing activities | ||||||||||||
| Issuance of common shares for cash | 8,248,109 | 20,000 | 30,000 | |||||||||
| Share subscriptions received in advance | 18,189,623 | - | - | |||||||||
| Share subscription funds to be returned | 1,982,911 | - | - | |||||||||
| 28,420,643 | 20,000 | 30,000 | ||||||||||
| Increase (decrease) in cash | 9,701,075 | (2,649 | ) | 2,277 | ||||||||
| Cash, beginning of year | - | 2,649 | 372 | |||||||||
| Cash, end of year | 9,701,075 | - | 2,649 | |||||||||
Supplemental Disclosures with Respect to Cash Flows (Note 10)
The accompanying notes are an integral part of these consolidated financial statements.
| 19 |
HQDA Elderly Life Network Corp.
(formerly Hartford Retirement Network Corp.)
Consolidated Statements of Changes in Stockholders’ Deficiency
(Expressed in U.S. Dollars)
| Notes | Number of shares issued |
Capital stock $ | Additional paid-in capital $ | Share subscriptions received in advance $ |
Deficit, accumulated $ | Total stockholders’ equity $ | ||||||||||||||||||||||
| Balance at 30 June 2015 | 9,895,000 | 9,895 | 925,005 | - | (943,273 | ) | (8,373 | ) | ||||||||||||||||||||
| Contributions to capital by related party | 7,10 | - | - | 63,600 | - | - | 63,600 | |||||||||||||||||||||
| Common shares issued for cash | 6 | 30,000 | 30 | 29,970 | - | - | 30,000 | |||||||||||||||||||||
| Net loss for the year | - | - | - | - | (148,178 | ) | (148,178 | ) | ||||||||||||||||||||
| Balance at 30 June 2016 | 9,925,000 | 9,925 | 1,018,575 | - | (1,091,451 | ) | (62,951 | ) | ||||||||||||||||||||
| Contributions to capital by related party | 7,10 | - | - | 47,700 | - | - | 47,700 | |||||||||||||||||||||
| Common shares issued for cash | 6 | 20,000 | 20 | 19,980 | - | - | 20,000 | |||||||||||||||||||||
| Net income for the year | - | - | - | - | 29,464 | 29,464 | ||||||||||||||||||||||
| Balance at 30 June 2017 | 9,945,000 | 9,945 | 1,086,255 | - | (1,061,987 | ) | 34,213 | |||||||||||||||||||||
| Common shares issued for cash | 6 | 69,980,000 | 69,980 | 8,178,129 | - | - | 8,248,109 | |||||||||||||||||||||
| Share subscriptions received | 6 | - | - | - | 18,189,623 | - | 18,189,623 | |||||||||||||||||||||
| Net loss for the year | - | - | - | - | (467,482 | ) | (467,482 | ) | ||||||||||||||||||||
| Balance at 30 June 2018 | 79,925,000 | 79,925 | 9,264,384 | 18,189,623 | (1,529,469 | ) | 26,004,463 | |||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements
| 20 |
HQDA Elderly Life Network Corp.
(formerly Hartford Retirement Network Corp.)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2018
| 1. | NATURE AND CONTINUANCE OF OPERATIONS |
HQDA Elderly Life Network Corp. (formerly Hartford Retirement Network Corp.) (the “Company”) was incorporated under the laws of the State of Nevada on 21 January 2004.
Effective 26 June 2017, the Company increased its authorized shares of common stock, par value $0.001 per share from 75,000,000 to 200,000,000 and authorized 10,000,000 preferred stock, par value $0.001 per share, with such rights, preferences and limitations as may be set from time to time by resolution of the Board of Directors (Note 6).
These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company was in the business of acquiring and exploring mineral properties. In May 2017, the Company shifted its focus to senior housing and retirement services and products. The Company is devoting all of its present efforts in establishing a new business.
The Company’s consolidated financial statements as at 30 June 2018 and for the year then ended have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company reported a net loss of $467,482 for the year ended 30 June 2018 (30 June 2017 – income of $29,464, 30 June 2016 – loss of $148,178) and has a working capital of $7,769,148 at 30 June 2018 (30 June 2017 –$34,213).
Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. Management believes that the Company’s capital resources will not be adequate to continue operating and maintaining its business strategy for the next 12 months. If the Company is unable to raise additional capital in the near future, management expects that the Company will need to curtail operations, seek additional capital on less favorable terms and/or pursue other remedial measures. These consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
At 30 June 2018, the Company had an accumulated deficit of $1,529,469 and cash of $9,701,075. Although management is currently attempting to implement its new business plan, and is seeking additional sources of equity or debt financing, there is no assurance these activities will be successful. Accordingly, the Company must rely on its president to perform essential functions without compensation until a business operation can be commenced. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| 21 |
HQDA Elderly Life Network Corp.
(formerly Hartford Retirement Network Corp.)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2018
| 2. | SIGNIFICANT ACCOUNTING POLICIES |
The following is a summary of significant accounting policies used in the preparation of these consolidated financial statements.
Basis of presentation
The consolidated financial statements of the Company have been prepared in accordance with GAAP and are expressed in U.S. dollars. The Company’s fiscal year end is 30 June.
Principles of consolidation
The Company’s consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Shanghai Hartford Health Management Ltd., a company incorporated in the People’s Republic of China from 9 November 2017, and Dynamic Grand Holdings Ltd., a company incorporated in Alberta, Canada from the date of incorporation on November 21, 2007 to the date of it being dissolved on 27 April 2017. All inter-company balances have been eliminated upon consolidation.
Cash and cash equivalents
Cash and cash equivalents include highly liquid investments with original maturities of three months or less.
Derivative financial instruments
The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
Revenue recognition
Revenue includes service and management fees associated with the operation of senior holiday services. Revenue is recognized when the services are rendered.
Property and equipment
Property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The cost of an item of property and equipment consists of the purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use and an initial estimate of the costs of dismantling and removing the item.
Depreciation is provided at rates calculated to write off the cost of property and equipment, less their estimated residual value, using the straight-line method over the following expected useful lives:
| ● | Computer equipment: 2 years | |
| ● | Furniture: 5 years |
| 22 |
HQDA Elderly Life Network Corp.
(formerly Hartford Retirement Network Corp.)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2018
| 2. | SIGNIFICANT ACCOUNTING POLICIES (continued) |
Income taxes
Deferred income taxes are reported for timing differences between items of income or expense reported in the consolidated financial statements and those reported for income tax purposes in accordance with Accounting Standards Codification (“ASC”) 740, “Income Taxes”, which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases, and for tax losses and credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not.
Basic and diluted net loss per share
The Company computes net income (loss) per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excluded all dilutive potential shares if their effect is anti-dilutive.
Segments of an enterprise and related information
ASC 280, “Segment Reporting” establishes guidance for the way that public companies report information about operating segments in annual consolidated financial statements and requires reporting of selected information about operating segments in interim consolidated financial statements issued to the public. It also establishes standards for disclosures regarding products and services, geographic areas and major customers. ASC 280 defines operating segments as components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.
Foreign currency translation
The Company’s functional and reporting currency is U.S. dollars. The consolidated financial statements of the Company are translated to U.S. dollars in accordance with ASC 830, “Foreign Currency Matters”. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
| 23 |
HQDA Elderly Life Network Corp.
(formerly Hartford Retirement Network Corp.)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2018
| 2. | SIGNIFICANT ACCOUNTING POLICIES (continued) |
Use of estimates and assumptions
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from these estimates.
Comparative figures
Certain comparative figures have been adjusted to conform to the current year’s presentation.
Recently issued accounting pronouncements
In February 2016, the FASB issued ASU No. 2016-02 (Topic 842) “Leases.” Topic 842 supersedes the lease recognition requirements in Accounting Standards Codification (“ASC”) Topic 840 “Leases.” Under Topic 842, lessees are required to recognize assets and liabilities on the balance sheet for most leases and provide enhanced disclosures. Leases will continue to be classified as either finance or operating. Topic 842 is effective for annual reporting periods and interim periods within those years beginning after 15 December 2018. Early adoption by public entities is permitted. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements, and there are certain optional practical expedients that an entity may elect to apply. Full retrospective application is prohibited. The Company does not anticipate this amendment to have a significant impact on the consolidated financial statements.
In April 2016, the FASB issued ASU 2016 – 10 “Revenue from Contract with Customers: identifying Performance Obligations and Licensing”. The amendments in this Update clarify the two following aspects (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The amendments in this Update are intended to reduce the degree of judgement necessary to comply with Topic 606. This guidance is effective for reporting periods beginning after 15 December 2017. The Company does not expect the adoption of this guidance to have an impact on the consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years beginning after 15 December 2019. The Company does not anticipate this amendment to have a significant impact on the consolidated financial statements.
| 24 |
HQDA Elderly Life Network Corp.
(formerly Hartford Retirement Network Corp.)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2018
| 3. | LOANS RECEIVABLE |
During the year ended 30 June 2018, the Company loaned $1,576,921 (RMB 10,437,800) to Shanghai Qiao Garden Group (“Shanghai Qiao Garden”). The loan was unsecured, bears interest at 8% per annum and due on demand. During the year ended 30 June 2018, the Company received $1,524,044 (RMB 10,087,000).
During the year ended 30 June 2018, the Company waived $51,299, the full amount of accrued interest as the Company demanded the payment prematurely (2017 - $Nil).
| 4. | ASSET PURCHASE AGREEMENT |
On 2 April 2018, the Company entered into an Asset Purchase Agreement ( the “APA”) whereby the Company will purchase land, buildings, and right to use, construction use rights and other property rights located in Shanghai from Shanghai Qiao Garden. Properties are split into two groups:
| ● | Property A: land use rights and adhesive substance use rights, right to own, and right to operate of the land located in Shanghai Pudong New Area Zhangjiang Ziwei Rd No. 372 and No. 376. Assets are owned by Shanghai Qiao Garden Real Estate Group, a subsidiary 100% owned by Shanghai Qiao Garden; | |
| ● | Property B: land use right, adhesive substance under construction use rights, right to own, and right to operate of the land located in Shanghai Chongming District San Shuang Gong Lu No. 4797. Assets are owned by Shanghai Qiao Garden Information Technology, Ltd. (“Transferor”), a subsidiary 100% owned by Shanghai Qiao Garden. |
The Company has agreed to pay the purchase price totaling of $36,991,173 (RMB 233,000,000) in instalments over the next 20 months as follows:
| a. | RMB 7,000,000 before 9 April 2018 (paid); | |
| b. | RMB 43,000,000 before 10 April 2018 (paid); | |
| c. | RMB 20,000,000 before 10 May 2018 (paid); | |
| d. | RMB 20,000,000 before 31 July 2018 (paid); | |
| e. | RMB 35,000,000 before 30 October 2018 (RMB 25,682,000 was paid during the year ended 30 June 2018 and RMB 9,318,000 was paid subsequent to 30 June 2018); | |
| f. | RMB 35,000,000 before 30 December 2018 (RMB 25,682,000 was paid subsequent to 30 June 2018); | |
| g. | RMB 30,000,000 before 30 April 2019; | |
| h. | RMB 22,000,000 before 31 August 2019; and | |
| i. | RMB 21,000,000 before 31 December 2019. |
As at 30 June 2018, the Company has paid $18,233,403 (RMB 115,682,000) as deposits (Note 14). Subsequent to the year-end, the Company has paid $5,131,000 (RMB 35,000,000).
Subsequent to the year-end, the Company has obtained the full management and operation rights of the hotel property and all other assets of Property A (Note 13).
| 25 |
HQDA Elderly Life Network Corp.
(formerly Hartford Retirement Network Corp.)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2018
| 4. | ASSET PURCHASE AGREEMENT (continued) |
Subsequent to the year-end, the Company has entered into a share purchase agreement to acquire Property B by acquiring 100% outstanding shares of the Transferor for $731,968 (RMB 5,000,000). The total proceeds has been included in the deposits paid by the Company and shares will be transferred when all current and potential liabilities are settled by the Transferor (Note 13).
| 5. | EQUIPMENT |
Furniture and Office Equipment $ | Total $ | |||||||
| COSTS | ||||||||
| 30 June 2017 | - | - | ||||||
| Additions | 3,157 | 3,157 | ||||||
| 30 June 2018 | 3,157 | 3,157 | ||||||
| ACCUMULATED DEPRECIATION | ||||||||
| 30 June 2017 | - | - | ||||||
| Additions | 1,245 | 1,245 | ||||||
| 30 June 2018 | 1,245 | 1,245 | ||||||
| NET BOOK VALUE | ||||||||
| 30 June 2017 | - | - | ||||||
| 30 June 2018 | 1,912 | 1,912 | ||||||
| 6. | CAPITAL STOCK |
Authorized
The total authorized capital is 200,000,000 common shares with a par value of $0.001 and 10,000,000 preferred shares with a par value of $0.001.
On 26 June 2017, the Company increased the authorized shares of common stock of the Company from 75,000,000 shares to 200,000,000 shares and authorized the issuance of up to 10,000,000 shares of preferred stock, with such rights, preferences and limitations as may be set from time to time by resolution of the Board of Directors (Note 1).
Issued and outstanding
At 30 June 2018, the total issued and outstanding capital stock is 79,925,000 common shares with a par value of $0.001 per common share (30 June 2017 - 9,945,000).
On 7 April 2018, the Company completed a private placement of 47,500,000 common shares for total proceeds of $7,124,109.
| 26 |
HQDA Elderly Life Network Corp.
(formerly Hartford Retirement Network Corp.)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2018
| 6. | CAPITAL STOCK (continued) |
Issued and outstanding (continued)
On 2 March 2018, the Company completed a private placement of 2,920,000 common shares for total proceeds of $146,000.
On 5 October 2017, the Company completed a private placement of 5,000,000 common shares for total proceeds of $250,000.
On 8 September 2017, the Company completed a private placement of 1,950,000 common shares for total proceeds of $97,500.
On 8 August 2017, the Company completed a private placement of 19,910,000 common shares for total proceeds of $995,500
On 4 August 2017, the Company completed a private placement of 5,750,000 common shares for total proceeds of $287,500.
During the year ended 30 June, 2018, the Company cancelled 13,050,000 common shares for total proceeds of $652,500 which was not received.
On 20 April 2017, the Company completed a private placement of 20,000 common shares at a price of $1.00 per share for total proceeds of $20,000.
As at 30 June 2018, the Company received subscriptions of $18,189,623 in advance related to the private placement that was closed subsequent to 30 June 2018 (Note 13).
As at 30 June 2018, the Company received $1,982,911 in subscription funds that will be returned to investors due to cancellation of the subscriptions ((Note 13).
| 7. | RELATED PARTY TRANSACTIONS |
During the year ended 30 June 2018, a former officer and a former director of the Company made contributions to capital for management fees in the amount of $Nil (2017 - $45,000, 2016 – $60,000) and for rent in the amount of $Nil (2017 - $2,700, 2016 – $3,600) (Note 10).
During the year ended 30 June 2018, the Company paid management fees of $75,000 and consulting fee of $16,000 to the Company’s Chief Financial Officer (2017 - $Nil, 2016 - $Nil).
Included in accounts payable and accrued liabilities was $3,160 (30 June 2017 - $3,034) due to the Company’s Chief Financial Officer. The amount is non-interest bearing, unsecured and due on demand.
| 27 |
HQDA Elderly Life Network Corp.
(formerly Hartford Retirement Network Corp.)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2018
| 8. | SERVICE AGREEMENT |
On 25 August 2017, the Company entered into a Retirement Vacation Services Agreement (the “Service Agreement”) with Shanghai Qiao Garden International Travel Agency (“Shanghai Travel”), whereby the Company is to provide favorable pricing on hotel rooms in California, USA from 15 May 2017 to 31 May 2018. The agreement can be renewed automatically on an annual basis. Shanghai Travel will provide at least 300 retirement vacation clients annually, for a minimum total hotel stay of 3,000 nights. The Company will be charging Shanghai Travel $80 per client per hotel stay and $2,000 monthly management fees. During the year ended 30 June 2018, the Company did not record any receivables related to the monthly management fee as there was uncertainty as to whether the amount would be collectible (30 June 2017 - $50,000). At 30 June 2018, this service agreement was terminated.
| 9. | INCOME TAXES |
The Company has losses carried forward for income tax purposes to 30 June 2018. There are no current or deferred tax expenses for the year ended 30 June 2018 due to the Company’s loss position. The Company has fully reserved for any benefits of these losses. The deferred tax consequences of temporary differences in reporting items for financial statement and income tax purposes are recognized, as appropriate. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carryforward period. Management has considered these factors in reaching its conclusion as to the valuation allowance for financial reporting purposes.
| The provision for refundable federal income tax consists of the following: |
For the year ended 30 June 2018 $ | For the year ended 30 June 2017 $ | For the year ended 30 June 2016 $ | ||||||||||
| Income tax rate | 21 | % | 34 | % | 34 | % | ||||||
| Current operations | (98,171 | ) | 10,017 | (50,380 | ) | |||||||
| Contributions to capital by related parties | - | 16,218 | 21,624 | |||||||||
| Impact on change of tax rates and others | 66,975 | - | - | |||||||||
| Less: Change in valuation allowance | 31,196 | (26,235 | ) | 28,756 | ||||||||
| Net refundable amount | - | - | - | |||||||||
| 28 |
HQDA Elderly Life Network Corp.
(formerly Hartford Retirement Network Corp.)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2018
| 9. | INCOME TAXES (continued) |
| The composition of the Company’s deferred tax assets as at 30 June 2018 and 30 June 2017 are as follows: |
As at 30 June 2018 $ | As at 30 June 2017 $ | |||||||
| Net income tax operating loss carryforward | 176,134 | 144,938 | ||||||
| Less: Valuation allowance | (176,134 | ) | (144,938 | ) | ||||
| Net deferred tax asset | - | - | ||||||
The potential income tax benefit of these losses has been offset by a full valuation allowance.
As at 30 June 2018, the Company has an unused net operating loss carry-forward balance of approximately $839,000 that is available to offset future taxable income. This unused net operating loss carry-forward balance expires between 2024 and 2038.
During the year ended 30 June 2016, the Company received an assessment for penalties from the Internal Revenue Service regarding failure to file certain supplementary forms for the tax years 2007 to 2011. During the year ended 30 June 2017, the penalties were reversed.
| 10. | SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS |
For the year ended 30 June 2018 $ | For the year ended 30 June 2017 $ | For the year ended 30 June 2016 $ | ||||||||||
| Cash paid during the period for interest | - | - | - | |||||||||
| Cash paid during the period for income taxes | 828 | - | - | |||||||||
During the year ended 30 June 2018, a former officer and a former director of the Company made contributions to capital for management fees in the amount of $Nil (2017 - $45,000, 2016 – $60,000) and for rent in the amount of $Nil (2017 - $2,700, 2016 – $3,600) (Note 7).
| 29 |
HQDA Elderly Life Network Corp.
(formerly Hartford Retirement Network Corp.)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2018
| 11. | FINANCIAL INSTRUMENTS |
The carrying value of cash and accounts payable approximates fair value due to the short-term maturity of these financial instruments.
Credit Risk
Financial instruments that potentially subject the Company to credit risk consist of cash. The Company deposits cash with high credit quality financial institutions as determined by rating agencies. The Company is subject to medium credit risk with respect to its loans receivable due to potential non repayment.
Currency Risk
The Company’s functional and reporting currency is the U.S. dollar. Foreign currency transactions are primarily undertaken in Chinese Yuan. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
If the Chinese Yuan had weakened (strengthened) against the U.S. dollar, with all other variables held constant, by 100 basis points (1%) at year end, the impact on net loss would have approximately $97,000
At the end of the reporting period, the carrying amounts of monetary assets and monetary liabilities denominated in Chinese Yuan are as follows:
As at 30 June 2018 $ | As at 30 June 2017 $ | |||||||
| Assets | 9,736,992 | - | ||||||
Interest Rate Risk
The Company has cash balances and no interest-bearing debt. It is management’s opinion that the Company is not exposed to significant interest risk arising from these financial instruments.
Liquidity Risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with its financial liabilities. The Company is reliant upon a related party and private placements as its sources of cash. The Company has received financing from a related party and private placements in the past; however, there is no assurance that it will be able to do so in the future.
| 30 |
HQDA Elderly Life Network Corp.
(formerly Hartford Retirement Network Corp.)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
30 June 2018
| 12. | SEGMENTED INFORMATION |
The Company operates in one industry segment, being the senior housing and retirement services in China. Majority of capital assets are located in China. There are $9,684,115 saved in bank accounts in China in the form of Chinese Yuan, a loan of $52,877 receivable from a Chinese company and $18,233,403 in deposits for asset purchases in China.
| 13. | SUBSEQUENT EVENTS |
Between 30 June 2018 and 10 October 2018, the Company issued 57,203,013 shares of its common stock for gross proceeds of $18,673,398 (Note 6).
Between 30 June 2018 and 10 October 2018, the Company cancelled 1,421,072 shares of its common stock for gross proceeds of $1,136,858 which were returned to treasury for cancellation. The remainder of 1,057,567 shares of its common stock for gross proceeds of $846,053 will be cancelled (Note 6).
Between 30 June 2018 and 10 October 2018, the Company paid $5,131,000 (RMB 35,000,000) as deposit for assets purchasing (Note 4).
On 1 September 2018, the Company has obtained the full management and operation rights of the hotel property and all other assets of Property A listed in asset purchase agreement (Note 4).
On 8 August 2018, the Company entered into a share purchase agreement to purchase 100% outstanding shares of the Transferor for RMB 5,000,000. The transfer will be complete when all current and potential liabilities are settled by the Transferor (Note 4).
| 14. | COMMITMENTS |
The Company entered into the APA to purchase two properties in Shanghai totaling $ 36,991,173 (RMB 233,000,000). Payments of $18,233,403 has been made during the year ended 30 June 30 2018 and remainder of $ 18,757,769 are due in 18 months.
On 15 June 2018, the Company entered into a conference consultancy service agreement whereas the consultant will provide consulting service and assistance to the Company to hold 30 conferences in China within a two-year period for a total purchase price of $ 794,000 (RMB 5,250,000).
| 31 |
ITEM 8 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
We did not have any disagreements on accounting and financial disclosures with our present accounting firm during the reporting period.
ITEM 8A – CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Based on the management’s evaluation (with the participation our President and Chief Financial Officer), our President and Chief Financial Officer have concluded that as of June 30, 2018, the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange of 1934 (the “Exchange Act”) are effective to provide reasonable assurance that the information required to be disclosed in this annual report on Form 10-K is recorded, processed, summarized and reported within the time period specified in Securities and Exchange Commission rules and forms and that such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.
(b) Internal Controls over Financial Reporting
Management’s annual report on internal control over financial reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting should include those policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with applicable GAAP, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.
Under the supervision and with the participation of our management, including Ms. Ziyun Xu, our Chief Executive Officer, and Mr. Jimmy Zhou, our Chief Financial Officer, we have evaluated the effectiveness of our internal control over financial reporting and preparation of our quarterly consolidated financial statements as of June 30, 2018 and believe they are effective.
Based upon their evaluation of our controls, Ms. Ziyun Xu, our Chief Executive Officer, and Mr. Jimmy Zhou, our Interim Chief Financial Officer, has concluded that, there were no significant changes in our internal control over financial reporting or in other factors during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Attestation report of the registered public accounting firm
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.
Changes in internal control over financial reporting
There were no changes in our internal controls that occurred during the year covered by this report that have materially affected or are reasonably likely to materially affect our internal controls.
| 32 |
Changes in internal controls
Based on the evaluation as of June 30, 2018, Ms. Ziyun Xu, our Chief Executive Officer, and Mr. Jimmy Zhou, our Chief Financial Officer have concluded that there were no significant changes in our internal controls over financial reporting or in any other areas that could significantly affect our internal controls subsequent to the date of his most recent evaluation, including corrective actions with regard to significant deficiencies and material weaknesses.
ITEM 8A(T) – CONTROLS AND PROCEDURES
See Item 8A – Controls and Procedures above.
None.
ITEM 9 – DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Our executive officers and directors and their respective ages as of the date of this annual report are as follows:
Our executive officers and directors and their respective ages as of the date of this annual report are as follows:
Directors and Executive Officers
| Name of Director | Age | Position | Since | |||
| Ziyun Xu | 49 | CEO, President, Director | 4/12/18 | |||
| Lianyue Song | 59 | Director | 5/4/17 | |||
| Peigeng Xu | 40 | Director | 4/12/18 | |||
| Jimmy Zhou | 50 | CFO, Secretary, Director | 5/17/17 | |||
| Haixiang Shen | 40 | Director | 4/12/18 |
The following describes the business experience of our directors and executive officers, including other directorships held in reporting companies:
Ziyun Xu, President and Chief Executive Officer and Director
Ms. Ziyun Xu is the president of HQDA International Investment Holdings Ltd., Shanghai Zhonghuiai Wufu Investment Group, Guangdong Wugufushuo E-commerce Ltd., Sichuan Mianyang Wufu Ecological Tourism Co., Ltd, ZHA Wu Fu (Shanghai) Hotel Management Co. Ltd., China Elderly & Ecological Development Foundation Fund. Ms. Xu graduated at Hongkong International Business College in 1993 and worked in foreign enterprises in charge of marketing and planning in China thereafter. In 2003, she worked as the planning manager and journalist in “Golden Era” magazine of Guangdong Provincial Committee of the Youth League in Chinese government. In 2007, she started her own entrepreneurship. In 2009, she began to research the Chinese market on the industry of the senior services. In 2012, she established the senior retirement services and organized her own team to implement her innovational concept of the retirement model of the “Zero input”. Nowadays, this business model has been proved by her success in the Chinese senior retirement industry.
Lianyue Song, Director
Mr. Lianyue Song was born in Jiangsu, China. Since 1976, from an ordinary small business owner to today’s business leader, Qiao Garden Group founder, Chairman and President, for the past 35 years. Mr. Song graduated from Renmin University of China, major in Journalism Professional Photography, and won the “Ten Outstanding Chinese Photographer” title in 1987. In 1989, he was resigned from Naval Air Force as a Lieutenant Commander and started his business and worked very hard to build this “Qiao Garden Business Empire”. Over 20 years, Mr. Lianyue Song has led Qiao Garden Group from scratch, from small to large, from weak to strong and successfully developed a commercial real estate-based resort chain derived from the vacation health industry, the chain office industry, high-end dining industry and cultural media industry. In the meantime Mr. Song has studied EMBA graduate school at Shanghai Jiaotong University, also served as Vice President of the Federation of Chinese Associations of Southern California, Southern California Real Estate Association in United States, the Chief Planner and Producer of the global public offering of the “Chamber of Commerce” magazine, Vice President of Shanghai Chamber of Commerce, China Chamber of Commerce Executive Director and Vice President of the Chinese Private Entrepreneurs. In 2010, he was awarded “Chinese Outstanding Private Entrepreneurs”, “Chinese Economy One of Hundred Outstanding Figures”. He started the “Happy Senior Retirement Technology Network Incorporation nationwide since 2012 and now he is the Chairman and CEO of Hartford International Retirement Network, Incorporation in U.S.
Peigeng Xu, Director
Mr. Peigeng Xu is a manager of HQDA International Investment Holdings Ltd. and the general manager of Sichuan Mianyang Wufu Ecological Tourism Co., Ltd. He graduated in Guangzhou Academy of Fine Arts in 2001 and joined in HQDA in 2013. He has served as a successful manager to operating the company and made Xunlongshan Scenic Area become a national AAAA-grade tourist attraction in 2015, along with a good reputation in the Chinese tourism industry.
| 33 |
Jimmy Zhou, Chief Financial Officer and a Director
Mr. Zhou, prior to his appointment as CFO and Secretary of the Corporation, he was employed as CEO/CFO from July 2015 until October 2016 by Kiwa Bio-Tech Products Group located in Claremont, Ca (“KWBT”). KWBT is a public company involved in the development, manufacture, distribution and marketing of innovative, cost-effective and environmentally safe bio-technological products for agriculture. Prior to that Mr. Zhou was employed by AXA Advisors LLC (“AXA”) in California as a financial advisor from 2000 to 2007. He became a Certified Estate Planner (CEP) and a Registered Financial Consultant (RFC) with AXA in 2005. From 2007 to 2008, Mr. Zhou was involved in investment banking projects between China and the United States and since 2008. Mr. Zhou has worked as an independent business consultant and as an offshore financial advisor to clients in China for over 10 years. Mr. Zhou graduated from Shanghai International Studies University in China in 1990.
Haixiang Shen, Director
Mr. Haixiang Shen is a partner of Shanghai Office of Zhongyin Law Firm and an investment advisor of HQDA International Investment Holdings Ltd. He graduated in University of Political Science and Law along with a bachelor’s degree in China in 2008. He is an experienced lawyer and investment advisor in investment and financing, enterprise legal advisory, pension industry investment and commercial merger and acquisition services, and has participated in a number of large commercial mergers and acquisitions since 2008.
Ms. Xu and Mr. Xu are sister and brother.
Conflict of Interest
As our present business plan is focused entirely on building a new business in the senior retirement sector, there is no expectation of any conflict between our business interests and those of our directors. However, possible conflicts may arise in the future.
Our bylaws provide that each officer who holds another office or possesses property whereby, whether directly or indirectly, duties or interests might be created in conflict with his duties or interests as our officer shall, in writing, disclose to the President the fact and the nature, character and extent of the conflict and be approved by a majority of the disinterested directors of our board of directors.
Significant Employees
The Registrant does not presently employ any person as a significant employee who is not an executive officer but who makes or is expected to make a significant contribution to the business of the Company.
Family Relationships
None.
Involvement in Certain Legal Proceedings
No event listed in Sub-paragraphs (1) through (4) of Subparagraph (d) of Item 401 of Regulation S-B, has occurred with respect to any present executive officer or director of the Registrant or any nominee for director during the past five years which is material to an evaluation of the ability or integrity of such director or officer.
Section 16(A) Beneficial Ownership Reporting Compliance
Section 16(A) of the Exchange Act requires our executive officers and directors, and persons who beneficially own more than 10% of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than 10% shareholders are required by Securities and Exchange Commission regulation to furnish us with copies of all Section 16(A) forms they file. Based on our review of the copies of such forms we received, we believe that during the fiscal year ended June 30, 2018 all such filing requirements applicable to our officers and directors were current in their filings.
| 34 |
Code of Ethics
We have not adopted a written Code of Ethics at this time that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. Our Board of Directors are reviewing the necessity of adopting such a document given we are still in the start-up exploration stage and have limited employees, officers and directors.
Board Committees
Nominating Committee
We do not have a Nominating Committee. Since our formation we have relied upon the personal relationships of our President to attract individuals to our Board of Directors.
We do not have a policy regarding the consideration of any director candidates which may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our Board of Directors established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our Board has not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given our relative size and lack of directors and officers insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees.
Compensation Committee
We do not have a Compensation Committee. Our entire Board of Directors review and recommend the salaries, and benefits of all employees, consultants, directors and other individuals compensated by us.
Audit Committee
We do not have a standing Audit Committee. The functions of the Audit Committee are currently assumed by our Board of Directors.
Our Board of Directors has determined that we have at least one financial expert. Mr. Schottelkorb is considered independent.
An audit committee financial expert means a person who has the following attributes:
| (a) | An understanding of generally accepted accounting principles and financial statements; | |
| (b) | The ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves; | |
| (c) | Experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the small business issuer’s financial statements, or experience actively supervising one or more persons engaged in such activities; | |
| (d) | An understanding of internal control over financial reporting; and | |
| (e) | An understanding of audit committee functions. |
| 35 |
ITEM 10 – EXECUTIVE COMPENSATION
The table below summarizes all compensation awarded to, earned by, or paid to our executive officers by any person for all services rendered in all capacities to us for the fiscal years ended June 30, 2018, 2017 and 2016.
Summary Compensation Table
| Name and Principal Position | Year | Salary
($) | Bonus
($) | Stock
Awards ($) | Option
Awards ($) | Non-Equity
Incentive Plan Compensation ($) | Nonqualified
Deferred Compensation ($) | All
Other Compensation ($) | Total
($) | |||||||||||||||||||||||||||
Ziyun Xu (5) Chief Executive Officer and a Director | 2018 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| 2017 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| 2016 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
Lianyue Song (1)(4) President, Chief Executive Officer and a Director | 2018 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| 2017 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| 2016 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
Jimmy Zhou (1) Chief Financial Officer and a Director | 2018 | - | - | - | - | - | - | 91,000 | 91,000 | |||||||||||||||||||||||||||
| 2017 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| 2016 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
Aaron Schottelkorb(1) Director | 2018 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| 2017 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| 2016 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| Tim Coupland (2) Former President, former Chief Executive Officer and a former Director | 2018 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| 2017 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| 2016 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| Edward Burylo(3) Former Chief Financial Officer and a former Director | 2018 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| 2017 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| 2016 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| Tamiko Coupland (2) Former Corporate Secretary | 2018 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| 2017 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| 2016 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
Brian Game (2) Former Director
| 2018 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| 2017 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| 2016 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
Notes:
(1) Appointed on May 4, 2017.
(2) Resigned on May 4, 2017.
(3) Mr. Edward Burylo was appointed to the office of CFO on April 24, 2014 and resigned on May 4, 2017.
(4) Resigned on May 4, 2017.
(5) Appointed on May 4, 2017.
Outstanding Equity Awards
As of September 30, 2017, our directors and executive officers did not hold any unexercised options, stock that had not vested, or equity incentive plan awards.
| 36 |
Compensation of Directors
Our directors did not earn any compensation during the fiscal year ended June 30, 2018.
Employment Contracts and Termination of Employment or Change of Control
We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation or retirement) or change of control transaction.
No retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by us for the benefit of our employees.
ITEM 11 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table lists, as of October 10, 2018, the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power. In computing the number and percentage of shares beneficially owned by each person, we include any shares of common stock that could be acquired within 60 days of October 10, 2018, by the exercise of options or warrants.
| Name and Address | Amount of Beneficial Ownership | Percent of Class | ||||||||
| HQDA
International Holdings Ltd. Unit 1206, Greenfield Tower, Concordia Plaza #1 Science Museum Road, Kowloon, Hong Kong | Common Stock | 94,231,867 | (1) | 69.0 | % | |||||
Ziyun Xu, Pres./CEO/ Chairperson of the Board 3 rd Floor, Asia International Hotel YueXiu District, Guangzhou City, China | Common Stock | 94,231,867 | (1) | 69.0 | % | |||||
| Lianyue
Song, Director 8780 Valley Blvd., Ste. J, Rosemead, CA 91770 | Common Stock | 5,185,000 | (2) | 3.8 | % | |||||
| Jimmy
Zhou, CFO/Sec. & Director 8780 Valley Blvd., Ste. J, Rosemead, CA 91770 | Common Stock | 137,500 | * | |||||||
| Hartford
International Retirement Network, Inc. 8780 Valley Blvd., Ste. J, Rosemead, CA 91770 | Common Stock | 5,185,000 | (2) | 3.8 | % | |||||
Haixiang Shen 3 rd Floor, Asia International Hotel YueXiu District, Guangzhou City, China | Common Stock | -0- | -0- | |||||||
Peigeng Xu 3 rd Floor, Asia International Hotel YueXiu District, Guangzhou City, China | Common Stock | -0- | -0- | |||||||
| Directors and officers as a group (5) | Common stock | 99,507,500 | 72.8 | % | ||||||
* Less than 1%
| (1) | Ms. Xu, the CEO of the Company, is the President and controlling shareholder of HQDA International Holdings Ltd., and as such Ms. Xu has discretionary voting and investment authority over these shares. | |
| (2) | Mr. Song is the President and controlling shareholder of Hartford International Retirement Network, Inc, and as such Mr. Song has discretionary voting and investment authority over these shares. |
| 37 |
Changes in Control
Effective May 4, 2017 (the “Closing Date”), Tim Coupland and Brian Game, the principal stockholders of the Company (the “Sellers”), entered into a Stock Purchase Agreement (the “Agreement”) dated April 4, 2017, with Hartford International Retirement Network, Inc., a California corporation (the “Buyer”), pursuant to which, among other things, the Sellers agreed to sell to the Buyer, and the Buyer agreed to purchase from Sellers, a total of 5,185,000 shares of Common Stock owned of record and beneficially by the Sellers (the “Purchased Shares”). The Purchased Shares represented approximately 3.82% of the Company’s issued and outstanding shares of Common Stock.
On April 7, 2018, the Company entered into a Securities Purchase Agreement (“SPA”) with HQDA International Holdings Limited (the “Investor”), wherein the Company sold 47,500,000 shares of its common stock (the “Shares”) for an aggregate of US$7,124,109 (the “Purchase Price”) and Bin He and Zhenghui Zhang, two non-affiliated shareholders of the company ( collectively the “Seller”), who pursuant to the SPA sold 5,000,000 shares that they owned of the Company’s common stock to the Investor for $749,906 (the “Seller Purchase Price”). Upon the closing, , the Investor assumed control of the Company with approximately 65% ownership of the outstanding common stock of the Company.
In accordance with the Agreement, upon the closing, most of the old officers and directors resigned and the current officers and directors were appointed.
ITEM 12 – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Certain Relationships and Related Transactions
During the year ended 30 June 2018, a former officer and a former director of the Company made contributions to capital for management fees in the amount of $Nil (2017 - $45,000, 2016 – $60,000) and for rent in the amount of $Nil (2017 - $2,700, 2016 – $3,600) (Note 10).
During the year ended 30 June 2018, the Company paid management fees of $75,000 and consulting fee of $16,000 to the Company’s Chief Financial Officer (2017 - $Nil, 2016 - $Nil).
Included in accounts payable and accrued liabilities was $3,160 (30 June 2017 - $3,034) due to the Company’s Chief Financial Officer. The amount is non-interest bearing, unsecured and due on demand.
Director Independence
One of our directors, Mr. Haixiang Shen is considered independent, as the term “independent” is defined by the rules of the Nasdaq Stock Market. Our shares of common stock are listed on the Over-the-Counter Bulletin Board under the symbol “HQDA”. On September 17, 2014, the Company received approval to trade on the OTCQB market platform (United States). The OTCQB is the venture stage marketplace for early stage U.S. and international companies and development stage companies in the United States. The Company was able to comply with new standards of eligibility that were implemented on March 26, 2014 to provide a stronger baseline of transparency for investors and undergo an annual verification and management certification process.
| 38 |
The following exhibits are furnished as required by Item 601 of Regulation S-B.
| * | Included in our original SB-2 Registration Statement filed on December 9, 2004. |
| ** | Included in our 10-QSB filed on February 14, 2008. |
| *** | Included in our SB-2 Amended Registration Statement filed on October 19, 2005. |
| **** | Included in our 8K filed on June 6, 2008. |
| ***** | Included in our 10-KSB filed on September 24, 2008. |
| ****** | Included in our 10-K filed on September 15, 2009. |
| ******* | Included in our 10-K filed on September 15, 2010. |
| ******* * | Included in our 10-K filed on September 23, 2011. |
| ******* ** | Included in our 10-K filed on September 14, 2012. |
| 39 |
ITEM 14 – PRINCIPAL ACCOUNTANT FEES AND SERVICES
Fees and Services
The following is an aggregate of fees billed for each of the last two fiscal years for professional services rendered by our current and prior principal accountants:
| 2018 | 2017 | |||||||
| Audit fees* | $ | 25,000 | $ | 5,000 | ||||
| Audit-related fees** | 12,000 | 3,200 | ||||||
| Tax fees | 1,000 | - | ||||||
| All other fees | - | - | ||||||
| Total fees paid or accrued to our principal accountants | $ | 38,000 | $ | 8,200 | ||||
* Audit fees consist of fees related to professional services rendered in connection with the audit of our annual consolidated financial statements.
** Audit related fees consist of fees related to professional services rendered in connection with the review of our quarterly reports on Form 10-Q.
Pre-Approval Policies and Procedures
Our policy is to pre-approve all audit and permissible non-audit services performed by the independent accountants. These services may include audit services, audit-related services, tax services and other services. Under our audit committee’s policy, pre-approval is generally provided for particular services or categories of services, including planned services, project based services and routine consultations. In addition, the audit committee may also pre-approve particular services on a case-by-case basis. We approved all services that our independent accountants provided to us in the past two fiscal years.
| 40 |
SIGNATURE
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| HQDA ELDDER LIFE NETWORK CORP. | ||
| BY: | /s/ Ziyun Xu | |
| Ziyun Xu, Chief Executive Officer | ||
| BY: | /s/ Jimmy Zhou | |
| Jimmy Zhou, Chief Financial Officer | ||
| DATE: | October 15, 2018 | |
Pursuant to requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
| BY: | /s/ Ziyun Xu | |
| Ziyun Xu, Chief Executive Officer | ||
| Date: | October 15, 2018 | |
| BY: | /s/ Jimmy Zhou | |
| Jimmy Zhou, Chief Financial Officer | ||
| DATE: | October 15, 2018 |
| 41 |