Filed 2025-03-28 · Period ending 2024-12-31 · 33,017 words · SEC EDGAR
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# Hongchang International Co., Ltd (HCIL) — 10-K **Filed:** 2025-03-28 **Period ending:** 2024-12-31 **Accession:** 0001013762-25-004096 **Source:** [SEC EDGAR](https://www.sec.gov/Archives/edgar/data/1086303/000101376225004096/) **Origin leaf:** 543a836a7a6ee32dbe16eeef7da5a69ac3e192f241eaed6c98e8ef4e3fee3c52 **Words:** 33,017 --- ** UNITED STATES** **SECURITIES AND EXCHANGE COMMISSION** **WASHINGTON, D.C. 20549** **FORM 10-K ** **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** FOR THE FISCAL YEAR ENDED DECEMBER 31, 2024 **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** FOR THE TRANSITION PERIOD FROM ______ TO ______ **COMMISSION FILE NUMBER 000-26731** **Hongchang International Co., Ltd** (Exact name of Registrant as specified in its charter) | Nevada | | 87-0627910 | | | (State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) | | | Block 20, Hongchang Food Co., Ltd., Yuanhong Investment Zone, Donggao Village, Chengtou Town, Fuqing City, Fuzhou City, Fujian Province, 350300, China | | 350300 | | | (Address of principal executive offices) | | (Zip Code) | | REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE: **(86) 180 5901 6050** SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: | Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered | | | None | | None | | None | | SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock, $0.001 par value per share (Title of Class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.YesNo Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.YesNo Indicate by check mark whether the registrant (1) has filed all reports required to be filed be Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.YesNo Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).YesNo Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act. | Large accelerated filer | | Accelerated filer | | | | Non-accelerated filer | | Smaller reporting company | | | | | | Emerging growth company | | | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b). Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).YesNo As of June 28, 2024, the last business day of the registrants most recently completed second fiscal quarter, the aggregate market value of the common stock outstanding held by non-affiliates of the registrant, computed by reference to the closing sales price for the common stock of $0.20, as reported on the OTC Pink Market, was approximately $4,265,529.20. As of March 28, 2025, there were 518,831,367 shares of the registrants Common Stock outstanding. **CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS** *This Annual Report on Form 10-K (this Report) contains forward-looking statements. These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections. We may use words such as anticipate, expect, intend, plan, believe, foresee, estimate and variations of these words and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted. These risks and uncertainties include the following:* | | | The availability and adequacy of our cash flow to meet our requirements; | | | | | | | | | | Economic, competitive, demographic, business, and other conditions in our local and regional markets; | | | | | | | | | | Changes or developments in laws, regulations, or taxes in our industry; | | | | | | | | | | Actions taken or omitted to be taken by third parties including our suppliers and competitors, as well as legislative, regulatory, judicial, and other governmental authorities; | | | | | | | | | | Competition in our industry; | | | | | | | | | | The loss of or failure to obtain any license or permit necessary or desirable in the operation of our business; | | | | | | | | | | Changes in our business strategy, capital improvements, or development plans; | | | | | | | | | | The Companys ability to devise and implement effective internal controls and procedures; | | | | | | | | | | The availability of additional capital to support capital improvements and development; and | | | | | | | | | | Other risks identified in this Report and in our other filings with the Securities and Exchange Commission or the SEC. | | *This Report should be read completely and with the understanding that actual future results may be materially different from what we expect. The forward-looking statements included in this Report are made as of the date of this Report and should be evaluated with consideration of any changes occurring after the date of this Report. We will not update forward-looking statements even though our situation may change in the future and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.* ** **TABLE OF CONTENTS** **** | | | | Page | | | PART I | | | | | | | ITEM 1. | BUSINESS | | 1 | | | ITEM1A. | RISK FACTORS | | 7 | | | ITEM 1B. | UNRESOLVED STAFF COMMENTS | | 10 | | | ITEM 1C. | CYBERSECURITY | | 10 | | | ITEM 2. | PROPERTIES | | 11 | | | ITEM 3. | LEGAL PROCEEDINGS | | 11 | | | ITEM 4. | MINE SAFETY DISCLOSURES | | 11 | | | | | | | | | PART II | | | | | | | ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | | 12 | | | ITEM 6. | [RESERVED] | | 13 | | | ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | | 14 | | | ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | | 18 | | | ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | | 18 | | | ITEM 9. | CHANGES OF INDEPENDENT CERTIFYING ACCOUNTANT | | 19 | | | ITEM 9A. | CONTROLS AND PROCEDURES | | 19 | | | ITEM 9B. | OTHER INFORMATION | | 19 | | | Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. | | 19 | | | | | | | | | PART III | | | | | | | ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | | 20 | | | ITEM 11. | EXECUTIVE COMPENSATION | | 23 | | | ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | | 24 | | | ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | | 25 | | | ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES | | 25 | | | | | | | | | PART IV | | | | | | | ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES | | 26 | | | ITEM 16. | FORM 10-K SUMMARY | | 27 | | | | SIGNATURES | | 28 | | i **PART I** **** *Unless otherwise indicated, all share amounts and per share amounts in this Report have been presented giving effect to a 1-for-464 reverse split that became effective on April 11, 2018, a 100-for-1 forward stock split that became effective on September 11, 2018, and a 1-for-10 reverse stock split effective on August 14, 2023.* ** Unless the context requires otherwise, references in this Annual Report on Form 10-K to the Company or our Company refer to Hongchang International Co., Ltd (formerly known as Heyu Biological Technology Corporation), a Nevada company; we, us, and ourrefer to Hongchang International Co., Ltd and its subsidiaries, unless the context otherwise indicates. **ITEM 1. BUSINESS** The Company is a holding company incorporated in the State of Nevada and not a Chinese operating company. As a holding company with no material operations of our own, we conduct our operations and operate our business in China through our subsidiaries. Holders of our stock hold equity interest in Hongchang International Co., Ltd, a Nevada holding company with business operations in China and therefore, may never hold equity interests directly in our Chinese operating entities. The Company holds equity interests in its PRC subsidiaries through its subsidiaries incorporated in British Virgin Islands and Hong Kong. As we have a direct equity ownership structure, we do not have any agreement or contract between our Company and any of its subsidiaries that is typically seen in a variable interest entity structure. There are significant legal and operational risks associated with conducting a substantial portion of our operations in mainland China, including, the changes in the legal, political, and economic policies of the Chinese government, may materially and adversely affect our business, financial condition, results of operations, and the market price of our shares. Any such changes could significantly limit or completely hinder our ability to offer or continue to offer our shares to investors and could cause the value of our shares to significantly decline or become worthless. The PRC laws and regulations are sometimes vague and uncertain, and, as a result, these risks may result in material changes in the operations of our PRC subsidiaries, significant depreciation of the value of our shares, or a complete hindrance of our ability to offer or continue to offer our securities to investors. In addition, we are subject to risks and uncertainties of the interpretations and applications of PRC laws and regulations, including, but not limited to, those imposing limitations on foreign ownership in our industry. We are also subject to the risks and uncertainties about any future actions of the PRC government. If any future actions of the PRC government result in a material change in our operations, the value of our shares may depreciate significantly or become worthless. See *Risk FactorsRisks Related to Doing Business in ChinaThe uncertainties in the Chinese legal system could materially and adversely affect us*. The Chinese government has exercised, and may continue to exercise, substantial influence or control over virtually every sector of the Chinese economy through regulation and state ownership. The central or local Chinese governments could impose new, stricter regulations or interpretations of existing regulations that could require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Recently, the PRC government initiated a series of regulatory actions and made a number of public statements on the regulation of business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas, adopting new measures to extend the scope of cybersecurity reviews, and expanding efforts in anti-monopoly enforcement and data privacy protection. As of the date hereof, we do not believe that we are subject to (a) the cybersecurity review with the Cyberspace Administration of China, or CAC, as we do not qualify as a critical information infrastructure operator or possess a large amount of personal information in our business operations, and our business does not involve data possessing that affects or may affect national security, implicates cybersecurity, or involves any type of restricted industry; or (b) merger control review by Chinas anti-monopoly enforcement agency due to the fact that we do not engage in monopolistic behaviors that are subject to these statements or regulatory actions. However, since these statements and regulatory actions are new, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, and, if any, the potential impact such modified or new laws and regulations will have on our daily business operation, the ability to accept foreign investments, and listing of our securities. For more details, see *Risk FactorsRisks Related to Doing Business in China We may be required under PRC laws to submit filings to CSRC, the CAC, or other PRC governmental authorities for our future offering.* 1 We are not currently required to obtain prior approval or prior permission from the China Securities Regulatory Commission (CSRC) or any other Chinese regulatory authority under the Chinese laws and regulations currently in effect to issue securities to foreign investors.On February 17, 2023, the CSRC promulgated a new set of regulations that consists of the Trial Administrative Measures for Overseas Securities Offering and Listing by Domestic Companies (the Trial Measures) and five supporting guidelines. Pursuant to the Trial Measures, we may be required to submit filings to the CSRC following the submission of future overseas listings and the completion of future offerings of our equity securities to foreign investors. For more details, see *Risk FactorsRisks Related to Doing Business in China We may be required under PRC laws to submit filings to CSRC, the CAC, or other PRC governmental authorities for our future offerings.* As there are uncertainties with respect to the Chinese legal system and changes in laws, regulations, and policies, including how those laws, regulations and policies will be interpreted or implemented, there can be no assurance that we will not be subject to additional requirements, approvals, or permissions in the future. In addition, the PRC government has published new policies that significantly affected certain industries, and we cannot rule out the possibility that it will in the future release regulations or policies regarding the industry where we operate, which could adversely affect our business, financial condition and results of operations. Furthermore, the PRC government has recently indicated an intent to exert more oversight and control over overseas securities offerings and other capital markets activities and foreign investment in China-based companies like us. These risks could result in a material change in our operations and the value of our shares, or could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless. See *Risk FactorsRisks Related to Doing Business in China The PRC government exerts substantial influence over the manner in which our PRC subsidiaries must conduct their business activities.* Our shares may be prohibited from trading under the Holding Foreign Companies Accountable Act if the Public Company Accounting Oversight Board (PCAOB) is unable to inspect our auditor for two consecutive years. Our auditor, WWC, P.C. is headquartered in San Mateo, California and has been inspected by the PCAOB on a regular basis, and it is not subject to the determinations announced by the PCAOB on December 16, 2021 or the Statement of Protocol with the China Securities Regulatory Commission and the Ministry of Finance of the Peoples Republic of China on August 26, 2022. If trading in our shares is prohibited under the Holding Foreign Companies Accountable Act in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, trading of our shares may be prohibited. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (HFCAA), which, if passed by the U.S. House of Representatives and signed into law, would reduce the period of time for foreign companies to comply with PCAOB audits to two consecutive years, instead of three, thus reducing the time period before our securities may be prohibited from trading. On December 29, 2022, a legislation entitled Consolidated Appropriations Act, 2023 (the Consolidated Appropriations Act), was signed into law by President Biden. The Consolidated Appropriations Act contained, among other things, an identical provision to HFCAA, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three years to two. On August 26, 2022, the CSRC, the Ministry of Finance of the PRC, and the PCAOB signed a Statement of Protocol (the Protocol), governing inspections and investigations of audit firms based in China and Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOBs access in the future, the PCAOB Board will consider the need to issue a new determination. Notwithstanding the foregoing, because we have substantial operations within the PRC through the PRC operating entities, if the PCAOB is not able to fully conduct inspections of our auditors work papers in China, you may be deprived of the benefits of such inspection which could result in limitation or restriction to our access to the U.S. capital markets and trading of our securities may be prohibited under the HFCAA. **** 2 We were incorporated in the State of Nevada on May 18, 1987, as Asphalt Associates, Inc. and changed its name to Pacific WebWorks Inc. in January 1999. From 1999 to 2016 the Company engaged in the development and distribution of web tools software, electronic business storefront hosting, and Internet payment systems for individuals and small to medium sized businesses. On February 23, 2016, the Company filed a voluntary petition for bankruptcy in the U.S. Bankruptcy Court for the District of Utah, and soon afterwards ceased its business activities. On August 19, 2016, the Company proposed a Plan of Liquidation and on November 28, 2016, the Court entered an order confirming the Plan of Liquidation and establishing a Liquidating Trust. On December 28, 2016, all assets and liabilities of the Company were transferred to the Liquidating Trust (the Liquidation). On March 12, 2018, the Board of Directors of the Company (the Board), with the consent of the majority stockholder, approved a 1-for-464 reverse stock split. On April 11, 2018, the reverse split became effective. On April 18, 2018, the Company entered into a Share Purchase Agreement (the SPA) with Mr. Ban Siong Ang (the Purchaser) and Mr. Dan Masters (the Seller), pursuant to which the Purchaser acquired 1,021,051,700 shares, representing 98.91% of the issued and outstanding shares of common stock of the Company (Common Stock) from Seller for an aggregate purchase price of $335,000 (Share Purchase). As a result of the SPA, the Company accepted the resignation of Dan Masters, as the Companys President, Chief Executive Officer, Chief Financial Officer, Secretary and Chairman of the Board. This resignation was given in connection with the closing of the Share Purchase and was not the result of any disagreement with the Company on any matter relating to the Companys operations, policies, or practices. Additionally, all debt due to Mr. Masters from the Company was cancelled as of the closing of the Share Purchase and recognized as contributed capital. On April 18, 2018, to fill the vacancies created by Mr. Masterss resignations, Ban Siong Ang and Hung Seng Tan were elected as the directors of the Company. Mr. Ang was appointed as President, Chief Executive Officer, and Chairman of the Board. Mr. Tan was appointed as Executive Director of the Company. Ms. Wendy Wei Li was appointed as Chief Financial Officer. On July 3, 2018, the Company changed its name to Heyu Biological Technology Corporation, with a new ticker symbol, HYBT. The Company currently has no business operations. On July 30, 2018, the Company amended its Articles of Incorporation with the State of Nevada in order to increase its authorized shares of Common Stock from 150,000,000 to 2,000,000,000. On September 11, 2018, the Nevada Secretary of State approved the Companys certificate of amendment to amend its Articles of Incorporation to effectuate a 100-for-1 forward stock split. The total issued and outstanding shares of Common Stock have increased from 10,324,660 to 1,032,466,000 shares, with the par value unchanged at $0.001. On September 25, 2018, the Financial Industry Regulatory Authority, Inc. (FINRA) approved the 100 for 1 forward stock split (the Forward Split) with an effective date of September 25, 2018 and a pay date of September 24, 2018. In connection with the Forward Split, no fractional shares were issued, and stockholders did not need to present certificates for exchange. The consideration for the Forward Split was payable directly to each stockholder by the issuance of shares representing the split differential. On February 28, 2021, Ms. Wendy Wei Li resigned from her position with the Company as the Chief Financial Officer. To fill the vacancies created by Ms. Wendy Wei Lis resignation, Mr. Ang was appointed as the Chief Financial Officer. On November 30, 2021, Mr. Bo Lyu has been appointed as the Chief Financial Officer. On August 21, 2023, Mr. Bo Lyu resigned as the Chief Financial Officer of the Company, and Ms. Wendy Li was appointed as the Chief Financial Officer of the Company. Effective May 8, 2024, Ms. Wendy Li resigned as the Chief Financial Officer of the Company, and Mr. Zengqiang Lin was appointed as the Chief Financial Officer of the Company. On February 17, 2023, the Board appointed Mr. Zengqiang Lin as a director of the Company. On August 21, 2023, Hung Seng Tan, Kwee Huwa Tan, and Senad Busatlic, resigned from the Board. On the same date, Mr. Ban Siong Ang was reappointed and reconfirmed as the Chairman of the Board, and Ms. Zhenzhu Lin, Mr. Stephan Truly Busch, and Mr. Xingjia Gao were appointed as directors. On March 27, 2024, Mr. Stephan Truly Busch resigned as a director of the Company and Ms. Qingqing Wang was appointed as Board Secretary. On May 8, 2024, Mr. Xingjia Gao resigned as a director. On August 8, 2023, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the State of Nevada to effect a one-for-ten reverse stock split pursuant to which every ten shares of common stock issued and outstanding immediately prior to the effective time of such split were combined into one share of common stock. On August 21, 2023, Mr. Zengqiang Lin was also appointed as the Chief Executive Officer and President of the Company. 3 **Share Transfer Agreement with Mr. Yu Xu** On January 17, 2019, Jiashierle (Xiamen) Healthcare Technology Co., Ltd. (JSEL), a limited liability company incorporated under the laws of the Peoples Republic of China (the PRC), and an indirect wholly owned subsidiary of the Company, entered into a Share Transfer Agreement (the Share Transfer Agreement) with Mr. Yu Xu (Mr. Xu), an individual who owned 90% of the equity interests of Shanghai Kangzi Medical Technology Co., Ltd., a limited liability company organized under the laws of the PRC (Kangzi). Pursuant to the Share Transfer Agreement, Mr. Xu transferred 60% of the equity interests of Kangzi to JSEL on January 17, 2019 for the purpose of developing a joint venture in the business of selling medical equipment. In return, JSEL would fund the operations of Kangzi in proportion to its equity interest in Kangzi. Kangzi owned no assets and conducts no business operation of its own. As a result, as of January 17, 2019, Kangzi became an indirect subsidiary of the Company. **Share Cancellation Agreement with Mr. Ban Siong Ang** On March 15, 2019, the Company, with the approval of the Board, entered into a Share Cancellation Agreement (the Share Cancellation Agreement) with Mr. Ban Siong Ang, a director of the Company. Pursuant to the Share Cancellation Agreement, the Company and Mr. Ang agreed to cancel 109,006,861 shares of Common Stock previously issued to Mr. Ang. **Acquisition of the Hongchang Group** On August 21, 2023, the Company entered into a Share Exchange Agreement (the Share Exchange Agreement) with Hong Chang Global Investment Holdings Limited (Hongchang BVI) and Hongchang BVIs stockholders, Zengqiang Investment Limited, a business company incorporated in the British Virgin Islands (BVI), and Hong Jin Investment Limited, a business company incorporated in the BVI (the Selling Stockholders and each a Selling Stockholder), in relation to the acquisition of Hongchang BVI by our Company (the Hongchang Acquisition). Zengqiang Investment Limited is wholly-owned by Mr. Zengqiang Lin and Hong Jin Investment Limited is wholly-owned by Ms. Zhenzhu Lin. Mr. Zengqiang Lin has been a director of our Company since February 17, 2023, and Ms. Zhenzhu Lin is the sister of Mr. Zengqiang Lin. In accordance with the terms of the Share Exchange Agreement, the Selling Stockholders sold and transferred100shares of Hongchang BVI, constituting all of the issued and outstanding share capital of Hongchang BVI, to the Company in exchange for an aggregate of415,582,375new shares of the Companys common stock (the Consideration Shares), of which353,322,843shares were issued to Zengqiang Investment Limited and62,259,532shares were issued to Hong Jin Investment Limited. **Disposal of our then-existing business** On August 21, 2023, we entered into a share purchase agreement (Share Purchase Agreement) with our Director, Mr. Ban Siong Ang as the buyer, to dispose of our existing assets held prior to the Hongchang Acquisition, comprising of our entire shareholding interest in HP TECHNOLOGY LIMITED, which directly and indirectly holds the equity interest in our indirect subsidiaries, Heyu Healthcare Technology Limited, Jiashierle (Xiamen) Healthcare Technology Co., Ltd. and our 60% equity interest in Shanghai Kangzi Medical Technology Co., Ltd. (the Share Disposal). Our Company received nominal consideration for the Share Disposal as we have determined that our shareholding interest in HP TECHNOLOGY LIMITED is of a deficit value. The Share Disposal was consummated on September 4, 2023. **Change of Name and Ticker Symbol** **** In November 2023, the Company filed a Certificate of Amendment to its Articles of Incorporation with Nevadas Secretary of State to change its name from Heyu Biological Technology Corporation toHongchang International Co., Ltd.The Company also requested to change its OTC Markets ticker symbol from HYBT to HCIL, which was approved by FINRA and took effect as of November 28, 2023. 4 **Corporate Structure** The following diagram sets forth the corporate structure of the Company as of the date of this Annual Report: **** 5 **Cash Transfers and Distributions** **** No cash transfers have occurred among our subsidiaries and the Company during the fiscal years ended December 31, 2024 and 2023. We are not aware of any restrictions on foreign exchange or limitations on transferring cash among the Company, our BVI subsidiary, and our Hong Kong subsidiary. Transfers of funds among our PRC subsidiaries are free of restrictions. The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. Remittances of funds from our PRC subsidiaries to the Company, our BVI subsidiary, and/or our Hong Kong subsidiary are subject to review and conversion of Renminbi to U.S. Dollars through the bank designated and authorized by Chinas State Administration of Foreign Exchange (SAFE) to monitor foreign exchange activities. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of SAFE by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, cash generated from the operations of our PRC subsidiary in China may be used to pay dividends to our company without prior approval of SAFE. However, approval from or registration with appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result, we will need to obtain SAFE approval or complete certain mandatory registration procedures to use cash generated from the operations of our PRC subsidiary to pay any debts they may incur in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside China in a currency other than Renminbi. In addition, any transfer of funds by us to our PRC subsidiaries, either as a stockholder loan or as an increase in registered capital, is subject to approval by or registration or filing with relevant governmental authorities in China. Any foreign loans procured by our PRC subsidiaries will be required to be registered with SAFE or its local branches or satisfy relevant requirements. These restrictions may adversely affect the operations of our PRC subsidiaries. The remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by SAFE. Our PRC subsidiaries may be restricted from paying dividends to us, and if we are unable to obtain dividends from our PRC subsidiaries, if any, it may adversely impact our dividends distribution to investors (if any). See *Risk Factors Governmental control of currency conversion may limit our ability to utilize our income effectively and affect the value of your investment.* Currently, we do not have cash management policies that dictate cash transfers among our Company and its subsidiaries. During the fiscal years ended December 31, 2024 and 2023, (1) no cash transfers have occurred between our Company and its subsidiaries; (2) none of our subsidiaries have made any dividend payment or distribution to our Company; and (3) neither the Company nor any of its subsidiaries have made any dividends or distributions to U.S. investors. Our subsidiaries have no plans to make any distribution or dividend payment to the Company in the near future. Neither the Company nor any of its subsidiaries have plans to make any distribution or dividend payment to the investors in the near future. **Available Information** The Company expects to continue to file annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, proxy statements and other information with the SEC. Any materials filed by the Company with the SEC may be read and copied at the SECs Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information on the operation of the SECs Public Reference Room is available by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains annual, quarterly and current reports, proxy statements and other information that issuers (including the Company) file electronically with the SEC. The Internet address of the SECs website is http://www.sec.gov. The address of our principal executive offices and corporate offices is Block 20, Hongchang Food Co., Ltd., Yuanhong Investment Zone, Donggao Village, Chengtou Town, Fuqing City, Fuzhou City, Fujian Province, 350300, China. Our telephone number is (86) 180 5901 6050. 6 **ITEM 1A. RISK FACTORS** Smaller reporting companies are not required to provide the information required by this item. **** **Risks Related to Doing Business in China** **** **The uncertainties in the Chinese legal system could materially and adversely affect us.** In 1979, the Chinese government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past four decades has significantly enhanced the protections afforded to various forms of foreign investments in mainland China. However, mainland China has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in mainland China. In particular, the Chinese legal system is based on written statutes and prior court decisions have limited value as precedents. Since these laws and regulations are relatively new and the Chinese legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules may not be uniform and enforcement of these laws, regulations and rules involves uncertainties. These uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce our contractual rights or tort claims. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from us. Furthermore, the Chinese legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have a retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime after the violation. In addition, any administrative and court proceedings in mainland China may be protracted, resulting in substantial costs and diversion of resources and management attention. In July 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued a document to enhance its enforcement against illegal activities in the securities markets and promote the high-quality development of capital markets, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over Chinese companies listed overseas, and to establish and improve the system of extraterritorial application of the Chinese securities laws. Since this document is relatively new, uncertainties exist in relation to how soon legislative or administrative regulation-making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on companies like us. It is especially difficult for us to accurately predict the potential impact on the Company of new legal requirements in mainland China because the Chinese legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value. **The Chinese government may intervene in or influence our operations at any time, which could result in a material change in our operations and significantly and adversely impact the value of our shares, including potentially making those shares worthless.** The Chinese government has significant oversight and discretion over the conduct of our business and may intervene or influence our operations as the government deems appropriate to further regulatory, political and societal goals. The Chinese government has recently published new policies that significantly affected certain industries such as the education and internet industries, and we cannot rule out the possibility that it will in the future release regulations or policies regarding our industry that could require us to seek permission from Chinese authorities to continue to operate our business, which may adversely affect our business, financial condition, and results of operations. Furthermore, recent statements made by the Chinese government have indicated an intent to increase the governments oversight and control over offerings of companies with significant operations in mainland China that are to be conducted in foreign markets, as well as foreign investment in China-based issuers. Any such action, if taken by the Chinese government, could significantly limit or completely hinder our ability to offer or continue to offer shares to our investors and could cause the value of our shares to significantly decline or become worthless. 7 **The PRC government exerts substantial influence over the manner in which our PRC subsidiaries must conduct their business activities.** **** The PRC government has exercised, and continues to exercise, substantial control over virtually every sector of the Chinese economy through regulation and state ownership, including food trade where our PRC subsidiaries have been doing their business. Any government decisions or actions to change the way food business is regulated, or any decisions the government might make to cut spending, could adversely impact our PRC subsidiaries business and our results of operations. In addition, the ability of our PRC subsidiaries to operate in China may be harmed by changes in PRC laws and regulations, including those relating to food safety, taxation, environmental conditions, land use rights, property and other matters. The central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties. The central or local governments of the jurisdictions in which our PRC subsidiaries operate may impose new, stricter regulations or interpretations of existing regulations with little advance notice that would require additional expenditures and efforts on their part to ensure our subsidiaries compliance with such regulations or interpretations. Our PRC subsidiaries may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. In the event that our PRC subsidiaries are not able to substantially comply with any existing or newly adopted laws and regulations, our business operations may be materially adversely affected and the value of our stock may significantly decrease. Furthermore, the PRC government authorities may strengthen oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers like us. Such actions taken by the PRC government authorities may intervene or influence the operations of our PRC subsidiaries at any time, which may be beyond our control. Therefore, any such action may adversely affect the operations of our PRC subsidiaries and substantially limit or hinder our ability to offer or continue to offer securities to you and significantly reduce the value of such securities or cause the value of such securities to be completely worthless. **** **We may be required under PRC laws to submit filings to CSRC, the CAC, or other PRC governmental authorities for our future offerings. However, we believe that we and our PRC subsidiaries are not currently required to obtain the approval and/or comply with other requirements of the CSRC, the CAC, or other PRC governmental authorities under PRC rules, regulations or policies in connection with our continued listing. In the event that any such approval is required or that there are other requirements we and/or our PRC subsidiaries are obligated to comply with, we cannot predict whether or how soon we and/or our PRC subsidiaries will be able to obtain such approvals and/or comply with such requirements.** We are not currently required to obtain prior approval or prior permission from the CSRC or any other Chinese regulatory authority under the Chinese laws and regulations currently in effect to issue securities to foreign investors. On February 17, 2023, the CSRC released the Trial Administrative Measures for Administration of Overseas Securities Offerings and Listings by Domestic Companies (the Trial Measures) and five supporting guidelines, which came into effect on March 31, 2023. Pursuant to the Trial Measures, PRC domestic companies that seek to offer and list securities overseas, directly or indirectly, should fulfill the filing procedure and report relevant information to the CSRC. The Trial Measures provides that subsequent securities offerings of an issuer in the same overseas market where it has previously offered and listed securities shall be filed with theCSRCwithin three (3) working days after the offering is completed, which may subject us to additional compliance requirements in the future, and we cannot assure that we will be able to get the clearance of filing procedures under the Trial Measures on a timely basis, or at all. If a PRC domestic company fails to complete the filing procedures or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties by the CSRC, such as order to rectify, warnings, fines, and its controlling stockholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines. Additionally, the Trial Measures and supporting guidelines will implement a new regulatory framework requiring China-based companies to submit filings to the CSRC following the completion of future issuances of equity securities to foreign investors. The Circular on Administrative Arrangements for Filing of Overseas Issuance and Listing of Domestic Companies released by the CSRC provides that companies already listed on overseas exchanges will be grandfathered, such that prior offerings will not need to be filed with the CSRC. However, we may be required to submit filings to the CSRC in connection with future offerings, including follow-on offerings, secondary offerings, or other shelf offerings, within three working days following the completion of any such offering(s). 8 On February 24, 2023, the CSRC and other PRC governmental authorities jointly issued the revised Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (the Revised Confidentiality Provisions), which came into effect on March 31, 2023. According to the Revised Confidentiality Provisions, Chinese companies that directly or indirectly conduct overseas offerings and listings, shall strictly abide by the laws and regulations on confidentiality when providing or publicly disclosing, either directly or through their overseas listed entities, materials to securities services providers. In the event such materials contain state secrets or working secrets of government agencies, the Chinese companies shall first obtain approval from authorities, and file with the secrecy administrative department at the same level with the approving authority; in the event that such materials, if divulged, will jeopardize national security or public interest, the Chinese companies shall comply with procedures stipulated by national regulations. The Chinese companies shall also provide a written statement of the specific sensitive information provided when providing materials to securities service providers, and such written statements shall be retained for inspection. The PRC Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the M&A Rules) appear to require that offshore special purpose vehicles, controlled by Chinese companies or individuals formed for the purpose of seeking a public listing on an overseas stock exchange through acquisitions of Chinese domestic companies or assets in exchange for the shares of the offshore special purpose vehicles, obtain CSRC approval prior to publicly listing their securities on an overseas stock exchange. The interpretation and application of those regulations remain unclear. Furthermore, in July 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly promulgated the Opinions on Strictly Cracking Down on Illegal Securities Activities in Accordance with the Law, pursuant to which Chinese regulators are required to accelerate rulemaking related to the overseas issuance and listing of securities, and update the existing laws and regulations related to data security, cross-border data flow, and management of confidential information. Numerous regulations, guidelines and other measures have been or are expected to be adopted under the umbrella of or in addition to the PRC Cyber Security Law and PRC Data Security Law. The Cybersecurity Review Measures (Decree No. 8 of the Cybersecurity Administration of the PRC), or the revised Cybersecurity Review Measures, enacted on December 28, 2021 and came into effect on February 15, 2022, require online platform operators holding over one million users personal information to apply for a cybersecurity review before any public offering on a foreign stock exchange.These statements and regulations are recently issued, and there remain substantial uncertainties about their interpretation and implementation. Certain internet platforms in China have reportedly become subject to heightened regulatory scrutiny in relation to cybersecurity matters. As of the date of this Report, we have not been included within the definition of operator of critical information infrastructure by a competent authority, nor have we been informed by any PRC governmental authority of any requirement that we file for a cybersecurity review. However, if we are deemed to be a critical information infrastructure operator or an online platform operator that is engaged in data processing and holds personal information of more than one million users, we could be subject to PRC cybersecurity review in the future. As there are still uncertainties regarding the interpretation and implementation of such regulatory guidance, we cannot assure investors that we will be able to comply with new regulatory requirements relating to our future overseas capital-raising activities, and we may become subject to more stringent requirements with respect to matters including data privacy and cross-border investigation and enforcement of legal claims. If our Chinese subsidiaries do not receive or maintain approvals or inadvertently conclude that approvals needed for their business are not required or if there are changes in applicable laws (including regulations) or interpretations of laws and our Chinese subsidiaries are required but unable to obtain approvals in the future, then such changes or need for approvals (if not obtained) could adversely affect the operations of our Chinese subsidiaries, including limiting or prohibiting the ability of our Chinese subsidiaries to operate, and the value of our shares could significantly decline or become worthless. To operate our general business activities currently conducted in mainland China, each of our Chinese subsidiaries is required to obtain a business license from the local counterpart of the State Administration for Market Regulation, or SAMR. Each of our Chinese subsidiaries has obtained a valid business license from the local counterpart of the SAMR, and no application for any such license has been denied. 9 We have not yet received any inquiry, notice, warning, or sanction regarding obtaining approval, completing filing, or other procedures in connection with our previous issuances of securities to foreign investors from the CSRC, CAC, or any other Chinese regulatory authorities that have jurisdiction over our operations. Based on our understanding of the Trial Measures and supporting guidelines, we will not be required to submit an application to the CSRC for our previous issuances of securities to foreign investors, but we may be required to submit filings with the CSRC after the completion of future securities offering in the same overseas markets. There remains uncertainty as to the interpretation and implementation of regulatory requirements related to overseas securities offerings and other capital markets activities, and we cannot assure you that the relevant Chinese regulatory authorities, including the CSRC, would reach the same conclusion as us. If, for any reason, we were to fail to obtain any approvals or to complete any filings or other procedures subsequently required by the CSRC or other Chinese regulatory authorities, future offerings of our equity securities to foreign investors may be delayed or prevented or we may face sanctions, fines, and other penalties, limitations on our ability to pay dividends outside of mainland China, limitations on our operations in mainland China, delays or restrictions on the repatriation of the proceeds from our public offerings into mainland China, or other actions that could have a material adverse effect on our business, financial condition, results of operations, and prospects, as well as the trading price of our shares. Any uncertainties and/or negative publicity regarding the aforementioned approvals, filings, or other procedures or any further laws, regulations, or interpretations that may be released or enacted in the future could have a material adverse effect on the trading price of our shares, including potentially making those shares worthless. **Governmental control of currency conversion may limit our ability to utilize our income effectively and affect the value of your investment** The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our income in Renminbi. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of SAFE by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, cash generated from the operations of our PRC subsidiary in China may be used to pay dividends to our company without prior approval of SAFE. However, approval from or registration with appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result, we will need to obtain SAFE approval or complete certain mandatory registration procedures to use cash generated from the operations of our PRC subsidiary to pay any debts they may incur in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside China in a currency other than Renminbi. In addition, if any of our stockholders who is subject to SAFE regulations fails to satisfy the applicable overseas direct investment filing or approval requirement, the PRC government may restrict our access to foreign currencies for current account transactions. If we are prevented from obtaining sufficient foreign currency to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our stockholders. **ITEM 1B. UNRESOLVED STAFF COMMENTS** Not applicable. **ITEM 1C. CYBERSECURITY** **Risk management and strategy** Our Company recognizes the importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data. We have established policies and processes for assessing, identifying, and managing material risk from cybersecurity threats. We assess risks from cybersecurity threats against our information systems that may result in adverse effects on our information systems or any information residing therein. We conduct periodic assessments to identify cybersecurity threats. 10 Following these risk assessments, we evaluate whether and how to re-design, implement, and maintain reasonable safeguards to mitigate identified risks and reasonably address any identified gaps in existing safeguards. Our IT leadership reports to our Chief Executive Officer (CEO) to manage the risk assessment and mitigation process. We monitor and test our safeguards and train our employees on these safeguards, in collaboration with human resources, IT, and management. We aim to promote a company-wide culture of cybersecurity risk management. **Risks from Cybersecurity Threats** We have not encountered cybersecurity challenges that have materially impaired our business strategy, results of operations, or financial condition during the financial years ended December 31, 2024 and December 31, 2023. **Governance** Our board of directors is responsible for monitoring and assessing strategic risk exposure. Our board of directors administers its cybersecurity risk oversight function directly as a whole. Our executive management team informs the board on cybersecurity risks on a regular basis, with a minimum frequency of once per year. Our cybersecurity coordinator is responsible for assessing and managing our material risks from cybersecurity threats, in close collaboration with our IT team and periodically reports to our CEO. This ensures that the senior management are kept abreast of the cybersecurity posture and potential risks faced by the Company. **ITEM 2. PROPERTIES** Our principal executive offices and corporate offices which are located at Block 20, Hongchang Food Co., Ltd., Yuanhong Investment Zone, Donggao Village, Chengtou Town, Fuqing City, Fuzhou City, Fujian Province, China, 350300, the total gross floor area is approximately 800 square meters, or 8,611.13 square feet. **ITEM 3. LEGAL PROCEEDINGS** From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. There are currently no legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results. **ITEM 4. MINE SAFETY DISCLOSURES** Not applicable. 11 **PART II** **** **ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES** There is limited public trading market for our Common Stock; our Common Stock is quoted on the OTC Pink Market under the symbol HCIL. The market price of our Common Stock is subject to significant fluctuations in response to variations in our quarterly operating results, general trends in the market, and other factors, over many of which we have little or no control. In addition, broad market fluctuations, as well as general economic, business, and political conditions, may adversely affect the market for our Common Stock, regardless of our actual or projected performance. Trading in stocks quoted on the OTC Pink Market is often thin and is characterized by wide fluctuations in trading prices due to many factors that may have little to do with a companys operations or business prospects. We cannot assure you that there will be a market for our Common Stock in the future. The following table sets forth the quarterly high and low sales price per share of our Common Stock for the periods indicated. The prices represent inter-dealer quotations, which do not include retail mark-up, mark-down or commission and may not necessarily represent actual transactions. | FISCAL YEAR 2023 | | HIGH | | | LOW | | | | First Quarter | | $ | 0.8295 | | | $ | 0.0130 | | | | Second Quarter | | | 2.1000 | | | | 0.7940 | | | | Third Quarter | | | 2.8980 | | | | 0.2931 | | | | Fourth Quarter | | | 0.6000 | | | | 0.2222 | | | | FISCAL YEAR 2024 | | HIGH | | | LOW | | | | First Quarter | | $ | 0.3520 | | | $ | 0.2222 | | | | Second Quarter | | | 0.3000 | | | | 0.2001 | | | | Third Quarter | | | 0.3020 | | | | 0.2001 | | | | Fourth Quarter | | | 0.2720 | | | | 0.1026 | | | As of March 27, 2025, the last sale price reported on the OTC Pink Market for our Common Stock was $0.155 per share. **Dividend Policy** We have not paid any dividends on our Common Stock and do not intend to pay any dividends in the foreseeable future. **Stockholders of Record** As of March 28, 2025, we had 724 holders of record of our Common Stock. This number excludes any estimate by us of the number of beneficial owners of shares held in street name, the accuracy of which cannot be guaranteed. 12 Effective August 11, 1993, the SEC adopted Rule 15g-9, which established the definition of a penny stock, for purposes relevant to the Company, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a persons account for transactions in penny stocks; and (ii) that the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a persons account for transactions in penny stocks, the broker or dealer must (i) obtain financial information and investment experience and objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form, (i) sets forth the basis on which the broker or dealer made the suitability determination; and (ii) states that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Disclosure also has to be made about the risks of investing in penny stock in both public offerings and in secondary trading, and about commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. **Transfer Agent** The transfer agent for our capital stock is Standard Registrar and Transfer Company, Inc., located at 440 East 400 South, Suite 200, Salt Lake City, UT 84111. Their telephone number is (801) 571-8844. **Equity Compensation Plan Information** Currently, there is no equity compensation plan in place for the Company. **Recent Sales of Unregistered Securities** During the fiscal years ended December 31, 2024, 2023 and 2022, we did not have sales of unregistered securities other than those already disclosed in the quarterly reports on Form 10-Q in the fiscal years 2024, 2023 and 2022 and current reports on Form 8-K. There were no repurchases of the common stock of the Company by the Company during the fiscal years ended December 31, 2024 and 2023. **ITEM 6. RESERVED** Not applicable. 13 **ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** **** *The following discussion and analysis of financial condition and results of operations relates to the operations and financial condition reported in our consolidated financial statements, which appear elsewhere in this Report, and should be read in conjunction with such financial statements and related notes included in this Report. Except for the historical information contained herein, the following discussion, as well as other information in this Report, contain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created by those sections. Actual results and the timing of the events may differ materially from those contained in these forward-looking statements due to many factors, including those discussed in the Forward-Looking Statements set forth elsewhere in this Report.* ** **Overview** **** Hongchang International Co., Ltd (the Company, formerly known as Heyu Biological Technology Corporation) was incorporated in the state of Nevada on May 18, 1987. Hongchang Global Investment Holdings Limited (Hongchang BVI)) was incorporated in British Virgin Island under the laws of the British Virgin Islands in January 2023. Fuqing Hongchang Food Co., Ltd. (Hongchang Food, or the Operating Entity) wasestablished in September 2017, and primarily engages in the construction of and investment in Hongchang Food Industrial Park project. Its main asset is its investment in the food industrial park, which was obtained by bidding in September 2020 and is currently under construction. Upon completion of such project, Hongchang Food will engage in the core businesses of food trade. Hongchang Food has commenced limited sales operations in 2023, during which revenue has been recognized. Hongchang Food Industrial Park is part of the third batch of key projects in Fujian Province, PRC, and is located adjacent to the Taiwan Strait in Fujian province, PRC, in the Fuqing Functional Zone of Fuzhou New District, in the Yuanhong Investment Zone, which is jointly developed by the PRC and Indonesia. On September 4, 2023, the Company completed the merger and other related transactions (the Merger Transactions) with Hongchang BVI, as a result of which Hongchang BVI became a wholly-owned subsidiary of the Company and the Company assumed and began conducting the principal business of Hongchang Food.**** **Results of Operations** The following chart provides a summary of our results of operations for the fiscal years ended December 31, 2024 and 2023: | | | Fiscal Year ended December 31, | | | | | | 2024 | | | 2023 | | | | Net revenue | | $ | 2,867,102 | | | $ | 2,675,789 | | | | Cost of revenue | | | (2,685,470 | ) | | | (2,606,431 | ) | | | Gross profit | | | 181,632 | | | | 69,358 | | | | Total operating expenses | | | (564,958 | ) | | | (538,930 | ) | | | Loss from operations | | | (383,326 | ) | | | (469,572 | ) | | | Total other income (expense) | | | (111,370 | ) | | | 24,873 | | | | Loss before income taxes | | | (494,696 | ) | | | (444,699 | ) | | | Income tax benefit | | | (22,303 | ) | | | (65,905 | ) | | | Net loss | | $ | (472,393 | ) | | $ | (378,794 | ) | | | Basic net loss per share | | $ | (0.00 | ) | | $ | (0.00 | ) | | 14 *Revenue* ** Our business is in its early stages, revenue represents the sales of goods supplied to customers, and sales are primarily driven by the demand from customer. The growth of our revenue will be primarily driven by increasing our product variety, expanding the distribution network, both in China and overseas and the initiation of other projects or business lines in the future. Revenue is influenced by potential competitors entering the market, economic conditions, pricing, inflation, product diversification, and customer consumption habits. We generated revenue of $2,867,102 for the year ended December 31, 2024, compared to $2,675,789 for the year ended 2023, due to launch of our new beef and mutton supplying business at the end of 2024. *Cost of revenue* Cost of revenues represents costs and expenses directly attributable to the purchase of our products sold and delivered, and direct labor costs. Cost of revenues was $2,685,470 for the year ended December 31, 2024, compared to $2,606,431 for the year ended 2023, due to the increase in sales. *Gross profit and margin* Gross profit is the difference between revenue and cost of revenue. Our cost of revenue mainly includes purchasing raw material and prepackaged products. The supply and prices of our products may be influenced by various factors, including product types, seasonal fluctuations, demand, and macroeconomic environment. Due to the increase in the prices of our suppliers goods, we may not be able to raise prices to compensate for the increased costs, which will have a negative impact on our business results and profitability. We believe that if our strategic business development plan can proceed smoothly, we will collaborate with more suppliers to expand our product supply range and establish mature procurement plans to control costs. Gross margin is gross profit divided by revenue. Gross margin is a measure used by management to indicate whether we are selling products at an appropriate gross profit. Our gross margin is influenced by product prices, product combinations, availability, and discounts, as some products typically offer higher gross profit margins, as well as the impact of our product costs, which may vary. At present, we offer competitive prices to attract and retain customers. In the future, as we grow, we will launch diversified products and competitive services to increase market share. We regularly evaluate the profitability of its products. We had a gross profit of $181,632 and $69,358 for the years ended December 31, 2024 and 2023, respectively. *Operating expenses* ** Our operating expenses consist of sales and marketing expenses and general and administrative expenses. *Sales and marketing expenses* Sales and marketing expenses consist primarily of advertising expenses, gift expenses and sample fees. We incurred advertising expenses of $1,353 and $nil for the years ended December 31, 2024 and 2023, respectively. *General and administrative expenses* We incurred general and administrative expenses of $560,577 and $538,902 for the years ended December 31, 2024 and 2023, respectively. *Income tax expense* ** We incurred income tax benefit of $22,303 and $65,905 for the years ended December 31, 2024 and 2023, respectively. ** *Net loss* ** As a result of the foregoing, we reported a net loss of $472,393 and $378,794 for the years ended December 31, 2024 and 2023 respectively. 15 **Liquidity and Capital Resources** ** The following chart provides a summary of our key balance sheet items for the fiscal years ended December 31, 2024 and 2023, and should be read in conjunction with the financial statements, and notes thereto, included with this Report at Part II, Item 8, below. | Year ended December 31 | | 2024 | | | 2023 | | | | Cash | | $ | 240,598 | | | $ | 895,730 | | | | Accounts receivables, net | | $ | 52,514 | | | $ | 742,851 | | | | Amount due from a related party | | | 38,360 | | | | 141 | | | | Other receivables, net | | $ | 6,854,374 | | | $ | 1,106,574 | | | | Other current assets | | $ | 936,230 | | | $ | 1,128,598 | | | | Total current assets | | $ | 8,126,102 | | | $ | 3,960,742 | | | | Construction-in-progress | | $ | 41,264,766 | | | $ | 41,423,399 | | | | Land use right, net | | $ | 3,909,114 | | | $ | 4,118,101 | | | | Total assets | | $ | 57,451,227 | | | $ | 50,215,568 | | | | Accounts payable-construction in progress | | $ | 12,289 | | | $ | 18,493 | | | | Amounts due to a related party - current portion | | $ | 6,289,440 | | | | - | | | | Total current liabilities | | $ | 6,691,706 | | | $ | 1,055,203 | | | | Amounts due to a related party | | $ | 3,493,486 | | | $ | 6,682,959 | | | | Total non-current liabilities | | $ | 11,986,051 | | | $ | 8,672,422 | | | | Total liabilities | | $ | 18,677,757 | | | $ | 9,727,625 | | | | Total equity | | $ | 38,773,470 | | | $ | 40,487,943 | | | As of December 31, 2024, we had US$240,598 in cash, as compared to US$895,730 as of December 31, 2023. We continued financing our daily operation and construction in progress in 2024. As of December 31, 2024, our construction in progress balance amounted to approximately US$41,264,766, as compared to US$41,423,399 as of December 31, 2023. This reflects the construction progress of our Hongchang Food Industrial Park. **Capital Expenditure Commitment as of December 31, 2024** **** As of December 31, 2024, the Company has entered into several contracts for construction of the Hongchang Food Industrial Park and the improvement of Industrial Buildings. Total outstanding commitments under these contracts were $9,275,828 and $18,492,173 as of December 31, 2024 and 2023, respectively. The Company expected to pay off all the balances within 1-3 years. *Off Balance Sheet Arrangements* ** We did not have any off-balance sheet arrangements as of December 31, 2024 and 2023. The following table sets forth a summary of our cash flows for the periods presented: | | | For the years ended December 31, | | | | | | 2024 | | | 2023 | | | | | | US$ | | | US$ | | | | Net cash (used in) provided by operating activities | | $ | (7,337,639 | ) | | $ | 750,521 | | | | Net cash used in investing activities | | $ | (3,504,356 | ) | | $ | (41,679,473 | ) | | | Net cash provided by financing activities | | $ | 10,204,753 | | | $ | 40,942,007 | | | | Effect of foreign exchange on cash | | $ | (17,890 | ) | | $ | 879,534 | | | | Net (decrease) increase in cash | | $ | (655,132 | ) | | $ | 892,589 | | | | Cash at the beginning of the year | | $ | 895,730 | | | $ | 3,141 | | | | Cash at the end of the year | | $ | 240,598 | | | $ | 895,730 | | | 16 *Operating activities* **** Net cash used in operating activities for the year ended December 31, 2024 was US$7,337,639, which primarily reflected our net loss of US$472,394 as mainly adjusted for amortization of US$90,510, and adjustment for changes in working capital primarily consisting of a decrease in accounts receivable of US$677,615 and increase in other current assets of US$183,013 offset by (i) decrease in accounts payable of US$640,421, (ii) increase in other receivable of US$6,920,988 and (iii) decrease in accrued expenses and other payables of US$236,528. Net cash provided by operating activities for the year ended December 31, 2023 was US$750,521, which primarily reflected our net loss of US$378,794 as mainly adjusted for amortization of US$88,173, and adjustment for changes in working capital primarily consisting of an increase in other current assets of US$1,058,798 offset by (i) increase in deferred subsidies of US$1,990,873, (ii) increase in accounts payable of US$645,831 and (iii) increase in accrued expenses and other payables of US$313,708. *Investing activities* ** Net cash used in investing activities for the years ended December 31, 2024 and 2023 was US$3,504,356 and US$41,679,473, mainly attributable to the purchase of property and equipment and payments for acquisitions of businesses. ** *Financing activities* **** Net cash provided by financing activities for the year ended December 31, 2024 was US$10,204,753, primarily due to (i) proceeds from long term loans of US$6,884,567 and (ii) loans from related parties of US$8,926,432 and repayments to related parties US$5,606,246. Net cash provided by financing activities for the year ended December 31, 2023 was US$40,942,007, primarily due to (i) capital contributions made by stockholders of US$41,241,108 and (ii) loan from a related party of US$2,900,289 and repayments to a related party of US$3,199,390. **Critical Accounting Policies Involving Critical Accounting Estimates** Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements. These financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of our assets and liabilities and revenue and expenses, to disclose contingent assets and liabilities on the date of the consolidated financial statements, and to disclose the reported amounts of revenue and expenses incurred during the financial reporting period. The most significant estimates and assumptions include the assessment of the expected credit losses for receivables and the recoverability of long-lived assets. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe critical accounting policies as disclosed in this report reflect the more significant judgments and estimates used in the preparation of our consolidated financial statements. The critical accounting policies, judgments and estimates that we believe to have the most significant impact on our consolidated financial statements are described below, which should be read in conjunction with our consolidated financial statements and accompanying notes and other disclosures included in this report. When reviewing our financial statements, you should consider: | | our selection of critical accounting policies; | | | | the judgments and other uncertainties affecting the application of such policies; | | | | the sensitivity of reported results to changes in conditions and assumptions. | | 17 We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. We consider our critical accounting estimates include (i) allowance for expected credit losses for accounts receivable and (ii) impairment of long-lived assets. The following critical accounting policies rely upon assumptions and estimates and were used in the preparation of our consolidated financial statements: **Allowance of Expected Credit Losses** The Company adopted ASU No. 2016-13, Financial Instruments Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments on January 1, 2023 using a modified retrospective approach. ASC 326 introduces an approach based on expected losses to estimate the allowance for doubtful accounts, which replaces the previous incurred loss impairment model. The expected credit loss impairment model requires the entity to recognize its estimate of expected credit losses for affected financial assets using an allowance for credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Our account receivables, advance to suppliers, other receivables and long-term prepayments are within the scope of ASC Topic 326. We use the loss-rate method to evaluate the expected credit losses on an individual basis. When establishing the loss rate, we make the assessment on various factors, including historical experience, credit-worthiness of debtors, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from the debtors. We also provide specific provisions for allowance when facts and circumstances indicate that the receivable is unlikely to be collected. Expected credit losses are included in the consolidated statements of operations and comprehensive income(loss). After all attempts to collect a receivable have failed, the receivable is written off against the allowance. There were no expected credit loss for the years ended December 31, 2024 and 2023. **Impairment of long-lived Assets** Long-lived assets with finite lives, primarily property and equipment, construction in progress, intangible assets and land use right, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the assets carrying value, then the asset is deemed to be impaired and written down to its fair value. Impairment charge recognized for the years ended December 31, 2024 and 2023 were $2,837 and $nil, respectively. **ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK** Pursuant to Item 305(e) of Regulation S-K ( 229.305(e)), the Company is not required to provide the information required by this Item as it is a smaller reporting company, as defined by Rule 229.10(f)(1). **ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA** The consolidated financial statements and supplementary data required with respect to this Item 8, and as identified in Item 15 of this Report, are included in this Report. 18 **ITEM 9. CHANGES OF INDEPENDENT CERTIFYING ACCOUNTANT** None. **ITEM 9A. CONTROLS AND PROCEDURES** **Evaluation of Disclosure Controls and Procedures** Management has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934), as of the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were not effective as a result of a material weakness primarily related to a lack of a sufficient number of personnel with appropriate training and experience in accounting principles generally accepted in the United States of America, or U.S. GAAP. To remediate the material weakness, in the near future, subject to our internal resources permitting, we intend to hire more personnel with sufficient training and experience in U.S. GAAP. **Managements Annual Report on Internal Control over Financial Reporting** Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such item is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the company. Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. Under the supervision and with the participation of our current chief executive officer we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024, based on the framework set forth in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under this framework, current management concluded that our internal control over financial reporting was not effective as of the evaluation dates due to the same reasons illustrated in *Evaluation of Disclosure Controls and Procedures* above. **Changes in Internal Control over Financial Reporting** There was no change in our internal control over financial reporting that occurred during the fiscal year ended December 31, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within any company have been detected. **ITEM 9B. OTHER INFORMATION** None. **Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections** Not applicable. 19 **PART III** **** **ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE** The following table sets forth information regarding each of our current directors and executive officers: **Our Directors and Executive Officers** | Name | | Age | | Position | | | Zengqiang Lin | | 28 | | Director, Chief Executive Officer, Chief Financial Officer and President | | | Ban Siong Ang | | 50 | | Director and Chairman of the Board | | | Zhenzhu Lin | | 32 | | Director | | | Qingqing Wang | | 31 | | Board Secretary | | **Business Experience** The following is a brief account of the education and business experience of each director and executive officer of the Company: (1) such persons name; (2) the year in which such person was first elected a director of the Company; (3) all positions and offices with the Company held by such person; (4) the business experience of such person during the past five years; (5) certain other directorships, if any, held by such person; and briefly discusses the specific experience, qualifications, attributes or skills that led to the conclusion that each such person should serve as a director for us. **Mr. Zengqiang Lin**has been our director since February 17, 2023, and in connection with the acquisition of Fuqing Hongchang Food Co., Ltd., was appointed as our Chief Executive Officer and President on August 21, 2023. Mr. Zengqiang Lin is one of the founders and has served as the chairman of the board of directors of Fuqing Hongchang Food Co., Ltd, an international food trading company since 2017. He also held the position of manager at Xizang Changhui Construction Engineering Co., Ltd from July 2015 to May 2017. Mr. Lin has a wealth of experience in business operation, supply chain management, and market expansion. **Mr. Ban Siong Ang**has been our Director and Chairman of the Board since April 18, 2018. He graduated from the University of Southern Queensland, Australia, in 1998 and completed his Doctor of Philosophy in International Finance (Honoris Causa) from Gideon Robert University in 2017. Upon his graduation from the University of Southern Queensland, he started his career and worked as Senior Officer in Bursa Malaysia Depository Sdn Bhd (formerly known as Kuala Lumpur Stock Exchange) between 1998 and 2004. From 2004 to 2009, he served as the Director and principal consultant for Golden Design Renovation and Construction Sdn Bhd. Between 2010 and 2011, he served as General Manager and Directors for E-World Films Production Limited. In 2012, he founded Heyu Group of Companiesin China, Hong Kong, and Malaysia. Heyu Group of Companies are engaged in Leisure and Hotelsmanagement, Biotechnology, FinanceandInvestment, Brand Franchising, Advance Entertainment Technology, Event Management, Property Development and Management, land & real estate property development, etc. He is responsible for the formulation and implementation of the Heyu Group of Companies corporate strategies as well as in charge of the corporate finance and investment management aspects of the Group due to his acute knowledge with rich experience, strong commitment, innovative and dynamic personality. He also as a member of The Academic Council on the United Nations System (ACUNS) in Canada. In view of Mr. Angs humanitarian sectors, his outstanding contributions to establish, promote and protect humanity, Peace, Culture Human resource development and Education for the well-being of human society through volunteerism, he was also bestowed the Royal Orders from the State of Pahang in Malaysia. 20 **Ms. Zhenzhu Lin**serves as our Director from August 21, 2023. Ms. Lin is one of the founders and has served as directors of Fuqing Hongchang Food Co., Ltd, an international food trading company since 2017. Prior to her current role, Ms. Lin served as the general manager of Xizang Changhui Construction Engineering Co., Ltd from December 2008 to May 2017. Ms. Lin has extensive experience in the company from the grassroots to the management level. **Ms. Qingqing Wang** serves as our Board Secretary from March 27, 2024. Ms. Wang graduated from Minnan Normal University in the PRC with a bachelors degree in financial management in 2015, and holds an intermediate accountant certificate and an assistant financial planner certificate. Ms. Wang worked at Fuqing Greens Investment Consulting Co., Ltd. from March 2015 to October 2016 as an accounting assistant. From November 2016 to October 2021, she worked at Fuzhou Zhihui Auto Sales and Service Co., Ltd. as an accounting supervisor. From November 2021 to October 2022, she served at Fujian Zhihuishuan Finance and Taxation Consulting Co., Ltd. as an accounting supervisor. Ms. Wang joined our Company in November 2022 as a financial manager and is responsible for the daily management of the groups financial department. **Family Relationships** Mr. Zengqiang Lin and Ms. Zhenzhu Lin are siblings. None of our other directors or executive officers have a family relationship as defined in Item 401 of Regulation S-K. **Involvement in Certain Legal Proceedings** To the best of our knowledge, none of our directors or executive officers has, during the past ten years: | | | been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); | | | | | had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; | | | | | been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; | | | | | been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; | | | | | been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or | | 21 | | | been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. | | **** **Director Independence** After review of all relevant transactions or relationships between each director, or any of his or her family members,our Board has determined that there is no independent director as defined under the Nasdaq listing standards. Pursuant to the applicable Nasdaq listing standards, an independent director refers to a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which, in the opinion of the companys board of directors, would interfere with the directors exercise of independent judgment in carrying out the responsibilities of a director. Our common stock is not currently listed on Nasdaq. **Committees of the Board of the Company** We do not have a standing nominating, compensation, or audit committee. Rather, our full Board performs the functions of these committees. We do not believe it is necessary for our Board to appoint such committees because the volume of matters that come before our Board for consideration permits the directors to give sufficient time and attention to such matters to be involved in all decision making. Additionally, because our Common Stock is not listed for trading or quotation on a national securities exchange, we are not required to have such committees. **Code of Ethics** We adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer or persons performing similar functions. A copy of the code is filed hereto as Exhibit 14.1 and is incorporated herein by this reference. **Insider Trading Policy** **** We have adopted an insider trading policy for directors, officers and employees of the Company that govern the purchase, sale and/or other dispositions of the Companys securities and other securities by our directors, executive officers, employees and any member of his or her immediate family living in his or her household. A copy of such policy is filed hereto as Exhibit 19.1 and is incorporated herein by this reference. **Compliance with Section 16(a) of the Securities Exchange Act** Section 16(a) of the Exchange Act requires our directors, executive officers, and greater than 10% beneficial owners of our Common Stock to file reports of ownership and changes in ownership with the SEC. Directors, executive officers, and greater than 10% stockholders are required by the rules and regulations of the SEC to furnish us with copies of all Section 16(a) reports they file. Based solely on the Companys review of the copies of such forms it has received and written representations from certain reporting persons with respect to the period from January 1, 2024 through December 31, 2024, the Company believes that all of its officers, directors and greater than 10% beneficial owners, complied with all Section 16(a) filing requirements applicable to them during the Companys most recently completed fiscal year. 22 **ITEM 11. EXECUTIVE COMPENSATION** The following is a summary of the compensation we paid to our executive officers for the fiscal years ended December 31, 2024 and 2023 for the Company. | Name | | Year | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($) | | | Option Awards ($) | | | Non-Equity Incentive Plan Compensation ($) | | | Nonqualified deferred compensation earnings ($) | | | All Other Compensation ($) | | | Total ($) | | | | Zengqiang Lin | | 2024 | | | 3,335 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 3,335 | | | | CEO, CFO, President and Director | | 2023 | | | 1,130 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,130 | (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Wendy Li(2) | | 2024 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | Former CFO | | 2023 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | Bo Lyu(3) | | 2024 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | Former CFO | | 2023 | | | 64,000 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 64,000 | | | | (1) | Such amounts were accrued based on his appointment date in 2023. Mr. Zengqiang Lin was appointed as a director of the Company on February 17, 2023, and also as the Chief Executive Officer of the Company on August 21, 2023, and as the Chief Executive Officer of the Company on May 8, 2024. | | | (2) | Ms. Wendy Li was appointed as the Chief Financial Officer of the Company on August 21, 2023, and resigned from her position on May 8, 2024. | | | (3) | Mr. Bo Lyu was appointed as the Chief Financial Officer of the Company on November 30, 2021, and resigned from his position on August 21, 2023. | | **Aggregated Option Exercises and Fiscal Year-End Option Value Table** There were no stock options exercised since the date of our inception by the executive officers. **** **Long-Term Incentive Plan (LTIP) Awards Table** There were no awards made to any named executive officers in the last completed fiscal year under any LTIP. **Employment Agreements** The Company has entered into employment agreements with officers and other key employees. **Compensation of Directors** The following is a summary of the compensation we paid to our non-executive directors, for the fiscal year ended December 31, 2024. | Name | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($) | | | Option Awards ($) | | | Non-Equity Incentive Plan Compensation ($) | | | Nonqualified deferred compensation earnings ($) | | | All Other Compensation ($) | | | Total ($) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ban Siong Ang | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Zhenzhu Lin | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stephan Truly Busch (1) | | | 5,000 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 5,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Xingjia Gao (2) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (1) | Mr. Stephan Truly Busch was appointed as a director of the Company on August 21, 2023 and resigned from his position on March 27, 2024. | | | (2) | Mr. Xingjia Gao was appointed as a director of the Company on August 21, 2023, and resigned from his position on May 8, 2024. | | We do not currently have an established policy to provide compensation to members of our Board for their services in that capacity. 23 **Option Plan** We currently do not have a Stock Option Plan. However, we may issue stock options pursuant to a Stock Option Plan in the future. Such stock options may be awarded to management, employees, and members of the Board and consultants of the Company. **ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS** The following table sets forth certain information, as of March 28, 2025, with respect to the beneficial ownership of the outstanding common stock by (i) any holder of more than five (5%) percent; (ii) each of the Companys executive officers and directors; and (iii) the Companys directors and executive officers as a group. Unless otherwise indicated, the beneficial owners have sole voting and investment power, as applicable, over the shares of common stock listed below. For each individual and group included in the table below, percentage ownership is calculated by dividing (a) the number of shares of common stock beneficially owned by such person or group by (b) the sum of the shares of common stock outstanding as of March 28, 2025, plus the number of shares of common stock that such person or group had the right to acquire on or within 60 days after March 28, 2025. The address for each individual listed below is Block 20, Hongchang Food Co., Ltd. Yuanhong Investment Zone, Donggao Village, Chengtou Town, Fuqing City, Fuzhou City, Fujian Province, 350300, PRC, unless otherwise noted. Currently, there are no equity compensation plans in place for the Company. | Name and Address of Beneficial Owner(1) | | Number of Shares(2) | | | Percentage(3) | | | | Directors and Executive Officers | | | | | | | | | Zengqiang Lin(4) | | | 353,322,843 | | | | 68.1 | % | | | Ban Siong Ang | | | 56,011,747 | | | | 10.8 | % | | | Zhenzhu Lin(5) | | | 62,259,532 | | | | 12.0 | % | | | Qingqing Wang | | | - | | | | - | | | | Directors and officers as a group (four persons) | | | 471,594,122 | | | | 90.9 | % | | | Other 5% or more stockholders | | | - | | | | - | | | | (1) | Except as otherwise indicated, the persons named in this table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and to the information contained in the footnotes to this table. | | | (2) | The number of shares of common stock reflects the 100-for-1 forward stock split effective on September 25, 2018, and the 1-for-10 reverse stock split effective on August 14, 2023. | | | (3) | Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any shares as to which a stockholder has sole or shared voting power or investment power, and also any shares which the stockholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrants. | | | (4) | Mr. Zengqiang Lin is the sole stockholder of Zengqiang Investment Limited. Mr. Zengqiang Lin is the sibling of Ms. Zhenzhu Lin. Ms. Zhenzhu Lin and Mr. Zengqiang Lin are not acting in concert to acquire interests in the securities of our Company and Mr. Zengqiang Lin expressly disclaims any interest in the securities of our Company held directly or indirectly by Ms. Zhenzhu Lin. | | | (5) | Ms. Zhenzhu Lin is the sole stockholder of Hong Jin Investment Limited. Ms. Zhenzhu Lin is the sibling of Mr. Zengqiang Lin. Ms. Zhenzhu Lin and Mr. Zengqiang Lin are not acting in concert to acquire interests in the securities of our Company and Ms. Zhenzhu Lin expressly disclaims any interest in the securities of our Company held directly or indirectly by Mr. Zengqiang Lin. | | 24 **ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE** **Related Person Transactions** The following sets out the transactions or series of similar transactions to which we were or will be a party in which the amount involved exceeds $120,000 and in which any director, nominee for director, executive officer, beneficial holder of more than 5% of our common stock or any member of their immediate family or any entity affiliated with any of the foregoing persons had or will have a direct or indirect material interest, other than equity and other compensation, termination, change of control and other arrangements, which are described under Executive Compensation. **Loan Agreements with Related Parties** As of December 31, 2024 we obtained several loans from Mr. Zengqiang Lin, the CEO of the Company, with an aggregate principal amount of approximately $9.2 million, The loan agreement was signed on April 1, 2023, Hongchang Food would be able to obtain aggregate maximum loans of up to RMB60.0 million (US$8.5 million) from Mr. Zengqiang Lin for the period from April 1, 2023 to March 31, 2026.The loan is unsecured and non-interest bearing. **Controlling Stockholder** Zengqiang Investment Limited is the investment vehicle of our controlling stockholder and director, Mr. Zengqiang Lin, and directly owns 67.1% of our shares of common stock. **ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES** The following table provides information about the fees billed to us for professional services rendered by external accounting firms and auditing firms during fiscal years 2024 and 2023: | | | 2024 | | | 2023 | | | | Audit Fees | | $ | 109,000 | | | $ | 80,000 | | | | Tax Fees | | | 3,800 | | | | - | | | | Total | | $ | 112,800 | | | $ | 80,000 | | | *Audit Fees* Audit fees consist of fees for the audit of our annual financial statements or services that are normally provided in connection with statutory and regulatory annual and quarterly filings or engagements. *Tax Fees*. Tax fees consist of fees for tax compliance services, tax advice and tax planning. During the fiscal years of 2024 and 2023, the services provided in this category included assistance and advice in relation to the preparation of corporate income tax returns. **Pre-Approval Policies and Procedures**. Our Board pre-approved all services to be provided by WWC, Professional Corporation. 25 **PART IV** **** **ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES** (a) (1) *Index to Financial Statements* | Report of Independent Registered Public Accounting Firm (PCAOB ID: 1171) | | F-1 | | | | | | | | Consolidated Balance Sheets | | F-2 | | | | | | | | Consolidated Statements of Operations and Comprehensive Income (Loss) | | F-3 | | | | | | | | Consolidated Statements of Changes in Stockholders Equity | | F-4 | | | | | | | | Consolidated Statements of Cash Flows | | F-5 | | | | | | | | Notes to Consolidated Financial Statements | | F-6 | | | (2) | ALL OTHER SCHEDULES HAVE BEEN OMITTED BECAUSE THEY ARE NOT APPLICABLE OR THE REQUIRED INFORMATION IS SHOWN IN THE FINANCIAL STATEMENTS OR NOTES THERETO. | | | | | | | (3) | List of Exhibits | | | Exhibit | | Exhibit Description | | | 3.1(1) | | Articles of Incorporation. | | | 3.2(2) | | Certificate of Amendment. | | | 3.3(3) | | Certificate of Amendment. | | | 3.4(4) | | Certificate of Amendment. | | | 3.5(5) | | Certificate of Amendment of Articles of Incorporation filed with the Nevada Secretary of State on November 17, 2023. | | | 3.5(6) | | By-Laws. | | | 3.6(7) | | First Amendment to the By-Laws. | | | 3.7(8) | | Second Amendment to the By-Laws. | | | 3.8(9) | | Third Amended and Restated Bylaws of Hongchang International Co., Ltd effective as of November 23, 2023. | | | 4.1(10) | | Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. | | | 10.1(11) | | Share Exchange Agreement dated August 21, 2023 by and between Heyu Biological Technology Corporation, Hong Chang Global Investment Holdings Limited, Zengqiang Investment Limited and Hong Jin Investment Limited. | | | 10.2(12) | | Share Purchase Agreement dated August 21, 2023 by and between Heyu Biological Technology Corporation and Mr. Ban Siong Ang. | | | 10.3(13) | | Form of Director Service Agreement between the Registrant and its Directors. | | | 14.1* | | Code of Ethics | | | 19.1* | | Insider trading policies and procedures | | | 21.1* | | List of subsidiaries of the registrant | | 26 | Exhibit | | Exhibit Description | | | 31.1* | | Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | | 31.2* | | Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | | 32.1** | | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | | 32.2** | | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | | 101* | | The following information from our 2024 Annual Report on Form 10-K, formatted in Inline XBRL: (i) Consolidated Statement of Income, (ii) Consolidated Statement of Comprehensive Income, (iii) Consolidated Balance Sheet, (iv) Consolidated Statement of Changes in Equity, (v) Consolidated Statement of Cash Flows, and (vi) the Notes to the Consolidated Financial Statements. | | | 104* | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | | | (1) | Filed as an exhibit to the Companys Registration Statement on Form 10-12G, as filed with the SEC on July 16, 1999, and incorporated herein by this reference. | | | (2) | Filed as an exhibit to the Companys Form 8-K, as filed with the SEC on July 6, 2018, and incorporated herein by reference. | | | (3) | Filed as an exhibit to the Companys Form 8-K, as filed with the SEC on August 3, 2018, and incorporated herein by reference. | | | (4) | Filed as an exhibit to the Companys Form 8-K, as filed with the SEC on September 14, 2018, and incorporated herein by reference. | | | (5) | Filed as an exhibit to the Companys Form 8-K, as filed with the SEC on November 21, 2023, and incorporated herein by reference. | | | (6) | Filed as an exhibit to the Companys Registration Statement on Form 10-12G, as filed with the SEC on July 16, 1999, and incorporated herein by this reference. | | | (7) | Filed as an exhibit to the Companys Quarterly Report on Form 10-Q, as filed with the SEC on November 13, 2018, and incorporated herein by this reference. | | | (8) | Filed as an exhibit to the Companys Form 8-K, as filed with the SEC on July 1, 2019, and incorporated herein by reference. | | | (9) | Filed as an exhibit to the Companys Form 8-K, as filed with the SEC on November 24, 2023, and incorporated herein by reference. | | | (10) | Filed as an exhibit to the Companys Form 10-K, as filed with the SEC on March 23, 2023, and incorporated herein by reference. | | | (11) | Filed as exhibit 10.1 to the Companys Form 8-K, as filed with the SEC on August 23, 2023, and incorporated herein by reference. | | | (12) | Filed as exhibit 10.2 to the Companys Form 8-K, as filed with the SEC on August 23, 2023, and incorporated herein by reference. | | | (13) | Filed as exhibit 10.3 to the Companys Form 8-K, as filed with the SEC on August 23, 2023, and incorporated herein by reference. | | | * | Filed herewith. | | | ** | In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 herewith are deemed to accompany this Form 10-K and will not be deemed filed for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act. | | **ITEM 16. FORM 10-K SUMMARY** None. 27 **SIGNATURES** **** Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 28,2025. | | Hongchang International Co., Ltd | | | | | | | | | By: | /s/ Zengqiang Lin | | | | Name: | Zengqiang Lin | | | | Title: | Chief Executive Officer, Chief Financial Officer, Director, and President (Principal Executive Officer, Principal Financial Officer, and Director) | | Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated below: | Signature | | Title | | Date | | | | | | | | | | /s/Zengqiang Lin | | Chief Executive Officer, Chief Financial Officer and Director | | March 28, 2025 | | | Zengqiang Lin | | (Principal Executive Officer) | | | | | | | | | | | | /s/Ban Siong Ang | | Director | | March 28, 2025 | | | Ban Siong Ang | | | | | | | | | | | | | | /s/Zhenzhu Lin | | Director | | March 28, 2025 | | | Zhenzhu Lin | | | | | | 28 **Report of Independent Registered Public Accounting Firm** * | To: | The Board of Directors and Stockholders | | | | Hongchang International Co., Ltd | | **Opinion on the Financial Statements** We have audited the accompanying consolidated balance sheets of Hongchang International Co., Ltd and its subsidiaries (collectively the Company) as of December 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive income, changes in stockholders equity, and cash flows in each of the years for the two-year period ended December 31, 2024, and the related notes (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 December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. **Basis for Opinion** These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on the Companys 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. 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 Companys internal control over financial reporting. Accordingly, we express no such opinion. 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. **Critical Audit Matters** Critical audit matters are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there is no critical audit matter. /s/ WWC, P.C. WWC, P.C. Certified Public Accountants PCAOB ID No.1171 We have served as the Companys auditor since 2018. San Mateo, California March 28, 2025 **** F-1 **Hongchang International Co., Ltd** **Consolidated Balance Sheets** | | | As of December 31, | | | | | | 2024 | | | 2023 | | | | | | US$ | | | US$ | | | | ASSETS: | | | | | | | | | Current assets: | | | | | | | | | Cash | | | 240,598 | | | | 895,730 | | | | Accounts receivable, net | | | 52,514 | | | | 742,851 | | | | Amount due from a related party | | | 38,360 | | | | 141 | | | | Other receivable, net | | | 6,854,374 | | | | 1,106,574 | | | | Inventories, net | | | - | | | | 13,713 | | | | Advance to supplier | | | 4,026 | | | | 13,811 | | | | Advance to supplier-related party | | | - | | | | 59,324 | | | | Other current assets | | | 936,230 | | | | 1,128,598 | | | | Total current assets | | | 8,126,102 | | | | 3,960,742 | | | | | | | | | | | | | | | Non-current assets: | | | | | | | | | | | Property and equipment, net | | | 16,888 | | | | 3,193 | | | | Construction-in-progress | | | 41,264,766 | | | | 41,423,399 | | | | Intangible assets, net | | | - | | | | 3,213 | | | | Land use right, net | | | 3,909,114 | | | | 4,118,101 | | | | Other non-current assets | | | 4,134,357 | | | | 706,920 | | | | Total non-current assets | | | 49,325,125 | | | | 46,254,826 | | | | Total assets | | | 57,451,227 | | | | 50,215,568 | | | | | | | | | | | | | | | LIABILITIES AND STOCKHOLDERS EQUITY | | | | | | | | | | | Current liabilities: | | | | | | | | | | | Long-term loans -current portion | | | 235,306 | | | | - | | | | Accounts payable | | | - | | | | 650,905 | | | | Accounts payable-construction in progress | | | 12,289 | | | | 18,493 | | | | Advances from customers | | | 255 | | | | - | | | | Amounts due to related parties -current portion | | | 6,289,440 | | | | - | | | | Accrued expenses and other liabilities | | | 154,416 | | | | 385,805 | | | | Total current liabilities | | | 6,691,706 | | | | 1,055,203 | | | | | | | | | | | | | | | Non-current liabilities | | | | | | | | | | | Deferred subsidies | | | 1,929,637 | | | | 1,989,463 | | | | Long term loans | | | 6,562,928 | | | | - | | | | Amounts due to related parties | | | 3,493,486 | | | | 6,682,959 | | | | Total non-current liabilities | | | 11,986,051 | | | | 8,672,422 | | | | | | | | | | | | | | | Total liabilities | | | 18,677,757 | | | | 9,727,625 | | | | | | | | | | | | | | | Commitments and contingencies | | | - | | | | - | | | | | | | | | | | | | | | Stockholders equity: | | | | | | | | | | | Common stock (US$0.001 par value; 2,000,000,000 shares authorized; 518,831,367 and 518,831,367 issued and outstanding as of December 31, 2024 and 2023, respectively) | | | 518,831 | | | | 518,831 | | | | Additional paid-in capital | | | 39,905,228 | | | | 39,905,228 | | | | Statutory reserves | | | 1,197 | | | | - | | | | Accumulated deficit | | | (1,292,076 | ) | | | (812,539 | ) | | | Accumulated other comprehensive (loss) income | | | (365,573 | ) | | | 876,423 | | | | Total Hongchang International Co., Ltds stockholders equity | | | 38,767,607 | | | | 40,487,943 | | | | Non-controllinginterests | | | 5,863 | | | | - | | | | Total equity | | | 38,773,470 | | | | 40,487,943 | | | | | | | | | | | | | | | Total liabilities and equity | | | 57,451,227 | | | | 50,215,568 | | | The accompanying notes are an integral part of these consolidated financial statements. F-2 **Hongchang International Co., Ltd** **Consolidated Statements of Operations and Comprehensive Income(Loss)** | | | For the years ended December 31, | | | | | | 2024 | | | 2023 | | | | | | US$ | | | US$ | | | | Net revenue: | | | 2,867,102 | | | | 2,675,789 | | | | Cost of revenue | | | (2,685,470 | ) | | | (2,606,431 | ) | | | Gross profit | | | 181,632 | | | | 69,358 | | | | Sales and marketing expenses | | | (1,544 | ) | | | (28 | ) | | | General and administrative expenses | | | (560,577 | ) | | | (538,902 | ) | | | Intangible asset impairment charge | | | (2,837 | ) | | | - | | | | Total operating expenses | | | (564,958 | ) | | | (538,930 | ) | | | Operating loss | | | (383,326 | ) | | | (469,572 | ) | | | Interest income | | | 1,155 | | | | 1,386 | | | | Other income | | | 1,167 | | | | 23,531 | | | | Other expenses | | | (113,692 | ) | | | (44 | ) | | | Loss before income taxes | | | (494,696 | ) | | | (444,699 | ) | | | Income tax benefit | | | 22,303 | | | | 65,905 | | | | Net loss | | | (472,393 | ) | | | (378,794 | ) | | | | | | | | | | | | | | Other comprehensive loss net of tax: | | | | | | | | | | | Foreign currency translation difference net of tax | | | (1,242,080 | ) | | | 861,331 | | | | Total comprehensive (loss) income | | | (1,714,473 | ) | | | 482,537 | | | | Less: comprehensive income attributable to non-controlling interest | | | 5,863 | | | | - | | | | Comprehensive (loss) income attributable to Hongchang International Co., Ltds common stockholders | | | (1,720,336 | ) | | | 482,537 | | | | | | | | | | | | | | | Loss per share: | | | | | | | | | | | Common stocks - basic and diluted | | | (0.00 | ) | | | (0.00 | ) | | | | | | | | | | | | | | Weighted average shares outstanding used in calculating basic and diluted loss per share: | | | | | | | | | | | Common stocks - basic and diluted | | | 518,831,367 | | | | 450,231,897 | | | The accompanying notes are an integral part of these consolidated financial statements. F-3 **Hongchang International Co., Ltd** **Consolidated Statements of Changes in Stockholders Equity** | | | Ordinary Shares | | | Subscription | | | Additional Paid-in | | | Statutory | | | Accumulated | | | Accumulated other comprehensive | | | Total Hongchang International Co., Ltd stockholder's | | | Non- controlling | | | Total Stockholders | | | | | | Shares | | | Amount | | | Receivable | | | Capital | | | Reserve | | | Deficit | | | income (loss) | | | equity | | | interests | | | Equity | | | | | | | | | US$ | | | US$ | | | US$ | | | US$ | | | US$ | | | US$ | | | US$ | | | US$ | | | US$ | | | | Balance as of January 1, 2023 | | | 415,582,375 | | | | 415,582 | | | | (415,582 | ) | | | - | | | | - | | | | (433,745 | ) | | | 15,092 | | | | (418,653 | ) | | | - | | | | (418,653 | ) | | | Net loss | | | - | | | | - | | | | - | | | | - | | | | - | | | | (378,794 | ) | | | - | | | | (378,794 | ) | | | - | | | | (378,794 | ) | | | Foreign currency translation adjustment | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 861,331 | | | | 861,331 | | | | - | | | | 861,331 | | | | Contribution from shareholder | | | - | | | | - | | | | 415,582 | | | | 40,825,526 | | | | - | | | | - | | | | - | | | | 41,241,108 | | | | - | | | | 41,241,108 | | | | Deemed issuance of share upon the Merger transaction | | | 103,248,992 | | | | 103,249 | | | | - | | | | (920,298 | ) | | | - | | | | - | | | | - | | | | (817,049 | ) | | | - | | | | (817,049 | ) | | | Balance as of January 1, 2024 | | | 518,831,367 | | | | 518,831 | | | | - | | | | 39,905,228 | | | | - | | | | (812,539 | ) | | | 876,423 | | | | 40,487,943 | | | | - | | | | 40,487,943 | | | | Net loss | | | - | | | | - | | | | - | | | | - | | | | - | | | | (478,340 | ) | | | - | | | | (478,340 | ) | | | 5,947 | | | | (472,393 | ) | | | Foreign currency translation adjustment | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (1,241,996 | ) | | | (1,241,996 | ) | | | (84 | ) | | | (1,242,080 | ) | | | Appropriation of statutory reserve | | | - | | | | - | | | | - | | | | - | | | | 1,197 | | | | (1,197 | ) | | | - | | | | - | | | | - | | | | - | | | | Balance as of December 31, 2024 | | | 518,831,367 | | | | 518,831 | | | | - | | | | 39,905,228 | | | | 1,197 | | | | (1,292,076 | ) | | | (365,573 | ) | | | 38,767,607 | | | | 5,863 | | | | 38,773,470 | | | The accompanying notes are an integral part of these consolidated financial statements. F-4 **Hongchang International Co., Ltd** **Consolidated Statements of Cash Flows** **** | | | For the years ended December 31, | | | | | | 2024 | | | 2023 | | | | | | US$ | | | US$ | | | | CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | | Net loss | | | (472,393 | ) | | | (378,794 | ) | | | Adjustments to reconcile net (loss) income to net cash provided by operating activities: | | | | | | | | | | | Depreciation and amortization | | | 90,510 | | | | 88,173 | | | | Intangible asset impairment charge | | | 2,837 | | | | - | | | | Accrued interest income derived from loan to third party | | | - | | | | (23,249 | ) | | | Deferred tax benefit | | | (22,303 | ) | | | (65,905 | ) | | | Gain on disposal of subsidiary | | | (10 | ) | | | - | | | | Changes in operating assets and liabilities: | | | | | | | | | | | Accounts receivable | | | 677,614 | | | | (743,377 | ) | | | Amount due from a related party | | | (38,912 | ) | | | | | | | Inventories | | | 13,493 | | | | (13,723 | ) | | | Advance to supplier | | | (18,280 | ) | | | | | | | Other receivable | | | (6,920,988 | ) | | | (4,218 | ) | | | Advance to supplier-related party | | | 58,368 | | | | - | | | | Other current assets | | | 183,013 | | | | (1,058,798 | ) | | | Other non-current assets | | | (13,897 | ) | | | - | | | | Accounts payable | | | (640,421 | ) | | | 645,831 | | | | Accrued expenses and other payables | | | (236,528 | ) | | | 313,708 | | | | Advance from customers | | | 258 | | | | - | | | | Deferred subsidies | | | - | | | | 1,990,873 | | | | Net cash (used in) provided by operating activities | | | (7,337,639 | ) | | | 750,521 | | | | | | | | | | | | | | | CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | | Prepayment for acquisition of businesses | | | (567,005 | ) | | | - | | | | Purchases of property and equipment | | | (4,021,962 | ) | | | (40,596,144 | ) | | | Purchases of software | | | - | | | | (3,297 | ) | | | Loans to related parties | | | - | | | | (141 | ) | | | Cash disposed on disposal of subsidiary | | | (131 | ) | | | - | | | | Repayments from a related party | | | 139 | | | | - | | | | Repayments from a third party | | | 1,084,603 | | | | - | | | | Loan to third party | | | - | | | | (1,079,891 | ) | | | Net cash used in investing activities | | | (3,504,356 | ) | | | (41,679,473 | ) | | | | | | | | | | | | | | CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | | | | Capital contribution by stockholders | | | - | | | | 41,241,108 | | | | Proceeds from long term loans | | | 6,884,567 | | | | - | | | | Repayments to related parties | | | (5,606,246 | ) | | | (3,199,390 | ) | | | Loans from related parties | | | 8,926,432 | | | | 2,900,289 | | | | Net cash provided by financing activities | | | 10,204,753 | | | | 40,942,007 | | | | | | | | | | | | | | | Effect of exchange rate changes | | | (17,890 | ) | | | 879,534 | | | | | | | | | | | | | | | Net (decrease) increase in cash | | | (655,132 | ) | | | 892,589 | | | | Cash at beginning of year | | | 895,730 | | | | 3,141 | | | | Cash at end of year | | | 240,598 | | | | 895,730 | | | | Supplemental disclosure of cash flow information | | | | | | | | | | | Interest paid | | | 294,509 | | | | - | | | | Interest capitalized | | | 316,197 | | | | - | | | | Supplemental disclosure of non-cash transactions | | | | | | | | | | | Accrued but unpaid interest capitalized in construction-in-progress | | | 21,688 | | | | - | | | **** The accompanying notes are an integral part of these consolidated financial statements. F-5 **Hongchang International Co., Ltd** **Notes to Condensed Consolidated Financial Statements** **** **1. ORGANIZATION** **(a)Nature of operations** Hongchang International Co., Ltd (the Company) was incorporated in the state of Nevada on May 18, 1987. The Company is a holding company. The immediate and ultimate holding company of the Company is Zengqiang Investment Limited, a business company incorporated in the BVI which owns 70.0% of its common stocks, and Hong Jin Investment Limited, a business company incorporated in the BVI which owns 30.0% of its common stocks. On September 4, 2023, Heyu Biological Technology Corporation (HYBT), the Companys predecessor, completed the merger and other related transactions (the Merger Transactions) with Hongchang Global Investment Holdings Limited (Hongchang BVI), as a result of which Hongchang BVI became a wholly-owned subsidiary of HYBT and HYBT assumed and began conducting the principal business of Hongchang BVI. The name of the Company was changed from Heyu Biological Technology Corporation to Hongchang International Co., Ltd. (HCIL). The Group means (i) prior to the completion of the Reorganization, Hongchang BVI and its subsidiaries that engage in businesses of food trade and biotechnology in China (ii) upon and after completion of the Merger Transactions, the Company and its subsidiaries that engage in businesses of food trade and biotechnology in China. **(b)History and reorganization of the Group** In preparation of the Merger Transactions, the following transactions were undertaken to reorganize the legal structure of Operating Entity (Reorganization). On January 13, 2023, Mr. Zengqiang Lin and Ms. Zhenzhu Lin, the existing stockholders of Fuqing Hongchang Food Co., Ltd (Hongchang Food) established two wholly-owned subsidiaries (BVI-1 and BVI-2) in British Virgin Island, respectively. On January 18, 2023, Hong Chang Global Investment Holdings Limited (Hongchang BVI) was then incorporated by BVI-1 and BVI-2 which held70% and30% equity interest of Hongchang BVI, respectively. On February 6, 2023, Hongchang BVI incorporated a wholly-owned subsidiary,Hong Chang Biotechnologies (HK) Limited (Hongchang HK). On February 28, 2023, Hongchang HK incorporated a wholly-owned subsidiary, Fujian Hongjin Biotechnology Co., Ltd. (WFOE) in the Peoples Republic of China (PRC). WFOE then purchased the total equity interest of Hongchang Food. After the Reorganization,Mr. Zengqiang Lin and Ms. Zhenzhu Lin hold70% and30% equity interest of Hongchang Food through WFOE, respectively. As all the entities involved in the process of the Reorganization are under common ownership of Hongchang Foods stockholders before and after the Reorganization, the Reorganization is accounted for in a manner similar to a pooling of interests with the assets and liabilities of the parties to the Reorganization carried over at their historical amounts. Therefore, the accompanying consolidated financial statements were prepared as if the corporate structure of the Group had been in existence since the beginning of the periods presented. **(c) Reverse merger** On August 21, 2023, HYBT entered into a Share Exchange Agreement (the Share Exchange Agreement) with Hongchang BVI and Hongchang BVIs stockholders, Zengqiang Investment Limited, a business company incorporated in the BVI, and Hong Jin Investment Limited, a business company incorporated in the BVI (the Selling Stockholders and each a Selling Stockholder), in relation to the acquisition of Hongchang BVI by HYBT (the Hongchang Acquisition). Zengqiang Investment Limited is wholly-owned by Mr. Zengqiang Lin and Hong Jin Investment Limited is wholly-owned by Ms. Zhenzhu Lin. Mr. Zengqiang Lin has been a director of HYBT since February 17, 2023, and Ms. Zhenzhu Lin is the sister of Mr. Zengqiang Lin. In accordance with the terms of the Share Exchange Agreement, the Selling Stockholders sold and transferred100shares of Hongchang BVI, constituting all of the issued and outstanding share capital of Hongchang BVI, to HYBT in exchange for an aggregate of415,582,375new shares of HYBTs common stock (the Consideration Shares), of which353,322,843shares were issued to Zengqiang Investment Limited and62,259,532shares were issued to Hong Jin Investment Limited. F-6 **1. ORGANIZATION**(cont.) **(c) Reverse merger**(cont.)* Immediately following the closing of the Hongchang Acquisition, HYBT had a total of518,831,367issued and outstanding shares of common stock. The415,582,375Consideration Shares constitute80.1% of its enlarged share capital following the closing of the Hongchang Acquisition. The exchange consideration for the Hongchang Acquisition was determined on an arms length basis based on our valuation of Hongchang BVI and its subsidiaries and its assets. As HYBT, the legal acquirer and accounting acquiree, does not meet the definition of a business, management concluded that the Merger should be accounted for as a continuation of the financial statements of Hongchang BVI (the legal subsidiary), together with a deemed issue of shares and a re-capitalization of the equity of Hongchang BVI. Hongchang BVI is the continuing entity and is deemed to have issued shares in exchange for the identifiable net assets held by HYBT together with the listing status of HYBT. Management concluded that September 4, 2023 is the acquisition date of the Merger. Upon the reverse merge, the Company has set up a few new subsidiariesFujian Hongchang Global Food Co., Ltd (Hongchang Global Food), Fujian Hongchang Global Import & Export Co., Ltd (Hongchang Import & Export), and Fujian Hongchang Global Supply Chain Co., Ltd (Hongchang Supply Chain), in order for the company to develop different businesses. As date of this report, these subsidiaries have not generated significant revenue. In May 2024, the Company set up a new subsidiary Hongfu Food (Fujian) Co., Ltd (Hongfu Food), which is mainly engaged in the initial processing of agricultural products, specializing in pork segmentation and trade. Hongfu Food purchasing pork as raw materials and processing or dividing them into various finished products according to customer needs, or through secondary segmentation into various specifications of packed finished products. Based on above transactions, the accompanying consolidated financial statements reflect the activities of each of the following entities: | Entity | | Place of incorporation | | Percentage of direct orindirect ownership by theCompany | | Principal activities | | | Subsidiaries: | | | | | | | | | Hong Chang Global Investment Holdings Limited (Hongchang BVI) | | British Virgin Island | | 100% | | Investment holding | | | Hong Chang Biotechnologies (HK) Limited (Hongchang HK) | | HongKong | | 100% | | Investment holding | | | Fujian Hongjin Biotechnology Co., Ltd. (WFOE) | | PRC | | 100% | | Provision of technical and consultation services | | | Fuqing Hongchang Food Co., Ltd (Hongchang Food) | | PRC | | 100% | | Provision of Food Industry Park operation, food trade and meat processing | | | Fujian Hongchang Global Food Co., Ltd (Hongchang Global Food) | | PRC | | 100% | | Provision of food trade | | | Fuqing Hongchang Global Import & Export Co., Ltd (Hongchang Import&Export) | | PRC | | 100% | | Provision of food trade | | | Fuqing Hongchang Global Supply Chain Co., Ltd (Hongchang Supply Chain) | | PRC | | 100% | | Provision of food trade | | | Hongchang Global (Fuqing City) Agricultural Technology Development Co., Ltd (Hongchang Agricultural) | | PRC | | 100%, disposed on September 3, 2024 | | Provision of food trade and biotechnology | | | Hongfu Food (Fujian) Co., Ltd (Hongfu Food) | | PRC | | 51% | | Provision of food trade and meat processing | | F-7 **2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** **Basis of presentation** The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for information pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Through the Reorganization, the Company became the holding company of the companies now comprising the Group. Accordingly, for the purpose of preparation of the consolidated financial statements of the Group, the Company is considered as the holding company of the companies now comprising the Group throughout the reporting period. Through the Reorganization, the Company became the holding company of the contributed businesses now comprising the Group, which were under the common control of the controlling stockholder before and after the Reorganization. Accordingly, the financial statements were prepared on a consolidated basis by applying the principles of the pooling of interest method as if the Reorganization had been completed at the date when contributed business first came under the control of the controlling party. The consolidated statements of operations and comprehensive income (loss), changes in equity and cash flows of the Group included the results and cash flows of all companies now comprising the Group from the earliest date presented or since the date when the subsidiaries and/or businesses first came under the common control of the controlling stockholder, whenever the period is shorter. **Principles of consolidation** The accompanying consolidated financial statements of the Company include the financial statements of the Company and its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. **Use of estimates** The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenue and expenses during the reported period in the consolidated financial statements and accompanying notes. Significant accounting estimates reflected in the Groups consolidated financial statements mainly include, but are not limited to, assessment for impairment of long-lived assets, valuation of deferred tax assets and current expected credit loss of receivables. Management bases the estimates on historical experience and on various other assumptions as discussed elsewhere to the consolidated financial statements that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. On an ongoing basis, management evaluates its estimates based on information that is currently available. Changes in circumstances, facts and experience may cause the Group to revise its estimates. Changes in estimates are recorded in the period in which they become known. Actual results could materially differ from these estimates. **Foreign Currency** For fiscal year 2024, the Groups principal country of operations is the PRC. The accompanying consolidated financial statements are presented in US$. The functional currency of the Company is US$, and the functional currency of the Companys subsidiaries is RMB. The consolidated financial statements are translated into US$ from RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred. The resulting translation adjustments are recorded as a component of stockholders equity included in other comprehensive (loss) income. Gains and losses from foreign currency transactions are included in profit or loss. | | | As of December31, | | | | | | 2024 | | | 2023 | | | | RMB: US$ exchange rate | | | 7.2993 | | | | 7.0798 | | | | | | For the years ended December 31, | | | | | | 2024 | | | 2023 | | | | RMB: US$ exchange rate | | | 7.1957 | | | | 7.0748 | | | The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation. F-8 **2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**(cont.) **Cash** Cash consists of cash on hand and cash in bank, which are highly liquid and have original maturities of three months or less and are unrestricted as to withdrawal or use. The Group maintains cash with various financial institutions primarily in mainland China. Deposit insurance system in China only insured each depositor at one bank for a maximum of approximately US$68,500 (RMB 500,000). The amount in excess of the insurance as of December 31, 2024, was approximately US$147,900, the Group has not experienced any losses in bank accounts. **Accounts receivable and allowance for credit losses** **** Accounts receivable are stated at the historical carrying amount net of allowance for expected credit losses. The Group adopted ASU No. 2016-13, Financial Instruments Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments on January 1, 2023 using a modified retrospective approach. The Group also adopted this guidance to advance to suppliers, other receivables and long-term prepayments. To estimate expected credit losses, The Group has identified the relevant risk characteristics of its customers and the related receivables. The Group considers the past collection experience, current economic conditions, future economic conditions (external data and macroeconomic factors) and changes in The Groups customer collection trends. The allowance for credit losses and corresponding receivables were written off when they are determined to be uncollectible. **Inventories** **** Inventories are stated at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. Cost of inventory are determined using the weighted average cost method. The Group records inventory reserves for obsolete and slow-moving inventory. Inventory reserves are based on inventory obsolescence trends, historical experience and application of the specific identification method. **Lease** **** At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange of a consideration. To assess whether a contract is or contains a lease, the Group assess whether the contract involves the use of an identified asset, whether it has the right to obtain substantially all the economic benefits from the use of the asset and whether it has the right to control the use of the asset. The right-of-use assets and related lease liabilities are recognized at the lease commencement date. The Group recognizes operating lease expenses on a straight-line basis over the lease term. *Short-term leases* The Group has elected to not recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less. Lease payments associated with these leases are expensed as incurred. *Sales and leaseback contracts* The Group enters sale and leaseback transactions. The Group acts as the seller-lessee, transfers its assets to a third-party entity (the buyer-lessor) and then leases the transferred assets back from the buyer-lessor at a contract designated rental price. The Group evaluates if sales of the underlying assets in the sale and leaseback contract has occurred in accordance with ASC 606. When a sale and leaseback transaction does not qualify for sale accounting, the transaction is accounted for as a financing transaction by the seller-lessee and a lending transaction by the buyer-lessor. The seller-lessee shall not derecognize the transferred asset and shall account for any amounts received as a financial liability. **Property and equipment, net** Property and equipment are stated at cost less accumulated depreciation and impairment loss, if any. Property and equipment are depreciated at rates sufficient to write off their costs less impairment and residual value, if any, over their estimated useful lives on a straight-line basis. | Category | | Estimated useful life | | | Equipment | | 3 years | | F-9 **2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**(cont.) **Construction-in-progress** Property and equipment that are purchased or constructed which require a period of time before the assets are ready for their intended use are accounted for as construction-in-progress. Construction-in-progress is recorded at acquisition cost, including installation costs. Construction-in-progress is transferred to specific property and equipment accounts and commences depreciation when these assets are ready for their intended use. **Capitalized Interest** Interest incurred during and directly related to construction-in-progress is capitalized to the related property under construction during the active construction period, which generally commences when borrowings are used to acquire assets of construction-in-progress and ends when the properties are substantially complete or the property becomes inactive. Interest is capitalized based on the interest rate applicable to specific borrowings or the weighted average of the rates applicable to other borrowings during the period. All other interest is expensed as incurred. For the years ended December 31, 2024 and 2023, the total interest capitalized in the construction-in-progress was US$316,197 and US$nil, respectively. **Intangible assets** Intangible assets are carried at cost less accumulated amortization and impairment, if any. Intangible assets are amortized using the straight-line method over the estimated useful lives. The estimated useful lives of amortized intangible assets are reassessed if circumstances occur that indicate the original estimated useful lives have changed. | Category | | Estimated useful life | | | Purchased software | | 10 years | | **Land use right, net** The land use rights represent the operating lease prepayments for the rights to use the land in the PRC. Amortization of the prepayments is provided on a straight-line basis over the terms of the respective land use rights certificates. **Impairment of long-lived assets other than goodwill** **** Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying amount may not be fully recoverable or that the useful life is shorter than The Group had originally estimated. When these events occur, The Group evaluates the impairment by comparing carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, The Group recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. Impairment charge recognized for the years ended December 31, 2024 and 2023 was $2,837 and $nil, respectively. **** **Fair value of financial instruments** Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, The Group considers the principal or most advantageous market in which it would transact, and it also considers assumptions that market participants would use when pricing the asset or liability. Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1 Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 Other inputs that are directly or indirectly observable in the marketplace. Level 3 Unobservable inputs which are supported by little or no market activity. Financial assets and liabilities of The Group primarily consist of cash, accounts receivable, amounts due from related party, advance to suppliers-related party, other receivables, accounts payables, accounts payables - construction in progress and accrued expenses and other liabilities. As of December 31, 2024 and 2023, the carrying values of these financial assets and liabilities approximate their fair values due to the short-term nature. F-10 **2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**(cont.) **Revenue recognition** The Group adopted Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customer. To determine revenue recognition for contracts with customers, The Group performs the following five steps: | | Step 1: | Identify the contract with the customer | | | | Step 2: | Identify the performance obligations in the contract | | | | Step 3: | Determine the transaction price | | | | Step 4: | Allocate the transaction price to the performance obligations in the contract | | | | Step 5: | Recognize revenue when The Group satisfies a performance obligation | | The Group generates revenue from food trading business. The Group enters into contract with their customers to provide food, mainly frozen pork. All of The Groups contracts have single performance obligation as the promise is to transfer the goods to customers, and there are no other separately identifiable promises in the contracts. The Group recognizes revenue when it transfers its goods to customers in an amount that reflects the consideration to which The Group expects to be entitled in such exchange. The Group accounts for the revenue generated from sales of its products to its customers on a gross basis, because The Group is acting as a principal in these transactions, is subject to inventory risk, has latitude in establishing prices, and is responsible for fulfilling the promise to provide customers the specified goods. The Groups revenue is recognized at a point in time when the control has been transferred, usually when the customer accepts the goods. **Cost of revenue** Costs of revenues consist primarily of purchase price of products, shipping and handling expense and related costs, which are directly attributable to products. Write-down of inventories is also recorded in cost of sales, if any. Shipping and handling costs incurred to transport goods to customers are expensed in the periods incurred and are included in cost of revenues. The Group accounts for shipping and handling expenses as fulfilment costs because shipping and handling activities occur before the customers obtains control of the goods. Shipping and handling expenses amounted to US$11,521 and US$nil for the years ended December 31, 2024 and 2023, respectively. **Sales and marketing expenses** Sales and marketing expenses consist primarily of advertising expenses, gift expenses and sample fees. The Group expenses all advertising costs as incurred. Advertising costs amounted to US$1,353 and US$nil for the years ended December 31, 2024 and 2023, respectively. **General and administrative expenses** General and administrative expenses consist primarily of salaries and benefits for employees involved in general corporate functions, amortization of land use right, legal and other professional services fees, rental and other general corporate related expenses. **Government Subsidies** Government subsidies are recognized when there is reasonable assurance that the subsidy will be received and all attaching conditions will be complied with. When the subsidy relates to an expense item, it is recognized as income over the periods necessary to match the subsidy on a systematic basis to the costs that it is intended to compensate. Where the subsidy relates to an asset, it is recognized as deferred subsidies and is released to the statement of operations over the expected useful life in a consistent manner with the depreciation method for the relevant asset. Total government subsidies recorded in the deferred subsidies were US$1,929,637 and US$1,989,463 as of December 31, 2024 and 2023, respectively. F-11 **2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**(cont.) **Value-added taxes** **** Sales revenue represents the invoiced value of goods, net of VAT. The applicable VAT rate was 13% or 9% (depending on the type of goods involved) for products sold in the PRC. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded as VAT payable if output VAT is larger than input VAT and is recorded as VAT recoverable if input VAT is larger than output VAT. All of the VAT returns filed by The Groups subsidiaries in China, have been and remain subject to examination by the tax authorities **** **Income taxes** Current income taxes are recorded in accordance with the regulations of the relevant tax jurisdiction. The Group accounts for income taxes under the asset and liability method in accordance with ASC740,*Income Tax*, (ASC740). Under this method, deferred tax assets and liabilities are recognized for the tax consequences attributable to differences between carrying amounts of existing assets and liabilities in the financial statements and their respective tax basis, and operating loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in theyears in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statements of operations and comprehensive income (loss) in the period of change. Valuation allowances are established when necessary to reduce the amount of deferred tax assets if it is considered more likely than not that amount of the deferred tax assets will not be realized. The Group records liabilities related to uncertain tax positions when, despite The Groups belief that The Groups tax return positions are supportable, The Group believes that it is more likely than not that those positions may not be fully sustained upon review by tax authorities. Accrued interest and penalties related to unrecognized tax benefits are classified as income tax expense. The Group did not recognize uncertain tax positions as of December31, 2024 and 2023. **Related party transactions** **** Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Transactions involving related parties cannot be presumed to be carried out on an arms-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arms-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature. **Earnings per share** The Group calculates earnings per share in accordance with ASC Topic 260 Earnings per Share. Basic earnings per share is computed by dividing the net income by the weighted average number of common stocks outstanding during the period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common stocks that would have been outstanding if the potential common stocks equivalents had been issued and if the additional common stocks were dilutive. On September 4, 2023, The Group completed its reorganization whereby Hongchang BVIs stockholders received415,582,375shares in exchange for all the share capital of Hongchang BVI, which is reflected retroactively to December 31, 2021 and will be utilized for calculating earnings per share in all prior periods. The per share amounts have been updated to show the effect of the exchange on earnings per share as if the exchange occurred at the beginning of both years for the annual financial statements of The Group. The impact of the stock exchange is also shown on The Groups Statements of Stockholders Equity. Before the reorganization, Hongchang Food depended on loans from stockholders for the construction of the Hongchang Food Industrial Park and its daily operations. These were recorded as loans from related parties. In May 2023, Hongchang Food reached an agreement with a stockholder to convert an outstanding loan balance of US$41,241,108 into a capital contribution. The company then recalculated the weighted average number of common stocks outstanding during the period, based on the timing of the cash inflows from the stockholder loans. F-12 **2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (cont.) **Comprehensive income** **** The Group applies ASC 220, Comprehensive Income (ASC 220), with respect to reporting and presentation of comprehensive income and its components in a full set of financial statements. Comprehensive income is defined to include all changes in equity of The Group during a period arising from transactions and other event and circumstances except those resulting from investments by stockholders and distributions to stockholders. For the years ended December 31, 2024 and 2023, The Groups comprehensive income(loss) includes net income(loss) and other comprehensive income(loss). **Segment reporting** **** ASC 280, Segment Reporting, (ASC 280), establishes standards for companies to report in their financial statements information about operating segments, products, services, geographic areas, and major customers. Based on the criteria established by ASC 280, our chief operating decision maker (CODM) has been identified as our Chief Executive Officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of The Group. As a whole and hence, we have only one reportable segment. We do not distinguish between markets or segments for the purpose of internal reporting. As our long-lived assets are substantially located in the PRC, no geographical segments are presented. **** **Uncertainty and risks** Political, social and economic risks The Group has substantial operations in China through its PRC subsidiaries. Accordingly, The Groups business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Groups results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although The Group has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results. The Groups business, financial condition and results of operations may also be negatively impacted by risks related to regional wars, geopolitical tensions, natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, which could potentially and significantly disrupt The Groups operations. Liquidity As reflected in the Financial Statements, the Group had an accumulated deficit of US$1,292,076 at December 31, 2024, a net loss of US$472,393 and net cash used in operating activities of US$7,337,639 during the year ended December 3l, 2024. These financial factors are indicators that raise substantial doubt of our ability to continue as a going concern. However, in May 2023, Hongchang BVI received a cash injection of US$41,241,108 from shareholders via its subsidiary, Hongchang Food. On April 1, 2023, Hongchang Food secured an interest-free loan agreement with Zengqiang Lin, enabling it to access up to RMB60.0 million (approximately US$8.5 million) from April 1, 2023, to March 31, 2026. During 2024, Hongchang Food obtained long-term loans of total RMB45.5 million (approximately US$6.2 million) from Fujian Fuqing Huitong Rural Commercial Bank Co., Ltd.. On October 23, 2024, Hongchang Food entered into a sales and leaseback contract with Chailease International Finance Co., Ltd.. Pursuant to the contract, the Company sold its machines for RMB 4,100,000 (approximately US$561,698) and immediately leased it back from Chailease for a three-year period from October 25, 2024 to October 25, 2027. Consequently, the combination of the Company's current cash reserves, the capital contributions received, and the loans from shareholders are anticipated to provide sufficient funds to carry out the Companys planned operations through the next twelve months. On January 20, 2025 Hongchang Food entered into an agreement with the construction contractor, to refund RMB50 million ($6,849,972) in 2025. On March 21, 2025, Hongchang Food entered into an agreement with controlling shareholder, Zengqiang Lin, the shareholder promised that an amount of RMB25.5 million ($3,482,954) that the Company due to the controlling shareholder would not be asked to payback until March 31, 2026, management believes that substantial doubt of our ability to continue as a going concern for at least one year from the issuance of these Financial Statements has been alleviated. Concentration risks Concentration of credit risk Financial instruments that potentially expose The Group to concentrations of credit risk consist primarily of cash in bank and accounts receivable. The Group places its cash with financial institutions with high credit ratings and quality. The Group conducts credit evaluations of customers, and generally does not require collateral or other security from its customers. The Group establishes an allowance for expected credit losses primarily based upon the factors surrounding the credit risk of specific customers. F-13 **2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** (cont.) **Uncertainty and risks***(cont.)* Concentration of customers and suppliers As of December 31, 2024, one client accounted for 100% of The Groups total accounts receivable. The major client is a local supermarket which has more than 10 stores in Fujian Province. The Groups outstanding account receivable from this client as of December 31, 2024 has been collected in full on January 10, 2025. No credit loss expense incurred historically for this client. As of December 31, 2023, one major client accounted for 96% of The Groups total accounts receivable. The client is a leading agricultural food processing company in China. The Groups outstanding account receivable from this client as of December 31, 2023 has been collected in full on January 26, 2024. No credit loss expense incurred historically for this client. For the year ended December 31, 2024, one major client accounted for 24% of The Groups total revenues. For the year ended December 31, 2023, one major client accounted for 96% of The Groups total revenues. As of December 31, 2024, one vendor accounted for 100% of The Groups total account payable. For the year ended December 31, 2024, two vendors accounted for 46% and 29% of The Groups total purchases, respectively. As of December 31, 2023, two vendors accounted for 81% and 15% of The Groups total account payable. For the year ended December 31, 2023, three vendors accounted for 42%, 38% and 16% of The Groups total purchases, respectively. **Recent accounting pronouncements** In December 2023, the FASB issued ASU 2023-09 Improvements to Income Tax Disclosures. The ASU improves the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. For public business entities, the ASU is effective for annual periods beginning after December 15, 2025. The Company is evaluating the potential impact of this guidance on its consolidated financial statements. In November 2024, the FASB issued ASU 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure (Subtopic 220-40): Disaggregation of Income Statement Expense and ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. The ASU improves the disclosures about a public business entitys expenses and provides more detailed information about the types of expenses in commonly presented expense captions. The amendments require that at each interim and annual reporting period an entity will, inter alia, disclose amounts of purchases of inventory, employee compensation, depreciation and amortization included in each relevant expense caption (such as cost of sales, general and administrative, and research and development). The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the potential impact of this guidance on its consolidated financial statement disclosures. Other accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Group does not discuss recent pronouncements that are not anticipated to have an impact on, or are unrelated to, its consolidated financial condition, results of operations, cash flows or disclosures. **3. ACCOUNTS RECEIVABLE** **** Accounts receivable consisted of the following: | | | As of December31, | | | | | | 2024 | | | 2023 | | | | | | US$ | | | US$ | | | | Accounts receivable | | | 52,514 | | | | 742,851 | | | | | | | 52,514 | | | | 742,851 | | | For the years ended December 31, 2024 and 2023, the Company had no allowance for expected credit losses for accounts receivable. F-14 **4. OTHER RECEIVALBE** **** Other receivable consisted of the following: | | | As of December31, | | | | | | 2024 | | | 2023 | | | | | | US$ | | | US$ | | | | Loans to third parties | | | - | | | | 1,079,127 | | | | Advanced construction payment | | | 6,849,972 | | | | - | | | | Others | | | 4,402 | | | | 27,447 | | | | | | | 6,854,374 | | | | 1,106,574 | | | **** As the result of negotiation between Hongchang Food and Sichuan Xiongji, the advanced payment for the construction of Hongchang Food Industrial Park of RMB 50 million (US$6,849,972) will be refunded in 2025. For the years ended December 31, 2024 and 2023, the Company had no allowance for expected credit losses for other receivable. **5. OTHER CURRENT ASSETS** **** Other current assets consisted of the following: | | | As of December31, | | | | | | 2024 | | | 2023 | | | | | | US$ | | | US$ | | | | VAT recoverable | | | 846,269 | | | | 1,039,421 | | | | Deferred tax assets | | | 85,865 | | | | 65,858 | | | | Prepaid Expenses | | | 4,096 | | | | 23,319 | | | | | | | 936,230 | | | | 1,128,598 | | | **6. PROPERTY AND EQUIPMENT** **** Property and equipment consisted of the following: | | | As of December31, | | | | | | 2024 | | | 2023 | | | | | | US$ | | | US$ | | | | Office equipment | | | 3,279 | | | | 3,381 | | | | Other machinery and Equipment | | | 17,546 | | | | - | | | | Accumulated depreciation | | | (3,937 | ) | | | (188 | ) | | | | | | 16,888 | | | | 3,193 | | | Depreciation expense was US$3,809 and US$188 for the years ended December 31, 2024 and 2023. F-15 **7. CONSTRUCTION-IN-PROGRESS** **** Construction-in-progress consisted of the following: | | | As of December31, | | | | | | 2024 | | | 2023 | | | | | | US$ | | | US$ | | | | Construction in progress | | | 41,264,766 | | | | 41,423,399 | | | | | | | 41,264,766 | | | | 41,423,399 | | | Hongchang Food Industrial Park covers a site area of108,000square meters, with a floor area of about130,000square meters. Hongchang Food Industrial Park is still under construction. **8. INTANGIBLE ASSTES** **** Intangible assets consist of the following: | | | As of December31, | | | | | | 2024 | | | 2023 | | | | | | US$ | | | US$ | | | | Purchased software | | | 3,196 | | | | 3,295 | | | | Less: accumulated amortization | | | (399 | ) | | | (82 | ) | | | Less: impairment allowance | | | (2,797 | ) | | | - | | | | | | | - | | | | 3,213 | | | Amortization expenses for the Purchased software were US$324 and US$82for the years ended December 31, 2024 and 2023, respectively.Impairment charge were US$2,837 and US$nil for the years ended December 31, 2024 and 2023, respectively. F-16 **9. LAND USE RIGHT, NET** Land use rights, net consist of the following: | | | As of December31, | | | | | | 2024 | | | 2023 | | | | | | US$ | | | US$ | | | | Land use rights | | | 4,256,831 | | | | 4,388,808 | | | | Less: accumulated amortization | | | (347,717 | ) | | | (270,707 | ) | | | | | | 3,909,114 | | | | 4,118,101 | | | Amortization expenses for the land use rights were US$86,377, and US$87,903for the years ended December 31, 2024 and 2023, respectively.Noimpairment charge was recorded for the years ended December 31, 2024 and 2023, respectively. The term is 50 years of the land use right and will terminate in 2070. | | | For the years ending December 31, | | | | | | 2025 | | | 2026 | | | 2027 | | | 2028 | | | 2029 | | | 2030 and thereafter | | | | | | US$ | | | US$ | | | US$ | | | US$ | | | US$ | | | US$ | | | | Amortization expenses | | | 86,383 | | | | 86,383 | | | | 86,383 | | | | 86,383 | | | | 86,383 | | | | 3,477,199 | | | **10. OTHER NON-CURRENT ASSETS** **** Other non-current assets consisted of the following: | | | As of December31, | | | | | | 2024 | | | 2023 | | | | | | US$ | | | US$ | | | | Other non-current asset Advanced construction payment | | | 3,561,700 | | | | 706,920 | | | | Other non-current asset Prepayment for acquisition of businesses | | | 558,957 | | | | - | | | | Other non-current asset Leasehold deposit | | | 13,700 | | | | - | | | | | | | 4,134,357 | | | | 706,920 | | | Other non-current asset were US$4,134,357, and US$706,920 for the years ended December 31, 2024 and 2023, respectively, which primarily consist of advanced payment to Sichuan Xiongji for the construction of Hongchang Food Industrial Park. On September 8, 2024, the Group entered into an agreement with Jingbiao Weng, a shareholder of Pucheng County Lvkanger Food Co., Ltd, to acquire 51% of its equity for RMB4.08 million (approximately US$0.56 million), with the agreement that the equity would be delivered on January 1, 2025. The payment for the acquisition has been made by Zengqiang Lin on behalf of the Group. **11. ACCRUED EXPENSES AND OTHER LIABILITIES** Accrued expenses and other liabilities consisted of the following: | | | As of December 31, | | | | | | 2024 | | | 2023 | | | | | | US$ | | | US$ | | | | Payroll and welfare payables | | | 80,115 | | | | 92,262 | | | | Value-added tax and other taxes payable | | | 8,197 | | | | 239,543 | | | | Others | | | 66,104 | | | | 54,000 | | | | | | | 154,416 | | | | 385,805 | | | F-17 **12. LONG TERM LOANS** Long-term loans represent the amounts due to various banks and financial lease companies lasting over one year. As of December 31, 2023, the Group had no loans, as of December 31, 2024, outstanding balances on long term loans consist of the following: | | | | | | | | | | Effective | | | | | | | | | | | | | Maturity | | Interest | | | | | | Creditors | | | | Balance | | | Date | | Rate | | | Collateral/Guarantee | | | | | | | US$ | | | | | | | | | | | Fujian Fuqing Huitong Rural Commercial Bank Co., Ltd. | | 1 | | | 2,191,991 | | | Jan-16-2034 | | | 5.25 | % | | Construction in progress of | | | | | 2 | | | 2,465,990 | | | | | | | | | the Hongchang Food | | | | | 3 | | | 958,996 | | | | | | | | | Industrial Park, WFOE, | | | | | 4 | | | 273,999 | | | | | | | | | Mr. Zengqiang Lin, | | | | | 5 | | | 342,499 | | | | | | | | | Ms. Zhenzhu Lin | | | Subtotal | | | | | 6,233,475 | | | | | | | | | | | | Chailease International Finance Co., Ltd. (Chailease) | | | | | 564,759 | | | Oct-25-2027 | | | 15.16 | % | | Machines, WFOE, | | | | | | | | | | | | | | | | | Mr. Zengqiang Lin and | | | | | | | | | | | | | | | | | Mr. Huaqiang Lin | | | Total | | | | | 6,798,234 | | | | | | | | | | | On October 23, 2024, Hongchang Food entered into a sales and leaseback contract with Chailease. Pursuant to the contract, the Company sold its machines for RMB 4,100,000 (approximately US$561,698) and immediately leased it back from Chailease for a three-year period from October 25, 2024 to October 25, 2027. The cost of the relevant equipment approximately RMB1.59 million (approximately US$218,505), which has been accounted in the other non-current assets. The Company had not transferred the control of the underlying assets to Chailease and the Company evaluated that the sales transaction did not qualify as a sale in accordance with ASC 606. Therefore, the sales and leaseback contract was in essence a debt financing arrangement and did not apply sales and leaseback accounting in ASC 842. The proceeds, net of the financing costs, were financial liability with a yearly implied interest rate of 15.16%. This long-term loan was guaranteed by WFOE, Mr. Zengqiang Lin and Mr. Huaqiang Lin. The Company was required to make monthly interest and principal payment. During the year ended December 31, 2024, The Company repaid RMB20,000 (approximately US$2,740). As of December 31, 2024, the Company had outstanding balance of US$564,759, of which US$161,325 and US$403,434 were classified to current portion and non-current portion, respectively. The future maturities of long-term loans due to Fujian Fuqing Huitong Rural Commercial Bank Co., Ltd. are as follows: | For the years ending December 31, | | Principal | | | | Remainder of 2024 | | $ | | | | | 2025 | | | 73,981 | | | | 2026 | | | 136,999 | | | | 2027 | | | 136,999 | | | | 2028 | | | 263,039 | | | | Thereafter | | | 5,622,457 | | | | | | $ | 6,233,475 | | | | less: current portion | | $ | 73,981 | | | | Non-current portion | | $ | 6,159,494 | | | The purposes of these long term loans are for the construction of Hongchang Food Industrial Park, the interest of these loans was capitalized in construction-in-progress, Interest capitalized in construction-in-progress was US$316,197 and US$nil for the years ended December 31, 2024 and 2023, respectively. F-18 **13. INCOME TAX** The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled. United States The Company is subject to U.S. Federal tax laws. On December 22, 2017, the Tax Cuts and Jobs Act (The Act) was enacted. Under the provisions of the Act, the U.S. corporate tax rate decreased from 34% to 21%. Accordingly, we have remeasured our deferred tax assets on our net operating loss carry forwards in the U.S at the lower enacted tax rate of 21%. However, this remeasurement had no effect on our income tax expense as we have provided a 100% valuation allowance on our deferred tax assets previously. British Virgin Islands Hongchang BVI was incorporated in the British Virgin Islands and is not subject to tax on income or capital gains under current British Virgin Islands law. In addition, upon payments of dividends by these entities to their stockholders, no British Virgin Islands withholding tax will be imposed. Hong Kong HK$2.0million assessable profits will be subject to a lower tax rate of 8.25% and the excessive taxable income will continue to be taxed at the existing 16.5% tax rate. The two-tiered tax regime becomes effective from the assessment year of 2018/2019, which was on or after April1, 2018. The application of the two-tiered rates is restricted to only one nominated enterprise among connected entities. PRC Fujian Hongjin Biotechnology Co., Ltd.(WFOE) and its subsidiaries are governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the EIT Laws), Chinese enterprises are subject to income tax at a rate of 25% after appropriate tax adjustments. Hongfu Food, engaged in primary processing of agricultural products, is eligible for full exemption from corporate income tax under the tax preferential policies stipulated in the EIT Laws, with an effective tax rate of 0% during the relevant accounting period. *Income taxes in the PRC are consist of*: | | | For The Year Ended December 31, | | | | | | 2024 | | | 2023 | | | | Deferred income tax benefit | | | 22,303 | | | | 65,905 | | | | Total income tax benefit | | $ | 22,303 | | | $ | 65,905 | | | F-19 **13. INCOME TAX**(cont.) Below is a reconciliation of the statutory tax rate to the effective tax rate: | | | For The Year Ended December 31, | | | | | | 2024 | | | 2023 | | | | PRC statutory income tax rates* | | | 25.00 | % | | | 25.00 | % | | | Non-deductible expenses | | | (0.27 | )% | | | (0.34 | )% | | | Preferential tax rate reduction | | | (1.2 | )% | | | - | | | | Change in valuation allowance | | | (18.97 | )% | | | (3.80 | )% | | | Actual income tax rate | | | 4.56 | % | | | 20.85 | % | | | | * | As the Companys business operation mainly concentrated in PRC, the Company determined to apply PRC statutory tax rate in reconciliation of the statutory tax rate to the effective tax rate | | Deferred tax assets consist of the following: | | | As of December 31, | | | | | | 2024 | | | 2023 | | | | Land use right amortization | | $ | 85,865 | | | $ | 65,858 | | | | Net operating losses carried forward in the PRC | | | 148,993 | | | | 101,852 | | | | Net operating losses carried forward in the U.S. | | | 193,608 | | | | 150,645 | | | | Totals | | | 428,466 | | | | 318,355 | | | | Less: Valuation allowance | | | (342,601 | ) | | | (252,497 | ) | | | Deferred tax assets, net | | | 85,865 | | | | 65,858 | | | As of December 31, 2024 and 2023, the Companys PRC entities had net operating loss carryforwards of approximately $0.49 million and $0.42 million, respectively which will start to expire from 2026. The Company reviews deferred tax assets for a valuation allowance based upon whether it is more likely than not that the deferred tax asset will not be fully realized. As of December 31, 2024 and 2023, full valuation allowance is provided against the deferred tax assets related to the Companys net operating loss carryforwards based upon managements assessment as to their realization. F-20 **14. COMMON STOCKS AND ADDITIONAL PAID-IN CAPITAL** In January 2023, 100 common stocks of Hongchang BVI were allotted and issued to the controlling stockholders, of par value US$1. As per the Reorganization described in Note 1(b) History and reorganization of the Group, the consolidated financial statements were prepared as if the 100 shares had been in existence since the beginning of the periods presented. As per the Reverse merger described in Note 1(c), in the Consolidated Statements of Changes in Equity, the 100 shares of the legal subsidiary (the accounting acquirer) was restated using the exchange ratio established in the acquisition agreement to reflect the number of shares of the legal parent (the accounting acquiree) issued in the reverse acquisition. In preparation of the Merger Transactions, the following transactions were undertaken to reorganize the legal structure of Operating Entity (Reorganization). On January 13, 2023, Mr. Zengqiang Lin and Ms. Zhenzhu Lin, the existing stockholders of Fuqing Hongchang Food Co., Ltd (Hongchang Food) established two wholly-owned subsidiaries (BVI-1 and BVI-2) in British Virgin Island, respectively. On January 18, 2023, Hong Chang Global Investment Holdings Limited (Hongchang BVI) was then incorporated by BVI-1 and BVI-2 which held 70% and 30% equity interest of Hongchang BVI, respectively. On February 6, 2023, Hongchang BVI incorporated a wholly-owned subsidiary, Hong Chang Biotechnologies (HK) Limited (Hongchang HK). On February 28, 2023, Hongchang HK incorporated a wholly-owned subsidiary, Fujian Hongjin Biotechnology Co., Ltd. (WFOE) in the Peoples Republic of China (PRC). WFOE then purchased the total equity interest of Hongchang Food. After the Reorganization, Mr. Zengqiang Lin and Ms. Zhenzhu Lin hold 70% and 30% equity interest of Hongchang Food through WFOE, respectively. As all the entities involved in the process of the Reorganization are under common ownership of Hongchang Foods stockholders before and after the Reorganization, the Reorganization is accounted for in a manner similar to a pooling of interests with the assets and liabilities of the parties to the Reorganization carried over at their historical amounts. Therefore, the consolidated financial statements were prepared as if the 100 shares had been in existence since the beginning of the periods presented. On August 21, 2023, HYBT entered into a Share Exchange Agreement (the Share Exchange Agreement) with Hongchang BVI and Hongchang BVIs stockholders, Zengqiang Investment Limited, a business company incorporated in the BVI, and Hong Jin Investment Limited, a business company incorporated in the BVI (the Selling Stockholders and each a Selling Stockholder), in relation to the acquisition of Hongchang BVI by HYBT (the Hongchang Acquisition). Zengqiang Investment Limited is wholly-owned by Mr. Zengqiang Lin and Hong Jin Investment Limited is wholly-owned by Ms. Zhenzhu Lin. Mr. Zengqiang Lin has been a director of HYBT since February 17, 2023, and Ms. Zhenzhu Lin is the sister of Mr. Zengqiang Lin. In accordance with the terms of the Share Exchange Agreement, the Selling Stockholders sold and transferred 100 shares of Hongchang BVI, constituting all of the issued and outstanding share capital of Hongchang BVI, to HYBT in exchange for an aggregate of 415,582,375 new shares of HYBTs common stock (the Consideration Shares), of which 353,322,843 shares were issued to Zengqiang Investment Limited and 62,259,532 shares were issued to Hong Jin Investment Limited. Therefore, in the Consolidated Statements of Changes in Equity, the 100 shares of the legal subsidiary (the accounting acquirer) was restated using the exchange ratio established in the acquisition agreement to reflect the number of shares of the legal parent (the accounting acquiree) issued in the reverse acquisition In May 2023, Hongchang BVI received US$41,241,108 cash contribution from stockholders through its subsidiary Hongchang Food. On September 1, 2023, upon closing the Merger, 100 shares of Hongchang BVI par value US$1.00, constituting all of the issued and outstanding share capital of Hongchang BVI, were exchanged for the right to receive 415,582,375 common stocks of the Company, par value US$0.001. **** **15. RELATED PARTY TRANSACTIONS** | | (a) | Related parties | | The principal related parties with which the Group had transactions during the years presented are as follows: | Names of related parties | | Relationship with The Group | | | Zengqiang Lin | | The principal stockholder and director of the Company | | | Fuqing Xinhongbo Trading Co., Ltd. (Xinhongbo) | | An entity controlled by the principal stockholder of the Company | | | Fuqing Changhong Agricultural Products Supply Chain Co. Ltd.(Changhong) | | An entity controlled by the principal stockholder of the Company | | | Zhenzhu Lin | | The principal stockholder of the Company | | | Fujian Xindefu Agricultural Products Co., Ltd.(Xindefu) | | Non-controlling shareholder of Hongfu Food | | | Xiuhua Zhou | | Owner of Xindefu | | | Fujian Xiangbing Logistics Co., Ltd. (Xiangbing) | | Common controller with Xindefu | | | Huaqiang Lin | | Father of Zengqiang Lin | | F-21 **15. RELATED PARTY TRANSACTIONS**(cont.) **** | | (b) | Other than disclosed elsewhere, The Group had the following significant related party transactions for the years ended December 31, 2024 and 2023: | | **** | | | For years ended | | | | | | December 31, | | | | | | 2024 | | | 2023 | | | | | | US$ | | | US$ | | | | Loans from related parties: | | | | | | | | | -Zhenzhu Lin | | | 1,683,718 | | | | - | | | | -Zengqiang Lin | | | 5,685,707 | | | | 2,900,289 | | | | -Xiuhua Zhou | | | 1,557,007 | | | | - | | | | | | | 8,926,432 | | | | 2,900,289 | | | | | | | | | | | | | | | Repayments to related parties: | | | | | | | | | | | -Zhenzhu Lin | | | (1,644,203 | ) | | | - | | | | -Zengqiang Lin | | | (2,405,036 | ) | | | (3,199,390 | ) | | | -Xiuhua Zhou | | | (1,557,007 | ) | | | - | | | | | | | (5,606,246 | ) | | | (3,199,390 | ) | | | | | | | | | | | | | | Refunds from a related party | | | | | | | | | | | -Xinhongbo | | | 58,368 | | | | - | | | | -Changhong | | | 139 | | | | - | | | | | | | 58,507 | | | | - | | | | | | | | | | | | | | | Capital contribution to Hongchang Food: | | | | | | | | | | | -Zengqiang Lin | | | - | | | | 41,241,108 | | | | | | | | | | | | | | | Sales of goods: | | | | | | | | | | | -Fujian Xindefu Agricultural Products Co., Ltd. | | | 1,576 | | | | - | | | | | | | | | | | | | | | Procurement of goods: | | | | | | | | | | | -Fujian Xindefu Agricultural Products Co., Ltd. | | | 229,453 | | | | - | | | | | | | | | | | | | | | Procurement of service: | | | | | | | | | | | -Fujian Xindefu Agricultural Products Co., Ltd. | | | 272,647 | | | | - | | | | -Fujian Xiangbing Logistics Co., Ltd. | | | 112,236 | | | | - | | | | (c) | The Group had the following related party balances as of December 31, 2024 and 2023: | | | | | As of December31, | | | | | | 2024 | | | 2023 | | | | | | US$ | | | US$ | | | | Amount due from a related party | | | | | | | | | | | -Xindefu | | | 38,360 | | | | - | | | | Advance to supplier-related party | | | | | | | | | | | -Xinhongbo | | | - | | | | 59,324 | | | | Amount due from a related party | | | | | | | | | | | -Changhong | | | - | | | | 141 | | | | | | | | | | | | | | | Amounts due to related parties: | | | | | | | | | | | -Zhenzhu Lin current portion | | | 38,953 | | | | - | | | | -Zengqiang Lin | | | 3,493,486 | | | | 6,682,959 | | | | -Zengqiang Lin current portion | | | 6,250,487 | | | | - | | | | | | | 9,782,926 | | | | 6,682,959 | | | F-22 **15. RELATED PARTY TRANSACTIONS**(cont.) All balances with the related parties as of December 31, 2024 and 2023 were unsecured, interest-free and had no fixed terms of repayments. On April 1, 2023, Hongchang Food entered into an interest-free loan agreement with Zengqiang Lin to obtain aggregate maximum loans of up to RMB60.0 million (US$ 8.5 million) for the period from April 1, 2023 to March 31, 2026. On March 21, 2025, they have entered into an supplementary agreement, Zengqiang Lin promised that an amount of RMB25.5 million (US$3,493,486) of the loan would not be asked to payback until March 31, 2026. On May 16, 2024, Hongfu Food entered into an interest-free loan agreement with Zhenzhu Lin to obtain aggregate maximum loans of up to RMB30.0 million (US$4.3 million) for the period from May 16, 2024 to May 15, 2027. On October 8, 2024, in order to terminate the cooperation with Xindefu at the Hongfu Food level, Hongfu Food entered into an agreement with Xindefu, stipulating that Hongfu Food would transfer all its existing inventory at that time to Xindefu at market price, amounted RMB12,951,655 (approximately US$1,799,916). The transaction is determined to be not a sale but an exchange of assets and liabilities since its not part of the Group's ordinary course of business. Upon completion of the transaction, Hongfu Food no longer held any inventory stock. On November 30, 2024, Hongfu Food entered into an agreement with Xiangbing and Xiuhua Zhou, stipulating that the receivables owed by Hongfu Food to Xiangbing as of November 30, 2024, amounted RMB306,714 (approximately US$42,625), would be transferred to Xiuhua Zhou. On December 1, 2024, Hongfu Food entered into an agreement with Xindefu and Xiuhua Zhou. The agreement stipulated that the relevant accounts receivable, prepayments, and other receivables arising from business activities in the financial statements of Hongfu Food as of November 30, 2024, amounted RMB11,975,393 (approximately US$1,664,243), would be offset against the balance payable by Hongfu Food to Xiuhua Zhou. The remaining receivable amount after the offset, which is RMB1,002,798 (approximately US$139,361), would be borne by Xindefu and Xiuhua Zhou. **16. COMMITMENTS AND CONTINGENCIES** **** As of December 31, 2024, The Group has entered into several contracts for construction of the Hongchang Food Industrial Park and the improvement of Industrial Buildings. Total outstanding commitments under these contracts wereUS$9,275,828 and US$18,492,173as of December 31, 2024 and December 31, 2023, respectively. The Group expected to pay off all the balances within3years. **17. SUBSEQUENT EVENTS** **** Management has reviewed the Groups operations for potential disclosure or financial statement impacts related to events occurring after December 31, 2024 through the date the release of the consolidated financial statements contained in this annual report on Form 10-K were issued. Based on such evaluation, there were no additional subsequent event disclosures or financial statement impacts related to events occurring after December 31, 2024 that warranted adjustment to or disclosure in these consolidated financial statement except disclosed below. The Group entered into an agreement with Jingbiao Weng, a shareholder of Pucheng County Lvkanger Food Co., Ltd (Lvkanger Food), to acquire 51% of its equity for RMB4.08 million (approximately US$0.56 million). The principal business of Lvkanger Food is the livestock slaughtering. On January 1, 2025, the equity has been delivered to the Group, and the Group has gained effective control over Lukanger Food. On January 15, 2025, Hongfu Food and shareholder Zhenzhu Lin entered into an agreement, Zhenzhu Lin agreed to assume the repayment obligation for RMB612,798 (US$83,953) owed by Xindefu to Hongfu Food, whereby Hongfu Food's receivable from Xindefu in the amount of RMB612,798 (US$83,953) shall be offset against an equivalent amount payable to Zhenzhu Lin. On January 20, 2025, the Group and the contractor of the food industrial park entered into an agreement, a prepayment of RMB 50 million for the construction project will be refunded to the company in 2025, the Group has also agreed with the contractor that no additional payments for the construction will be required in 2025, and the progress of the construction can be adjusted according to the company's needs. The first quarter refund of RMB8 million (approximately US$1.1 million) under the agreement has been received in full in March 2025. On March 21, 2025, the Group and the controlling shareholder, Zengqiang Lin, entered into an agreement, the shareholder promised that an amount of RMB25.5 million (US$3,482,954) that the Company due to the controlling shareholder would not be asked to payback until March 31, 2026. F-23