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

Heyu Biological Technology Corporation (the "Company" or "we") was incorporated in the state of Nevada on May 18, 1987, as Asphalt Associates, Inc. and changed its name to Pacific WebWorks 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 mid-sized businesses.

On July 3, 2018, the Company changed its name to Heyu Biological Technology Corporation and applied for a new ticker symbol HYBT.

On January 17, 2019, Jiashierle (Xiamen) Healthcare Technology Co., Ltd. ("JSEL"), a limited liability company organized under the laws of the People's 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.

Since the beginning of 2019, Mr. Xu has led the core research and development team of Kangzi to develop and manufacture a new medical product, the Submillimeter Wave (Terahertz) Quantized Space Therapy Chamber (the "Chamber"). Utilizing submillimeter waves, the Chamber is a medical equipment designed to treat cancer through cold nuclear fusion caused by cosmic ray muons in an enclosed chamber. Specifically, we believe that exposure to an appropriate amount of submillimeter waves could accelerate the generation of a large number of cosmic ray muons inside the human body and that such cosmic ray muons could further facilitate cold nuclear fusion, which could reverse the process of cancer by converting selenium into nickel inside cells.





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The core research and development team consists of researchers who have extensive experience in medicine and physics. The lead scientist of the team, Mr. Xu, served as the deputy chief engineer of the New Energy Base of the National Defense-Science and Technology Commission in 1995, the director of Shanghai Hengbian New Energy Research Institute from 2003 to 2008, and the chairman and chief scientist of Shanghai Guangzhui New Energy Technology Co., Ltd. from 2011 to 2019. In 2012, Mr. Xu was awarded the "Harmony Person of the Year in China" at the "2011 Harmony China Annual Summit" in Beijing. He was also jointly recognized as "Leaping China: One of the Most Influential People of the Year in 2011" by China International Economic and Technical Cooperation Promotion Association, China Elite Culture Promotion Association, and China Outstanding Chinese Merchants Association. In 2013, the Organizing Committee of Boau Forum on Asian Small and Medium Enterprise Development awarded Mr. Xu "2013 China Economic Outstanding Contribution Award."

Pursuant to the terms of the Share Transfer Agreement, JSEL has the right to monitor and manage all aspects of operation of Kangzi, including its research and development activities relating to the Chamber. As the development of the Chamber enters its final stage at Kangzi, JSEL started accepting pre-orders for the Chamber in September 2019. On October 15, 2019, JSEL entered into a clinical cooperation agreement (the "Clinical Cooperation Agreement") with Shenzhen Saikun Biotechnology Co., Ltd. ("Saikun"). Pursuant to the Clinical Cooperation Agreement, Saikun agreed to pay JSEL RMB5.5 million as the total pre-order payment. RMB1.5 million and RMB1.5 million were delivered to JSEL on September 7 and September 27, 2019, respectively. The parties are currently working on the timing for payment of the remaining RMB2.5 million due under the Clinical Cooperation Agreement. In exchange, JSEL is obligated to purchase all the components of a Chamber from Kangzi, fully assemble it, and conduct a clinical trial with Saikun, third-party hospital partners, and patients using the Chamber. Specifically, after receiving the full amount of payment from Saikun, JSEL shall transport the Chamber to Saikun's preferred location, properly install it, and conduct a clinical trial that lasts at least one month. During the clinical trial, JSEL shall provide training sessions regarding the proper operation of the Chamber to Saikun's employees. Both Saikun and JSEL are obligated to find third-party hospitals that will agree to act as partners to co-host the clinical trial and patients who will voluntarily undergo treatment provided by the Chamber. While Saikun is responsible for various expenses related to the clinical trial, JSEL is responsible for communicating with patients receiving treatment and other patient-related administrative matters. When JSEL determines that Saikun is capable of properly operating the Chamber and managing activities related to the Chamber, Saikun may request JSEL to move the Chamber to a location designated by Saikun and reinstall it. Furthermore, upon the successful completion of the clinical trial, JSEL shall provide Saikun governmental permits necessary for the operation of the Chamber, and Saikun shall operate the Chamber and provide related services to patients under the supervision of JSEL. In addition, JSEL shall transfer the right of using the Chamber and any beneficiary right affiliated with using the Chamber to Saikun upon receiving the full amount of payment from Saikun. JSEL, nevertheless, owns all the intellectual property rights affiliated with the Chamber. If the two parties decide to terminate the Clinical Cooperation Agreement prior to the expiration of its term, Saikun's right of using the Chamber during the term is still effective as long as its use of the Chamber does not infringe any of JSEL's intellectual property rights affiliated with the Chamber. The two parties agreed that the term of the Clinical Cooperation Agreement would not end until Kangzi successfully obtains permits issued by relevant government entities supervising development and sale of medical equipment.

To prepare for mass production of the Chambers, Kangzi is conducting clinical experiments to make further improvements on the Chamber and adjusting features of the mass-production mold for the Chambers. As its long-term business strategy, Kangzi focuses on researching, developing, and manufacturing high-technology medical equipment while targeting both individual and institutional customers. It plans to mass-produce the Chambers in small and medium sizes, establish operation centers to sell the Chambers in various cities across China, and initiate advertising and marketing campaigns on different media platforms. Kangzi will also monetize on services provided to customers who use the Chambers and other medical products. As of the date of this Report, we are still in the clinical experiment phase and Kangzi is still in the process of obtaining official governmental permits from relevant government authorities to produce and sell the Chambers on a national scale. There is no assurance that we will obtain the official governmental permits.





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In addition to business activities related to the Chamber, the Company is also conducting research, development, manufacturing, and sale of healthcare equipment and plant-based disinfectant spray for treating skin infections and disinfecting wounds. On March 17, 2020, we entered into a business service cooperation agreement with Xiamen Qingda Intelligent Technology Co., Ltd., a wholly-owned subsidiary of Cross-strait Tsinghua Research Institute, pursuant to which the parties agreed to jointly improve a plant-based disinfectant spray for treating skin infections and disinfecting wounds. The term of such agreement is three years, and the agreement can be renewed upon mutual agreement of both parties. The original plant-based disinfectant spray was developed and owned by the Company, while the improved product shall be owned by both the Company and Cross-strait Tsinghua Research Institute. The Cross-strait Tsinghua Research Institute will receive 2% of the gross proceeds from sales of such improved product. In the near future, the Company aims to standardize the production and sale of healthcare equipment and plant-based disinfectant spray, while increasing its brand awareness in the healthcare markets.

Since the first quarter of 2020, there has been a worldwide impact from the COVID-19 pandemic. Government regulations and shifting social behaviors have limited or closed non-essential transportation, government functions, business activities and person-to-person interactions. In some cases, the relaxation of such trends has been followed by actual or contemplated returns to stringent restrictions on gatherings or commerce, including in parts of the U.S., and the rest of the world. Global trade conditions and consumer trends that originated during the pandemic continue to persist and may also have long-lasting adverse impact on us and our industries independently of the progress of the pandemic. We cannot predict the duration or direction of current global trends or their sustained impact. Ultimately, we continue to monitor macroeconomic conditions to remain flexible and to optimize and evolve our business as appropriate, and attempt to accurately project demand and infrastructure requirements globally and deploy our production, workforce and other resources accordingly.

Liquidity and Capital Resources

As of September 30, 2022, we had assets of $28,759, which consisted of current assets of $2,054 in cash, $23,667 in other receivables, and $3,038 as advances to suppliers. We had liabilities of $1,841,604, which consisted of current liabilities of $15,728 in accounts payable, $327,422 in accrued expenses and other payables, $421,953 in advances from customers, $136 in taxes payable, and $1,076,365 in related party payables. We had an accumulated deficit of $19,765,497.

As of December 31, 2021, we had assets of $37,377, which mainly consisted of $4,323 in cash and cash equivalents, $29,608 in other receivables, and $3,446 in operating lease right-of-use. As of December 31, 2021, we had liabilities of $1,903,401, which mainly consisted of $17,356 in accounts payable, $471,788 in advances from customers, $17 in other taxes payables, $1,072,293 in related party payables, and $58,073 in operating lease liabilities. We also had an accumulated deficit of $19,621,121.

In light of the impacts of the COVID-19 outbreak, if we are required to operate in a challenging economic environment in China, or incur unanticipated capital expenditures, or decide to accelerate growth, we may need additional financing. As of September 30, 2022, we had borrowed a total of $1,076,365 from our stockholders for working capital purposes. The loan is unsecured, non-interest bearing and payable on demand. We cannot guarantee, however, that additional financing, if required, would be available on favorable terms, if at all. Such financing may include the use of additional debt or the sale of the Company's equity interests. Any financing which involves the sale of the Company's equity interests or instruments that are convertible into the Company's equity interests could result in immediate and possibly significant dilution to our existing shareholders.





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Results of Operations

Comparison of the Nine Months Ended September 30, 2022 and 2021

Our revenues during the nine months ended September 30, 2022, were $28,968, and cost of revenues was $9,623, as compared to revenues of $78,397 and cost of revenues $ 24,069 for the same period in 2021, respectively. The decrease in our revenue were mainly due to the worsened situation of COVID-19 outbreak.

We had incurred selling expenses of $175 and administrative expenses of $163,633 during the nine months ended September 30, 2022, as compared to $1,208 and $193,905 for the same period in 2021, respectively. The decrease in selling expenses was mainly due to fewer advertising expenses for our products in the quarter ended September 30, 2022 compared with the same period in 2021, selling expenses. The decrease in administrative expenses was mainly due to rent expenses during the period.





Going Concern

The accompanying financial statements are presented on a going concern basis. The Company's financial condition raises substantial doubt about the Company's ability to continue as a going concern. As of September 30, 2022, the Company had an accumulated deficit of $19,765,497, and a net loss of $144,376 for the nine months ended September 30, 2022. It is relying on advances from its directors, Mr. Hungseng Tan and Mr. Ban Siong Ang, to meet its limited operating expenses.

In light of the impacts of the COVID-19 outbreak, if the economic environment in China worsens, or if we incur unanticipated capital expenditures or decide to accelerate growth, we may need additional financing. As of September 30, 2022, we had borrowed a loan from our stockholders for working capital purposes. The loan is unsecured, non-interest bearing and payable on demand. We cannot guarantee, however, that additional financing, if required, would be available on favorable terms, if at all. Such financing may include the use of additional debt or the sale of the Company's equity interests. Any financing which involves the sale of the Company's equity interests or instruments that are convertible into the Company's equity interests could result in immediate and possibly significant dilution to our existing stockholders.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues, or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.


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