HGYN 10-K & 10-Q changes, risk factors and insider trading

We have not yet generated sustained profits from our prior operations. Our independent accountants have expressed a “going concern” opinion. As of December 31, 2024,2025, we had an accumulated deficit of $97,784,280$97,652,645 and a netnegative working capital deficit of $243,326.$11,622.

Revenue was $837,753 in 2025 compared to $245,572 in 2024 compared to Nil in 2023.2024. The increase in revenue was mainly due to the consolidation of the Chinese VIEs under common common control which started generating revenue in the second quarter of 2024.2024 and has been ramping up the operations to generate more revenues.

Operating expenses were $189,198$363,167 and $154,476$189,198 for 20242025 and 2023,2024, respectively, an increase of $34,722$173,969 or 22.5%.92.0%. The increase was mainly due to the increase in general and administrative expenses, partlyselling offsetand bymarketing theexpenses, slight decrease inand professional fees. The increase in general and and administrative expenses in 20242025 was mainly due to the increase in rentpersonnel expense, personnellicense expense,and regulatory fee, and office expense.expense, partly offset by the decrease in travel, rent, and auto expenses.

During the year ended December 31, 2024,2025, the Company incurredhad a net lossincome of $96,437,$157,944, compared to a net loss of $154,464$96,437 during the year ended December December 31, 2023,2024, aan decreaseincrease of $58,027 or 37.6%.$254,381. The decreaseincrease in net lossincome in 20242025 was primarily due to the increase in gross profit as a result of the Chinese VIEs startingramping up the operations to generate revenue,more revenues,, partly offset by the increase inhigher operating expenses.expenses and the loss from discontinued operations.

For the year ended December 31, 2023,2025, net cash used in operating activities was $111,866.$28,440. This was primarily due to the net lossincome of $154,464,$163,783, adjusted by non-cash related expenses including depreciation of $1,378,$1,614, and then increasedecreased by favorableunfavorable changes in working capital of of $41,220.$185,953. The favorableunfavorable changes in working capital mainly resulted from an increase in accounts receivable of $372,088, an increase in prepaid expense and other receivables of $93,555, and an increase in inventory of $2,093, offset by an increase in accounts payable and accrued liabilities of $69,726, an increase in deferred revenue of $117,389, an increase in due to related party of $40,484.$86,243 and an increase in tax payable of $8,425.

We neither generated nor used cash in investing activities during the year ended December 31, 2024 and 2023.2024.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, we have incurreda net lossesincome of $96,437 and $154,464$157,944 for the year ended December 31, 20242025 and 2023,incurred net losses of $96,437 for the year ended December 31, 2024, respectively, and have a working capital deficit of $243,326$11,622 as of December 31, 2024, in addition to a stockholders’ deficit of $168,8022025, which raise substantial doubt about the Company’s ability to continue as a going concern.

We have not yet generated sustained profits from our prior operations. Our independent accountants have expressed a “going concern” opinion. As of MarchJune 31,30, 2026, we had an accumulated deficit of $97,745,991$97,840,395 and a net working capital deficit of $100,288.$174,082.

UnderThe the new revenue standards, the Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods. The Company recognizes revenues following the five stepfive-step model prescribed under ASUASC No. 2014-09606: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.

The Company reviews accounts receivable periodically for collectability and establishes an allowance for doubtful accounts and records bad debt expense when deemed necessary. Our allowance for doubtful accounts is maintained to provide for losses arising from customers’ inability to make required payments. If there is deterioration of our customers’ credit worthiness and/or there is an increase in the length of time that the receivables are past due greater than the historical assumptions used, additional allowances may be required. The Company has no allowance for doubtful accounts as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

Results of Operations for the Three Months Ended MarchJune 31,30, 2026 compared to the Three Months Ended MarchJune 31,30, 2025

Revenue was $43,697$32,161 in the three months ended MarchJune 31,30, 2026 compared to $184,492$112,812 in the same period last year. The decrease in revenue was mainly becausedue to the decline in Chinese VIEs revenue.

Cost of goods sold was $21,712$10,695 in the three months ended MarchJune 31,30, 2026 compared to $71,780$17,252 in the same period last year due to the decrease in revenue.

Operating expenses were $116,552$116,939 in the three months ended MarchJune 31,30, 2026 compared to $69,582$57,676 in the same period last year, an increase of $46,970$59,263 or 40.3%.102.8%. The increase was mainly due to the increase in professional fees, general and administrative expenses and selling and marketing expenses. The increase in general and administrative expenses in the firstsecond quarter of 2026 was mainly due to the increase in personnel expense, and license and regulatory fee related to maintaining the public company, partly offset by the decrease in rent, and office expense.

During the three months ended MarchJune 31,30, 2026, the Company had a net loss of $94,567,$94,404, compared to a net income of $43,130$30,042 in the same period last last year, a decrease of $137,697.$124,446. The decrease in net income in the firstsecond quarter of 2026 was primarily due to the decrease in gross profit profit as a result of the decline in Chinese VIEs revenue and higher operating expenses.

As of MarchJune 31,30, 2026 and December 31, 2025, we had a cash balance of $6,444$13,365 and $16,747 respectively. During the threesix months ended MarchJune 30, 31, 2026 and 2025, the company’s operations are primarily funded by the Company’s CEO and major shareholder and the minority owners of the Chinese VIEs.

For the threesix months ended MarchJune 31,30, 2026, net cash used in operating activities was $3,420.$11,284. This was primarily due to the net loss of $94,471,$190,285, adjusted by non-cash related expenses of $2,088$13,925 which consisted primarily of depreciation and amortization expenses,expenses and amortization of lease ROU, and then decreased by favorable changes in working capital of $88,963.$165,076. The favorable changes in working capital mainly resulted from an increase in accounts payable and accrued liabilities of $ 89,925,211,947, an increase in due to related party of $14,127, a decrease in accounts receivable of $21,021, and an decrease in inventory of $6,771, partly offset by$20,507, a decrease in deferred expense of $2,345, a decrease in operating lease payment of $12,561, partly offset by an increase in inventory of $2,567, an increase in prepaid expense and other receivable of $26,820, a decrease in deferred revenue of $34,746,$32,577, and a decrease in tax payable of $10,803. $9,325.

For the threesix months ended MarchJune 31,30, 2025, net cash used in operating activities was $13,234.$1,905. This was primarily due to the net income of $67,036, $37,357, adjusted by non-cash related expenses including depreciation of $335,$359, and then decreased by unfavorable changes in working capital of of $48,905.$67,273. The unfavorable changes in working capital mainly resulted from an increase in accounts receivable of $36,483, an increase in inventory of $17,690,$93,161, and an increase in prepaid expense and other receivable of $37,912,$60,118, partly offset by an increase in deferred revenue of $40,444, an increase in accounts payable payable and accrued liabilities of $40,720,$15,982, and an increase in due to related party of $2,461.$22,571.

For the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities was developing spending of $7,079$7,140 on software.

We neither generated nor used cash in investing activities during the threesix months ended MarchJune 31,30, 2025.

We neither generated nor used cash in financing activities during the threesix months ended MarchJune 31, 2026 and30, 2025.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, we had a net loss of $94,471$187,750 for the threesix months ended MarchJune 31,30, 2026 and a net income of $37,357$67,542 for the threesix months months ended MarchJune 31,30, 2025, and had a working capital deficit of $100,288$174,082 as of MarchJune 31,30, 2026, which raise substantial doubt about the Company’s ability to continue as a going concern.