HGYN Sheds 'Shell' Status, Reports $241K Revenue & Profit Turnaround

TL;DR

**HGYN is no longer a shell company, reporting actual revenue and a profit for the first time, making it a speculative buy for growth-oriented traders.**

AI Summary

HONG YUAN HOLDING GROUP (HGYN) filed a 10-Q/A for the quarter ended March 31, 2025, primarily to correct its 'shell' corporation designation from 'Yes' to 'No'. The company reported significant operational growth, with revenue reaching $241,065 for the three months ended March 31, 2025, compared to $0 in the prior-year period. This surge in revenue led to a gross profit of $116,718. Net income for the quarter was $37,357, a substantial improvement from a net loss of $46,554 in the same period of 2024. Operating expenses increased to $76,580 from $46,556, driven by general and administrative costs of $52,017 and professional fees of $24,390. Total assets grew to $243,087 from $222,664 at December 31, 2024, largely due to an increase in accounts receivable to $57,394 from $11,376. The company's accumulated deficit improved to $(97,746,780) from $(97,784,280) at December 31, 2024, reflecting the positive net income. Cash and cash equivalents decreased to $33,300 from $46,291, primarily due to net cash used in operating activities of $(13,234). The company, through its subsidiary Hongyuan HK and VIE Fengcuiyuan, is now focused on supply chain management services, including wholesale and internet sales of fast-moving consumer goods.

Why It Matters

This filing is crucial for investors as HGYN has officially corrected its 'shell' company status, signaling a transition from a development-stage enterprise to an operational entity with tangible revenue. The reported $241,065 in revenue and a net income of $37,357 for Q1 2025, a stark contrast to zero revenue and a loss in the prior year, demonstrate a significant shift in business activity following the acquisition of Hongyuan International Holding Group Co., Ltd. and its consolidation of Fengcuiyuan. This move positions HGYN as a player in the supply chain management sector, potentially increasing its competitive footprint against established logistics and e-commerce firms in China. Employees and customers of Fengcuiyuan and Rongcheng will see increased stability and potential for growth under the HGYN umbrella, while the broader market gains a new, albeit small, participant in the fast-moving consumer goods supply chain.

Risk Assessment

Risk Level: medium — The company still operates with a total stockholders' deficit of $(130,826) as of March 31, 2025, and net cash used in operating activities was $(13,234) for the quarter, indicating ongoing reliance on external funding. While revenue is now present, the company explicitly states it 'has not yet established an ongoing source of revenues sufficient to cover its operating costs and is dependent on debt and equity financing to fund its operations,' posing a significant going concern risk.

Analyst Insight

Investors should closely monitor HGYN's subsequent filings for sustained revenue growth and improved cash flow from operations. While the revenue generation is a positive step, the company's going concern warning and negative operating cash flow suggest that it is still in a high-risk, early-growth phase. Consider a small, speculative position only if comfortable with significant risk and a long-term horizon, focusing on the company's ability to scale its supply chain management services.

Financial Highlights

debt To Equity

N/A

revenue

$241,065

operating Margin

N/A

total Assets

$243,087

total Debt

N/A

net Income

$37,357

eps

N/A

gross Margin

48.4%

cash Position

$33,300

revenue Growth

+N/A%

Revenue Breakdown

Key Numbers

• $241,065 — Revenue (for the three months ended March 31, 2025, up from $0 in prior year)
• $37,357 — Net Income (for the three months ended March 31, 2025, compared to a net loss of $(46,554) in prior year)
• $116,718 — Gross Profit (for the three months ended March 31, 2025)
• $76,580 — Total Operating Expenses (for the three months ended March 31, 2025, up from $46,556 in prior year)
• $243,087 — Total Assets (as of March 31, 2025, up from $222,664 at December 31, 2024)
• $33,300 — Cash and cash equivalents (as of March 31, 2025, down from $46,291 at December 31, 2024)
• $(13,234) — Net Cash Used in Operating Activities (for the three months ended March 31, 2025)
• $(130,826) — Total Stockholders' Deficit (as of March 31, 2025, an improvement from $(168,802) at December 31, 2024)
• 74,640,766 — Common Shares Outstanding (as of July 25, 2025)
• $57,394 — Accounts receivable, net (as of March 31, 2025, up from $11,376 at December 31, 2024)

Key Players & Entities

• HONG YUAN HOLDING GROUP (company) — registrant
• U.S. Securities and Exchange Commission (regulator) — filing recipient
• Xudong Li (person) — majority shareholder and seller of Hongyuan International Holding Group Co., Ltd.
• Hongyuan International Holding Group Co., Ltd. (company) — acquired subsidiary
• Fengcuiyuan Chang Technology Development Co., Ltd (company) — variable interest entity (VIE)
• Rongcheng (Sichuan) Supply Chain Management Co., Ltd (company) — 98% owned subsidiary of Fengcuiyuan
• Chongqing Xuchang Qingrong Trading Co., Ltd. (company) — 55% subsidiary of Rongcheng
• Custodian Ventures, LLC (company) — former custodian and seller of shares
• David Lazar (person) — President, Secretary, Treasurer and Director appointed on June 4, 2019
• Nevada (regulator) — state of incorporation

FAQ

Risk Factors

• Dependence on VIE Structure [medium — operational]: The company operates through its subsidiary Hongyuan HK and a Variable Interest Entity (VIE) named Fengcuiyuan. This structure can introduce complexities and potential regulatory risks related to foreign ownership and control of Chinese businesses.
• Significant Accumulated Deficit [high — financial]: As of March 31, 2025, the company has an accumulated deficit of $(97,746,780). While this has improved from $(97,784,280) at December 31, 2024, it indicates a history of losses that could impact future financial stability.
• Declining Cash Position [medium — financial]: Cash and cash equivalents decreased to $33,300 as of March 31, 2025, from $46,291 at December 31, 2024. This decline is attributed to net cash used in operating activities of $(13,234).
• Increase in Operating Expenses [medium — operational]: Total operating expenses rose to $76,580 for the three months ended March 31, 2025, from $46,556 in the prior-year period. This increase was driven by higher general and administrative costs ($52,017) and professional fees ($24,390).
• Reliance on Fast-Moving Consumer Goods [medium — market]: The company's focus on supply chain management for fast-moving consumer goods (FMCG) exposes it to the competitive and price-sensitive nature of this market. Fluctuations in consumer demand and retail trends can significantly impact revenue.
• Shell Corporation Designation Correction [low — regulatory]: The 10-Q/A filing was primarily to correct the 'shell' corporation designation from 'Yes' to 'No'. While this is a correction, it highlights potential past issues with regulatory reporting or status that could warrant further scrutiny.

Industry Context

HONG YUAN HOLDING GROUP operates in the supply chain management sector, focusing on wholesale and internet sales of fast-moving consumer goods (FMCG). This industry is characterized by high competition, thin margins, and sensitivity to consumer trends and economic conditions. The rise of e-commerce and digital platforms presents both opportunities for expanded reach and challenges in logistics and customer acquisition.

Regulatory Implications

The correction of the 'shell' corporation designation from 'Yes' to 'No' in the 10-Q/A filing is a notable event. While it signifies a move towards operational status, it may draw attention to the company's past reporting and operational structure, particularly its reliance on VIEs, which are subject to evolving regulatory scrutiny in China.

What Investors Should Do

1. Monitor Accounts Receivable Growth
2. Analyze Operating Expense Drivers
3. Evaluate VIE Structure Risks
4. Assess Cash Burn Rate

Key Dates

• 2025-03-31: Quarter ended March 31, 2025 — Reported significant revenue growth to $241,065 and achieved net income of $37,357, a turnaround from a net loss in the prior year. Also, the company corrected its shell corporation designation.
• 2024-12-31: Year ended December 31, 2024 — Provided comparative figures for assets, liabilities, and accumulated deficit. Cash and cash equivalents were $46,291, and accounts receivable were $11,376.

Glossary

VIE

Variable Interest Entity. A structure used by companies to bypass foreign ownership restrictions in certain industries in China. (HGYN operates through a VIE, which is a key part of its operational structure and carries associated risks.)

Accumulated Deficit

The total cumulative net losses of a company since its inception, minus any cumulative net income. (HGYN has a substantial accumulated deficit of $(97,746,780), indicating a history of unprofitability.)

Shell Corporation

A company that has no commercial operations or assets, often used for financial maneuvering or to facilitate mergers and acquisitions. (HGYN corrected its designation from 'Yes' to 'No', indicating it is now considered an operating entity.)

Gross Profit

Revenue minus the cost of goods sold. (HGYN reported a gross profit of $116,718, showing profitability on its direct sales activities.)

Accounts Receivable, net

Money owed to a company by its customers for goods or services delivered but not yet paid for, net of any allowance for doubtful accounts. (A significant increase in accounts receivable to $57,394 suggests growing sales but also potential cash flow timing issues.)

Year-Over-Year Comparison

Compared to the prior-year period, HONG YUAN HOLDING GROUP has shown a dramatic turnaround, reporting revenue of $241,065 and a net income of $37,357, compared to zero revenue and a net loss of $(46,554) in the same quarter of 2024. This indicates significant operational progress. However, operating expenses have also increased to $76,580 from $46,556, and cash and cash equivalents have declined to $33,300 from $46,291, suggesting that while growth is occurring, it is accompanied by increased costs and a tightening cash position.

Filing Documents

• form10-qa.htm (10-Q/A) — 407KB
• ex31-1.htm (EX-31.1) — 11KB
• ex32-1.htm (EX-32.1) — 6KB
• 0001493152-25-015680.txt ( ) — 2451KB
• hgyn-20250331.xsd (EX-101.SCH) — 19KB
• hgyn-20250331_cal.xml (EX-101.CAL) — 41KB
• hgyn-20250331_def.xml (EX-101.DEF) — 58KB
• hgyn-20250331_lab.xml (EX-101.LAB) — 173KB
• hgyn-20250331_pre.xml (EX-101.PRE) — 135KB
• form10-qa_htm.xml (XML) — 236KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION 3 ITEM 1 Condensed Consolidated Financial Statements (Unaudited) 3 ITEM 2

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 13 ITEM 3

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 17 ITEM 4

Controls and Procedures

Controls and Procedures 17

– OTHER INFORMATION

PART II – OTHER INFORMATION 18 ITEM 1

Legal Proceedings

Legal Proceedings 18 ITEM 1A

Risk Factors

Risk Factors 18 ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds 18 ITEM 3 Defaults Upon Senior Securities 18 ITEM 4 Mine Safety Disclosures 18 ITEM 5 Other Information 18 ITEM 6 Exhibits 18 2 PART I – FINANCIAL INFORMATION This Quarterly Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934 (the "Exchange Act"). These statements are based on management's beliefs and assumptions, and on information currently available to management. Forward-looking Discussion and Analysis of Financial Condition and Results of Operations." Forward-looking statements also include statements in which words such as "expect," "anticipate," "intend," "plan," "believe," "estimate," "consider" or similar expressions are used. Forward-looking values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements. Item 1. Financial Statements HONG YUAN HOLDING GROUP Consolidated Balance Sheets March 31, December 31, 2025 2024 ASSETS Current Assets Cash and cash equivalents $ 33,300 $ 46,291 Accounts receivable, net 57,394 11,376 Inventory 48,697 43,748 Prepaid expense and other receivable 65,759 27,601 Total Current Assets 205,150 129,016 Property and equipment, net of accumulated 224 557 Right of use assets 37,713 93,091 TOTAL ASSETS $ 243,087 $ 222,664 LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Accounts payable and accrued liabilities $ 75,777 $ 42,260 Operating lease liabilities - Current 37,713 73,967 Tax payable 6,074 4,228 Due to related party

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View this 10-Q/A filing on SEC EDGAR