UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~December~~March 31, ~~2021~~2022

☐

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: 000-52417

HQDA ELDERLY LIFE NETWORK CORP.

(Exact name of registrant as specified in its charter)

nevada

98-1225287

(State or other jurisdiction

of organization)

(IRS. employer

identification no.)

372 Ziwei Road, Pudong New District

Shanghai, P.R. China

(Address of principal executive offices)

+86 15358018888

(Registrant’s telephone number, including area code)

(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

Title of each class		Trading Symbol(s)		Name of each exchange on which registered

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by 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. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See 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	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☒

		Emerging growth company	☒

If an emerging growth company, indicate by checkmark 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 is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The number of shares of Common Stock, $0.001 par value, of the registrant outstanding at ~~March~~July 1715, 2022 was 139,314,416.

HQDA ELDERLY LIFE NETWORK CORP.

FORM 10-Q

TABLE OF CONTENTS

PART 1. FINANCIAL INFORMATION 1 ITEM 1 – CONSOLIDATED FINANCIAL STATEMENTS 1 ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 1211 ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 1514 ITEM 4 – CONTROLS AND PROCEDURES 1514 (a) Evaluation of Disclosure Controls and Procedures 1514 (b) Internal control over financial reporting 1514 PART II – OTHER INFORMATION 1615 ITEM 1 – LEGAL PROCEEDINGS 1615 ITEM 1A. RISK FACTORS 1615 ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 1615 ITEM 3 – DEFAULTS UPON SENIOR SECURITIES 1615 ITEM 4 – MINE SAFETY DISCLOSURES 1615 ITEM 5 – OTHER INFORMATION 1615 ITEM 6 – EXHIBITS 1716 SIGNATURE 1817

PART 1. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

HQDA Elderly Life Network Corp.

Consolidated Balance Sheets

	December 31,			June 30,
	March 31,			June 30,
	2021			2021
	2022			2021
	(Unaudited)
ASSETS
Current assets:
Cash	$	1812,~~862~~090		$	28,080
Accounts and other receivables		2226,~~857~~038			34,418
Receivable - related parties		5960,~~625~~733			43,809
Total current assets		~~101~~98,~~344~~861			106,307
Deposits for assets purchased		20,~~731~~856,~~964~~120			20,597,809
Properties and equipment, net		5,~~689~~618,~~845~~867			5,713,732
Right -use-of asset		-			73,368
Total assets	$	26,~~523~~573,~~153~~848		$	26,491,216
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities	$	~~140~~106,~~673~~133		$	95,435
Payable to related parties		3,~~814~~806,~~279~~413			3,869,479
Unearned revenue		52136,~~678~~844			107,549
Lease liability		-			64,488
Litigation reserve		2,~~737~~941,~~277~~564			2,314,786
Customer deposits, noncurrent		223,~~548~~999			122,695
Total liabilities		67,~~968~~214,~~455~~953			6,574,432
Commitments and contingencies – Note 8		-
Commitments and contingencies – Note 7		-			-
STOCKHOLDERS’ DEFICIT
Preferred stock: authorized 10,000,000 shares of $0.001 par value; issued and outstanding, none		-			-
Common stock: authorized 200,000,000 shares of $0.001 par value; 139,314,416 shares issued and outstanding,		139,314			139,314
Additional paid-in capital		29,719,865			29,719,865
Accumulated other comprehensive loss		(~~506~~499,~~185~~055	)		(590,412	)
Accumulated deficit		(910,~~798~~001,~~296~~229	)		(9,351,983	)
Total stockholders’ equity		19,~~554~~358,~~698~~895			19,916,784
Total liabilities and stockholders’ equity	$	26,~~523~~573,~~153~~848		$	26,491,216

The accompanying notes are an integral part of these consolidated interim financial statements.

HQDA Elderly Life Network Corp

Consolidated Statements of Comprehensive Income (loss)

(Unaudited)

	Three months ended December 31,						Six months ended December 31,
	2022			2021			2022			2021
	2021			2020			2021			2020
	Three months ended March 31,						Nine months ended March 31,
Revenue	$	281,169		$	352,922		$	425,485		$	508,362
	2022			2021			2022			2021
Revenue	$	199,584		$	130,027		$	625,069		$	638,389
Operating costs:
Cost of food and beverages		35102,~~085~~793			5227,~~554~~298			62165,~~405~~198			99126,~~409~~706
Selling, general and administrative expenses		~~158~~21,~~950~~890			~~172~~212,~~560~~637			~~323~~345,~~457~~347			~~401~~614,~~827~~465
Depreciation and amortization		4581,~~013~~865			4142,~~134~~685			86168,~~743~~608			89131,~~083~~768
Total operating expenses		~~239~~206,~~048~~548			~~266~~282,~~248~~620			~~472~~679,~~605~~153			~~590~~872,~~319~~939
Operating income (loss)		42,121			86,674			(47,120	)		(81,957	)
Operating loss		(6,964	)		(152,593	)		(54,084	)		(234,550	)
Other income (expense):
Litigation reserve expense		(~~395~~196,~~375~~320	)		(~~298~~9,~~898~~316	)		(~~395~~592,~~375~~707	)		(~~474~~484,~~948~~264	)
Interest Income		16-			1821			16-			2950
Other income (expense), net		~~(1,435~~352	)		~~539~~(48,052	)		(32,~~834~~455	)		1(46,~~655~~397	)
Total other expense, net		(~~396~~195,~~794~~968	)		(~~298~~57,~~341~~347	)		(~~399~~595,~~193)~~162	)		(~~473~~530,~~264~~611	)
Net loss	$	(~~354~~202,~~673~~932	)	$	(~~211~~209,~~667~~940	)	$	(~~446~~649,~~313~~246	)	$	(~~555~~765,~~221~~161	)
Foreign currency translation, net tax		~~116~~7,~~619~~130			~~397~~(37,~~389~~684	)		8491,~~227~~357			~~537~~499,~~555~~871
Comprehensive income (loss)	$	(238,054	)	$	185,722		$	(362,086	)	$	(17,666	)
Comprehensive loss	$	(195,802	)	$	(247,624	)	$	(557,889	)	$	(265,290	)
Earnings per share
Basic and diluted loss per share	$	(0.00	)	$	(0.~~002~~00	)	$	(0.00	)	$	(0.~~004~~01	)
Weighted average common shares outstanding		139,314,416			139,314,416			139,314,416			139,314,416

The accompanying notes are an integral part of these consolidated interim financial statements.

HQDA Elderly Life Network Corp.

Consolidated Statements of Cash Flows

(Unaudited)

	Six months ended December 31
	2022			2021
	2021			2020
	Nine months ended March 31
	2022			2021
Cash flow from operating activities
Net loss	$	(~~446~~649,~~313~~246	)	$	(~~555~~765,~~221~~161	)
Adjustments to reconcile loss to net cash provided by operating activities:
Depreciation and amortization		86168,~~743~~608			89131,~~083~~768
Legal reserve		~~395~~591,~~375~~697			~~474~~484,~~948~~263
Amortization of Right-of-use assets		8,~~949~~928			-
Bad debt expense		~~20,179~~-			-
Changes in operating assets and liabilities：
Increase (decrease) in receivables		28,~~854~~741			~~(30~~2,~~920~~158	)
(Decrease) increase in related party receivables		(4326,~~886~~275	)		6837,~~356~~446
(Decrease) increase in accounts payable and accrued liabilities		(1817,~~850~~751	)		4527,~~272~~049
Decrease (increase) in unearned revenues		(55,878	)		6,829
Increase in unearned revenues		27,665			62,544
Increase of customer deposits – long-term		9998,~~150~~921			53,~~174~~163
Net cash provided by provided by operating activities		48,323			151,521
Net cash provided by operating activities		211,288			33,230
Cash flow from investing activities
Deposits paid for assets purchase		(23115,~~534~~198	)		-
Purchase of equipment		-			(~~359~~20,513	)
Net cash used in investing activities		(23115,~~534~~198	)		(~~359~~20,513	)
Cash flow from financing activities
Decrease in related party payable		(3374,~~340~~116	)		(~~120~~80,~~592~~942	)
Net cash used in financing activities		(3374,~~340~~116	)		(~~120~~80,~~592~~942	)
Effect of exchange rate changes		(~~667~~37,945	)		~~(525~~2,388	)
Decrease in cash		(915,~~218~~971	)		30(65,~~045~~837	)
Cash, beginning		28,~~080~~061			119,955
Cash, ending	$	1812,~~862~~090		$	~~150~~54,~~000~~118

The accompanying notes are an integral part of these consolidated interim financial statements.

HQDA Elderly Life Network Corp.

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

	Number of				Additional					Accumulated Other			Total
	Shares		Capital		Paid-in		Accumulated			Comprehensive			Stockholders’
	Issued		Stock		Capital		Deficit			Loss			Equity
Balance at June 30, 2020		139,314,416	$	139,314	$	29,719,865	$	(8,109,628	)	$	(1,234,719	)	$	20,514,832
Net loss		-		-		-		(~~555~~765,~~221~~161	)		-			(~~555~~765,~~221~~161	)
Foreign currency translation, net tax		-		-		-		-			~~537~~499,~~555~~871			~~537~~499,~~555~~871
Balance at December 31, 2020		139,314,416	$	139,314	$	29,719,865		(8,664,849	)		(697,164	)	$	20,497,166
Balance at March 31, 2021		139,314,416	$	139,314	$	29,719,865		(8,874,789	)		(734,848	)	$	20,249,542
Balance at June 30, 2021		139,314,416		139,314	$	29,719,865		(9,351,983	)		(590,412	)		19,916,784
Net loss		-		-		-		(~~446~~649,~~313~~246	)		-			(~~446~~649,~~313~~246	)
Foreign currency translation, net tax		-		-		-		-			8491,~~227~~357			8491,~~227~~357
Balance at December 31, 2020		139,314,416		139,314	$	29,719,865		(9,798,296	)		(506,185	)		19,554,698
Balance at March 31, 2022		139,314,416		139,314	$	29,719,865		(10,001,229	)		(499,055	)		19,358,895

The accompanying notes are an integral part of these consolidated interim financial statements.

1. Nature and Continuance of Operations

HQDA Elderly Life Network Corp. (formerly Hartford Retirement Network Corp.) (the “Company”) was incorporated under the laws of the State of Nevada on January 21, 2004. In November 2017, the Company acquired Shanghai Hongfu Health Management Ltd, a company incorporated in the People’s Republic China (“PRC”). Following the acquisition, on April 23, 2018, the Company changed its name to HQDA Elderly Life Network Corp.

Through its wholly-owned subsidiary, Shanghai Hongfu Health Management Ltd. (“Shanghai Hongfu”), the Company purchased senior living facilities and launched a senior living residences business, which hosts to mostly men and women over the age of 50. The Company intends to expand its business of owning, leasing and/or operating senior living residences that will provide seniors with a supportive, home life setting with care and services, including activities of daily living, life enrichment and health and wellness.

The Company’s consolidated financial statements as of ~~December~~March 31, ~~2021~~2022 and for the ~~six~~nine months ended have been prepared on a going ~~concern~~ concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company reported a net loss of $~~354~~202,~~673~~932 and $~~446~~649,~~313~~246 for the three and ~~six~~nine months ended ~~December~~March 31, ~~2021~~2022, respectively. As of ~~December~~ March 31, ~~2021~~2022, it had a negative working capital deficiency of $ 6,~~643~~892,~~563~~093 while it had a negative working capital deficiency of $6,345,430 at June 30, 2021.

There is limited historical financial information about the Company upon which to base of an evaluation of our performance. We shifted its focus to senior housing and retirement services and products. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new resource exploration company, including limited capital resources, unanticipated problems relating to exploration and additional costs and expenses that may exceed current estimates. To become profitable, we will attempt to implement a plan of operation as detailed above.

Our cash reserves are not sufficient to meet our obligations for the next twelve-month period. As a result, we will need to seek additional capital in the near future. We anticipate that additional capital will be raised in the form of equity financing from the sale of our common stock. As well, our management is prepared to provide us with short-term loans.

We cannot provide investors with any assurance that we will be able to raise sufficient capital from the sale of our common stock or through a loan from our directors to meet our obligations over the next twelve months. We do not have any arrangements in place for any future equity financing. If we are unable to arrange additional financing, our business plan will fail and operations will cease.

2. Basis of Significant Accounting policies

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The Company’s consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Shanghai Hongfu Health Management Ltd. All inter-company balances have been eliminated upon consolidation. The Company’s fiscal year end is June 30.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires the Company’s management to make estimates and assumptions that affect the amounts of assets and liabilities, the identification and disclosure of impaired assets and contingent liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Foreign currency translation

The United States dollar (“USD”) is the Company’s reporting currency. The Company’s wholly owned subsidiary, Shanghai Hongfu is located in Shanghai, China. The net sales generated, and the related expenses directly incurred from the operations are denominated in local currency, Renminbi (“RMB”). The functional currency of the subsidiary is generally the same as the local currency.

Assets and liabilities measured in RMB are translated into USD at the prevailing exchange rates in effect as of the financial statement date and the related gains and losses, net of applicable deferred income taxes, are reflected in accumulated other comprehensive income (loss) in its consolidated balance sheets. Income and expense accounts are translated at the average exchange rate for the period. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Certain amounts in prior periods have been reclassified to conform with current period presentation.

Revenue recognition

On July 1, 2018 the Company adopted Accounting Standards Update (“ASU”) 2014-09, Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606), which is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company adopted ASC 606 using the modified retrospective method. The Company evaluated its revenue streams to identify whether it would be subject to the provisions of ASC 606 and any differences in timing, measurement or presentation of revenue recognition. The Company’s main source of revenue is generated from operating senior living residences and business apartment service. For the senior living industry, the Company recognizes resident fees and services, other than move-in fees, monthly as services are provided.

Shanghai Hongfu entered a series leasing contracts with Shanghai Jinhong Business Hotel Co., Ltd. (“Shanghai Jinhong”) since November 2020, who subleases senior rooms, auxiliary building, property facilities and office spaces of the properties located at Zhangjiang, Shanghai from Shanghai Hongfu for five to fifteen years. The Company recognize the rental income based on the lease terms using straight-line method under ASC 842.

Contract A: On November 2020 and on April 2021 which amended on July 2021, the Company contracted with Shanghai Jinhong to lease a total 130 ~~rooms~~ rooms for five years and auto renew for another five years if no party in default pursuant to the contract terms. Shanghai Jinhong ~~subleases~~ subleases the rooms to the single independent resident and operates as business apartments. The initial room rental fee was around $6,200 ~~annum~~ annum for the first three years and $6,400 for the remaining terms. As of ~~December~~March 31, ~~2021~~2022, Shanghai Hongfu has delivered 60, 30 and 30 rooms to Shanghai Jinhong pursuant to the lease contracts on February, September and November 2021, respectively.

Contract B: On April 2021 and amended on July 2021, the Company entered a contract with Shanghai Jinhong to lease the auxiliary building including retail spaces along the street for ten years for the average yearly rent of $158,910 (approximately RMB 1 million).

Contract C: On July 2021, supplementary agreement of contract A entered, that Shanghai Jinhong will reconstruct the parking lot in order to increase the packing space to 40 and above. Both parties agree that 70% and 30% of the revenue generated from parking lot shared by Shanghai Hongfu and Shanghai Jinhong, respectively. As of ~~December~~March 31, ~~2021~~2022, the renovation project for parking lots has not yet completed.

Contract D: On July 2021, the Company entered a contract with Shanghai Jinhong to lease the facility area, including a room, gym, office, conference room & facilities for 15 years with eight-month-free rent holiday. The average annum rental income is around $12,000.

Contract E: On October 2021, the Company entered a contract with Shanghai Jinhong to lease an 500 meters square area, which can be used as office, conferences &dorms for 15 years with eight-month rent holiday. The average annual rental income is around $37,600.

Recently issued accounting pronouncements adopted

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02 (Topic 842) “Leases.” Topic 842 supersedes the lease recognition requirements in Accounting Standards Codification (“ASC”) Topic 840 “Leases.” Under Topic 842, lessees are required to recognize a right-of-use asset and a lease liability for substantially all leases. Leases will continue to be classified as either finance or operating. Topic 842 is effective for annual reporting periods and interim periods within those years beginning after December 15, 2018 with early adoptions permitted. The Company adopted the new standard July 1, 2019. As part of the adoption of ASU 2016-02, the Company made an accounting policy election that will not recognizing leases with an initial term of 12 months or less on the consolidated balance sheet. The Company only has one month-to-month office lease since July 1, 2019. The adoption of this new accounting standard did not have an effect on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles and Other (Topic 350): Simplifying the Test for Goodwill Impairment”, which eliminates the requirement to calculate the implied fair value of goodwill, but rather requires an entity to record an i7mpairment charge based on the excess of a reporting unit’s carrying value over its fair value. This amendment is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company adopted ASU No. 2017-04 on July 1, 2020 and the adoption did not have an impact on the Company’s interim financial position and results of operations.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 20163-13, “Financial Instruments—Credit Losses”. The standard, including subsequently issued amendments (ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10 and ASU 2019-11), requires a financial asset measured at amortized cost basis, such as accounts receivable and certain other financial assets, to be presented at the net amount expected to be collected based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. In November 2019, the FASB issued ASU No. 2019-10 to postpone the effective date of ASU No. 2016-13 for public business entities eligible to be smaller reporting companies defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is evaluating the impact of this guidance on its consolidated financial statements.

3. Related party Transactions

Receivable and Payable

Receivable from related parties amounted $5960,~~625~~733 and $43,809 at ~~December~~March 31, ~~2021~~2022 and June 30, 2021, respectively. Payable to related parties amounted to $ 3,~~814~~806,~~279~~413 and $ 3,869,479 at ~~December~~March 31, ~~2021~~2022 and June 30, 2021, respectively. The related party amounts are mainly operation advances and funding to support the Company’s daily operations. The payable balances bear no interest and due on demand.

Related party transactions

On September 1, 2018, the Company entered a three-year cooperation agreement with Zhonghuiai Wufu (Shanghai) Hotel Management Co., Ltd., (“ZHAWF Shanghai”), a related party, with respect to the daily operation and management of the senior hotel purchased on April 2018. According to the agreement, the Company shall pay RMB one million per year to ZHAWF Shanghai for the service provided. The Company amended the execution date of the cooperation agreement from September 1, 2018 to January 1, 2019 with three-year term with the expiration date on December 31, 2021. For the three and ~~six~~nine months ended ~~December~~March 31, ~~2021~~2022, the Company recorded hotel management fee of $~~39,223 (RMB250,000)~~ nil and $78,~~447~~ 267 (RMB 0.5 million), respectively. During the ~~six~~nine months ended ~~December~~March 31, ~~2021~~2022, ZHAWF Shanghai also collects some fund on behalf of Shanghai Hongfu due to the restriction of the Company’s bank accounts. Receivable due from and Payable due to ZHAWF Shanghai as of ~~December~~March 31, ~~2021~~ ~~and~~2022 and June 30, 2021 were $5253,~~821~~ 915 and $(144,638), respectively.

Other

During the three and ~~six~~nine months ended ~~December~~March 31, ~~2021~~2022, the Company recorded management fees of $~~32,440~~nil and $66,120 for the service provided by our ex-CFO, respectively, and $~~30,000~~nil and $60,000 for the three and ~~six~~nine months ended ~~December~~March 31, ~~2020~~ 2021, respectively. As of ~~December~~March 31, ~~2021~~2022 and ~~2020~~December 31, 2021, the payable due to ~~Chief~~our ex-CFO ~~Financial Officer~~ were $9377,~~387~~987 and $2035,~~000~~644, respectively.

4. Asset Acquisition

On April 2, 2018, the Company entered into an Asset Purchase Agreement (the “APA”) whereby the Company will purchase land use rights, buildings, construction rights and other property rights located in Shanghai from a third party for a total purchase price of $36,991,173 (RMB 233,000,000 at exchange rate of 0.1587), which was its approximate fair value as estimated by a third-party appraisal firm. A summary of fair value of the asset as following:

Summary of Fair Value of Asset

Description	Location	Amount ⁽¹⁾		Amount
		(in dollars)		(in RMB)
Building and building improvements and land use rights	Shanghai Pudong New Area Zhangjiang Ziwei Rd No. 372 and No. 376.		30,778,879		193,870,000
Land use rights	Shanghai Chongming District San Shuang Gong Lu No. 4797.		6,212,294		39,130,000
			36,991,173		233,000,000

(1)	The exchange rate of 0.1587 was used to translate the RMB amounts at purchase date.

As of ~~December~~March 31, ~~2021~~2022, the Company has paid a total of $27,~~353~~903,~~690~~069 (RMB 176.39 million). On September 1, 2018, the Company obtained the ~~full~~ full management and operation rights of the senior hotel property and other assets (Property A) located at Shanghai Pudong New Area pursuant to the Operation Rights Transferring Agreement entered on August 31, 2018 with the seller. Although the Company has the rights to operate the senior living services of Asset A purchased under this agreement, and is currently generating revenues, the Company has not received a deed because the seller is involved in several lawsuits that have restrictions on assets transferring sentenced Shanghai local district courts. The Company has decided not to make any further payments until the asset is legally free of the restrictions. The Seller filed a legal case against Shanghai Hongfu for the payment default pursuant to the APA on July 13, 2020. See Note 87 for more details about the lawsuit and the final court ruling. During the ~~six~~nine months ended ~~December~~March 31, ~~2021~~2022, the Company paid $23116,~~273~~090 (~~RMB150,000~~RMB735928) toward the agreement and the remaining unpaid balance was $8,~~797~~851,~~244~~777 (RMB56~~,700,000~~.1 million) as of ~~December~~March 31, ~~2021~~2022.

Further, the Company consummated the share purchase agreement to acquire the entity – Shanghai Qiaoyuan Information Technology Co., Ltd (“SH QYIT”) on November 2018 who holds the land use rights of Property B located on Shanghai Chongming. Asset B has been transferred to Properties and equipment, net during the year ended June 30, 2021. The two acquisitions were accounted for assets acquisitions.

5. Properties and Equipment, net

	December 31,			June 30,
	March 31,			June 30,
	2021			2021
	2022			2021
Land use rights and land use rights improvements	$	6,~~160~~172,~~168~~606		$	6,092,340
Furniture and office equipment		7,~~454~~469			7,399
Capitalized software		42,253			42,253
Motors and vehicles		21,~~060~~102			20,801
Minus: Accumulated depreciation and amortization		(~~541~~624,~~090~~563	)		(449,061	)
Properties and Equipment, net	$	5,~~689~~618,~~845~~867		$	5,713,732

For the ~~six~~nine months ended ~~December~~March 31, ~~2021~~2022 and ~~2020~~2021, the depreciation and amortization expenses were $86168,~~743~~608 and $89131,~~083~~768, respectively, and $4581,~~013~~865 and $4142,~~134~~685 for the three months ended ~~December~~March 31, ~~2021~~2022 and ~~2020~~2021, respectively.

6. Segment Information

The Company operates in one industry segment, being the senior housing and retirement services through its wholly owned subsidiary in China. As of ~~December~~March 31, 2022 and June 3130, 2021, the subsidiary had an amount of $15,~~796~~891,~~198~~ 286 and $15,743,371, respectively, in total assets, excluding inter-company balances, and it generated $~~425~~625,~~485~~ 069 and $~~508~~638,~~362~~389 revenue for the ~~six~~nine months ended ~~December~~March 31, ~~2021~~ 2022 and ~~2020~~2021, respectively, in revenue. There was no revenue generated from inter-company transactions.

7. Contingencies and ~~commitments~~Commitments

Lawsuit related to the assets purchase agreements

The Company entered into the APA to acquire two properties in Shanghai totaling RMB 233,000,000. Payments of $27,~~353~~903,~~690~~069 (RMB 176~~,300,000~~.9 million) have been made through December 31, 2021. Due to the Seller of the assets is involved in several lawsuits that have restrictions of assets transferring assets under this purchase agreement sentenced by Shanghai local district courts, the Company has decided not to make remaining payments until the asset is free of the restrictions in June 2019.

On May 1, 2020, a lawsuit was filed at a district court in Shanghai, China, against the Company and Shanghai Hongfu, by Shanghai Qiao Hong Real Estate, Ltd (“Shanghai Qiaohong” and the “Seller”) and its subsidiaries (the “Plaintiff”) for breach of contract and non-payment of installments pursuant to the APA entered into between the Company and the Plaintiff on April 2, 2018. The Plaintiff is alleging damages of RMB 76,654,000 (approximately $10,842,150), including remaining RMB58 million installments, interest for delayed payment, default penalty, and etc. The District Court ruled the first verdict (the “First Verdict”) on November 18, 2020 in favor of the Plaintiff’s claim - the Company should pay RMB11,140,000 penalty along with the lawsuit fee RMB374,415 and the remaining RMB57,000,000 installments to consummate the APA. On May 27, 2021, Shanghai No. 2 Intermediate Court entered a verdict of the second trial raised in the January 16, 2020 which supported the first verdict in November 18, 2020. The Court ordered the Company to pay to the plaintiff a total of RMB 68,400,000.

As of ~~December~~March 31, 2022 and June 2021, the Company reserved $2,~~737~~941,~~277~~564 and $2,314,786, respectively, for the lawsuit pursuant to the First Verdict, including penalty for payment in default and interest expenses ~~till December 31,2021~~. Four bank accounts owned by Shanghai Hongfu have been frozen with the cash balance of $~~2,767 and $~~638 as of ~~December 31, 2021 and~~ June 30, 2021~~, respectively~~.

Subsequently, the Company received a 2nd court executive order from the District Court who froze the 100% ownership of SH QYIT due to non-performance on the court executive order issued pursuant to the First Verdict. SH QYIT owns the land use right in the net amount of $6,~~160~~172,~~168 and~~606 and $6,092,340 as of ~~December~~March 31, 2022 and June 30, 2021, respectively.

On January 12, 2022, pursuant to the 2^nd court executive order, an agreement was entered between Shanghai Hongfu and Shanghai Qiaohong, the Plaintiff, pursuant to which, Shanghai Hongfu will take the land use rights owned by SH QYIT to the judicial auction. The proceeds of the auction or the second judicial auction price will be applied to the remaining purchase amount owned by the Company to the Plaintiff, depending on whether the auction is successfully completed. Shanghai Hongfu also agreed to pay the Plaintiff in four installments totaling RMB 3.6 million or about USD$567,000 in 2022, which will be generated from the rental income of the Property A to offset partial arrears to the Plaintiff. Based on the above commitment, the Plaintiff agreed to file the legal request to the Pudong District Court, China to unfreeze the bank accounts owned by Shanghai Hongfu, and lift restrictions on its legal representative. As of March 17, 2022, the above legal requests have been granted by the Pudong District Court, China.

Lianyuangang Acquisition

On October 26, 2020, the Company acquired 10% of the issued and outstanding shares (the “Shares”) of Lianyungang Yiheyuan Elderly Services Co., Ltd., a corporation registered in Jiangsu Province, PRC (“LYES”) pursuant to a Securities Purchase Agreement (the “Agreement”). In accordance with the Agreement, HQDA is purchasing the Shares in exchange for 234,845 shares of HQDA’s common stock valued at $1.00 per share, equivalent to 10% of the initial RMB16,000,000 (approximately USD$2,348,450) registered capital of LYES. LYES operates a unique elderly services business in its local hot spring resort.

As of June 30, 2021, due to the Covid-19 epidemic in China and other reasons from LYES, both parties verbally agreed to stop moving forward the acquisition transaction with no harm to any party of this cooperation. The official termination agreement is expecting to complete by the end of June 2022, and the 234,845 shares of HQDA’s common stock are in the process of cancellation.

Settlement of a Violation of Exchange Act

On March 11, 2021, the Company settled a violation of Exchange Act Rule 12b-25 with Securities and Exchange Commission (SEC) for a fine of $50,000. In accordance with the settlement, the Company is obligated to pay the $50,000 fine as follows: $10,000 within 14 days of the entry of the Order, $15,000 within 180 days of the entry of the order, $12,500 within 270 days of the entry of the Order and $12,500 days of the entry of the Order. As of December 31, and June 30, 2021, $12,500 and $25,000 payable were outstanding toward the settlement. During the ~~six~~nine months ended ~~December~~March 31,~~2021~~2022, $1527,~~000~~500 has been paid toward the settlement~~, and subsequently $12,500 has been paid on January 28, 2022 as well~~.

109

8. Operating lease

Sichuan HQDA Elderly Services Co., Ltd (“SHES”), the newly established subsidiary of Shanghai Hongfu, entered two operating leases with third parties at Chengdu, China on March 2021. The two operating leases have a twenty-two month term for the office space lease and a 1-year apartment lease for employee residence.

According to ASC 842, the Company records the office lease on the balance sheet as Right-of-use assets and Operating lease liabilities and choose the simplified method record the apartment lease. The incremental borrowing rate is 5.75%. Rental expenses for the three and ~~six~~nine months ended ~~December~~March 31,2022 ~~2020~~ were $6,120 and $3,060 respectively. Total cash flows paid toward operation lease were $11,326 and $6,120 for the nine ~~six~~ months ended ~~December~~March 31, ~~2021~~2022 and 2021, respectively. As of March 31, 2022 and June 30, 2021, the Company had Right-of-use assets and operating lease liabilities in the amounts of $73,368 and $64,488, respectively.

On October 15, 2021, SHES entered an early termination agreement with the count party of the lease agreement, who is the sublessor of the office space and currently having some arguments with the landlord. Pursuant to the early termination agreement, the lease payment obligation for SHES was terminated on September 3, 2021 and the sublessor will return SHES’s security deposit and unusual lease payment of September 2021 by November 19, 2021. As result of the early termination agreement, $~~8,174~~nil and $11,511 rent expenses were recorded for ~~the~~ the three and ~~six~~nine months ended ~~December~~March 31, ~~2021~~2022, respectively.

The Company also has an office lease located at Rosemead, California with monthly rent of $1,020 at month-to-month basis. The Company cancelled the office lease onin October 2021.

9. Subsequent event

On January 12, 2022, pursuant to the 2nd court executive order, an agreement was entered between Shanghai Hongfu and Shanghai Qiaohong, the Plaintiff, pursuant to which, Shanghai Hongfu will take the land use rights owned by SH QYIT to the judicial auction. The ~~proceeds of the~~ ~~auction~~Company orhas ~~the~~evaluated ~~second~~all ~~judicial~~other ~~auction~~subsequent ~~price~~events ~~will~~through ~~be applied to~~ the ~~remaining~~date ~~purchase~~these ~~amount~~consolidated ~~owned~~financial bystatements ~~the~~were ~~Company~~issued toand ~~the Plaintiff,~~determine ~~depending~~that onthere ~~whether~~were ~~the~~no ~~auction~~other issubsequent ~~successfully completed.~~events ~~Shanghai~~or ~~Hongfu~~transactions ~~also~~that ~~agreed~~require torecognition ~~pay the Plaintiff in four installments totaling RMB 3.6 million~~ or ~~about USD$567,000~~disclosures in ~~2022, which will be generated from~~ the ~~rental~~consolidated ~~income~~financial ~~of the Property A to offset partial arrears to the Plaintiff~~statements. Based on the above commitment, the Plaintiff agreed to file the legal request to the Pudong District Court, China to unfreeze the bank accounts owned by Shanghai Hongfu, and lift restrictions on its legal representative. As of March 17, 2022, the above legal requests have been granted by the Pudong District Court, China.

1110

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact are “forward-looking statements”, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include the words “may,” “could,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Except for our ongoing obligation to disclose material information as required by the federal securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. Some of the key factors impacting these risks and uncertainties include, but are not limited to:

	●	our failure to obtain additional financing;
	●	our inability to continue as a going concern;
	●	the unique difficulties and uncertainties inherent in the business;
	●	local and multi-national economic and political conditions, and
	●	our common stock.

Unless expressly indicated or the context requires otherwise, The terms “HQDA”, “Company”, “we”, “our”, and “us” refer to HQDA Elderly Life Network Corp. (formerly Hartford Retirement Network Corp.), a Nevada corporation.

General

HQDA Elderly Life Network Corp. (formerly Hartford Retirement Network Corp.) (“HQDA” or the “Company”) was incorporated in the State of Nevada on January 21, 2004. Our principal office is located at 372 Ziwei Road, Pudong New District Shanghai, P.R. China. Our telephone number is +86 15358018888.

The Company has not had any bankruptcy, receivership or similar proceeding since incorporation.

Our business plan is owning, leasing and/or operating senior living residences that provide seniors with a supportive, home life setting with care and services, including activities of daily living, life enrichment and health and wellness in certain cities in China. We also plan to operate a network carrier, providing scheduled air transportation to passengers, travel destination services to leisure travelers.

The Senior Living Industry

Through our newly acquired and wholly-owned subsidiary, Shanghai Hongfu Health Management Ltd., we purchased senior living facilities in April 2018, launched a senior living residences business, which, hosts to mostly men and women over the age of 50. We intend to expand the business of owning, leasing and/or operating senior living residences that will provide seniors with supportive, home life setting with care and services, including activities of daily living, life enrichment and health and wellness in China.

The senior living industry encompasses a broad spectrum of senior living service and care options, which include independent living, assisted living and skilled nursing care. Our primary focus will be on the independent living services. Independent living is designed to meet the needs of seniors who choose to live in an environment surrounded by their peers where they receive services such as housekeeping, meals and activities, but are not reliant on assistance with activities of daily living (for example, bathing, eating and dressing), although we may offer these services through contracts with third parties.

Our operating philosophy is to provide services and care which meet the individual needs of its residents, and to enhance their physical and mental well-being, thereby allowing them to live longer and to “age in place.” These facilities will offer, on a 24-hour basis, personal, supportive and home health care services appropriate for their residents in a home-like setting, which allow residents to maintain their independence and quality of life. We predict that the average of the residents at our facilities will be between 55 and 70.

Our primary focus will be in China, where we intend to grow and become a leader in senior living facilities. We also will seek to develop or acquire facilities and manage or cooperate with existing facilities as well. We believe that by concentrating or “clustering” our facilities in target areas with desirable demographics, can increase the efficiency of our management resources and achieve broad economies of scale.

1211

The long-term care industry encompasses a wide continuum of services and residential arrangements for elderly senior citizens. Skilled nursing facilities provide the highest level of care and are designed for elderly senior citizens who need chronic nursing and medical attention and are not able to live on their own. Further, skilled nursing facilities tend to be one of the most expensive alternatives while providing elderly senior citizens with limited independence and a diminished quality of life. On the other end of the continuum is home-based care, which typically is provided in an individual’s private residence. While this alternative allows the elderly individual to “age in place” in his or her home and, in certain instances, can provide most of the services available at a skilled nursing facility, it does not foster any sense of community or the ability to participate in group activities.

Assisted living facilities generally are designed to fill the gap in the middle of this continuum. Assisted living facilities have been described by the Assisted Living Federation of America (“ALFA”) as providing a special combination of housing and personal, supportive and home health care services designed to respond to the individual needs of those who need, or desire help with their activities of daily living, including personal care and household management. Services in an assisted living facility are generally available 24 hours a day to meet the scheduled and unscheduled needs of residents, thereby promoting maximum dignity and independence.

The assisted living industry is highly fragmented in China. At present, the industry is characterized by participants who operate only a limited number of facilities and who frequently can offer only basic assistance with a limited number of activities of daily living. We intend to be characterized by the following: (i) the ability to offer premium accommodations and a comprehensive bundle of standard services for a single inclusive monthly fee; (ii) sophisticated, professional management structures and highly trained employees; (iii) a cost-efficient, user-specific prototype facility; and (iv) experience in providing home health care services.

Our facilities will provide services and care which are designed to meet the individual needs of its residents, enhance their physical and mental well-being and promote a supportive, independent and home-like setting. Most of our facilities will be primarily designed as premium facilities at which residents receive a comprehensive, bundled package of standard services for a single monthly fee.

We will strive to combine in our facilities the best aspects of independent living with the protection and safety of assisted living, with trained staff members who provide 24-hour care and monitoring of every resident. The senior living facilities will be designed and decorated to have a home-like atmosphere. Residents will be encouraged to furnish their rooms with personal items they have collected during their lifetime. Our senior living facilities differ from skilled nursing facilities in that our senior living facilities will not provide the more extensive, and costly, nursing and medical care found in nursing homes.

1312

Results of Operations

	Three months ended December 31
	Three months ended March 31
	2021			2020			Changes
	2022			2021			Changes
Revenue	$	~~281~~199,~~169~~584		$	~~352~~130,~~922~~027		$	~~(71~~69,~~753~~557	)
Operating costs:
Cost of food and beverages		35102,~~085~~793			5227,~~554~~298			~~(17~~75,~~469~~495	)
Selling, general and administrative expenses		~~158~~21,~~950~~280			~~172~~212,~~560~~637			(13190,~~610~~747	)
Depreciation and amortization		4581,~~013~~865			4142,~~134~~685			339,~~879~~180
Total operating expenses		~~239~~206,~~048~~548			~~266~~282,~~248~~620			(2776,~~200~~072	)
Operating income	$	42,121		$	86,674		$	(44,553	)
Operating loss	$	(6,964	)	$	(152,593	)	$	145,629

Six months ended December 31

Nine months ended March 31

2021

2020

Changes

2022

2021

Changes

Revenue

~~425~~625,~~485~~069

~~508~~638,~~362~~389

(8213,~~877~~320

)

Operating costs:

Cost of food and beverages

62165,~~405~~198

99126,~~409~~706

~~(37~~38,~~004~~492

)

Selling, general and administrative expenses

~~323~~345,~~457~~347

~~401~~614,~~827~~465

(78269,~~370~~118

)

Depreciation and amortization

86168,~~743~~608

89131,~~083~~768

(236,~~340~~840

)

Total operating expenses

~~472~~679,~~605~~153

~~590~~872,~~319~~939

(~~117~~193,~~714~~786

)

Operating loss

(4754,~~120~~084

)

(81234,~~957~~550

)

34180,~~837~~466

Three months ended ~~December~~March 31, ~~2021~~2022 compared to three months ended ~~December~~March 31, ~~2020~~2021

The revenue for the three months ended ~~December~~March 31, ~~2021~~2022 ~~decreased~~increased $7169,~~753~~557 compared with the same period ended ~~December~~March 31,~~2020~~ 2021. The ~~decrease~~increase was mainly due to the ~~Company~~leasing ~~adjusted~~demand ~~partial~~increasing offor the ~~business~~three ~~model,~~months ~~(i.e.~~ended ~~subleases~~March ~~the~~31, ~~rooms~~2022 compared to ~~the~~three ~~single~~months ~~independent~~ended ~~resident~~March ~~and operates~~31, ~~as business apartments). The business is still growing during the transition period.~~2021

The total operating ~~income~~loss amounted $426,~~121~~964 for the three months ended ~~December~~March 31, ~~2021~~2022 as compared to operating ~~income~~loss $86152,~~674~~593 for the ~~three~~ three months ended ~~December~~March 31, ~~2020~~2021. The reason was mainly due to the revenue ~~decreased~~increasing along with the ~~operating~~total cost of G&A and cost of food and beverage reduced for the three months ended on ~~December~~March 31, ~~2021~~2022.

~~Six~~Nine months ended ~~December~~March 31, ~~2021~~2022 compared to ~~six~~Nine months ended ~~December~~March 31, ~~2020~~2021

The revenue for the ~~six~~nine months ended ~~December~~March 31, 2021 decreased $8213,~~877~~320 compared with the same period ended ~~December~~March 31,~~2020~~ 2021. The decrease ~~was~~ was mainly due to the Company adjusted partial of the business model, (i.e. subleases the rooms to the single independent resident and ~~operates~~ operates as business apartments), which causes additional time to sign new leasing.

The total operating loss amounted $4754,~~120~~084 for the ~~six~~nine months ended ~~December~~March 31, ~~2021~~2022 as compared to operating loss $81234,~~957~~550 for the ~~six~~ ~~months~~nine months ended ~~December~~March 31, ~~2020~~2021, a decreasing of $34180,~~837~~466. The reason was mainly due to the decreasing of selling, general and administrative expenses.

Liquidity and Capital Resources

As of ~~December~~March 31, ~~2021~~2022, we had cash on hand of $1812,~~862~~090 and liabilities of $6,~~968~~990,~~455~~954. We will require additional funding in order to cover all anticipated administration costs and to proceed with the unpaid balance of APA agreement as well as the interest and penalty. We intend to continue to explore the new business model, such as continue develop the Travel-and-living Business line, and provide management services to retirement homes, commercial properties and apartment buildings in China, which will result in higher administrative costs in the future.

Capital Expenditures

On April 2, 2018, we entered into an Asset Purchase Agreement (the “APA”) whereby we purchased land, buildings, and right to use, construction use rights and other property rights located in Shanghai from a third party. Properties are split into two groups:

	●	Property A: land use rights and adhesive substance use rights, right to own, and right to operate of the land located in Shanghai Pudong New Area Zhangjiang Ziwei Rd No. 372 and No. 376.

	●	Property B: land use right, adhesive substance under construction use rights, right to own, and right to operate of the land located in Shanghai Chongming District San Shuang Gong Lu No. 4797.

We have agreed to pay the purchase price totaling RMB 233,000,000 in instalments. Payments of $~~227~~27,~~353~~903,~~690~~069 (RMB 176,~~300~~885,~~000)~~928 have been made through ~~December~~March 31, ~~2021~~2022 and the remainder of $8,~~797~~851,~~244~~777 (RMB56,~~700~~114,~~000~~072) is going to pay based the schedule we entered with SHQHZY ~~on January~~in January 2022.

1413

Off-balance Sheet Arrangements

We have no 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 stockholders.

Critical Accounting Policies

Our interim financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. Preparing financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet dates, and the recognition of revenues and expenses for the reporting periods. These estimates and assumptions are affected by management’s application of accounting policies.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” we are not required to provide this information under this item pursuant to Regulation S-K.

ITEM 4 – CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Based on our management’s evaluation (with the participation of our President and Chief Financial Officer), our President and Chief Financial Officer have concluded that as of the end of the period covered by this report, our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange of 1934 (the “Exchange Act”)) are not effective to provide reasonable assurance that the information required to be disclosed in this quarterly report on Form 10-Q is recorded, processed, summarized and reported within the time period specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

(b) Internal control over financial reporting

Management’s annual report on internal control over financial reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting should include those policies and procedures that: pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with applicable GAAP, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during the quarter ended ~~December~~March 31, ~~2021~~2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

1514

PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

The Company is not a party to any pending legal proceeding. Our management is not aware of any threatened litigation, claims or assessments except below:

On May 1, 2020, a lawsuit was filed against the Company and its wholly-owned subsidiary, Shanghai Hongfu (collectively the “Company”), by Shanghai Qiao Hong Real Estate, Ltd and its subsidiaries (the “Plaintiff”) for breach of contract and non-payment of installments pursuant to the APA entered into between the Company and the Plaintiff on April 2, 2018. The Plaintiff was alleging damages of RMB 76,654,000 (approximately $10,842,150), including remaining RMB58 million installments, interest for delayed payment, default penalty, and etc. On November 18, 2020, there was a first verdict by the District Court in Shanghai, which was in favor of the Plaintiff’s claim, the Company should pay the penalty RMB11,140,000 along with the lawsuit fee RMB374,415 and the rest of RMB57,000,000 for the completion of the APA.

On May 27, 2021, Shanghai No. 2 Intermediate Court entered a verdict of the second trial raised in the January 16, 2020 which supported the first verdict in November 18, 2020. The Court ordered the Company to pay to the plaintiff a total of RMB 68,400,000. Subsequently, the Company received a 2^nd court executive order from the District Court who froze the 100% ownership of SH QYIT due to non-performance on the court executive order issued pursuant to the First Verdict. SH QYIT owns the land use right in the net amount of $6,160,168 and $6,092,340 as of December 31 and June 30, 2021, respectively.

ITEM 1A. RISK FACTORS

As a “smaller reporting company”, we are not required to provide this information under this item pursuant to Regulation S-K.

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4 – MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 – OTHER INFORMATION

None

1615

ITEM 6 – EXHIBITS

The following exhibits are furnished as required by Item 601 of Regulation S-B.

Exhibit No.		Exhibit Title

31.1*		Certificate of CEO as Required by Rule 13a-14(a)/15d-14
31.2*		Certificate of CFO as Required by Rule 13a-14(a)/15d-14
32.1*		Certificate of CEO and CFO as Required by Rule 13a-14(b) and Rule 15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

1716

SIGNATURE

Pursuant to the requirements 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.

	HQDA Elderly Life Network Corp.
March 22, 2022	BY:	/s/ Meichen Chen
July 19, 2022	BY:	/s/ Meichen Chen
Date		Meichen Chen, Interim Chief Executive Officer
March 22, 2022	BY:	/s/ Meichen Chen
July 19, 2022	BY:	/s/ Meichen Chen
Date		Meichen Chen, Chief Financial Officer

1817

Filing Compare · HQDA ELDERLY LIFE NETWORK CORP.