10-Q: Yubo Biotech Reports Zero Revenue, Going Concern Doubts

Yubo International Biotech Limited reported zero revenue for the nine months ended September 30, 2025, alongside a significant net loss and a going concern warning.

Summary

• Yubo International Biotech Limited, a U.S. holding company operating through a Variable Interest Entity (VIE) in China, reported no sales of products and services for the three and nine months ended September 30, 2025.
• The company's net loss decreased to $310,152 for the three months ended September 30, 2025, from $621,053 in the prior year period.
• For the nine months ended September 30, 2025, the net loss was $902,288, an improvement from $1,628,906 in the same period of 2024.
• The reduction in net loss was primarily driven by a decrease in total operating expenses, which fell to $902,228 for the nine months ended September 30, 2025, from $1,415,282 in the prior year.
• Operating expense reduction was largely due to decreased office lease occupancy expense, including the early termination of a lease for Yubo Shenzhen effective January 24, 2025.
• As of September 30, 2025, the company had cash of $10,926 and a negative working capital of $1,905,753.
• Net cash used in operating activities increased to $(714,050) for the nine months ended September 30, 2025, compared to $(405,018) in the prior year, mainly due to the absence of cash inflows from related parties.
• A capital raise occurred on July 31, 2025, where 50,600,000 shares of Class A Common Stock were issued to entities controlled by the CEO and a director at $0.05 per share, settling $2,530,000 in shareholder loans.
• The company's financial statements include an explanatory paragraph expressing substantial doubt about its ability to continue as a going concern.

Sentiment

Score: 1

Explanation: The company reported zero revenue, has significant accumulated losses, negative working capital, and a 'going concern' warning. The 'capital raise' was a debt-to-equity conversion with related parties, not fresh cash. Substantial risks related to its VIE structure and PRC regulations further compound the extremely negative outlook.

Positives

• Net loss decreased significantly for both the three-month and nine-month periods ended September 30, 2025, primarily due to reduced operating expenses.
• Operating expenses decreased to $310,134 for the three months and $902,228 for the nine months ended September 30, 2025, compared to $532,764 and $1,415,282 respectively in the prior year periods.
• The company secured a financial support letter from its major shareholder, Jun Wang, committing to provide continuous financial support for 12 months from March 31, 2025.
• A significant portion of shareholder loans ($2,530,000) was settled through a debt-to-equity conversion, reducing liabilities to related parties.

Negatives

• The company reported zero revenue for both the three and nine months ended September 30, 2025, indicating a complete halt in sales activities.
• Net cash used in operating activities increased to $(714,050) for the nine months ended September 30, 2025, from $(405,018) in the prior year, primarily due to the absence of cash inflows from related parties.
• The company has a negative working capital of $1,905,753 as of September 30, 2025.
• The financial statements include an explicit 'going concern' warning, raising substantial doubt about the company's ability to continue operations.
• The decrease in net loss was primarily due to cost cutting (lease termination) rather than revenue generation or improved operational efficiency.
• The company's business model relies on a Variable Interest Entity (VIE) structure in China, which carries significant legal and regulatory risks, including potential non-compliance with PRC laws and the risk of the stock becoming worthless.

Risks

• The company's corporate structure involving a Variable Interest Entity (VIE) in China may be found non-compliant with PRC laws, leading to severe penalties, relinquishment of interests, or forfeiture of rights under contractual arrangements.
• The PRC government could disallow contractual arrangements with the VIE, resulting in a material adverse change in operations and a significant decline or worthlessness of Class A common stock.
• Investors in Class A common stock do not hold, and may never hold, any equity interest, directly or indirectly, in the Chinese operating VIE or its subsidiaries.
• The company faces substantial legal and operational risks due to conducting day-to-day business operations primarily in China, subject to complex and evolving PRC laws and regulations.
• Changes in China's economic, political, or social conditions or government policies could materially adversely affect the VIE's business and results of operations.
• Risks associated with regulatory approvals on offshore securities offerings, antimonopoly actions, and oversight on cybersecurity and data privacy may impact the ability to conduct business or accept foreign investments.
• The PRC government has significant authority to intervene or influence the China operations of an offshore holding company at any time.
• There is doubt as to the enforceability in China of civil liabilities predicated solely on U.S. federal securities laws against the company or its directors and executive officers, who are residents of China with most assets located there.
• The company's securities may be prohibited from trading on U.S. exchanges under the HFCA Act if its auditor is not inspected by the PCAOB for two consecutive years, potentially leading to delisting.
• The company may be subject to cybersecurity review by the Cyberspace Administration of China (CAC) if deemed to hold personal information of over one million users or if data processing activities affect national security, potentially leading to suspension of operations or penalties.
• Compliance with PRC Personal Information Protection Law (PIPL) and related regulations for cross-border data transfer may increase operating costs or cause delays/disruptions.
• The company has not yet established an ongoing source of revenues and cash flows sufficient to cover its operating costs, raising substantial doubt about its ability to continue as a going concern.
• The company will need additional capital resources, and there is no assurance that it will be successful in obtaining additional financing, which could lead to significant dilution or relinquishment of asset rights.
• Any future debt financing may include financial and other covenants that restrict flexibility, and non-compliance could negatively impact the business.

Future Outlook

Management plans to obtain additional capital resources from significant shareholders and seek third-party equity and/or debt financing to address the going concern issue. The company expects to incur significant legal and accounting costs as a public company, which will impact liquidity. There is no assurance that additional financing will be obtained, and any future financing may cause significant dilution to existing stockholders or include restrictive covenants.

Management Comments

• "Managements plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its operating expenses and seeking third party equity and/or debt financing."
• "We believe that our cash on hand and working capital will be sufficient to meet our and Yubo Beijings anticipated cash requirements through 2025" (contingent on financial support letter from major shareholder).

Industry Context

Yubo International Biotech operates in the biotechnology and healthcare products sector in China, specifically focusing on endometrial stem cell research and related health management services. The industry in China is subject to stringent and evolving regulatory oversight, particularly concerning foreign investment, data security, and cybersecurity. The company's reliance on a VIE structure highlights the challenges foreign entities face in directly investing in certain sensitive Chinese industries. The reported zero revenue suggests significant operational hurdles or a strategic pivot, potentially exacerbated by broader market and economic conditions in China and the impact of U.S. tariffs.

Comparison to Industry Standards

• The company's zero revenue for the current nine-month period is significantly below industry standards for publicly traded biotechnology or healthcare product companies, which typically demonstrate ongoing sales or clear progress in product development/commercialization.
• The recurring net losses and negative working capital are indicative of a company in a very early stage or facing severe operational distress, contrasting sharply with established industry players that generate consistent revenue and profit.
• The explicit 'going concern' warning is a critical red flag, rarely seen in healthy, growing companies within the biotech sector, which often require substantial capital but usually demonstrate a clearer path to commercial viability or significant R&D milestones.
• The reliance on related-party financing and debt-to-equity conversions, rather than external institutional investment, suggests a lack of market confidence or inability to attract arms-length capital, which is atypical for a company with promising biotech assets.

Corporate Governance

Legal Proceedings

• The company is currently not a party to any material legal or administrative proceedings.

Related Party Transactions

• As of September 30, 2025, $284,407 was due from Beijing Zhenhuikang Biotechnology Co., LTD (Zhenhuikang), an entity controlled by Mr. Yulin Cao, a director and significant stockholder of Yubo Beijing. This amount is non-interest bearing and due on demand.
• As of September 30, 2025, the company had payables due to Mr. Jun Wang ($847,732), Mr. Yang Wang ($12,214), Ms. Huang Li ($54,438), and Mr. Jin Wei ($30,000). These are non-interest bearing and due on demand.
• On July 31, 2025, $2,530,000 owed to Mr. Yang Wang and Mr. Jun Wang was settled through the issuance of 50,600,000 shares of Class A Common Stock to FlyDragon International Limited and ChinaOne Technology Limited, which are controlled by Mr. Jun Wang and Mr. Yang Wang, respectively.
• An Entrustment Technical Service Agreement dated February 27, 2020, with Beijing Zhenhuikang Biotechnology Co. LTD (Zhenhuikang) for 300 sets of endometrial stem cell harvesting packages (RMB 199,800 total) has not yet commenced, and no payments or liabilities have been recorded as of September 30, 2025.

Stakeholder Impact

• Shareholders: Face significant dilution from the recent issuance of 50.6 million shares to related parties and potential future dilution from additional capital raises. The 'going concern' warning and zero revenue pose a severe risk to the value of their investment.
• Employees: The company's financial instability and lack of revenue could impact job security and future growth opportunities.
• Customers/Distributors: Prospective customers/distributors who have made advances (totaling $434,765) have the right to request the return of their advances, indicating potential uncertainty regarding product delivery or service fulfillment.
• Creditors: Related party creditors (e.g., Mr. Jun Wang, Mr. Yang Wang) have converted a significant portion of their loans to equity, but other related party payables remain. The company's negative working capital and going concern status pose risks to other potential creditors.

Next Steps

• Obtain additional capital resources from management and significant shareholders.
• Seek third-party equity and/or debt financing to meet operating expenses.
• Continue working toward identifying and obtaining new sources of financing in 2025.

Key Dates

Recommendation

The company reported zero revenue for the current nine-month period, indicating a complete lack of operational sales. It carries a substantial accumulated deficit and negative working capital, coupled with an explicit 'going concern' warning, which signals severe financial distress. While net losses decreased, this was primarily due to cost-cutting measures (lease termination) rather than improved revenue generation. The recent 'capital raise' was a debt-to-equity conversion with related parties, not an infusion of fresh cash, highlighting an inability to attract external, arms-length financing. Furthermore, the company operates under a high-risk Variable Interest Entity (VIE) structure in China, subject to significant and evolving regulatory uncertainties that could lead to severe penalties or the stock becoming worthless. Given these fundamental issues, including no revenue, severe liquidity problems, and significant regulatory risks, the stock presents an extremely unfavorable investment profile.

Keywords

Biotech, China VIE, SEC 10-Q, Going Concern, Financial Results, Stem Cell Technology, Healthcare Products, PRC Regulations, Cybersecurity Review, HFCA Act, Related Party Transactions, Operating Loss, Capital Raise, Shareholder Loans