HH Biotechnology (HHBT) 10-Q 2016 Q3 Quarterly report

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

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

For the quarterly period ended September 30, 2016

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

For the transition period from          to

Commission File No. 0-23015

HH BIOTECHNOLOGY HOLDINGS COMPANY

(Exact name of registrant as specified in its charter)

Nevada (State or other jurisdiction of incorporation or organization)   87-0450232 (IRS Employer Identification No.)  

C Site 25-26F President Building, No. 69 Heping North Street

Heping District, Shenyang 110003, Peoples Republic of China

(Address of principal executive offices)

0086-24-22813888

(Issuer’s telephone number)

Not Applicable

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-3 of the Exchange Act). (check one)

Large Accelerated Filer [  ]  Accelerated Filer [  ]  Non-Accelerated Filer [  ]  Smaller Reporting Company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ] No [X]

State the number of shares outstanding of each of the issuer’s classes of common equity:  As of July 27, 2016, there were 14,059,966 shares of common stock outstanding.

TABLE OF CONTENTS

ITEM NUMBER AND CAPTION	Page
Part I	2
Item 1. Financial Information	2
Balance Sheet as of September 30, 2016 and December 31, 2015 (Unaudited)	2
Statements of Operations for the Three-Month and Nine-Month Periods Ended September 30, 2016 and 2015 (Unaudited)	3
Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2016 and 2015 (Unaudited)	4
Notes to the Financial Statements (Unaudited)	5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 4. Controls and Procedures	18
Part II	19
Other Information	19
Item 6. Exhibits	19
Signatures	19

2

HH BIOTECHNOLOGY HOLDINGS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2016 AND DECEMBER 31, 2015
(UNAUDITED)
			As of
			September 30, 2016		December 31, 2015
ASSETS
Current assets:
	Cash and cash equivalents		$	3,287,664	$	9,819,260
	Accounts receivable, net			538,742		227,384
	Other receivable, net			621,380		683,666
	Other current assets			1,023		2,947
		Total current assets		4,448,809		10,733,257
Property, plant & equipment, net				536,713		225,800
Rental property, net				31,913,126		35,502,002
Intangible asset				-		-
Investment in financial asset				5,852,697		-
Investment-related party				-		-
Total assets			$	42,751,345	$	46,461,059
LIABILITIES AND EQUITY
Current liabilities:
	Bank loans		$	-	$	4,631,202
	Accounts payable			4,248,095		4,441,362
	Accrued expenses			13,460		13,376
	Other payable			1,909,006		1,917,779
	Due to a related party			364,377		314,975
	Payable to disposed subsidiaries			780,646		803,628
	Advances from tenants			1,298,015		1,512,204
	Taxes payable			4,538,332		4,467,561
		Total current liabilities		13,151,931		18,102,087
	Short Term Loan			13,151,931		18,102,087
Stockholders' equity:
	Common stock, $.001 par value 50,000,000
	shares authorized, 14,059,966 issued and outstanding
	as of June 30, 2016 and December 31, 2015			14,060		14,060
	Additional paid in capital			12,107,856		12,107,856
	Statutory reserve			638,128		638,128
	Accumulated other comprehensive income			3,061,754		3,684,314
	Retained earnings			13,756,517		11,771,832
		Total stockholders’ equity		29,578,315		28,216,190
	Non-controlling interest			21,099		142,782
Total equity				29,599,414		28,358,972
Total liabilities and equity			$	42,751,345	$	46,461,059

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

3

HH BIOTECHNOLOGY HOLDINGS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2016 and 2015

(UNAUDITED)

		For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2016		2015		2016		2015
Revenues
	Healthcare product sales	$	13,180	$	923	$	25,255	$	923
	Rental income		1,448,335		1,274,822		4,197,360		4,167,016
	Management fee income		485,574		490,802		1,482,550		1,574,283
	Total revenues		1,947,089		1,766,547		5,705,165		5,742,222
Cost of revenues
	Healthcare product sales		11,309		2,421		26,175		2,421
	Rental cost		950,919		954,122		2,759,657		3,101,658
	Management fee cost		242,843		359,006		874,960		996,506
	Total cost		1,205,071		1,315,549		3,660,792		4,100,586
	Gross profit		742,018		450,998		2,044,373		1,641,636
Operation expenses
	Selling expenses		1,405		17,228		11,674		30,900
	General and administrative expenses		499,613		389,533		1,387,257		1,078,609
	Recovery of bad debt		(1,392,936)		-		(2,005,008)		(1,573,416)
	Depreciation and amortization		3,134		2,092		15,080		12,188
	Total operation (income) expenses		(888,784)		408,853		(590,997)		(451,718)
Income from operations			1,630,802		42,145		2,635,370		2,093,354
Other income (expense)
	Disposal of parking lots income		-		-		26,761		-
	Other income, net		69,916		49,909		116,097		241,441
	Interest expense		(536)		(105,795)		(105,743)		(780,956)
	Total other income (expense)		69,380		(55,886)		37,115		(539,515)
Income (loss) before income taxes			1,700,182		(13,741)		2,672,485		1,553,839
Provision for income taxes			513,501		-		825,775		-
Net income (loss)			1,186,681		(13,741)		1,846,710		1,553,839
Net income attributable to the Company			1,233,429		4,729		1,984,684		1,583,084
Net loss attributable to the non-controlling interest			(46,748)		(18,470)		(137,974)		(29,245)
Other comprehensive loss:
	Foreign currency translation adjustment		(84,080)		(509,434)		(622,560)		(434,966)
Comprehensive (loss) income		$	1,102,601	$	(523,175)	$	1,224,150	$	1,118,874
Comprehensive income (expense) attributable to the Company			1,148,844		(504,705)		1,345,832		1,150,011
Comprehensive loss attributable to the non-controlling interest			(46,243)		(18,470)		(121,682)		(31,137)
Net (loss) income per share
	Basic	$	0.08	$	(0.04)	$	0.10	$	0.12
	Diluted	$	0.08	$	(0.04)	$	0.10	$	0.12
Weighted average number of shares outstanding
	Basic		14,059,966		14,059,966		14,059,966		13,392,907
	Diluted		14,059,966		14,059,966		14,059,966		13,392,907

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

4

HH BIOTECHNOLOGY HOLDINGS COMPANY AND SUBSIDIARIES

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

(UNAUDITED)

		Nine Months
		2016		2015
Cash flows from operating activities:
Net income (loss)		$	1,846,711	$	1,553,839
Adjustments to reconcile net income to net cash provided by operating activities:
Net cash provided by operating activities
	Depreciation and amortization		2,307,468		2,382,676
	Recovery of bad debt		-		(1,573,416)
Changes in operating assets and liabilities:
	Accounts receivable and other receivable		(249,072)		(172,330)
	Advances to suppliers		-		(5,803)
	Other current assets		1,924		(3,593)
	Prepayment		-		163,001
	Accounts payable and accrued expenses		(195,921)		-
	Other payable		(8,773)		-
	Payroll payables		2,738		-
	Other levies		1,397		-
	Due to related party		49,402		-
	Advances from tenants		(214,189)		76,373
	Payable to disposed subsidiaries		(22,982)
	Taxes payable		69,374		(100,028)
Net cash provided by operating activities			3,588,077		2,320,719
Cash flows used in investing activities:
	Purchase of property & equipment		(6,146)		(25,497)
	Investment-related party		(5,852,697)		-
Net cash used in investing activities			(5,858,843)		(25,497)
Cash flows from financing activities:
	Loans repayment from the borrowing parties		-		5,603,031
	Loans paid to the bank		(4,631,202)		(14,407,794)
	Proceeds from stock issuance, net of offering costs		-		7,544,000
	Proceeds from non-controlling interest		-		191,466
Net cash used in financing activities			(4,631,202)		(1,069,297)
Effect of exchange differences			370,372		(116,104)
Net (decrease) increase in cash and cash equivalents			(6,531,596)		1,109,821
Cash and cash equivalents, beginning of period			9,819,260		8,799,261
Cash and cash equivalents, end of period		$	3,287,664	$	9,909,082
Supplemental disclosures of cash flow information:
	Interest paid	$	105,743	$	790,609
	Income taxes		-	$	-

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

5

HH BIOTECHNOLOGY HOLDINGS COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.             Description of business

HH Biotechnology Holdings Company (“HHBT” or the “Company”), was incorporated in the State of Nevada on December 4, 1987, under the name of Quantus Capital, Inc. The Company, through its various subsidiaries, is engaged in commercial and residential real estate leasing, management, consulting, investment, development and sales in the city of Shenyang, Liaoning Province, in the People’ Republic of China (“PRC”). The Company is also engaged in the wholesale and retail distribution of consumer products including food products, dietary supplements, household products and daily necessities, etc., through its wholly owned subsidiary, Shenyang Ai Zhuang Trading Co., Ltd (“Ai Zhuang”), and the 53% owned entity, Panacea Co., Ltd.

2.             Summary of significant accounting policies

Principles of consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Silverstrand International Holdings Company Limited, Shenyang Maryland International Industry Company Limited, Shenyang Ai Zhuang Trading Co., Ltd (“Ai Zhuang”), and the 53% owned entity, Panacea Co., Ltd. Ai Zhuang and Panacea Co., Ltd. All significant inter-company transactions and balances within the Company are eliminated in consolidation.

Use of estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value Measurements

The Company applies the provisions of ASC Subtopic 820-10, “Fair Value Measurements”, for fair value measurements of financial assets and financial liabilities and for fair value measurements of non-financial items that are recognized or disclosed at fair value in the financial statements.  ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

● Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.

There were no assets or liabilities measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as of September 30, 2016 and December 31, 2015.

6

Foreign currency translation

The Company uses the United States dollar for financial reporting purposes. The Company’s subsidiaries maintain their books and records in their functional currency - Chinese Yuan Renminbi (CNY), being the primary currency of the economic environment in which their operations are conducted. All assets and liabilities are translated at the current exchange rate, stockholder’s equity are translated at the historical rates and income statement and statement of cash flows items are translated at the average exchange rate for the period. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not necessarily agree with changes in the corresponding balances on the balance sheet. The resulting translation adjustments are reported under other comprehensive as a component of shareholders’ equity.

Cash and cash equivalents

The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents.

Allowance for doubtful accounts

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and other receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. As of September 30, 2016 and December 31, 2015, the Company reserved $2,066,239 and $1,644,340 respectively, for other receivable bad debt; and $653,023 and $675,929 respectively, for accounts receivable bad debt. The Company also reserved $0 and $2,415,944 respectively for loans receivable as of September 30, 2016 and December 31, 2015 respectively.

Property, plant and equipment

Property, plant and equipment is being depreciated over the estimated useful lives of the related assets. Depreciation is computed on the straight-line basis over useful lives as follows:

Buildings	8-26 years
Equipment	5 years
Automobile	5 years
Office furniture and fixtures	5 years

Repairs and maintenance costs are normally charged to the statement of operations and other comprehensive income in the year in which they are incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of the asset, the expenditure is capitalized as an additional cost of the asset.

Property, plant and equipment are evaluated annually for any impairment in value. Where the recoverable amount of any property, plant and equipment is determined to have declined below its carrying amount, the carrying amount is reduced to reflect the decline in value. There were no property, plant and equipment impairments recognized as of September 30, 2016 and December 31, 2015 respectively.

Rental property

Properties include buildings held for rental and land use rights, which are being depreciated over the estimated useful lives of the related assets. Depreciation is computed on the straight-line basis over 20-26 years. As of September 30, 2016 and December 31, 2015, net property held for rental amounted to $31,913,126 and $35,502,002 respectively. Accumulated depreciation of rental properties amounted to $36,301,614 as of September 30, 2016 and $35,044,528 as of December 31, 2015.

7

Investment-related party

Because the fair value is not readily determinable and less than 20% of voting rights, our long-term investments apply ASC 325-20 cost method investments. The Company carries at cost with its investment in investees which does not have readily determinable fair value and the Company does not have significant influence. The Company only adjusts for other-than-temporary declines in fair value and distributions of earnings that exceed the Company’s share of earnings since its investment. The Company regularly evaluates the impairment of the cost method investments based on performance and financial position of the investee as well as other evidence of market value. Such evaluation includes, but is not limited to, reviewing the investee’s cash position, recent financing, projected and historical financial performance, cash flow forecasts and financing needs. An impairment loss is recognized in earnings equal to the excess of the investment’s cost over its fair value at the balance sheet date of the reporting period for which the assessment is made. The fair value would then become the new cost basis of investment.

Such evaluation includes, but is not limited to, reviewing the investee’s cash position, recent financing, projected and historical financial performance, cash flow forecasts and financing needs. An impairment loss is recognized in earnings equal to the excess of the investment’s cost over its fair value at the balance sheet date of the reporting period for which the assessment is made. The fair value would then become the new cost basis of investment.

Revenue recognition

Rental income and management fee income – The Company recognizes the rental income on the straight-line basis over the terms of the tenancy agreements. The management fee, including the service fee mainly for property management, maintenance and repair, and security, is recognized quarterly over the terms of the tenancy agreements.

Real estate sales – Revenue from the sales of development properties is recognized by the full accrual method when the sale is consummated. A sale is not considered consummated until (1) the parties are bound by the terms of a contract, (2) all consideration has been exchanged, (3) any permanent financing of which the seller is responsible has been arranged, (4) all conditions precedent to closing have been performed, (5) the seller does not have substantial continuing involvement with the property, and (6) the usual risks and rewards of ownership have been transferred to the buyer. Sales transactions not meeting all the conditions of the full accrual method are accounted for using the deposit method of accounting. Under the deposit method, all costs are capitalized as incurred, and payments received from the buyer are recorded as a deposit liability.

Real estate capitalization and cost allocation – Real estate held for development or sale is stated at cost or estimated net realizable value, whichever is lower. Costs include land and land improvements, direct construction costs and development costs, including predevelopment costs, interest on indebtedness, real estate taxes, insurance, construction overhead and indirect project costs. Selling and advertising costs are expensed as incurred. Total estimated costs of multi-unit developments are allocated to individual units based upon specific identification methods.

Impairment – If real estate is determined to be impaired, it will be written down to its fair market value. Real estate held for development or sale costs include the cost of land use rights, land development and home construction costs, engineering costs, insurance costs, wages, real estate taxes, and interest related to development and construction. All costs are accumulated by specific projects and allocated to residential and commercial units within the respective projects. The Company leases the land for the residential unit sites under land use rights with various terms from the government of the PRC. The Company evaluates the carrying value for impairment based on the undiscounted future cash flows of the assets. Write-downs of inventory deemed impaired would be recorded as adjustments to the cost basis. No depreciation is provided for construction in progress.

Other income

Other income consists of land leveling income, parking lot income, cleaning income and etc. This income was recognized as the services were performed and the settled amount has been paid in accordance with the terms of the agreement.

8

Earnings (loss) per share

Basic earnings (loss) per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income by the weighted-average number of common shares and dilutive potential common shares outstanding during the period.

As of September 30, 2016 and December 31, 2015, respectively, there were no outstanding securities or other contracts to issue common stock, such as options, warrants or conversion rights, which would have a dilutive effect on earnings per share as the effect of options outstanding at that time was anti- dilutive.

Income taxes

The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the difference are expected to affect taxable income.

The Company records a valuation allowance for deferred tax assets, if any, based on its estimates of its future taxable income as well as its tax planning strategies when it is more likely than not that a portion or all of its deferred tax assets will not be realized.

Non-controlling interest

 Non-controlling interest represents the portion of equity that is not attributable to the Company. The net income (loss) attributable to non-controlling interests are separately presented in the accompanying statements of income and other comprehensive income. Losses attributable to non-controlling interests in a subsidiary may exceed the interest in the subsidiary’s equity. The related non-controlling interest continues to be attributed its share of losses even if that attribution results in a deficit of the non-controlling interest balance. The non-controlling interest rate of entity Panacea Co., Ltd., which was set up in April 2015, was 47%, with the amount of $21,099 and $142,782 as of September 30, 2016 and December 31, 2015, respectively.

Concentrations of business and credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk are cash and cash equivalents, accounts receivable and other receivables arising from its normal business activities. The Company places its cash and cash equivalents in what it believes to be credit-worthy financial institutions. The Company has a diversified customer base, most of which are in China.

The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.

Statement of cash flows

Cash flows from the Company's operations is calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not necessarily agree with changes in the corresponding balances on the balance sheet.

9

Recent accounting pronouncements

Revenue Recognition:    In May 2014, the FASB issued ASU 2014-09,Revenue from Contracts with Customers: Topic 606and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016 and May 2016 within ASU 2015-04, ASU 2016-08, ASU 2016-10 and ASU 2016-12, respectively (ASU 2014-09, ASU 2015-04, ASU 2016-08, ASU 2016-10 and ASU 2016-12 collectively, Topic 606). Topic 606 supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of Topic 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. Topic 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation, among others. Topic 606 is effective for us as of either our first quarter of fiscal 2018 or our first quarter of fiscal 2019 using either of two methods: (1) retrospective application of Topic 606 to each prior reporting period presented with the option to elect certain practical expedients as defined within Topic 606 or (2) retrospective application of Topic 606 with the cumulative effect of initially applying Topic 606 recognized at the date of initial application and providing certain additional disclosures as defined per Topic 606. Preliminarily, we plan to adopt Topic 606 in the first quarter of fiscal 2019 pursuant to the aforementioned adoption method (1) and we do not believe there will be a material impact to our revenues upon adoption. We are continuing to evaluate the impacts of our pending adoption of Topic 606 and our preliminary assessments are subject to change. In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Gross versus Net),” clarifying the principal versus agent guidance in the new revenue recognition standard, by revising the indicators to focus on evidence that the company is a principal. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” reducing the complexity when applying the guidance for identifying performance obligations and clarifying how to determine whether revenue related to a performance obligation for an intellectual property license is recognized over time or at a point in time. In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients,” clarifying certain core recognition principles including collectability, sales tax presentation, noncash consideration, contract modifications and completed contracts at transition. These ASUs are effective for the Company beginning in the first quarter of 2018, allow for early adoption in the first quarter of 2017 and may be applied using either a full retrospective approach or a modified retrospective approach. The Company is currently evaluating the method of adoption and the impact these ASUs will have on its Consolidated Financial Statements.

Disclosure of Going Concern Uncertainties:     In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (ASU 2014-15), to provide guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for us in our fourth quarter of fiscal 2017 with early adoption permitted. We do not believe the impact of our pending adoption of ASU 2014-15 on the Company’s financial statements will be material.

Liabilities: In February 2015, FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The new consolidation standard changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a VIE, and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. The guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2015. Early adoption is allowed, including early adoption in an interim period. A reporting entity may apply a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or may apply the amendments retrospectively. The Company is currently assessing the impact of the adoption of this guidance on the consolidated financial statements.

Financial instrument: In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). The standard addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is not permitted. Accordingly, the standard is effective for us on September 1, 2018. We are currently evaluating the impact that the standard will have on our consolidated financial statements. In June 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The estimate of expected credit losses will require considerations of historical information, current information and reasonable and supportable forecasts. This ASU also expands the disclosure requirements to enable users of financial statements to understand the assumptions, models and methods for estimating expected credit losses. This ASU is effective for the Company beginning in the first quarter of 2020 and allows for early adoption beginning in the first quarter of 2019. The Company is currently evaluating the impact the ASU will have on its Consolidated Financial Statements.

10

Leases: In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-2”), which provides guidance on lease amendments to the FASB Accounting should Standard Codification. This ASU will be effective for us beginning in May 1, 2019. We are currently in the process of evaluating the impact of the adoption of ASU 2016-2on our consolidated financial statements.

Stock-based Compensation:    In March 2016, the FASB issued ASU 2016-09,Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting(ASU 2016-09). ASU 2016-09 changes how companies account for certain aspects of stock-based awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for us in the first quarter of 2018, and earlier adoption is permitted. We are still evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures.

Financial Instruments - Credit Losses: In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): The amendments in this Update require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The amendments broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The use of forecasted information incorporates more timely information in the estimate of expected credit loss, which will be more decision useful to users of the financial statements. ASU 2016-13 is effective for the Company for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is allowed as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is still evaluating the effect that this guidance will have on the Company’s consolidated financial statements and related disclosures.

Statement of Cash Flows: In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): The amendments in this Update apply to all entities, including both business entities and not-for-profit entities that are required to present a statement of cash flows under Topic 230. The amendments in this Update provide guidance on the following eight specific cash flow issues. The amendments are an improvement to GAAP because they provide guidance for each of the eight issues, thereby reducing the current and potential future diversity in practice described above. ASU 2016-15 is effective for the Company for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is still evaluating the effect that this guidance will have on the Company’s consolidated financial statements and related disclosures.

3.            Property, Plant & Equipment and Rental property

Property, Plant & Equipment consisted of the following:

	September 30, 2016		December 31,  2015
Building	$	39,644	$	15,144
Automobile		1,104,281		1,136,790
Office equipment & Furniture		895,641		609,932
		2,039,566		1,761,866
Accumulated depreciation		(1,502,853)		(1,536,066)
Property, plant and equipment, net	$	536,713	$	225,800

	September 30, 2016		December 31,  2015
Rental property	$	68,214,740	$	70,546,530
Accumulated depreciation		(36,301,614)		(35,044,528)
Rental property, net	$	31,913,126	$	35,502,002

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The Company recorded depreciation expense relating to properties held for rental, as well as property, plant and equipment amounting to $3,134, and $2,092 for the three months ended September 30,2016 and 2015, and $2,293,977 and $2,382,676 for the nine months ended September 30, 2016 and 2015, respectively.

$499,613 and $389,533 for the three months ended September 30, 2016 and 2015, and $1,387,257 and $1,078,609 for the nine months ended September 31, 2016 and 2015 were recorded as general and administrative expense, respectively.

As of September 30, 2016, no fixed assets or rental property were pledged as security for long-term loans.

4.             Related party transactions

Investment in a related party

On May 15, 2016, the Company entered into a Framework Agreement on Capital Increase and Equity Enlargement with the shareholders of Jiangcheng Sino-Au Agricultural Technology Development Co., Ltd. (“SAAT”) for the purchase of 14.07 million shares in the capital of SAAT for approximately 5,852,697 (RMB 37.48 million) based on the fair value . After the investment HHBT holds 11.12% of the total share capital of SAAT.

As of September 30, 2016 and December 31, 2015, the Company's balance of long-term investment was $5.85 million and $0 million, respectively. For the period ended September 30, 2016, the Company did not record any investment income.

The investment is accounted for under the cost method, and is reviewed periodically for indicators of other-than-temporary impairment. If we determine that an other-than-temporary impairment has occurred, we write down the investment to its fair value. We estimate fair value of our cost method investments considering available information such as pricing in recent rounds of financing, current cash positions, earnings and cash flow forecasts, recent operational performance and any other readily available market data. For the three and nine months ended September 30, 2016, we determined there were no other-than-temporary impairments on our cost method investment.

Due to a related party

The due to a related party is the amount due to a Company’s stockholder. The amount of due to a related party is $364,377 as of September 30, 2016 and $314,975 as of December 31, 2015.

5.             Accrued expenses

Accrued expenses consisted of the following:

	September 30, 2016		December 31,  2015
Payroll and welfare payable	$	2,738	$	4,260
Accrued expenses		10,722		9,116
Total	$	13,460	$	13,376

6.             Other payable

Other payable consisted of the following:

	September 30, 2016		December 31,   2015
Customer guarantee deposit	$	313,318	$	1,117,614
Customer deposit for property decoration		18,722		18,502
Miscellaneous payable		1,576,966		781,663
Total	$	1,909,006	$	1,917,779

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7.             Tax payables

Tax payables consisted of the following:

	September 30, 2016		December 31,  2015
Income tax payable in Mainland China	$	1,679,649	$	1,576,275
Business tax		607,137		602,586
Land VAT payable		2,250,149		2,316,391
Other levies		1,397		(27,691)
Total	$	4,538,332	$	4,467,561

8.             Payable to disposed subsidiary

The Company had amounts due to a Loyal Best, a previously disposed of entity, as of September 30, 2016 and December 31, 2015 in the amount of $780,646 and $803,628 respectively.

9.             Loan Payable

Loans payable (including accrued interest) consisted of the following:

Nature	Due on	Interest per Annum	September 30, 2016		December 31,  2015
Bank loan	6-12-2016	8.775%	$	-	$	4,631,202
			$	-	$	4,631,202

The above loans were previously secured by the Company's rental properties.

The Company's incurred interest expense of $0 and$113,769 for the three months ended September 30, 2016 and 2015, and $105,743 and $790,609 for the nine months ended September 30, 2016 and 2015 respectively.

10.           Statutory reserve

As stipulated by the Company Law of the People’s Republic of China (PRC), net income after taxation can only be distributed as dividends after appropriation has been made for the following:

i.	Making up cumulative prior years’ losses, if any;
ii.	Allocations to the “Statutory Surplus Reserve” of at least 10% of income after tax, as determined under PRC accounting rules and regulations, until the fund amounts to 50% of the Company’s registered capital;
iii.	Allocations of 5% to 10% of income after tax, as determined under PRC accounting rules and regulations, to the Company’s “Statutory Common Welfare Fund”, which is established for the purpose of providing employee facilities and other collective benefits to the Company’s employees; and statutory common welfare fund is no longer required per the new cooperation law executed in 2006; and
iv.	Allocations to the discretionary surplus reserve, if approved in the stockholders’ general meeting.

The Company did not contribute to statutory reserve for the period ended September 30, 2016 and 2015, respectively.

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11.           Segment information

ASC 280 requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.

During 2016 and 2015, the Company was organized into two main business segments: (1) Rental income & Management fee, and (2) Consumer product sales. The following table presents a summary of operating information and certain year-end balance sheet information as of nine-month and three-month periods ended of September 30, 2016 and 2015, respectively.

			For the Three Months Ended September 30,		For the Nine Months Ended September 30,
			2016	2015	2016	2015
Revenues from unaffiliated customers:
	Rental income & Management fee		1,933,909	1,765,624	5,679,910	5,741,299
	Consumer product sales		13,180	923	25,255	923
		Consolidated	1,947,089	1,766,547	5,705,165	5,742,222
Operating income (loss):
	Rental income & Management fee		1,796,667	144,034	3,254,348	2,359,192
	Consumer product sales		(103,727)	(83,054)	(310,686)	(83,054)
	Corporation (1)		(62,138)	(18,835)	(308,292)	(182,784)
		Consolidated	1,630,802	42,145	2,635,370	2,093,354
Net income (loss) before taxes:
	Rental income & Management fee		1,864,716	84,423	3,303,101	1,819,440
	Consumer product sales		(101,882)	(82,755)	(307,648)	(82,755)
	Corporation (1)		(62,652)	(15,409)	(322,968)	(182,846)
		Consolidated	1,700,182	(13,741)	2,672,485	1,553,839
Identifiable assets:
	Rental income & Management fee		(865,818)	(1,259,280)	32,096,044	40,156,866
	Consumer product sales		(301)	511,170	31,635	511,170
	Corporation (1)		-	(49,132)	-	7,241,049
		Consolidated	(866,119)	(797,242)	32,127,679	47,909,085
Depreciation and amortization:
Consumer product sales			944	(1,620,978)	8,477
	Rental income & Management fee		2,190	2,372,020	6,603	2,372,020
	Corporation (1)		-	1,552	-	10,656
		Consolidated	3,134	752,594	15,080	2,382,676
Capital expenditures:
	Rental income & Management fee		506	755	6,146	4,196
	Consumer product sales		-	21,290	-	21,290
		Consolidated	-	22,045	6,146	25,486

(1). Unallocated loss from Operating income (loss) and Net income before provision for income taxes are primarily related to general corporate expenses.

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

Caution Regarding Forward-Looking Information

The following discussion and analysis should be read in conjunction with our consolidated financial statements prepared in accordance with accounting principles generally accepted in the USA. Unless otherwise indicated, references in this discussion to “we”, “our” and “us” are to HH Biotechnology Holdings Company, and its subsidiaries.

Any statements in this discussion that are not historical facts are forward-looking statements that involve risks and uncertainties; actual results may differ from the forward-looking statements.  Sentences or phrases that use such words as “believes”, “anticipates”, “plans”, “may”, “hopes”, “can”, “will”, “expects”, “is designed to”, “with the intent”, “potential” and others indicate forward-looking statements, but their absence does not mean that a statement is not forward-looking.  This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by any forward-looking statements.  We do not undertake any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Executive Summary

HHBT, through its various subsidiaries, is or has been engaged in commercial and residential real estate leasing, management, consulting, investment, development and sales, We conduct all our operation in the People’s Republic of China through our direct and indirect wholly owned subsidiaries; Silverstrand International Holdings Company Limited (“Silverstrand”)., Shenyang Maryland International Industry Company Limited (“Maryland”),Shenyang Ai Zhuang Trading Co., Ltd (“Ai Zhuang”), and Panacea Co., Ltd. Ai Zhuang and Panacea Co., Ltd. were established during the first Nine months of 2015 to engage in wholesale and retail distribution of consumer products including food products, dietary supplements, household products and publications. Ai Zhuang and Panacea Co., Ltd. had started business operation during the quarter ended September 30, 2015.

Recent Development

There is a huge demand for health care products. According to the Boston consulting firm (BCG) latest report "released from insight to action: Digging China health consumer market" pointed out: the Chinese consumers are leading the global health awareness, which is due to the care about the health and effects of China development environment. By 2020 China's GDP will reach about 8 trillion and 500 billion yuan in the narrow sense, while the general health industry production value will reach 17 trillion yuan.

In 2015, HHBT began the transformation of the main business, because of macadamia nuts in the prevention of cardiovascular disease and Alzheimer's disease has a prominent effect. HHBT will regard the perilla oil as the core raw material, through bio technology, research and development of green health food products (drugs) the company's main business, plans to transition from planting, development to production and marketing of the whole industry chain green health industry company.

On May 15, 2016, HH Biotechnology Holdings Company (“HHBT” or the “Company”) entered into a Framework Agreement on Capital Increase and Equity Enlargement (the “Agreement”) with the shareholders of Jiangcheng Sino-Au Agricultural Technology Development Co., Ltd. (“SAAT”) for the purchase of 14.07 million shares in the capital of SAAT for RMB 37.4795 million Yuan (approximately US$5,746,318 at May 16, 2016). After the investment HHBT holds 11.12% of the total share capital of SAAT.

SAAT owns approximately 2,470 acres of land in Yunnan Province, PRC, and is engaged in the business of cultivating, processing, and trading Macadamia.  The acquisition of the interest in SAAT is a major step forward in the plan of HHBT to move into the nutraceutical and healthy foods sector.

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On July 27, 2016, the board of directors and stockholders of HHBT approved an amendment to the Articles of Incorporation changing the name of the Company to “HH Biotechnology Holdings Company.”  We expect to file a certificate of amendment with the state of Nevada to effectuate the name change within a few days after the later of the date that is 20 days from the date this Information Statement is disseminated to our stockholders and the date the Financial Industry Regulatory Authority completes its review and processing of our name change.

Results of Operations

Comparison of operations for the Three-Months ended September 30, 2016 and 2015

The Company had net income of $1,186,681 for the three months ended September 30, 2016, which represents an increase in net income by $1,200,422 or 8,736.06%, compared with a net loss of $13,741 in the same period of 2015.  Components resulting in this increase are discussed below. 

Revenues increased by $180,542 or 10.22% from $1,766,547 for the three months ended September 30, 2015 to $1,947,089 for the same period of 2016.  The increase was mainly due to increase of revenue from rental business.

The cost of revenue decreased by $110,478 or 8.40% from $1,315,549 for the three months ended September 30, 2015 to $1,205,071 for the three months ended September 30, 2016. The decrease was mainly due to decrease of cost under rental business, including the decrease in business tax and addition, and less .repair and maintenance activities.

The gross margin for the rental business was 38.1% and 25.5% for the three months ended September 30, 2016 and 2015 respectively.  This increase is attributable to the Company's effective cost controlling measure due to the economics of scale. The large increase of gross margin was from the management cost fee, contributing 40.98% for the three months ended September 30, 2016, compared with the 36.70% of gross margin for the three months ended September 30, 2015.  

Selling expenses decreased by $15,823or 91.84% from $17,228 for the three months ended September 30, 2015 to $1,405 for the three months ended September 30, 2016.  The decrease was due to the cancellation of lease certificate fee by the government in 2016.

General and administrative expenses increased by $110,080 or 28.26% from $389,533 for the three months ended September 30, 2015 to $499,613 for the three months ended September 30, 2016.  The increase is mainly because of the addition of the healthcare product sales business.

Reversal of bad debt allowance increased by $1,392,936 for the three months ended September 30, 2016 compared with the three months ended September 30, 2015, as the Company’s recovery of bad debt increased from $0 in the three-month period ended September 30, 2015, to $1,392,936 for the comparable period in 2016.

Depreciation and amortization was $3,134 and $2,092 for the three months ended September 30, 2016 and 2015 respectively.  

Interest expense was $536 and $105,795 for the three months ended September 30, 2016 and 2015 respectively. The decrease is mainly because the Company has already paid off certain bank loans in 06/12/2016.

Other income, net increased by $20,007 from $49,909 for the three months ended September 30, 2015 to $69,916 for the three months ended September 30, 2016.

The net income (loss) before income taxes was income of $1,700,182 and loss of $13,741 during three months ended September 30, 2016 and 2015, respectively. The primary reason is the increase in recovery of bad debt during the current period.

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Comparison of operations for the Nine-Months ended September 30, 2016 and 2015

The Company had net income of $1,846,710 for the nine months ended September 30, 2016, which represents an increase in net income by $292,871 or 18.85%, compared with a net income of $1,553,839 in the same period of 2015.  Components resulting in this increase are discussed below.

Revenues decreased by $37,057 or 0.65% from $5,742,222 for the nine months ended September 30, 2015 to $5,705,165 for the same period of 2016. The decrease was mainly due to decrease of revenue from management business.

The cost of revenue decreased by $439,794 or 10.73% from $4,100,586 for the nine months ended September 30, 2015 to $3,660,792 for the nine months ended September 30, 2016. The decrease was mainly due to decrease of cost under rental businessincluding the decrease in business tax and addition, and less .repair and maintenance activities.

The gross margin for the rental business was 35.8% and 28.6% for the nine months ended September 30, 2016 and 2015 respectively.  This increase is attributable to the Company's effective cost controlling measure due to the economics of scale. The large increase of gross margin was from the rental business, contributing 34.25% for the Nine months ended September 30, 2016, compared with the 25.57% of gross margin for rental business for the nine months ended September 30, 2015.  

Selling expenses decreased by $19,226 or 62.22% from $30,900 for the nine months ended September 30, 2015 to $11,674 for the nine months ended September 30, 2016.  The decrease was due to the cancellation of lease certificate fee by the government in 2016.

General and administrative expenses increased by $308,648 or 28.62% from $1,078,609 for the nine months ended September 30, 2015 to $1,387,257 for the nine months ended September 30, 2016.  The increase is mainly because of the addition of the healthcare product sales business.

Reversal of bad debt allowance increased by $431,592 for the nine months ended September 30, 2016 compared with the nine months ended September 30, 2015, as the Company’s recovery of bad debt increased from $1,573,415 for the nine months ended September 30, 2015 to $2,005,008 in the nine months ended September 30, 2016.

Depreciation and amortization was $15,080 and $12,188 for the nine months ended September 30, 2016 and 2015 respectively.  

Interest expense was $105,743 and $780,956 for the nine months ended September 30, 2016 and 2015 respectively. The increase is mainly because the Company has already paid off certain bank loans in 06/12/2016.

Other income, net decreased by $125,344 from negative $241,441 for the nine months ended September 30, 2015 to $116,097 for the nine months ended September 30, 2016.

The net income before income taxes was $2,672,485 and $1,553,839 during nine months ended September 30, 2016 and 2015, respectively. The primary reason is the increase in recovery of bad debt during the current period.

Cash Flow Discussion

Net cash flows provided by operating activities for the period ended September 30, 2016 and 2015 were $3,588,077 and $2,320,719, respectively.  The decrease in net operating activities cash flow amounted to $1,267,358 or 54.6%, which is due primarily to the net income of $1,846,711 in the current period, compared to $1,553,839 in prior period. 

Net cash flows used in investing activities for the period ended September 30, 2016 and 2015 were $5,858,843 and 25,497, respectively. The increase in net investing activities cash outflow amounted to $5,833,346 or 22878.6%, which is due primarily to the investment in financial asset of Jiangcheng Sino-Au Agricultural Technology Development Co., Ltd., amounted to $5,852,697 in the current period.

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Net cash flows used in financing activities were $4,631,202 and $1, 069,297 for the nine months ended September 30, 2016 and 2015, respectively.  The increase in net financing activities cash outflow amounted to $3,561,905 or 333.1%, which is due primarily to the stock issuance, net of offering costs amounted to $7,544,000 in prior period.

Liquidity and Capital Resources

Current liabilities exceeded current assets by $8,703,122 as of September 30, 2016.  

Sources of Liquidity

During the nine months ended September 30, 2016, net cash provided by operating activities totaled $3,588,077. Net cash used in investing activities totaled $5,858,843. Net cash used in financing activities totaled $4,631,202. The resulting change in cash for the period was a decrease of $6,531,596. The cash balance at the beginning of the period was $9,819,260. The cash balance on September 30, 2016 was $3,287,664.

The decrease in cash balances is primarily due to the investment in a related party with $5,825,697, repayment to bank loan of $4,631,202, and capital expenditures of $6,146, which were offset by a net cash provided in operating activities of $3,588,077.Operations during the period ended September 30, 2016 provided $3,588,077 in cash, as compared to $2,320,719 provided during the period ended September 30, 2015.  The primary reason for the increase was that no adjustment from bad debt recovery to decrease the net income to net cash provided by operating activities in the current period, whereas there was $1,573,416 of bad debt recovery to reconcile the net income in prior period.

Our investing activities during the period ended September 30, 2016 consisted of $6,146 in cash used to purchase additional property and equipment, as well as $5,852,697 of investment to acquire 11.12% of the total share capital of a related party, SAAT,

Our financing activities used $4,631,202 in cash during the period ended September 30, 2016 since we paid off the remaining bank loan. There was no more outstanding bank loan as of September 30, 2016.

During the nine months ended September 30, 2015, net cash provided by operating activities totaled $2,320,719. Net cash used in investing activities totaled $25,497. Net cash used in financing activities totaled $1,069,297 during the period. The resulting change in cash for the period was an increase of $1,109,821. The cash balance at the beginning of the period was $8,799,261. The cash balance on September 30, 2015 was $9,909,082.

As of September 30, 2016, the Company had $13,151,931 in total current liabilities, which comprised of $4,248,095 in accounts payable, $13,460 in accrued expenses, $1,909,006 in other payable, $1,298,015 in advance from tenants, $364,377 in due to a related party, $780,646 in payable to disposed subsidiaries, and $4,538,332 in tax payables. As of December 31, 2015, the Company had $18,102,087 in total current liabilities, which comprised of $4,631,202 in bank loans, $4,441,362 in accounts payable, $13,376 in accrued expenses, $1,917,779 in other payable, $314,975 in due to a related party, $803,628 in payable to disposed subsidiaries, $1,512,204 in advances from tenants, and $4,467,561 in tax payables.

The Company had no outstanding bank loans as of September 30, 2016. However, we may, if necessary, obtain financing through loans from banks secured by the rental properties that we could pledge as collateral. We are also exploring various proposals and alternatives in order to secure sources of financing and improve our financial position. We are also exploring potential strategic partnerships, which could provide a capital infusion to the Company. Additionally, the Company is assessing its ability to increase rental rates for its leasing business in order to generate additional revenue.  Further, the Company is continuing to focus efforts on cost containment to reduce general and administrative expenses.  With its relevant hands-on expertise, the Company also plans to expand operations to include property management.

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Contractual Obligations

The following table was a summary of the Company’s contractual obligations as of September 30, 2016:

	Total		Less than one year		1-3 Years		Thereafter
Short-Term Debt	$	-	$	-	$	-	$	-
Long-Term Debt		-		-		-		-
Amounts due to related parties		49,402		49,402		-		-
Construction commitments		-		-		-		-
Total Contractual Cash Obligations	$	49,402		49,402	$	-	$	-

ITEM 4. CONTROLS AND PROCEDURES

Our management, under the supervision and with the participation of our Chief Executive and Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15 promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act’) as of the end of the period covered by this interim period report.  Disclosure controls and procedures are controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and include controls and procedures designed to ensure that information we are required to disclose in such reports is accumulated and communicated to management, including our certifying officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon that evaluation, our certifying officer concluded that as of such date, our disclosure controls and procedures were not effective to ensure that the information required to be disclosed by us in our reports is recorded, processed, summarized and reported within the time periods specified by the SEC due to a weakness in our internal control over financial reporting described below, which we view as an integral part of our disclosure controls and procedures.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.  Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America.  Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and, providing reasonable assurance that unauthorized acquisition, use, or disposition of Company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis.  Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.

Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Based on this evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of September 30, 2016.

A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.  At September 30, 2016, the Company had only one executive officer performing the functions of chief executive officer and chief financial officer.  As a result, the Company’s internal controls were deficient for the following reasons:

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● There were no entity level controls because there was only one person serving in the dual capacity of chief executive officer and chief financial officer,

● There was no segregation of duties as that same person was responsible for the process of approving and paying the Company’s bills and recording the other financial transactions of the Company, and

● There was no separate audit committee.

As a result of management’s evaluation described above, it concluded on that the Company had significant control deficiencies as of September 30, 2016, that constituted a material weakness in the Company’s internal control over financial reporting.  Notwithstanding these control deficiencies, our certifying officer believes that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the respective periods presented.

The Company proposes to remediate the material weakness as its business develops by engaging accounting support that will effectively segregate different accounting functions and incorporate control processes for managing the accounting and financial affairs of the Company.  As the Company’s business develops it will recruit additional directors who are independent and can otherwise serve on an audit committee that fulfills the traditional oversight functions with respect to our internal system of controls and financial reporting.

There have been no changes in our internal control over financial reporting during the three-month period ended September 30, 2016, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II.  OTHER INFORMATION

ITEM 6.  EXHIBITS

Copies of the following documents are included or furnished as exhibits to this report pursuant to Item 601 of Regulation S-K.

Exhibit No.	SEC Ref. No.	Title of Document
31.1	31	The certification of chief executive officer required by Rule 13a-14(a) or Rule 15d-14(a)
31.2	31	The certification of chief financial officer required by Rule 13a-14(a) or Rule 15d-14(a)
32.1	32	The certifications required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350
101	101	Interactive Data files

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	HH BIOTECHNOLOGY HOLDINGS COMPANY
Date: November 14, 2016	By	/s/ Jiang Sheng
		Jiang Sheng, Chief Executive Officer
	By	/s/ Wang Lirong
		Wang Lirong, Chief Financial Officer

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