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 June 30, 2018



or



☐
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:  000-28767



YOSEN
GROUP, INC.

(Exact
name of registrant as specified in its charter)



|Nevada                                                                         | 88-0403070                              
|------------------------------------------------------------------------------ | ----------------------------------------
|(State
        or other jurisdiction of incorporation or
        organization) | (I.R.S.
    Employer Identification No.)





288
Hongshan Road Xiangzhou District

Zhuhai
City, Guangdong Province, China 519075

(Address
of Principal Executive Offices) (Zip Code)



+86-0756-2680558

(Registrant’s
telephone number,)



Indicate
by check whether the issuer (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 the 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 ☐       |  | Smaller reporting comp[any ☒
|                              |  | Emerging growth company ☐   





If
an emerging growth company, indicate by a check mark 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 No 12b-2 of the Exchange Act).

Yes ☐
 No ☒



As
of August 14, 2018, the registrant had 19,785,106 shares of common stock outstanding.





1







TABLE
OF CONTENTS



|PART
    I. FINANCIAL INFORMATION
|---------------------------------
|Item
    1                       
|                                 
|                                 
|                                 
|                                 
|Item
    2                       
|Item
    3                       
|Item
    4                       
|                                 
|Part
    II: Other Information   
|                                 
|Item 2                           
|Item 6                           



2









FORWARD
LOOKING STATEMENTS



This
report contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words
such as “expects,” “anticipates,” “intends,” “plans,” “believes,”
“seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking
statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this
report. Additionally, statements concerning future matters are forward-looking statements.



Although
forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based
on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties
and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking
statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those
specifically addressed under the headings “Risks Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in our annual report on Form 10-K for the year ended December 31, 2017, in
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-Q and
information contained in other reports that we file with the SEC. You are urged not to place undue reliance on these forward-looking
statements, which speak only as of the date of this report.



We
file reports with the SEC. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the SEC, including us. You can also read and copy any materials
we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain additional
information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330 FREE.



We
undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that
may arise after the date of this report, except as required by law. Readers are urged to carefully review and consider the various
disclosures made throughout the entirety of this quarterly report, which are designed to advise interested parties of the risks
and factors that may affect our business, financial condition, results of operations and prospects.





3









PART
I. FINANCIAL INFORMATION

Item
1.  Financial Statements



YOSEN
GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED
BALANCE SHEETS



|                                                                                                                                                                         |  | June
    30, |             | December
    31,
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------ | ----------- | ----------------
|                                                                                                                                                                         |  | 2018         |             | 2017            
|                                                                                                                                                                         |  |              | (Unaudited) |                 
|ASSETS                                                                                                                                                                   |  |              |             |                 
|Current
    assets:                                                                                                                                                      |  |              |             |                 
|Cash
    and equivalents                                                                                                                                                 |  | $            | 7,351       |                 
|Accounts
    receivable, net                                                                                                                                             |  |              | —           |                 
|Inventories                                                                                                                                                              |  |              | —           |                 
|Advances
    to suppliers                                                                                                                                                |  |              | —           |                 
|Prepaid
    expenses and other current assets                                                                                                                            |  |              | 246,000     |                 
|Total
    current assets                                                                                                                                                 |  |              | 253,351     |                 
|Property
    and equipment, net                                                                                                                                          |  |              | —           |                 
|Intangible
    asset                                                                                                                                                     |  |              | 60,436      |                 
|Other
    non-current assets                                                                                                                                             |  |              | —           |                 
|Total
    assets                                                                                                                                                         |  | $            | 313,787     |                 
|                                                                                                                                                                         |  |              |             |                 
|LIABILITIES
    AND STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                                       |  |              |             |                 
|Current
    liabilities:                                                                                                                                                 |  |              |             |                 
|Short-term
    loans                                                                                                                                                     |  | $            | —           |                 
|Accounts
    payable                                                                                                                                                     |  |              | —           |                 
|Advance
    from related party                                                                                                                                           |  |              | 68,219      |                 
|Accrued
    expenses and other payables                                                                                                                                  |  |              | 200,391     |                 
|Advance
    from customers                                                                                                                                               |  |              | —           |                 
|Income
    tax payable                                                                                                                                                   |  |              | —           |                 
|Total
    liabilities                                                                                                                                                    |  |              | 268,610     |                 
|                                                                                                                                                                         |  |              |             |                 
|Commitments
    and contingencies                                                                                                                                        |  |              |             |                 
|Stockholders’
    equity (deficit):                                                                                                                                      |  |              |             |                 
|Common
    stock, $0.001 par value, 50,000,000 shares authorized, 19,785,106 and 11,267,918 shares issued and outstanding as of June
    30, 2018 and December 31, 2017. |  |              | 19,785      |                 
|Additional
    paid-in capital                                                                                                                                           |  |              | 37,354,856  |                 
|Subscription
    receivable                                                                                                                                              |  |              | —           |                 
|Statutory
    reserve                                                                                                                                                    |  |              | —           |                 
|Other
    comprehensive income                                                                                                                                           |  |              | 307         |                 
|Accumulated
    deficit                                                                                                                                                  |  |              | (37,329,771 | )               
|Total
    Yosen Group's stockholders’ equity (deficit)                                                                                                                   |  |              | 45,177      |                 
|Noncontrolling
    interest                                                                                                                                              |  |              | —           |                 
|Total
    stockholders’ equity (deficit)                                                                                                                                 |  |              | 45,177      |                 
|Total
    liabilities and stockholders’ equity (deficit)                                                                                                                 |  | $            | 313,787     |                 



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





4









YOSEN
GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

THREE
AND SIX MONTHS ENDED JUNE 30, 2018 and 2017 (UNAUDITED)



|                                                                              |  | Three
    Months Ended June 30, |            | Six
    Months Ended June 30,
|----------------------------------------------------------------------------- |  | ------------------------------- | ---------- | -----------------------------
|                                                                              |  | 2018                            |            | 2017                         
|Net sales                                                                     |  | $                               | —          |                              
|Cost
    of sales                                                             |  |                                 | —          |                              
|Gross
    profit                                                              |  |                                 | —          |                              
|Selling,
    general and administrative expenses                              |  |                                 | 69,253     |                              
|Loss
    from continuing operations                                           |  |                                 | (69,253    | )                            
|Other
    (income) expense:                                                   |  |                                 |            |                              
|Other
    expense                                                             |  |                                 | 162        |                              
|Total
    other expense                                                       |  |                                 | 162        |                              
|                                                                              |  |                                 |            |                              
|Loss
    from continuing operations before income taxes                       |  |                                 | (69,415    | )                            
|Loss
    from continuing operations                                           |  |                                 | (69,415    | )                            
|Discontinued
    operations:                                                  |  |                                 |            |                              
|Loss
    from operations of discontinued component, net of income taxes       |  |                                 | (70,043    | )                            
|Gain
    from disposition of discontinued operations, net of income taxes     |  |                                 | 4,077,267  |                              
|Net
    income ( loss) from discontinued operations, net of income taxes      |  |                                 | 4,007,224  |                              
|Income
    (loss) including noncontrolling interest                           |  |                                 | 3,937,809  |                              
|                                                                              |  |                                 |            |                              
|Loss
    attributable to noncontrolling interest                              |  |                                 | (14,801    | )                            
|                                                                              |  |                                 |            |                              
|Net
    income (loss) attributable to Yosen Group                             |  |                                 | 3,952,610  |                              
|                                                                              |  |                                 |            |                              
|Other
    comprehensive items:                                                |  |                                 |            |                              
|Foreign
    currency translation income (loss) attributable to Yosen Group    |  |                                 | 253,862    |                              
|Foreign
    currency translation loss attributable to noncontrolling interest |  |                                 | (9,009     | )                            
|                                                                              |  |                                 |            |                              
|Comprehensive
    income (loss) attributable to Yosen Group                   |  | $                               | 4,206,472  |                              
|Comprehensive
    loss attributable to noncontrolling interest                |  | $                               | (23,810    | )                            
|                                                                              |  |                                 |            |                              
|Basic
    and diluted earnings (loss) per share:                              |  |                                 |            |                              
|Continuing
    operations                                                     |  | $                               | (0.01      | )                            
|Discontinued
    operations                                                   |  |                                 | 0.23       |                              
|Net
    earnings (loss) per share                                             |  | $                               | 0.22       |                              
|                                                                              |  |                                 |            |                              
|Weighted average shares outstanding:                                          |  |                                 |            |                              
|Basic
    and diluted                                                         |  |                                 | 17,601,256 |                              
|                                                                              |  |                                 |            |                              



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



5









YOSEN
GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED
STATEMENTS OF CASH FLOWS

SIX
MONTHS ENDED JUNE 30, 2018 and 2017 (UNAUDITED)



|                                                                                                                  |  | 2018 |            | 2017
|----------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ----
|CASH
    FLOWS FROM OPERATING ACTIVITIES:                                                                         |  |      |            |     
|Net
    income (loss) including noncontrolling interest                                                           |  | $    | 3,718,136  |     
|Adjustments
    to reconcile net loss including noncontrolling interest to net cash used in operating activities: |  |      |            |     
|Depreciation
    and amortization - discontinued operations                                                       |  |      | 37,991     |     
|Stock
    based compensation                                                                                      |  |      | 79,334     |     
|Net
    gain on disposal of discontinued operation                                                                |  |      | (4,076,277 | )   
|(Increase)
    /decrease in assets:                                                                               |  |      |            |     
|Accounts
    receivable - discontinued operations                                                                 |  |      | 36,373     |     
|Other
    receivable - discontinued operations                                                                    |  |      | (5,180     | )   
|Inventories
    - discontinued operations                                                                         |  |      | 159,634    |     
|Prepaid
    expenses and other current assets                                                                     |  |      | (8,000     | )   
|Prepaid
    expenses and other current assets – discontinued operations                                           |  |      | —          |     
|Advance
    to suppliers - discontinued operations                                                                |  |      | 11,385     |     
|Other
    noncurrent asset - discontinued operations                                                              |  |      | 66,862     |     
|(Increase)
    /decrease in current liabilities:                                                                  |  |      |            |     
|Accounts
    payable - discontinued operations                                                                    |  |      | (97,968    | )   
|Accrued
    expenses and other payables                                                                           |  |      | 57,100     |     
|Accrued
    expenses and other payable - discontinued operations                                                  |  |      | 921,394    |     
|Advance
    from customer - discontinued operations                                                               |  |      | (35,520    | )   
|Income
    tax payable - discontinued operations                                                                  |  |      | 40         |     
|Net
    cash provided by (used in) operating activities                                                           |  |      | 865,376    |     
|                                                                                                                  |  |      |            |     
|CASH
    FLOWS FROM INVESTING ACTIVITIES:                                                                         |  |      |            |     
|Purchase
    of property and equipment – discontinued operations                                                  |  |      | (4,967     | )   
|Construction
    in progress – discontinued operations                                                            |  |      | —          |     
|Payment
    for intangible asset                                                                                  |  |      | (62,822    | )   
|Net
    cash used in investing activities                                                                         |  |      | (67,789    | )   
|                                                                                                                  |  |      |            |     
|CASH
    FLOWS FROM FINANCING ACTIVITIES:                                                                         |  |      |            |     
|Repayment
    of short-term loans  – discontinued operations                                                      |  |      | (29,369    | )   
|Proceeds
    from equity financing                                                                                |  |      | —          |     
|Advance
    from (to) related party – discontinued operations                                                     |  |      | (770,779   | )   
|Net
    cash provided by (used in) financing activities                                                           |  |      | (800,148   | )   
|                                                                                                                  |  |      |            |     
|Effect
    of exchange rate changes on cash and equivalents                                                       |  |      | 2,030      |     
|Net
    decrease in cash and equivalents                                                                          |  |      | (530       | )   
|Cash
    and equivalents, beginning of period                                                                     |  |      | 7,881      |     
|Cash
    and equivalents, end of period                                                                           |  | $    | 7,351      |     
|                                                                                                                  |  |      |            |     
|Supplemental
    disclosure of cash flow information:                                                             |  |      |            |     
|Income
    taxes paid                                                                                             |  | $    | —          |     
|Interest
    paid - discontinued operations                                                                       |  | $    | 79,204     |     
|                                                                                                                  |  |      |            |     



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





6











YOSEN
GROUP, INC. AND SUBSIDIARIES

NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE
30, 2018 AND 2017



Note
1 - ORGANIZATION





Yosen Group, Inc. (the “Company”
or “Yosen”) is a Nevada corporation, organized on August 20, 1998.



The Company’s former business was conducted
through Capital Future Developments Limited (“Capital”). The sale of Capital included Capital’s subsidiaries
and Capital’s equity interest in its affiliates. On May 22, 2018, the Company transferred all of its equity in Capital and
its affiliates to the former chief executive officer in exchange for the transfer by him to the Company of 1,738,334 shares of
common stock, which was all of the common stock owned by him pursuant to an agreement dated March 29, 2018. The 1,738,334 shares
of common stock were canceled on May 22, 2018.



On February 6, 2018, the Company established
a wholly-owned subsidiary in British Virgin Island, DB-Link Ltd (“DB-Link”). The Company plans to operate franchising
or operations of restaurants through DB-Link. On July 18, 2018, the Company established a wholly-owned subsidiary, DBUB Group
Inc., a Nevada corporation.



Note
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Basis
of Presentation



The
accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of
Regulation S-X. Accordingly, these interim financial statements do not include all of the information and notes required by GAAP
for complete financial statements. All adjustments (consisting of normal recurring items) necessary to present fairly the Company’s
consolidated financial position have been included. These interim financial statements should be read in conjunction with the
consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December
31, 2017. Operating results for the interim periods presented herein are not necessarily indicative of the results that may be
expected for any other interim period or for the entire year. Reclassifications have been made to conform historical financial
statements to the current period’s presentation.



The
parent company does not have operations. Its main activities were incurring expenses relating to its status as a public company
in the United States. The functional currency of the Company is the United States dollar.



Going
Concern



The
accompanying consolidated financial statements were prepared on a going concern basis which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. For the six months ended June 30, 2018, the Company realized
a net loss from continuing operations of $137,054. The Company generated no revenue from continuing operations and requires significant
funding for its operations with no assurance as to its ability to obtain the funding on reasonable, if any, terms. The Company
has an accumulated deficit of $37,329,771 as of June 30, 2018. There can be no assurance that the Company will become profitable
or obtain necessary financing for our business or that it will be able to continue in business. These issues raise substantial
doubt regarding the Company’s ability to continue as a going concern.





Principles of Consolidation







The consolidated financial statements include
the accounts of Yosen and its subsidiaries. The consolidated results of operations and consolidated financial condition of Capital
is reflected as net income (loss) from discontinued operations, and the assets and liabilities of the discontinued operations at
December 31, 2017 are reflected as current and non-current assets and liabilities of the Company. All material intercompany accounts,
transactions and profits were eliminated in consolidation.







Noncontrolling Interest



Before May 22, 2018, Capital had invested
RMB 6,193,541($898,852) in Zhejiang Lamapai and owned 64.9% interest in Zhejiang Lamapai. The 35.1% owned by the third parties
is presented as non-controlling interest. On May 22, 2018, The Company sold its equity in Capital. Capital includes Capital’s
its subsidiaries as well as Capital’s equity interest in Zhejiang Lamapai . At June 30, 2018, the Company did not have any
non-controlling interest.



7





The
Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
Topic 810, “Consolidation,” which governs the accounting for and reporting of non-controlling interests in
partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate,
among other things, that non-controlling interests be treated as a separate component of equity, not as a liability, that increases
and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than
as step acquisitions or dilution gains or losses, and that losses of a partially owned consolidated subsidiary be allocated to
the non-controlling interest even when such allocation might result in a deficit balance. This standard also required changes
to certain presentation and disclosure requirements.

The
net income attributed to the non-controlling interest is separately designated in the accompanying consolidated statements of
income and other comprehensive income (loss). Losses attributable to the non-controlling interest in a subsidiary may exceed the
non-controlling interest’s interests in the subsidiary’s equity. The excess attributable to the non-controlling interest
is attributed to those interests. The non-controlling interest attributed its share of losses even if that attribution resulted
in a deficit non-controlling interest balance.



Currency
Translation



The
accounts of Capital’s subsidiaries were maintained, and its financial statements were expressed RMB. Such financial statements
were translated into United States dollars in accordance with FASB ASC Topic 830-10, “Foreign Currency Translation,” with
the RMB as the functional currency. According to FASB ASC Topic 830-10, assets and liabilities were translated at the ending exchange
rate, stockholders’ equity is translated at the historical rates and income statement items are translated at the average
exchange rate for the year. The resulting translation adjustments are reported as other comprehensive income in accordance with
FASB ASC Topic 220, “Reporting Comprehensive Income,” as a component of shareholders’ equity.
Transaction gains and losses are reflected in the consolidated statements of operations and comprehensive loss.



The
impact of foreign translation from our accounts in RMB to United States dollars on the Company’s operating results was not
material in the three and six months ended June 30, 2018 and 2017. During the translation process, the assets and liabilities
of all PRC subsidiaries are translated into US dollars at period-end exchange rates. The revenues and expenses are translated
into United States dollars at average exchange rates of the periods. Resulting translation adjustments are recorded as a
component of accumulated other comprehensive income within stockholders’ equity.





|                                                |  | Six
    Months Ended June 30,
|----------------------------------------------- |  | -----------------------------
|                                                |  | 2018                         
|RMB/$ exchange
    rate at period end           |  |                              
|Average
    RMB/$ exchange rate for the periods |  |                              



|                                                |  | Three
    Months Ended June 30,
|----------------------------------------------- |  | -------------------------------
|                                                |  | 2018                           
|RMB/$ exchange
    rate at period end           |  |                                
|Average
    RMB/$ exchange rate for the periods |  |                                



Transaction
gains or losses arising from exchange rate fluctuation on transactions denominated in a currency other than the functional
currency were included in the consolidated Statements of Operations and Comprehensive Loss. As a result of the translation,
As a result of the translation, Yosen recorded a foreign currency gain of $86,748 in the six months ended June 30, 2018 and a
loss of $71,696 in 2017, and a foreign currency gain of $253,862 and a loss of $50,807 for the three months ended June 30,
2018 and 2017. These gains and losses relate to the discontinued operations.





Use
of Estimates



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



8









Risks
and Uncertainties





The Company is subject to risks from, among
other things, intense competition associated with the industry in general, other risks associated with financing, liquidity requirements,
rapidly changing customer tastes and requirements, limited operating history, foreign currency exchange rates and the volatility
of public markets as well as other risks associated with the restaurant and related industries.



Contingencies



Certain
conditions may exist as of the date the financial statements are issued, which could result in a loss to the Company but which
will only be resolved when one or more future events occur or fail to occur. The Company’s management assesses such contingent
liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal
proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s
management evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the
amount of relief sought or expected to be sought.



If
the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability
can be estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates
that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated,
then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material
would be disclosed.



Loss
contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case
the guarantee would be disclosed.



Long-Lived
Assets



The
Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with FASB ASC
360, “Property, Plant and Equipment,” which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to
be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on
the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Losses on long-lived assets
to be disposed of are determined in a similar manner, except that fair market values are reduced for the cost of disposal.
Based on its review, the Company believes that, as of June 30, 2018 (unaudited) and December 31, 2017, there were no
significant impairments of its long-lived assets not related to the discontinued operations.



Fair
Value of Financial Instruments



FASB
ASC Topic 825, “Financial Instruments,” requires the Company disclose estimated fair values (“fair
values”) of financial instruments. The carrying amounts reported in the statements of financial position for current assets
and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.



Revenue
Recognition





The Company recognizes revenue in accordance
with ASC Topic 606, “Revenue from Contracts with Customers.” Revenue is recognized when control of the promised goods
or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled
to in exchange for those goods or services. Under Topic 606, revenue is recognized when there is a contract which has commercial
substance which is approved by both parties and identifies the rights of the parties and the payment terms. The Company adopted
Topic 606 as of January 1, 2018. Because all of the Company’s prior operations are discontinued and was disposed of on May
22, 2018, the adoption of Topic 606 does not affect the Company’s prior operations.



Cost
of Sales



Cost
of sales consists of actual product cost, which is the purchase price of the product less any discounts.  Cost of sales
excludes freight charges, purchase and delivery costs, internal transfer, freight charges and the other costs of the Company’s
distribution network, which are identified in general and administrative expenses.



9









General
and Administrative Expenses



General
and administrative expenses are comprised principally of payroll and benefits costs for retail and corporate employees, occupancy
costs of corporate facilities, lease expenses, management fees, traveling expenses and other operating and administrative expenses,
including freight charges, purchase and delivery costs, internal transfer freight charges and other distribution costs.



Share
Based Payment



The
Company follows FASB ASC 718-10, “Stock Compensation,” which addresses the accounting for transactions in which
an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains
employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received
in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental
compensation costs arising from subsequent modifications of awards after the grant date must be recognized.



Income
Taxes



The
Company utilizes FASB ASC Topic 740, “Income Taxes.” Deferred income taxes are recognized for the tax consequences
in future years of differences between the tax bases 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 differences are expected to affect
taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to
be realized.



Basic
and Diluted Earnings (Loss) per Share





Earnings (loss) per share are calculated in
accordance with FASB ASC Topic 260, “Earnings per Share,” Basic earnings (loss) per share is based upon the
weighted average number of common shares outstanding. Diluted earnings (losses) per share is based on the assumption that all dilutive
convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under
this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later),
and as if funds obtained thereby were used to purchase common stock at the average market price during the period. If convertible
shares and stock options are anti-dilutive, the impact of conversion is not included in the diluted net income per share. Excluded
from the calculation of diluted earnings per share for 2018 and 2017 were warrants to purchase 1,475,583 shares of common stock
because the inclusion of such warrants would have been anti-dilutive.





Statement
of Cash Flows



In
accordance with FASB ASC Topic 230, “Statement of Cash Flows,” cash flows from the Company’s
operations are calculated based upon the functional currency, in our case the RMB. As a result, amounts related to changes in
assets and liabilities reported on the statement of cash flows will not necessarily agree with the changes in the corresponding
balances on the balance sheet. Following the disposal of the discontinued operations, cash from operations, investing and financing
activities for the six months ended June 30, 2018 is net of the effect of such disposal.



Concentration
of Credit Risk



Financial
instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable, advances to suppliers
and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy
financial institutions. Since the Company has not generated any revenues or commenced operations in its continuing business, the
Company cannot evaluate the risk of a concentration of credit risk.



Segment
Reporting



FASB
ASC Topic 280, “Segment Reporting,” 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. Following the Company’s disposal
of its existing business, the Company has one operating segment which has not commenced active operations.



10









Recent
Accounting Pronouncements



The
Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption
of any such pronouncements may be expected to cause a material impact on the Company’s financial statements.



Note
3 - STOCK WARRANTS, OPTIONS, AND COMPENSATION

Stock
options - Options issued have a 10-year life and were vested upon issuance. The option holder has no voting or dividend rights.
The grant price was the market price at the date of grant. The Company records the expense of the stock options over the related
vesting period. The options were valued using the Black-Scholes option-pricing model at the date of grant stock option pricing
and are classified as equity.



Outstanding
options and warrants by exercise price consisted of the following as of June 30, 2018:



|Outstanding    |      | Exercisable         
|-------------- | ---- | --------------------
|Exercise Price |      | Number of
    Shares
|Warrants:      |      |                     
|$              | 0.75 |                     
|$              | 0.75 |                     
|$              | 0.75 |                     



(1)
On September 1, 2015, the Company issued warrants to purchase 1,218,076 shares of common stock at $0.75 per share. The stock warrants
expire on August 31, 2018. The Company determined that the fair value of these warrants was $1,183,970 based on the following
assumptions:



|Term                                       |  | 3
    years
|------------------------------------------ |  | -----------
|Expected
    volatility                    |  |            
|Risk
    – free interest rate              |  |            
|Dividend
    yield                         |  |            
|Weighted-average
    grant date fair value |  | $          



(2)
On November 16, 2015, the Company issued stock warrants to purchase 66,975 shares of common stock at $0.75 per share. The warrants
expire on November 15, 2018. The Company determined that the fair value of these warrants was $81,375 based on the following assumptions:



|Term                                       |  | 3
    years
|------------------------------------------ |  | -----------
|Expected
    volatility                    |  |            
|Risk
    – free interest rate              |  |            
|Dividend
    yield                         |  |            
|Weighted-average
    grant date fair value |  | $          



(3)
On March 18, 2016, the Company issued warrants to purchase 190,532 shares of common stock at $0.75 per shares as part of a private
placement of 190,532 units with each unit consisting of one share of common stock and a three-year warrant to purchase one share
of common stock. The Company determined that the fair value of these warrants was $206,917 based on the following assumptions:



|Term                                       |  | 3
    years
|------------------------------------------ |  | -----------
|Expected
    volatility                    |  |            
|Risk
    – free interest rate              |  |            
|Dividend
    yield                         |  |            
|Weighted-average
    grant date fair value |  | $          





11







Note
4 - INCOME TAXES

The
parent company is subject to the United States federal income tax at 21% in 2018 and 34% in 2017. The parent company does not
conduct any operations and only incurs expenses, such as legal fees, accounting fees, investor relations expenses and filing fees,
relating to the Company’s status as a reporting company under the United States securities laws. DB-Link Ltd  is not
subject to United States or PRC income tax and is not subject to income tax in the British Virgin Islands.



In
the six months ended June 30, 2018, the United States operating subsidiaries incurred a net operating loss of $128,964. As a result,
$27,082 of deferred tax assets and valuation allowance was recorded.  In the six months ended June 30, 2017, the US operating
subsidiaries incurred a net operating loss of $124,334. As a result, $42,274 of deferred tax assets and valuation allowance was
recorded.



In
the three months ended June 30, 2018, the United States operating subsidiaries incurred a net operating loss of $69,422. As a
result, $14,579 of deferred tax assets and valuation allowance was recorded.  In the three months ended June 30, 2017, the
US operating subsidiaries incurred a net operating loss of $189,478. As a result, $47,370 of deferred tax assets and valuation
allowance was recorded.



All
PRC subsidiaries, were sold on May 22, 2018. These entities are subject to the PRC income tax at a rate of 25% before May 22,
2018.



The
components of deferred tax assets and liabilities as of June 30, 2018 and December 31, 2017 were as follows:



|                              |  | 2018 |         | 2017
|----------------------------- |  | ---- | ------- | ----
|Deferred
    tax assets:      |  |      |         |     
|U.S.
    net operating losses |  | $    | 27,082  |     
|Discontinued
    operation    |  |      | 55,519  |     
|Total
    deferred tax assets |  |      | 82,602  |     
|Less
    valuation allowance  |  |      | (82,602 | )   
|                              |  | $    | —       |     



Reconciliation
of the differences between the statutory United States Federal income tax rate and the effective rate for the six months ended
June 30, 2018 and 2017 is as follows:



|                                   |  | 2018 |       | 2017
|---------------------------------- |  | ---- | ----- | ----
|Tax
    (Credit) at statutory rate |  |      | (21.0 | )%  
|Tax rate
    difference            |  |      | (2.0  | )%  
|Valuation
    allowance            |  |      | 23.0  | %   
|Effective
    rate                 |  |      | —     | %   



Reconciliation
of the differences between the statutory United States Federal income tax rate and the effective rate for the three months ended
June 30, 2018 (unaudited) and 2017 (unaudited) is as follows:



|                                   |  | 2018 |       | 2017
|---------------------------------- |  | ---- | ----- | ----
|Tax
    (Credit) at statutory rate |  |      | (21.0 | )%  
|Tax rate
    difference            |  |      | (2.0  | )%  
|Valuation
    allowance            |  |      | 23.0  | %   
|Effective
    rate                 |  |      | —     | %   



Note
5– DISCONTINUED OPERATIONS



The
Company’s former business was the distribution of imported products, including digital products, baby products, health nutrition
and frozen food through its online store, applications on mobile devices and also in physical stores. The Company had sustained
continuing losses in this business and did not believe it will be able to operate that business profitably. As a result, the Company
transferred the equity in Capital to its former chief executive officer. The Company’s former business is treated as a discontinued
operation.



12









The
following table summarizes the assets and liabilities of the discontinued operations as of June 30, 2018 and December 31,
2017(audited) included in the consolidated balance sheets:



|                                           |  | 2018 |            | 2017
|------------------------------------------ |  | ---- | ---------- | ----
|Cash                                       |  | $    | 12,230     |     
|Accounts
    receivable                    |  |      | 57,867     |     
|Inventories                                |  |      | 228,425    |     
|Advance
    to suppliers                   |  |      | 136,032    |     
|Prepaid
    expenses and other receivables |  |      | 104,683    |     
|Intangible
    asset                       |  |      | 17,820     |     
|Other
    non-current assets               |  |      | 249,931    |     
|Property,
    plant and equipment          |  |      | 128,387    |     
|Total
    assets                           |  |      | 2,556,253  |     
|                                           |  |      |            |     
|Short-term
    loans                       |  |      | (2,241,030 | )   
|Accounts
    payable                       |  |      | (224,215   | )   
|Advance
    from customers                 |  |      | —          |     
|Accrued
    expenses and other payable     |  |      | (1,416,315 | )   
|Income
    tax payable                     |  |      | 818,182    | )   
|Advance
    from related party             |  |      | —          |     
|Total
    liabilities                      |  |      | (4,699,742 | )   
|Net
    liabilities                        |  | $    | (2,143,489 | )   



As
a result of the sale of the equity interest in Capital to former chief executive officer, the Company recognized a gain of
$4,077,267 from the disposition of the equity of Capital and its affiliates stock in the three and six months ended June 30,
2018. This amount consists of a $2,456,389 gain from sale of the Company’s equity in Capital and its affiliates
and $1,620,878 reflecting the principal of loans by Capital on the date of the transfer, which, as a result of the transfer
of the equity in Capital, are no longer obligations of the Company. The obligations were liabilities of Capital with no
recourse to the Company.



The
following table summarizes the operating results of the discontinued operations included in the Consolidated Statements of Operations
and Comprehensive Income (Loss) for the six months ended June 30, 2018 and 2017:



|                                                                      |  | 2018 |           | 2017
|--------------------------------------------------------------------- |  | ---- | --------- | ----
|Sales,
    net                                                        |  | $    | 272,204   |     
|Cost
    of sales                                                     |  |      | (246,888  | )   
|Gross
    profit                                                      |  |      | 25,316    |     
|General
    and administrative expenses                               |  |      | (188,110  | )   
|Loss
    from discontinued operations                                 |  |      | (162,794  | )   
|Other
    income (expenses)                                           |  |      | (59,283   | )   
|Gain
    on disposal of discontinued operations                       |  |      | 4,077,267 |     
|Income
    (loss)     before income taxes                             |  |      | 3,855,190 |     
|Provision
    for income taxes                                        |  |      | —         |     
|Net
    income (loss) from discontinued operations, net of income tax |  | $    | 3,855,190 |     



The
following table summarizes the operating results of the discontinued operations included in the Consolidated Statements of Operations
and Comprehensive Income (Loss) for the three months ended June 30, 2018 and 2017:



|                                                                      |  | 2018 |           | 2017
|--------------------------------------------------------------------- |  | ---- | --------- | ----
|Sales,
    net                                                        |  | $    | 65,427    |     
|Cost
    of sales                                                     |  |      | (75,303   | )   
|Gross
    profit                                                      |  |      | (9,876    | )   
|General
    and administrative expenses                               |  |      | (48,081   | )   
|Loss
    from discontinued operations                                 |  |      | (57,957   | )   
|Other
    income (expenses)                                           |  |      | (12,086   | )   
|Gain
    on disposition of discontinued operations                    |  |      | 4,077,267 |     
|Income
    (loss)     before income taxes                             |  |      | 4,007,224 |     
|Provision
    for income taxes                                        |  |      | —         |     
|Net
    income (loss) from discontinued operations, net of income tax |  | $    | 4,007,224 |     





13









Note
6- PREPAID EXPENSES AND OTHER CURRENT ASSETS



Prepaid
expenses and other current assets as of June 30, 2018 (unaudited) and December 31, 2017 were $246,000 and $419,112 respectively.
Prepaid expense consists primarily the deferred stock compensation as a result of restricted stock issued on December 23, 2016.
The deferred stock compensation is expensed over three years .



Note
7 - OTHER COMPREHENSIVE INCOME



Other
comprehensive income, included in stockholders’ deficit at June 30, 2018 and 2017, is foreign currency translation adjustment.
Following the disposal of Capital, Other comprehensive Income was reclassified in the equity section and included in gain on disposal
in accordance with ASC 830-30-40-1.



Note
8 - CURRENT VULNERABILITY DUE TO CERTAIN RISK FACTORS



The
Company’s operations are in the PRC. Accordingly, the Company’s business, financial condition and results of operations
may be influenced by the political, economic and legal environments in the PRC and by the general state of the PRC’s economy.
The Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.



Note
9 - SEGMENT INFORMATION



Following
the Company’s decision to discontinue its existing business, the Company only has one operating segment - restaurant franchise
business through DB-Link. DB-Link is currently in the process of setting up wholly foreign-owned entity in China to commence its
restaurant franchise business.



NOTE
10 - RELATED PARTY TRANSACTION



On
May 22, 2018, pursuant to an agreement dated March 29, 2018, the Company sold to its former chief executive officer, who is also
a former director and chairman of the board, all of the stock in Capital [and its affiliates?] in exchange for the transfer by
the former chief executive officer to the Company of 1,738,334 shares of the Company’s common stock, which is all of the
Company’s common stock owned by him. As of May 22, 2018, the 1,738,334 shares were cancelled. As a result of the sale of
this subsidiary to the former chief executive officer, the Company effectively sold all of its PRC subsidiaries in exchange for
the surrender of 1,738,334 shares of common stock valued at $312,900 at $0.18 per share, which was the market price of Company’s
common stock share on May 22, 2018. The Company recorded a gain of $4,077,267. See Note 5.



NOTE
11 - STOCKHOLDERS’ EQUITY



On
March 29, 2018, the Company entered into a debt conversion agreement with Qishizhihe Investment Co. Ltd., a British Virgin Island
company (“Qishizhihe”), pursuant to which Qishizhihe agreed to convert loans of RMB4,500,000 ($717,886) into 10,255,522
shares of common stock at $0.07 per share. Qishizhihe had made the loans pursuant to loan and security agreements dated December
22, 2016 and June 1, 2016.  The shares were issued and the debt was converted on May 3, 2018.



Following
the disposal of the BVI and PRC subsidiaries, statutory reserve of $ 11,542,623 which was appropriated from retained earnings
in prior years was transferred to accumulated deficit.



On
May 22, 2018, the Company cancelled 1,738,334 shares of common stock acquired from the former chief executive officer in connection
with the transfer by the Company of the equity in Capital. See Notes 5 and 10.





14







Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview



From
2007 until the May 22, 2018, we were engaged in the resale and distribution of third party products such as mobile phones, facsimile
machines, DVD players, stereos, speakers, MP3 and MP4 players, iPods, electronic dictionaries, CD players and audio systems. As
a result of declining sales and continuing losses, we discontinued this business. We had previously imported into China digital
products, baby products, health nutrition and frozen food products, but this business was discontinued prior to December 31, 2017.



On
February 15, 2018, our then current directors and officers resigned and we brought in new management and changed our business
plan. We intend to open, manage and operate upscale restaurants and license our restaurants to restaurant operators. We may also
enter into agreements with licensees pursuant to which our wholly-owned subsidiary, DB-Link Ltd, and the licensee would invest
in the restaurant. Our business plan contemplates that DB-Link will have a majority interest in the joint venture entity that
operates the restaurants, DB-Link will manage the restaurants for which it will receive a management fee, DB-Link will establish
a restaurant business related training school to train chefs and wait staff, and DB-Link will operate its own online restaurant
supplies store to service the restaurants we own or license. However, through June 30, 2018, we have not generated any revenue
from this business and we cannot assure you that we will be able to open and operate restaurants or enter into license agreements
with qualified licensees or the terms of any license or management agreement or that we can or will operate profitably. We require
significant funding for our operations can we cannot assure you whether we will be able to obtain the necessary funding.



In
furtherance of our plan to engage in the upscale restaurant business, on April 3, 2018, DB-Link entered into a cooperation agreement
dated March 16, 2018, with Alvin Leung, regarding brand cooperation and the catering business in the initial territory of. The
agreement provides that Mr. Leung will exclusively work with DB-Link in the initial territory and will provide DB-Link with the
brand names of “Bo” and “Daimon” in the initial territory, and he granted DB-Link a first right of cooperation
before seeking similar cooperation with other third parties in Canada, Hong Kong and Europe. DB-Link’s business will be
operated by joint venture entities in which DB-Link will hold a 66% equity interest and Mr. Leung a 34% interest. In addition,
DB-Link will pay Mr. Leung RMB 800,000 (approximately $127,000), half of which was paid with the balance being payable in 2019.



On
May 22, 2018, we transferred to Zhenggang Wang, our former chief executive officer who was also a director and chairman of the
board until his resignation on February 1, 2018, all of the stock in our wholly-owned subsidiary, Capital Future Development Limited
(“Capital”), a British Virgin Islands company,  in exchange for the transfer by Mr. Wang to us of
1,738,334 shares of our common stock, which represents all of the common stock owned by him. All of our consolidated liabilities
are liabilities as of December 31, 2017 were liabilities of Capital. All of our former business was conducted through Capital
and its subsidiaries.



Our
ongoing restaurant and related business will be conduted through DB-Link, and our business will be conducted through DB-Link and
its subsidiaries. We anticipate we will have separate subsidiaries for the restaurants we own or operate although we may have
one subsidiary owning more than one restaurant in a city. To the extent that these restaurants are operated in the manner contemplated
by our agreement with Mr. Leung, BD-Link will own a 66% interest in the subsidiary and Mr. Leung will own a 34% interest.



Results
of Operations



Three
and six months ended June 30, 2018 and 2017



For
the three and six months ended June 30, 2018 and 2017, we had no sales and we incurred general and administrative expenses of
$69,260 and $136,673 for the three and six months ended June 30, 2018 and $62,312 and $123,892 for the three and six months ended
June 30, 2017. These expenses related primary to expenses incurred as a public reporting company and, to a lesser extent, in the
six months ended June 30, 2018, to expenses relating to preliminary efforts to begin to develop our proposed restaurant business.
Our net loss from continuing operations was $69,260 and $136,673 for the three and six months ended June 30, 2018 and $62,312
and $124,334 for the three and six months ended June 30, 2017.



For
the three and six months ended June 30, 2018, we had loss from discontinued operations of $70,043 and $222,077. For the three
and six months ended June 30, 2017, we had loss from discontinued operations of $406,563 and $694,653.



15











We had a gain from discontinued operations
of $4,077,267 from the disposition of our equity in Capital in the three and six months ended June 30, 2018. This amount consists
of a $2,456,389 gain from our sale of our equity in Capital and $1,620,878 reflecting the principal of loans at the date of disposition
by Capital which, as a result of the transfer of the equity in Capital, are no longer our obligations. The obligations were liabilities
of Capital with no recourse to us.





For
the three and six months ended June 30, 2018, we have a net income attributable to us of $3,952,609 and $3,758,059, or $0.22 and
$0.26 per share (basic and diluted). We has a net loss from continuing operations of $(0.01) and $(0.01) per share (basic and
diluted) and the net income from discontinued operations, including the gain from the disposition of the discontinued operations,
of $0.23 and $0.27 per share (basic and diluted) for the three and six months ended June 30, 2018.



For
the three and six months ended June 30, 2017, we had a net loss attributable to us of $141,151 and $677,836, or $(0.03) and $(0.07)
per share (basic and diluted). The net loss from continuing operations was $(0.02) and $(0.01) per share and the net loss from
discontinued operations was $(0.01) and $(0.06) per share for the three and six months ended June 30, 2017.



Liquidity
and Capital Resources



Our
cash flows for the six month periods are summarized as follows:



|                                                           |  | Six
    Months Ended June 30,
|---------------------------------------------------------- |  | -----------------------------
|                                                           |  | 2018                         
|Net
    cash provided by (used in) operating activities    |  | $                            
|Net
    cash used in investing activities                  |  |                              
|Net
    cash provided by (used in) financing activities    |  |                              
|Effect
    of exchange rate change on cash and equivalents |  |                              
|Net
    decrease in cash and equivalents                   |  |                              
|Cash
    and equivalents at beginning of period            |  |                              
|Cash
    and equivalents at end of period                  |  | $                            



Cash
activities in the six months ended June 30, 2018 and 2017 included changes in discontinued operations. Net cash provided by operating
activities was $865,376 for the six months ended June 30, 2018 compared to net cash used in operating activities of $357,314 for
the six months ended June 30, 2017.  Net cash provided by operating activities was mainly attributable to a decrease
in accrued expenses and other payable of $921,394 and decrease in inventories of $159,634 from discontinued operations, offset
by increase in accounts payable of $97,968 in discontinued operations. Net cash used in operating activities for the continuing
operations was only $530.





Net cash used in investing activities was attributable
to the first installment payment to Alvin Leung, pursuant to our cooperation agreement. Pursuant to our agreement with Mr. Leung,
we are to make payments totaling RMB 800,000 (approximately $127,000) and grant him a 34% interest in DB-Link Ltd for Leung’s
contribution of brand names “Bo” and “Daimon”/an equivalent new brand and his expertise, reputation, skills
in the catering business.



Net cash used in financing activities includes
repayment of short-term loans of $29,369 and advance from former chief executive officer of $841,690 to the discontinued operations.
Net cash used in financing activities also included advance from chief executive officer to provide us with the funds to make the
initial payment to Mr. Leung.





Cash
and equivalents as of June 30, 2018 were solely bank accounts in United States.



Cash
and equivalents as of December 31, 2017 were solely bank accounts in the United States and China. All cash and cash equivalents,
other than $7,881 at December 31, 2017, was cash held by the discontinued operations.



Working
Capital Requirements



With
the change in our business, our working capital requirements relate to our proposed restaurant business. Before we can open any
restaurant, we will require sufficient capital to cover our cash outlays before we generate revenue. These expenditures relate
to finding an acceptable location, negotiating a lease and making the initial payments under the lease, making the leasehold improvements,
including the purchase or lease of restaurant equipment, obtaining necessary permits, developing relationships with food suppliers
and the media, and recruiting and training staff and payroll during the preopening period. Until we have demonstrated that we
are able to operate an upscale restaurant profitable, we may have difficulty in obtaining the financing. It may be necessary for
us to provide the financing source with an equity position in a restaurant, which would reduce our percentage interest in the
restaurant. To the extent that we have to raise funds through the sale of our equity securities, it would be necessary for us
to issue equity at a discount from the market price, which could result in significant dilution to our stockholders. We do not
have any agreement or understanding with any financing source and we cannot assure you that we will be able to obtain the funding
required for any restaurant. To the extent that we are not able to obtain the necessary financing, we may not be able to open
restaurants, which would severely impair our ability to operate profitably or continue in operations. We currently have no commitments
from any financing sources. There is no assurance we will be able to raise any funds on terms favorable to us, or at all. In the
event we issue shares of equity or convertible securities, the shares held by our existing stockholders would be diluted. Future
expansion will be limited by the availability of financing products and raising capital.



16









Off-Balance
Sheet Arrangements



We
have no off-balance sheet arrangements.



Critical
Accounting Policies



Our
discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements,
which were prepared in accordance with US GAAP. The preparation of these requires us to make estimates, judgments and assumptions
that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets
and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable
under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from these estimates.



An
accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters
that are highly uncertain at the time the estimates are made, and if different estimates that reasonably could have been used,
or changes in the accounting estimates that are reasonably likely to occur, could materially impact the consolidated financial
statements. We believe the following critical accounting policies reflect the more significant estimates and assumptions used
in the preparation of the consolidated financial statements.



Going
Concern



Our
consolidated financial statements were prepared on a going concern basis which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. For the six months ended June 30, 2018, we realized a net loss from
continuing operations of $137,054. We generated no revenue from continuing operations, and we require significant funding for
our operations with no assurance as to our ability to obtain the funding on reasonable, if any, terms. We have an accumulated
deficit of $37,329,771 as of June 30, 2018. There can be no assurance that we will become profitable or obtain necessary financing
for our business or that we will be able to continue in business. These issues raise substantial doubt regarding our ability to
continue as a going concern.



Revenue
Recognition



We
recognize revenue in accordance with ASC Topic 606, “Revenue from Contracts with Customers.” Revenue is recognized
when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which
the entity expects to be entitled to in exchange for those goods or services. Under Topic 606, revenue is recognized when there
is a contract which has commercial substance which is approved by both parties and identifies the rights of the parties and the
payment terms. We adopted Topic 606 as of January 1, 2018. Because all of our prior operations are discontinued operations, the
adoption of Topic 606 does not affect our prior operations.



Item
3. Quantitative and Qualitative Disclosures About Market Risk.



Not
applicable.



Item
4. Controls and Procedures.



Evaluation
of Disclosure Controls and Procedures



Under
the supervision and with the participation of our management, including our principal executive officer and principal financial
officer, our management conducted an evaluation of our disclosure controls and procedures as of June 30, 2018, as such term is
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and
principal financial officer concluded that, as of such date, the Company’s disclosure controls and procedures were not effective
due to the material weakness in our internal controls identified in our Annual Report on Form 10-K for the year ended December
31, 2017.



17









Disclosure
controls and procedures are designed to provide that information required to be disclosed by us in reports that we file or submit
under the Exchange Act is accumulated, recorded, processed, summarized, communicated to our management, including our principal
executive officer and principal financial officer and reported within the time periods specified in Securities and Exchange Commission
rules and forms.



Changes
in Internal Control Over Financial Reporting



As
reported in our annual report on Form 10-K for the year ended December 31, 2017, management has determined that our internal audit
our internal controls contains material weaknesses and identified the following material weaknesses: our inability to record transactions
and provide disclosures in accordance with US GAAP. The current staff in our accounting department is inexperienced in US GAAP
and needs substantial training to meet the demands of a United States public company. The accounting skills and understanding
necessary to fulfill the requirements of US GAAP-based reporting, including the preparation of financial statements and consolidation,
are inadequate.



There
was no change in our internal control over financial reporting that occurred during the three months ended June 30, 2018 that
has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



PART
II. OTHER INFORMATION



Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.



On
May 3, 2018, pursuant to a previously reported agreement dated March 29, 2018, with Qishizhihe Investment Co. Ltd., a British
Virgin Island company (“Qishizhihe”), the Company issued 10,255,522 shares of common stock upon conversion by Qishizhihe
of loans in the principal amount of RMB4,500,000 ($717,886) into shares of common stock. The shares were issued pursuant to Regulation
S under the Securities Act.



On
May 22, 2018, pursuant to an agreement dated March 29, 2018, the Company sold to its former chief executive officer, who is also
a former director and chairman of the board, all of the stock in Capital [and its affiliates?] in exchange for the transfer by
the former chief executive officer to the Company of 1,738,334 shares of common stock, which is all of the Company’s common
stock owned by him. As of May 22, 2018, the 1,738,334 shares were cancelled. As a result of the sale of this subsidiary to the
former chief executive officer, the Company effectively sold all of its PRC subsidiaries in exchange for the surrender of 1,738,334
shares of common stock valued at $312,900, at $0.18 per share, which was the market price of Company’s common stock share
on May 22, 2018.



18









Item
6.  Exhibits.



|31.1    | Rule
    13a-14(a)/15d-14(a) certification of Principal Executive Officer            
|------- | -------------------------------------------------------------------------------------
|31.2    | Rule
    13a-14(a)/15d-14(a) certification of Principal Financial Officer            
|32.1    | Section
    1350 certification of Chief Executive Officer and Chief Financial Officer
|101.INS | XBRL
    Instance Document                                                           
|101.SCH | XBRL
    Taxonomy Extension Schema Document                                          
|101.CAL | XBRL
    Taxonomy Extension Calculation Linkbase Document                            
|101.DEF | XBRL
    Taxonomy Extension Definition Linkbase Document                             
|101.LAB | XBRL
    Taxonomy Extension Label Linkbase Document                                  
|101.PRE | XBRL
    Taxonomy Extension Presentaiton Linkbase Document                           



19









SIGNATURES



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.



|                          | YOSEN
    GROUP, INC.
|------------------------- | ---------------------
|                          |                      
|Date:
    August 20, 2018 | By:                  
|                          |                      
|                          |                      
|                          |                      
|Date:
    August 20, 2018 | By:                  
|                          |                      
|                          |                      



20