Zhong Yuan Bio-Technology Holdings Ltd. has applied to register 31.45 million of its shares for trading on the OTCQB market.
Based in Hong Kong, Zhong Yuan has completed a reverse merger in August 2019. In December, it sold 1.45 million of its ordinary shares in a private offering to investors outside the United States.
The shares it is registering to sell currently are owned by existing investors in Zhong Yuan and are offered at 10 cents apiece, according to a Friday filing with the U.S. Security and Exchange Commission. The company will not receive any proceeds from the deal, it said.
Zhong Yuan develops and sells nervonic acid-based health supplements and acer truncatum seedlings through a subsidiary, China Bio-Technology Holdings Ltd. The onshore subsidiary on China Bio-Technology which conducts the sales is called Bao Feng Bio-Technology (Beijing) Ltd.
Bao Feng is one of the earliest nervonic acid biotechnology companies, operating since 2012. In China, it is the only national high-tech enterprise specializing in the production and application of nervonic acid, according to the filing.
For the year ended March 2019, China Bio-Technology scored sales at $1.2 million compared with $259,500 in the preceding year. Its net income reached $280,200 compared with losses of $388,600 in the year through March 2018.
Zhong Yuan’s filing with the SEC says:
Nervonic acid is a long chain unsaturated omega 9 fatty acid that is an important component in myelin biosynthesis in the central and peripheral nervous system. Myelin insulates nerve cell axons to increase the speed at which information (encoded as an electrical signal) travels from one nerve cell body to another or from a nerve cell to another type of cell in the body. It is thought that nervonic acid may enhance brain function and prevent demyelination of nerve cells, and that, therefore, it may be effective in retaining or improving the health of the brain, for example in preventing or ameliorating attention-deficit hyperactive disorder (“ADHD”) in children, Alzheimer's disease and mental degradation in the elderly and cerebrovascular disease, as well as promoting normal brain development in premature infants. The role of nervonic acid is also being studied with respect to psychotic illnesses, such as schizophrenia.
In addition, the company wrote:
Nervonic acid is not present in foods. It has been found that the dried seeds of the acer truncatum tree, which is a type of maple native to northern China, Mongolia and Korea, contain 5.8% nervonic acid. Therefore, the seed oil is considered to be a good source of natural nervonic acid, as well as other compounds such as Vitamin E. The Company extracts the nervonic acid that it utilizes in its products from acer truncatum seeds.
Zhong Yuan also said it has a distribution agreement with an American health product company to sell its products in China. The company hopes to expand its lineup of products and build factories.
The OTCQB, on which Zhong Yuan is seeking a quotation, is the middle-tier of the over-the-counter market and lists early-stage and developing companies.