Form 10-12G ENTREPRENEUR UNIVERSE


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UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549

  

FORM
10

 

GENERAL
FORM FOR REGISTRATION OF SECURITIES

Pursuant
to Section 12(b) or (g) of The Securities Exchange Act of 1934

 

ENTREPRENEUR UNIVERSE BRIGHT GROUP
(Exact name of registrant as specified in its charter)

 

 

Nevada   90-1734867
(State
or other jurisdiction of
incorporation or organization)
  (I.R.S.
Employer
Identification No.)
     
Suite
907, Saigao City Plaza Building 2,
No. 170, Weiyang Road, Xi’an, China
   
(Address
of principal executive office)
  (Zip
Code)

 

Registrant’s
telephone number including area code: +86-400-6087979

 

Securities
to be registered pursuant to Section 12(b) of the Act:

 

None   None
(Title
of class)
  Name
of each exchange on which each class is to be registered

  

Securities
to be registered pursuant to Section 12(g) of the Act:

 

Common
Stock, par value $0.0001 per share
 

(Title
of class)    

 

Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act.

 

Large
accelerated filer
Accelerated
filer
Non-accelerated
filer
Smaller
reporting company
    Emerging
growth company

 

If
an emerging growth company, indicate by 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.    ☐

 

 

 

TABLE
OF CONTENTS

 

  

 

EXPLANATORY
NOTE

 

Entrepreneur
Universe Bright Group is filing this General Form for Registration of Securities on Form 10, or this “registration statement,”
to register its common stock, par value $0.0001 per share, pursuant to Section 12(g) of the Securities Exchange Act of 1934. Unless otherwise
mentioned or unless the context requires otherwise, when used in this registration statement, the terms “Company,” “we,”
“us,” “our” and “EUBG” refer to Entrepreneur Universe Bright Group. 

 

SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This
following information specifies certain forward-looking statements of management of our Company. Forward-looking statements are statements
that estimate the happening of future events and are not based on historical fact. Forward-looking statements may be identified by the
use of forward-looking terminology, such as may, shall, could, expect, estimate, anticipate, predict, probable, possible, should, continue,
or similar terms, variations of those terms, or the negative of those terms. Such statements include, among others, those concerning
market and industry segment growth; any projections of earnings, revenue, margins or other financial items; any statements of the plans,
strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; as
well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking
statements are not guarantees of future performance and involve risks and uncertainties, including without limitation, those listed in
the “Risk Factors” section, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause
our results to differ materially from those expressed or implied by such forward-looking statements. The forward-looking statements specified
in the following information have been compiled by our management on the basis of assumptions made by management and considered by management
to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to
be inferred from those forward-looking statements.

 

The
assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future
events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result,
the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among
reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially
from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements.

 

The
market data and other statistical information contained in this registration statement are based on internal Company estimates of our
past experience in the industry, general market data, and public information which was not commissioned by us for this filing.

  

Readers
are cautioned that the registration statement are not exhaustive of all factors, estimates and assumptions that may apply to or impact
the Company’s results. Although the Company has attempted to identify important factors that could cause actual results to differ
materially from the forward-looking information and statements contained in this this registration statement, there may be other factors
that cause results not to be as anticipated, estimated or intended. There can be no assurance that such forward-looking information and
statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such information
and statements. Accordingly, readers should not place undue reliance on forward-looking information and statements. The forward-looking
information and statements contained herein are presented to assist readers in understanding the Company’s expected financial and
operating performance and the Company’s plans and objectives and may not be appropriate for other purposes. The forward-looking
information and statements contained in this registration statement represents the Company’s views and expectations as of the date
of this Form 10 unless otherwise indicated. The Company anticipates that subsequent events and developments may cause its views and expectations
to change. However, while the Company may elect to update such forward-looking information and statements at a future time, it has no
current intention of and assumes no obligation for doing so, except to the extent required by applicable law. 

 

Additionally,
the following discussion regarding our financial condition and results of operations should be read in conjunction with the financial
statements and related notes included in this Form 10.

 

 

ITEM
1. BUSINESS

 

History
of Our Company

 

We
were incorporated in the State of Nevada on April 21, 1999 under the name LE GOURMET CO, INC. Since our inception, the Company had the
following name changes: On March 17, 2003, to Estelle Reyna, Inc.; on September 11, 2003 to Karma Media, Inc.; on July 8, 2005 to Pitboss
Entertainment, Inc.; on March 3, 2006 to US Energy Holdings, Inc.; on December 20, 2006 to Lonestar Group Holdings Company; on November
9, 2007 to Guardian Angel Group, Inc.; and on May 18, 2011 to REE International, Inc.; and on March 23, 2020, the Company filed a Certificate
of Amendment to the Nevada Secretary of State amending Article I of its Articles of Incorporation changing the Company’s name to
Entrepreneur Universe Bright Group, with an effective date of April 3, 2020.

 

Lonestar
Group Holdings Company was a voluntary filer and filed a Form 15 with the Securities and Exchange Commission (“SEC”) on August
20, 2007.

 

In
July 2018, XTC Inc. (“XTC”), one of our shareholders, petitioned the Eight Judicial District Court in Clark County, Nevada
(the “Court”), for appointment as custodian of the Company. On September 4, 2018, the Court granted XTC custodianship of
the Company with the right to appoint officers and directors, negotiate and compromise debt, execute contracts, issue stock and authorize
new classes of stock (the “Custodianship”).

 

Since
the Form 15 filing on August 20, 2007 and prior to the Custodianship, our management believes that we were inactive with no business
operations. In December 2018, XTC filed a Certificate of Revival for a revival of its charter, effective December 13, 2018, with the
Nevada Secretary of State. XTC acted together with MXD Inc. (“MXD”) to revive the Company and to get current. MXD is a private
company incorporated in the State of Colorado. As the president of XTC is also the president of MXD, the Company considered that the
XTC and MXD are under common control.

 

XTC
and MXD performed the following actions in its capacity as custodian:

 

Funded
all expenses of the Company including paying off all outstanding liabilities discovered;
Brought
the Company back in compliance with the Nevada Secretary of State, resident agent, transfer
agent, OTC Markets Group;
Brought
in and paid for accounting professionals as well as securities counsel.

 

On
December 18, 2018, we formed REE International, Inc. Colorado (“REE-CO”). On December 21, 2018, we entered into an Agreement
for Divestiture of Assets to Subsidiary with REE-CO, where all of our assets, liabilities, and business were transferred to REE-CO. in
exchange for 1,000 shares of REE-CO, and we became the parent company of REE-CO. Since then, we have no assets, liabilities and business.

 

On
December 28, 2018, we entered into a Sale and Purchase Agreement (the “SPA”) with XTC to transfer 1,000 common shares of
REE-CO to XTC at nil cash consideration (with XTC assuming all of the obligations and liabilities of REE-CO). Pursuant to the SPA, all
the assets and liabilities previously reported in our financial statements were acquired by XTC and all the continuing obligations assumed
were taken up by XTC. Since the closing of the SPA, REE-CO ceased to be a subsidiary of the Company on the same date., and we no longer
had any assets, liabilities and business.

 

In
consideration of the payments made to revive the Company and get current by the XTC and MXD, , we issued 1,000,000 shares of Series A
Preferred Stock to MXD on December 11, 2018 and issued 50,000 shares of Series B Preferred Stock to XTC on February 27, 2019, respectively.

 

 

On
March 5, 2019, the total authorized common stock of the Company was increased to 1,800,000,000.

 

On
April 24, 2019, XTC was discharged as custodian of the Company. Prior to the Custodianship and immediately before May 15, 2019, the Company
has abandoned all of its business operations.

 

On
May 15, 2019, 1,590,605,141 shares of our Common Stock was issued to MXD as consideration for its services to revive the Company and
get current.    On the same date, MXD and XTC agreed to voluntarily retire 1,000,000 Series A Preferred Stock and 50,000
shares of Series B Preferred Stock, respectively (the “Issuance”).

 

Immediately
after the Issuance, MXD entered into certain Sale and Purchase Agreements, dated May 15, 2019 (the “Stock Purchase Agreements”),
with Tethys Fountain Limited, New Finance Consultants Limited, Jia Wang, Jianyong Li, Haijun Jiang, Xuebin Wu and Fanfan Chen (collectively,
the “Purchasers”), to transfer all its 1,590,605,141 shares of common stock of the Company to the Purchasers in exchange
for an aggregate purchase price of $135,000. Upon the closing of the Stock Purchase Agreements, the Purchasers collectively owned 93.5%
of the issued and outstanding shares of the Company’s common stock, and Tethys Fountain Limited became the controlling shareholder
of the Company.

 

On
May 20, 2019, and as authorized by our board of directors, we begun our current business a marketing consulting company, as further described
in the section entitled “Item 1. Business – Business Overview” below.

 

Corporate
Structure

 

We
are a Nevada corporation but all of our business operations are conducted through our wholly-foreign owned Chinese subsidiary, Xian Yunchuang
Space Information Technology Co., Ltd. (formerly Entrepreneurship World Consultants Limited) in Xi’an, China (hereinafter referred
as “ECW-China” or “WFOE”). ECW-China is wholly-owned by our direct subsidiary, Entrepreneurship World Technology
Holding Group Company Limited, a Hong Kong limited company (“EWT-HK”). EWT-HK was incorporated by us on May 15, 2019 with
HK$10,000 as its registered capital as a holding company. ECW-China was incorporated on October 18, 2019 with HK$1,000,000 as its registered
capital. On May 7, 2020, we incorporated Xian Yunchuang Space Information Technology Co., Ltd, BaiYin Branch (formerly Entrepreneurship
World Consultants Limited, BaiYin Branch), with RMB900,000 as its registered capital, as an extension of business of ECW-China in Baiyin
District, Xi’an, China (“ECW-BY”).

 

 

 

Our
offices are located at Suite 907, Saigao City Plaza Building 2, No. 170, Weiyang Road, Xi’an, China, and our telephone number is
+86 400-6087979  . We maintain a website at https://www.overseacytx.com, however, our website or any information contained
therein on our website do not constitute a part of this registration statement.

 

 

Business
Overview

 

Our
current principal business activities of EUBG are providing consulting services and sourcing and marketing services in China. We provide
services aimed at connecting businesses with e-commerce platforms.   

 

Our
integrated service platform focuses on strategy marketing consulting. The establishment of our platform is to serve the digital marketing
strategy needs of the start-up business companies and small-size companies. We offer our digital marketing on e-commerce solution plan
to these companies in order for them to provide products to their customers. Our mission is to help start-up companies and small-size
companies and guide these companies’ founders in utilizing our digital marketing consulting plan to reach their business goals.
Our marketing consultation on e-commerce solution plan aim to bring online traffic and attention from the markets for our customers to
conduct their e-commerce and build their brands. Our customers are mainly private companies which need digital marketing services for
branding or engaging in e-commerce.

 

As
of the date of this filing, the Company had twenty-two (22) full-time employees. Full-time positions include CEO, CFO, President,
V.P., Product Department, Sales Department, Customers Services Department, Administrative staffs, and Financial department. We anticipate
adding approximately three additional employees in 2021 to our Customer Services Department.

 

Except for the seven (7) trademarks owned by us, we do not own or control any intellectual property rights, such as patents, franchise or concessions, except the trademarks owned by the Company.

 

The company does not need any government approvals of principal services.

 

Our
main service is Marketing Consultancy, which includes Digital Marketing Consulting and KOL (Key Opinion Leaders) Training/Influencer
Training Coordination.

 

A. Digital
Marketing Consulting:

 

We
provide a full range of marketing consulting services to assist our clients and customers in selling their products. With our professional
knowledge and practical experience, we use various marketing methods (e.g. KOL) to increase brand awareness in the local market and ultimately
drive sales. We work outward from a client’s brand strategy and existing online assets to define the optimal digital footprint
for the brand.

 

Currently,
the Company provides substantial of our marketing consulting services through an e-commerce mobile application (“APP”) namely
“Chuangyetianxia”. The APP is developed by our related company (as described below in Relative Party Transaction), Xi’an
Chuangyetianxia Network Technology Co., Ltd. (“Xi’an CNT”), a limited liability company established in the Peoples’
Republic of China (“PRC” or “China”).

 

The
future of our Marketing Consulting Services will include, but is not limited to: Diagnosing marketing strategy options, assisting in
establishing complete marketing system, positioning branding, branding image design and broadcasting, online and off-line sales channel
setup, products development plans, marketing model setup, choosing e-commerce platform, proposing digital marketing projects, enhancing
e-commerce traffic, and acting as sales agent for our clients, and business marketing training (marketing strategy, sales techniques,
customer services, management knowledges, e-commerce traffic generating, and KOL training etc.)

 

B. KOL
(Key Opinion Leaders) Training Coordination

 

The
core advantage of Influencer Marketing (Influencer Marketing) is the precise market positioning and exposure to tens of thousands of
target audiences in a short period of time. According to recent survey data conducted by ChiefMarketer, 75% of marketers adopt the strategy
of online influencer marketing, and 43% of them plan to increase their investment in this area in 2019 (Source: ChiefMarkerter, https://www.chiefmarketer.com/majority-marketers-use-influencers-survey/).
Enterprises choose to cooperate with the brand and have a level of follower influence. The influencer then introduces and recommends
those companies products to their followers through creative video content on a social media platform on a professional platform.

 

 

An
influencer has an excellent ability to generate content, and enjoys creativity, content creation, and sharing audience. If influencers
know their followers well, care about their feelings, and know what content to post, it is more effective for the followers. If the influencers
and the client’s branding match accurately, the communication and cooperation between the two parties would work smoothly.

 

The
word “influencer” as it is used in China is broad and applies to people who are bloggers, online content creators, vloggers
and live streamers, as well as traditional celebrities. China has its own terminology to refer to an influencer marketing practitioner:
key opinion leader (KOL) or “wang-hong,” which is the romanization of the Mandarin pronunciation for “online celebrity.”

 

Chinese
users behave differently when it comes to taking advice. Instead of depending on search engines, Chinese users value advice from sources
such as their peers, friends, bloggers and celebrities also known as KOL (Key Opinion Leaders). Much like influencers in the Western
world, KOLs are very crucial in the overall digital marketing approach in China. An industry of “wang-hong incubators” or
“KOL academies” is thriving to meet the flood of KOL aspirants. Currently, we cooperate with third party live-broadcasting
training agencies to coordinate, recruit and enroll KOL students in various training programs in professional anchor quality. Such programs
are able to qualify the trainees to obtain anchor licenses/permits before they broadcast on the internet. The future plan of our KOL
Training Coordination Services will include: Individual KOL training – providing training sites, positioning KOLs individually
according to their personality and appearance, languages and body languages training, one-on-one contents operation training, IP packaging,
and their channel operation supporting. We also work with our clients to provide the training classes in training their own potential
KOL candidates.

 

Industry
Overview

 

The
marketing consultation industry in China is a thriving market. Recent projections from an analysis report “China’s Marketing
Consultation Industry Market Research and Prospect Forecast Analysis Report (2021 – 2026)
” by Gaozhan Consultancy indicate
that the aggregate revenue in the industry amounts to USD 2,000,000,000 of sales as in 2019 and is expected to grow to USD 2,700,000,000
in 2026, though the market was affected by the COVID-19 pandemic and was reduced to USD 180,000,000 in 20201.

 

Chart
1: China Marketing Consultation Industry Market Size Forecast (2017 – 2020) RMB (a hundred million)

 

 

Source:
China’s Marketing Consultation Industry Market Research and Prospect Forecast Analysis Report (2021 – 2026)
by Gaozhan Consultancy

 

1 Figures
provided by Gaozhan Consultancy, China’s Marketing Consultation Industry Market Research and Prospect Forecast Analysis Report
(2021 – 2026)
” , www.gaozhanzx.com

 

 

Chart
2: China Marketing Consultation Industry Market Size Forecast (2021 – 2016) RMB (a hundred million)

 

 

Source:
China’s Marketing Consultation Industry Market Research and Prospect Forecast Analysis Report (2021 – 2026)
by Gaozhan Consultancy

 

Pursuant
to the analysis report by Gaozhan Consultancy, there are four reasons that the marketing consultation industry will keep grow in the
next 5 years2:

 

Business
and marketing Information will be easier to be obtained by the marketing consulting through
internet, which enhance the abilities of the marketing consulting company to advise their
clients;
The
internal market in China has grown rapidly, which push the domestic companies to strengthen
their marketing demands for marketing consultation in China;
The
digital marketing needs from the domestic companies are critical to the marketing strategies
when the digital scale and data is continuously expanding in China;
The
managements of domestic companies realized the value of marketing consultancy through the
connecting with businesses in the world.

 

Our
Strategy

 

We
work closely with Xi’an CNT for using the application (“APP”) “Chuangyetianxia” as the platform to provide
our marketing consulting services to our customers.

 

We
also cooperate with third party live-broadcasting training agencies to coordinate, recruit and enroll KOL students in various training
programs in professional anchor quality.

 

Our
business objective is to generate revenues based on providing our digital marketing consultation and to maintain and grow ultimate user
group for our clients.

 

Our
target market is the start-up and small-size companies mainly situation in China which needs to upgrade their traditional marketing plan
to digital marketing and establishing their brand names and exploit products market in the digital world and specified target audiences.

 

2 See
page 64 of the above report  

 

 

We
seek to leverage our marketing management’s experience to expand our consumer base, starting with start-ups and small-size corporate
clients. Our customers are from different market sectors including but not limited to online education, biotechnology, health care products,
and agriculture technology products.

 

Potential
competitors 

 

There
are more than 39,000 marketing consultancy companies in China in 2020 (Source: page 57, China’s Marketing Consultation Industry
Market Research and Prospect Forecast Analysis Report (2021 – 2026)
” by Gaozhan Consultancy). We are operating in a highly
competitors in the consulting market, given the highly competitive environment we operate in, from both existing competitors and new
market entrants. Our main competitors include: Soplan (索象), Han-Consulting (汉哲), Osens (欧赛斯),Bayii
(倍壹), Huayuhua (华与华),SEMTIME, and Caina (采纳). However, none of these companies
are applying the apps to other app platform as we do. Those competitors are not using the methods to connect different platforms together
to bring traffics to another platform. Though we believe that we are the pioneer in using this strategy, these competitors may adopt
the same method for their clients.

 

Key
Factors that Affect Operating Results

 

We
believe the following key factors may affect our financial condition and results of operations:   

 

Our
success depends on our ability to acquire clients effectively

 

Our
ability to increase our revenue largely depends on our ability to attract and engage potential clients. Our sales and marketing efforts
include those related to client acquisition and retention, and general marketing. We intend to continue to dedicate significant resources
to our sales and marketing efforts and constantly seek to improve the effectiveness of these efforts to grow our revenues.

  

Our
client acquisition channels primarily include our sales and marketing campaigns and existing client referrals. In order to acquire clients,
we have made significant efforts in building mutually beneficial long-term relationships with local government and local business associations.
In addition, we also market our services through the influence of our founder and CEO, Mr. Guolin Tao, who is a well-known entrepreneur
in China. If any of our current client acquisition channels becomes less effective, or if we are unable to continue to use any of these
channels, we may not be able to attract new clients in a cost-effective manner or convert potential clients into active clients and may
even lose our existing clients to our competitors. To the extent that our current client acquisition and retention efforts becomes less
effective, our service revenue may be significantly impacted, which would have a significant adverse effect on our revenues, financial
condition and results of operations.

 

Our
current operation depends on two major customers

 

For
the year ended December 31, 2020, the customers for the Company that constitutes a greater-than ten percent (10%) contribution to gross
revenues are Beijing Borui Siyuan Network Technology Co., Ltd. (54%), and Shangxi Dachun Culture Communication Ltd. (17%), both are conducting
online education business. We are currently in the process of diversifying our customers to attract more customers other than doing online
education business. There is a risk to the Company’s revenue in case these two major customers decided to terminate the services
with us which will significantly harm our business.

 

 

A
severe or prolonged slowdown in the global or Chinese economy could materially and adversely affect our business and our financial condition.

 

The
rapid growth of the Chinese economy has slowed down since 2012 and such slowdown may continue in the future. There is considerable uncertainty
over the trade conflicts between the United States and China and the long-term effects of the expansionary monetary and fiscal policies
adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States and
China; the withdrawal of these expansionary monetary and fiscal policies could lead to a contraction. There continue to be concerns over
unrest and terrorist threats in the Middle East, Europe, and Africa, which have resulted in volatility in oil and other markets. There
are also concerns about the relationship among China and other Asian countries, which may result in or intensify potential conflicts
in relation to territorial disputes. The eruption of armed conflict could adversely affect global or Chinese discretionary spending,
either of which could have a material and adverse effect on our business, results of operation in financial condition. Economic conditions
in China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected
or perceived overall economic growth rate in China. Any severe or prolonged slowdown in the global or Chinese economy would likely materially
and adversely affect our business, results of operations and financial condition. In addition, continued turbulence in the international
markets may adversely affect our ability to access capital markets to meet liquidity needs.

 

Our
services depend on our ability to retain our cooperation with Xi’an CNT

 

To
stabilize our services, we provide a substantial portion of our marketing consulting services through an e-commerce APP namely “Chuangyetianxia”.
The APP is developed by our related company, Xi’an CNT. Our customers who completed the transactions through the APP of Xi’an
CNT share their profits with us for a certain percentage the revenue they earned. In case Xi’an CNT suspends the APP or anything
occurred which prevents its normal operation, our revenue will be significantly affected.

 

The
impact from COVID-19 could materially and adversely affect our business and our financial condition.

 

In
early January of 2020, a novel coronavirus (“COVID-19”) outbreak took place in Wuhan, China. Subsequently, it has spread
rapidly to Asia and other parts of the world. The COVID-19 outbreak has resulted in widespread economic disruptions in China, as well
as stringent government measures by the Chinese government to contain its transmissions including quarantines, travel restrictions, and
temporary closures of non-essential businesses in China and elsewhere. The outbreak in China mainly occurred in the first quarter of
2020, and it gradually stabilized and business activities started to resume under the guidance and support of the government since late
second quarter of 2020.

 

All
of our revenues and operations are concentrated in China. Consequently, our results of operations and financial performances have been
affected in 2020. Due to the government restrictions, we were prevented from arranging offline activities from late January to May 2020,
resulting in cancellations or postponements of marketing efforts of our customers. In addition, due to widespread economic disruptions
during the outbreak, demand for our consulting services to small and medium-sized enterprises were also adversely affected.

  

As
of December 31, 2020, the COVID-19 outbreak in China appears to be generally under control and business activities have recovered on
the whole, and we have resumed contacting potential customers since June 2020, the aforementioned negative impact has been further improved
since the third quarter of 2020, when the outbreak became more stabilized in China and other regions in the world. However, sporadic
cases are found throughout the first half year of 2021 in China. Due to the uncertainty on future developments, which cannot be predicted
with confidence at this time, we are not able to assess the overall or long-term effect the outbreak may have on our financial results
and business operations.

 

Licenses,
Permits and Government Regulations

 

PRC
Legal System

 

The
PRC legal system is a civil law system based on the PRC Constitution and is made up of written laws, regulations and directives. Unlike
in the US where the law built partly upon decisions of common law cases, court cases in the PRC do not constitute binding precedents.
The governmental directives are organized in the following hierarchy.

 

The
National People’s Congress of the PRC (“NPC”) and the Standing Committee of the NPC are empowered by the PRC Constitution
to exercise the legislative power of the state. The NPC has the power to amend the PRC Constitution and to enact and amend primary laws
governing the state organs and civil and criminal matters. The Standing Committee of the NPC is empowered to interpret, enact and amend
laws other than those required to be enacted by the NPC.

 

 

The
State Council of the PRC is the highest organ of state administration and has the power to enact administrative rules and regulations.
Ministries and commissions under the State Council of the PRC are also vested with the power to issue orders, directives and regulations
within the jurisdiction of their respective departments. Administrative rules, regulations, directives and orders promulgated by the
State Council and its ministries and commissions must not be in conflict with the PRC Constitution or the national laws and, in the event
that any conflict arises, the Standing Committee of the NPC has the power to annul such administrative rules, regulations, directives
and orders.

 

At
the regional level, the people’s congresses of provinces and municipalities and their standing committees may enact local rules
and regulations and the people’s government may promulgate administrative rules and directives applicable to their own administrative
area. These local laws and regulations may not be in conflict with the PRC Constitution, any national laws or any administrative rules
and regulations promulgated by the State Council.

 

Rules,
regulations or directives may be enacted or issued at the provincial or municipal level or by the State Council of the PRC or its ministries
and commissions in the first instance for experimental purposes. After sufficient experience has been gained, the State Council may submit
legislative proposals to be considered by the NPC or the Standing Committee of the NPC for enactment at the national level.

 

Governmental
Regulations in Relation to the Company’s Businesses

 

This
section set forth a summary of the principal PRC laws and regulations relevant to our business and operations in China.

 

Regulations
Related to Foreign Investment

 

Guidance
Catalogue of Industries for Foreign Investment

 

Investment
activities in the PRC by foreign investors are principally governed by the Guidance Catalogue of Industries for Foreign Investment,
or the Guidance Catalog, which was promulgated and is amended from time to time by Ministry of Commerce, or MOFCOM, and the National
Development and Reform Commission, or NDRC. The Guidance Catalog lays out the basic framework for foreign investment in China, classifying
businesses into three categories with regard to foreign investment: “encourage,” “restricted” and “prohibited.”
Industries not listed in the catalog are generally deemed as falling into a fourth category “permitted” unless specifically
restricted by other PRC laws.

 

In
addition, in June 2018 the MOFCOM and the NDRC promulgated the Special Management Measures (Negative List) for the Access of
Foreign Investment
, or the Negative List, which became effective on July 28, 2018 and was further updated on June 30, 2019 and June
23, 2020.

 

Foreign
Investment Law

 

On
March 15, 2019, the National People’s Congress approved the Foreign Investment Law of the PRC, or the Foreign
Investment Law, which came into effect on January 1, 2020 and replaced the trio of existing laws regulating foreign investment in China,
namely, the Sino-foreign Equity Joint Venture Enterprise Law of the PRC, the Sino-foreign Cooperative Joint Venture
Enterprise Law of the PRC 
and the Wholly Foreign-invested Enterprise Law of the PRC, together with their implementation
rules and ancillary regulations. The organization form, organization and activities of foreign-invested enterprises shall be governed,
among others, by the PRC Company Law and the PRC Partnership Enterprise Law. Foreign-invested enterprises
established before the implementation of the Foreign Investment Law may retain the original business organization and so on within five
years after the implementation of this Law.

 

The
Foreign Investment Law is formulated to further expand opening-up, vigorously promote foreign investment and protect the legitimate rights
and interests of foreign investors. According to the Foreign Investment Law, foreign investments are entitled to pre-entry national treatment
and are subject to negative list management system. The pre-entry national treatment means that the treatment given to foreign investors
and their investments at the stage of investment access shall not be less favorable than that of domestic investors and their investments.
The negative list management system means that the state implements special administrative measures for access of foreign investment
in specific fields.

 

 

Foreign
investors’ investment, earnings and other legitimate rights and interests within the territory of China shall be protected in accordance
with the law, and all national policies on supporting the development of enterprises shall equally apply to foreign-invested enterprises.
Among others, the state guarantees that foreign-invested enterprises participate in the formulation of standards in an equal manner and
that foreign-invested enterprises participate in government procurement activities through fair competition in accordance with the law.
Further, the state shall not expropriate any foreign investment except under special circumstances. In special circumstances, the state
may levy or expropriate the investment of foreign investors in accordance with the law for the needs of the public interest. The expropriation
and requisition shall be conducted in accordance with legal procedures and timely and reasonable compensation shall be given. In carrying
out business activities, foreign-invested enterprises shall comply with relevant provisions on labor protection. 

 

The Implementation
Regulations of Foreign Investment Law of the PRC
, adopted by the State Council on December 26, 2019 and came into effect on January
1, 2020, provides implementing measures and detailed rules to ensure the effective implementation of the Foreign Investment Law.

 

Regulations
Related to Mobile Internet Applications Information Services

 

Mobile
Internet applications and application stores are specifically regulated by the Administrative Provisions on Mobile Internet Applications
Information Services
, or the App Provisions, which were promulgated by the Cyberspace Administration of China, or the CAC, on June
28, 2016, and became effective on August 1, 2016. Pursuant to the App Provisions, application information service providers shall obtain
the relevant qualifications prescribed by laws and regulations, strictly implement their information security management responsibilities
and carry out certain duties, including establishing and completing user information security protection mechanism and information content
inspection and management mechanisms, protect users’ right to know and to choose in the process of usage, and to record and preserve
users’ daily usage information for at least 60 days. Furthermore, internet application store service providers and internet application
information service providers shall sign service agreements to determinate both sides’ rights and obligations.

 

In
addition, on December 16, 2016, the MIIT promulgated the Interim Measures on the Administration of Pre-Installation and Distribution
of Applications for Mobile Smart Terminals
, or the App Interim Measures, which took effect on July 1, 2017. The App Interim Measures
requires, among others, that internet information service providers must ensure that a mobile application, as well as its ancillary resource
files, configuration files and user data can be uninstalled by a user on a convenient basis, unless it is a basic function software,
which refers to a software that supports the normal functioning of hardware and operating system of a mobile smart device.

 

Neither
the App Provisions nor the App Interim Measures, however, has further clarified the scope of “information services,” neither
do they specify what “relevant qualification(s)” that an app owner/operator must obtain. In practice, operational activities
of a company conducted through an app is currently subject to the supervisions of local departments of the Information Communications
Administration, and often, the local departments differentiate the operational activities conducted through websites and through apps.

 

As
a marketing consulting services company providing sourcing and marketing service, we do not believe that we are subject to these regulations.
However, there can be no assurance that the PRC government will ultimately take a view that is consistent with ours.    

 

Regulations
Related to Online Transmission of Audio-Visual Programs

 

On
April 13, 2005, the State Council promulgated the Certain Decisions on the Entry of the Non-state-owned Capital into the Cultural
Industry
. On July 6, 2005, five PRC governmental authorities, including the Ministry of Culture, or the MOC, the State Administration
of Radio, Film and Television, or the SARFT (the predecessor of the National Radio and Television Administration, or NRTA), the General
Administration of Press and Publication, or the GAPP, the China Securities Regulatory Commission, or the CSRC and the MOFCOM, jointly
adopted the Several Opinions on Canvassing Foreign Investment into the Cultural Sector. Under these provisions, non-state
owned capital and foreign investors are prohibited from engaging in the business of distributing audio-visual programs through information
networks.

 

 

To
further regulate the provision of audio-visual program services to the public via the internet, including through mobile networks, within
the territory of the PRC, the SARFT and the MIIT jointly promulgated the Administrative Provisions on Internet Audio-Visual Program
Service
, or the Audio-Visual Program Provisions, on December 20, 2007, which took effect on January 31, 2008 and subsequently amended
on August 28, 2015. Pursuant to the Audio-Visual Program Provisions, Internet audio-visual program services refer to activities of making,
redacting and integrating audio-visual programs, providing them to the general public via the Internet, and providing platforms for uploading
and spreading audio-visual programs. Providers of internet audio-visual program services are required to obtain the Audio-Visual License
issued by SARFT, or complete certain registration procedures with SARFT. In general, providers of internet audio-visual program services
must be either state-owned or state-controlled entities, and the business to be carried out by such providers must satisfy the overall
planning and guidance catalog for internet audio-visual program service determined by SARFT. Our VIE is neither state-owned nor state-controlled,
therefore it is unlikely that it will be able to obtain the Audio-Visual License if required to do so. Whoever engages in Internet audio-visual
program service without the license or registration, the competent authorities shall give it/him an admonition and order it/him to correct,
and may impose a fine of not more than RMB30,000 (approximately US$4,348); if the circumstances are serious, a punishment shall be imposed
in accordance with the provision of Article 47 of the Radio and Television Administration Regulation.

 

On
May 21, 2008, SARFT issued a Notice on Relevant Issues Concerning Application and Approval of License for the Online Transmission
of Audio-Visual Programs
, as amended on August 28, 2015, which further set out detailed provisions concerning the application and
approval process regarding the Audio-Visual License. Further, on March 31, 2009, SARFT promulgated the Notice on Strengthening
the Administration of the Content of Internet Audio-Visual Programs
, which reiterates the pre-approval requirements for the audio-visual
programs transmitted via the internet, including through mobile networks, where applicable, and prohibits certain types of internet audio-visual
programs containing violence, pornography, gambling, terrorism, superstition or other similarly prohibited elements.

 

On
March 17, 2010, the SARFT issued the Internet Audio-visual Program Services Categories (Provisional), or the Provisional
Categories, as amended on March 10, 2017. According to the Provisional Categories, there are four categories of internet audio-visual
program services which are further divided into seventeen sub-categories. The third sub-category to the second category covers the making
and editing of certain specialized audio-visual programs concerning, among other things, finance and educational content, and broadcasting
such content to the general public online. However, there are still significant uncertainties relating to the interpretation and implementation
of the Audio-Visual Program Provisions, in particular, the scope of “internet audio-visual programs”.

 

In
addition, the Notice concerning Strengthening the Administration of the Streaming Service of Online Audio-Visual Programs promulgated
by the State Administration of Press and Publication Radio, Film and Television, or the SAPPRFT (the predecessor of NRTA) on September
2, 2016 emphasizes that, unless a specific license is granted, audio-visual programs service provider is forbidden from engaging in live
streaming on major political, military, economic, social, cultural and sports events. On November 4, 2016, the State Internet Information
Office promulgated the Administrative Provisions on Internet Live-Streaming Services, or Internet Live-Streaming Services
Provisions, which came into effect on December 1, 2016. According to the Internet Live-Streaming Services Provisions, an internet live-streaming
service provider shall (a) establish a live-streaming content review platform; (b) conduct authentication registration of internet live-streaming
issuers based on their identity certificates, business licenses and organization code certificates; and (c) enter into a service agreement
with internet live-streaming services user to specify both parties’ rights and obligations.

 

On
March 16, 2018, the SAPPRFT issued the Notice on Further Regulating the Transmission Order of Internet Audio-Visual Programs,
which requires that, among others, audio-visual platforms shall: (i) not produce or transmit programs intended to parody or denigrate
classic works, (ii) not re-edit, re-dub, re-caption or otherwise.

 

As
a marketing consulting services company providing sourcing and marketing service, we do not believe that we are subject to these regulations.
However, there can be no assurance that the PRC government will ultimately take a view that is consistent with ours.  

 

 

Regulations
Related to Information Security

 

Internet
content in China is regulated and restricted from a state security standpoint. The Standing Committee of the National People’s
Congress, or the SCNPC, enacted the Decisions on the Maintenance of Internet Security on December 28, 2000, which was
amended on August 27, 2009, that may subject persons to criminal liabilities in China for any attempt to: (i) gain improper entry to
a computer or system of strategic importance; (ii) disseminate politically disruptive information; (iii) leak state secrets; (iv) spread
false commercial information or (v) infringe upon intellectual property rights. In 1997, Ministry of Public Security, or the MPS, issued
the Administration Measures on the Security Protection of Computer Information Network with International Connections, which
were amended by the State Council on January 8, 2011 and prohibit using the Internet in ways which, among others, result in a leakage
of state secrets or a spread of socially destabilizing content. The MPS has supervision and inspection powers in this regard, and relevant
local security bureaus may also have jurisdiction. On December 13, 2005, the MPS promulgated Regulations on Technological Measures
for Internet Security Protection
, or the Internet Protection Measures, which took effect on March 1, 2006 and requires internet service
providers to take proper measures including anti-virus, data back-up and other related measures, to keep records of certain information
about its users (including user registration information, log-in and log-out time, IP address, content and time of posts by users) for
at least 60 days, and to detect illegal information, stop transmission of such information, and keep relevant records. If an ICP License
holder violates these measures, the PRC government may revoke its ICP License and shut down its websites.

 

In
November 2016, the SCNPC promulgated the Cyber Security Law of the PRC, or the Cyber Security Law, which became effective
on June 1, 2017 and requires network operators to perform certain functions related to cyber security protection and the strengthening
of network information management. For instance, under the Cyber Security Law, network operators of key information infrastructure shall
store within the territory of the PRC all the personal information and important data collected and produced within the territory of
PRC and their purchase of network products and services that may affect national securities shall be subject to national cybersecurity
review. On April 13, 2020, the CAC and other 11 Commissions, Ministries and Administrations, jointly issued the Measures for
Cybersecurity Review,
 which took effect on June 1, 2020, to provide for more detailed rules regarding cybersecurity review requirements.

 

On
March 13, 2019, the SAMR and the CAC jointly promulgated the Announcement on the Implementation of App Security Certification,
or the Implementation Announcement, according to which, the China Cyber Security Review Technology and Certification Center shall be
responsible for app security certification work, and app operators are encouraged to undergo such security certification voluntarily;
search engines, app stores, among others, are encouraged to clearly mark and give priority to recommend certified apps. As an attachment
to the Implementation Announcement, the Implementation Rules of App Security Certification, which came into effect on March
15, 2019, stipulated specific certification procedures, post-certification supervision and management of app security certifications.

 

As
a marketing consulting services company providing sourcing and marketing service, we do not believe that we are subject to these regulations.
However, there can be no assurance that the PRC government will ultimately take a view that is consistent with ours.  

 

Regulations
Related to Internet Privacy Protection

 

Pursuant
to the Internet Protection Measures, Internet services providers are prohibited from unauthorized disclosure of users’ information
to any third parties unless such disclosure is required by the laws and regulations. They are further required to establish management
systems and take technological measures to safeguard the freedom and secrecy of the users’ correspondences.

 

On
December 28, 2012, the SCNPC promulgated the Decision on Strengthening Network Information Protection, which took into effect
on the same date, to enhance the legal protection of information security and privacy on the internet. On July 16, 2013, the MIIT promulgated
the Provisions on Protection of Personal Information of Telecommunication and Internet Users, which took into effect on September
1, 2013, to regulate the collection and use of users’ personal information in the provision of telecommunication services and internet
information services in China and the personal information includes a user’s name, birth date, identification card number, address,
phone number, account name, password and other information that can be used independently or in combination with other information for
identifying a user.

 

 

On
December 29, 2011, the MIIT promulgated the Several Provisions on Regulation of the Order of Internet Information Service Market,
which took into effect on March 15, 2012. The Provisions stipulate that without the consent of users, internet information service providers
shall not collect information relevant to the users that can lead to the recognition of the identity of the users independently or in
combination with other information, nor shall they provide the information to others, unless otherwise provided by laws and administrative
regulations.

 

On
May 8, 2017, the Supreme People’s Court and the Supreme People’s Procuratorate released the Interpretations of the
Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Application of Law in the
Handling of Criminal Cases Involving Infringement of Citizens’ Personal Information
, or the Interpretations, which took into
effect on June 1, 2017. The Interpretations clarify several concepts regarding the crime of “infringement of citizens’ personal
information” stipulated by Article 253A of the Criminal Law of the PRC, including “citizen’s personal information”,
“provision”, and “unlawful acquisition”. Also, the Interpretations specify the standards for determining “serious
circumstances” and “particularly serious circumstances” of this crime.

 

On
January 23, 2019, the CAC, the MIIT, the MPS and the SAMR jointly issued the Notice on Special Governance of Illegal Collection
and Use of Personal Information via Apps
, which restates the requirement of legal collection and use of personal information, encourages
app operators to conduct security certifications, and encourages search engines and app stores to clearly mark and recommend those certified
apps.

 

On
November 28, 2019, the CAC, MIIT, MPS and SAMR jointly issued the Measures to Identify Illegal Collection and Usage of Personal
Information by APPs
, which lists six types of illegal collection and usage of personal information, including “not publishing
rules on the collection and usage of personal information” and “not providing privacy rules.”

 

On
May 28, 2020, the NPC adopted the Civil Code of the PRC, or the Civil Code, which became effective on January 1, 2021 and
abolished the General Rules of the Civil Law of the PRC. Pursuant to the Civil Code, the collection, storage, use, process,
transmission, provision and disclosure of personal information should follow the principles of legitimacy, properness and necessity.

 

On
March 12, 2021, the CAC, the MIIT, the MPS and the SAMR jointly promulgated the Regulations on the Scope of Necessary Personal
Information for Common Types of Mobile Internet Apps
, which will become effective on May 1, 2021. According to these regulations,
an app may not refuse a user from using its basic functional services if the user disagrees to provide unnecessary personal information.
In particular, basic functional services of job hunting and recruitment applications are the “exchange of job hunting and recruitment
information,” and the necessary personal information includes mobile phone numbers of registered users and resumés provided
by job seekers. Additionally, the regulations also apply to mini programs, which are apps developed and based on open platform interfaces
and available to users without installation.

 

As
a marketing consulting services company providing sourcing and marketing service, we do not believe that we are subject to these regulations.
However, there can be no assurance that the PRC government will ultimately take a view that is consistent with ours.  

 

Regulations
Related to Internet Culture Activities

 

On
February 17, 2011, the MOC promulgated the Interim Administrative Provisions on Internet Culture, or the Internet Culture
Provisions, which became effective on April1, 2011 and was amended on December 15, 2017. The Internet Culture Provisions require ICP
services providers engaging in commercial “internet culture activities” to obtain an Internet Culture Business Operating
License from the MOC. “Internet cultural activity” is defined in the Internet Culture Provisions as an act of provision of
internet cultural products and related services, which includes (i) the production, duplication, importation, and broadcasting of the
internet cultural products; (ii) the online dissemination whereby cultural products are posted on the internet or transmitted via the
internet to end-users, such as computers, fixed-line telephones, mobile phones, television sets and games machines, for online users’
browsing, use or downloading; and (iii) the exhibition and comparison of the internet cultural products. In addition, “internet
cultural products” is defined in the Internet Culture Provisions as cultural products produced, broadcast and disseminated via
the internet, which mainly include internet cultural products specially produced for the internet, such as online music entertainment,
online games, online shows and plays (programs), online performances, online works of art and online cartoons, and internet cultural
products produced from cultural products such as music entertainment, games, shows and plays (programs), performances, works of art,
and cartoons through certain techniques and duplicating those to internet for dissemination.

 

 

As
a marketing consulting services company providing sourcing and marketing service, we do not believe that we are subject to these regulations.
However, there can be no assurance that the PRC government will ultimately take a view that is consistent with ours.  

 

Regulations
Related to Consumer Rights Protection

 

The Consumer
Rights and Interests Protection Law of the PRC
, or the Consumer Protection Law, promulgated by the SCNPC on October 31, 1993 and
most recently amended on October 25, 2013 (effective as of March 15, 2014), and the Online Trading Measures issued by
the SAIC on January 26, 2014 (effective as of March 15, 2014), set out the obligations of business operators and the rights and interests
of the customers. For example, business operators must guarantee the quality, function, usage, term of validity, personal or property
safety requirement of the goods and services and provide customers with authentic information about the goods and services. Consumer
whose legitimate rights and interests are harmed in the purchase of goods or receipt of services rendered through an online trading platform
may seek compensation from the seller or the service provider.

 

On
March 15, 2021, the SAMR promulgated the Measures for the Supervision and Administration of Online Trading, or New Online
Trading Measures, which will come into effect on May 1, 2021 and replace the above original Online Trading Measure. The New Online Trading
Measures also apply to all online commerce business conducted through information networks in general, with particular emphasis on transactions
through online social networking and online live streaming. Under the New Online Trading Measures, online trading operators shall perform
relevant compliance obligations, such as registration with the SAMR, protection of customers’ personal information and fair competition.

 

Additionally,
the Civil Code, which became effective on January 1, 2021 and replaced the Tort Liability Law of the PRC, provides that both
internet users and internet service providers may be liable for the wrongful acts of users who infringe the lawful rights of other parties.
If an internet user utilizes internet services to commit a tortious act, the party whose rights are infringed may request the internet
service provider to take measures, such as removing or blocking the content, or disabling the links thereto, to prevent or stop the infringement.
If the internet service provider does not take necessary measures after receiving such notice, it shall be jointly liable for any further
damages suffered by the rights holder. Furthermore, if an internet service provider fails to take necessary measures when it knows that
an internet user utilizes its internet services to infringe the lawful rights and interests of other parties, it shall be jointly liable
with the internet user for damages resulting from the infringement.

 

As
a marketing consulting services company providing sourcing and marketing service, we do not believe that we are subject to these regulations.
However, there can be no assurance that the PRC government will ultimately take a view that is consistent with ours.  

 

Regulations
Related to Intellectual Property Rights

 

Copyright

 

The Copyright
Law of the PRC
, or the Copyright Law, which took effect on June 1, 1991 and was amended in 2001, 2010 and 2020. The latest version
will come into effect on June 1, 2021. Under the currently effective Copyright Law and its implementing regulations adopted in 2002 and
amended in 2011 and 2013, Chinese citizens, legal persons, or other organizations will, whether published or not, enjoy copyright provides
that Chinese citizens, legal persons, or other organizations shall, whether published or not, own copyright in their copyrightable works,
which include, among others, works of literature, art, natural science, social science, engineering technology and computer software.
Copyright owners enjoy certain legal rights, including right of publication, right of authorship and right of reproduction. The Copyright
Law extends copyright protection to Internet activities, products disseminated over the Internet and software products. In addition,
the Copyright Law provides for a voluntary registration system administered by the China Copyright Protection Center, or the CPCC. According
to the Copyright Law, an infringer of the copyrights shall be subject to various civil liabilities, which include ceasing infringement
activities, apologizing to the copyright owners and compensating the loss of copyright owner. Infringers of copyright may also subject
to fines and/or administrative or criminal liabilities in severe situations.

 

 

Pursuant
to the Computer Software Copyright Protection Regulations promulgated by the State Council in 1991 and amended in 2001,
2011 and 2013 respectively, Chinese citizens, legal persons and other organizations shall enjoy copyright on software they develop, regardless
of whether the software is released publicly. Software copyright commences from the date on which the development of the software is
completed. The protection period for software copyright of a legal person or other organizations shall be 50 years, concluding on December
31 of the 50th year after the software’s initial release. The software copyright owner may go through the registration formalities
with a software registration authority recognized by the State Council’s copyright administrative department. The software copyright
owner may authorize others to exercise that copyright, and is entitled to receive remuneration.

 

Trademark

 

Trademarks
are protected by the Trademark Law of the PRC, which was adopted in 1982 and subsequently amended in 1993, 2001, 2013 and
2019 as well as by the Implementation Regulations of the PRC Trademark Law adopted by the State Council in 1983 and as most recently
amended on April 29, 2014. The Trademark Office under the SAIC handles trademark registrations. The Trademark Office grants a 10-year
term to registered trademarks and the term may be renewed for another 10-year period upon request by the trademark owner. A trademark
registrant may license its registered trademarks to another party by entering into trademark license agreements, which must be filed
with the Trademark Office for its record. As with patents, the Trademark Law has adopted a first-to-file principle with respect to trademark
registration. If a trademark applied for is identical or similar to another trademark which has already been registered or subject to
a preliminary examination and approval for use on the same or similar kinds of products or services, such trademark application may be
rejected. Any person applying for the registration of a trademark may not injure existing trademark rights first obtained by others,
nor may any person register in advance a trademark that has already been used by another party and has already gained a “sufficient
degree of reputation” through such party’s use.

 

Domain
name

 

The
domain names are protected under the Administrative Measures on the Internet Domain Names, or the Domain Name Measures, which
was promulgated by the MIIT and became effective in November 2017. The MIIT is the major regulatory body responsible for the administration
of the PRC internet domain names, under supervision of which China Internet Network Information Center, or the CNNIC, is responsible
for the daily administration of CN domain names and PRC domain names. Pursuant to the Domain Name Measures, the registration of domain
names adopts the “first to file” principle and the registrant shall complete the registration via the domain name registration
service institutions. In the event of a domain name dispute, the disputed parties may lodge a complaint to the designated domain name
dispute resolution institution to trigger the domain name dispute resolution procedure in accordance with the CNNIC Measures on Resolution
of the Domain Name Disputes, file a suit to the People’s Court, or initiate an arbitration procedure.

 

Regulations
Related to Foreign Exchange 

 

The
principal regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, promulgated
by the State Council in 1996 and most recently amended in 2008. Under the PRC foreign exchange regulations, payments of current account
items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without
prior approval from State Administration of Foreign Exchange or SAFE by complying with certain procedural requirements. By contrast,
approval from or registration with appropriate governmental authorities is required where Renminbi is to be converted into foreign currency
and remitted out of China to pay capital expenses such as the repayment of foreign currency-denominated loans.

 

In
November 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign
Direct Investment,
 or SAFE Circular 59, which was most recently amended in 2015 and substantially amends and simplifies the
current foreign exchange procedures. Pursuant to SAFE Circular 59, the opening of various special purpose foreign exchange accounts,
such as pre-establishment expenses accounts, foreign exchange capital accounts, and guarantee accounts, the reinvestment of Renminbi
proceeds derived by foreign investors in China, and remittance of foreign exchange profits and dividends by a foreign-invested enterprise
to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same entity
may be opened in different provinces, which was not possible previously.

 

 

In
February 2015, SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning
Direct Investment,
 or SAFE Circular 13, pursuant to which, instead of applying for approval regarding foreign exchange registrations
of foreign direct investment and overseas direct investment from SAFE, entities and individuals may apply for such foreign exchange registrations
from qualified banks. The qualified banks, under the supervision of SAFE, may directly review the applications and conduct the registration.

 

In
March 2015, SAFE issued the Circular of the State Administration of Foreign Exchange on Reforming the Administration of Foreign
Exchange Settlement of Capital of Foreign-invested Enterprises,
 or SAFE Circular 19. Pursuant to SAFE Circular 19, a foreign-invested
enterprise may, according to its actual business needs, settle with a bank the portion of the foreign exchange capital in its capital
account for which the relevant foreign exchange administration has confirmed monetary capital contribution rights and interests (or for
which the bank has registered the injection of the monetary capital contribution into the account). In addition, for the time being,
foreign-invested enterprises are allowed to settle 100% of their foreign exchange capital on a discretionary basis. A foreign-invested
enterprise shall truthfully use its capital for its own operational purposes within the scope of business. Where an ordinary foreign-invested
enterprise makes domestic equity investment with the amount of foreign exchanges settled, the invested enterprise must first go through
domestic re-investment registration and open a corresponding account for foreign exchange settlement pending payment with the foreign
exchange administration or the bank at the place where it is registered.

 

In
June 2016, SAFE promulgated the Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement
of Capital Accounts,
 or SAFE Circular 16, pursuant to which, in addition to foreign currency capital, enterprises registered
in China may also convert their foreign debts, as well as repatriated fund raised through overseas listing, from foreign currency to
Renminbi on a discretional basis. SAFE Circular 16 also reiterates that the use of capital so converted shall follow “the principle
of authenticity and self-use” within the business scope of the enterprise. According to SAFE Circular 16, the Renminbi funds so
converted shall not be used for the purposes of, whether directly or indirectly, (i) paying expenditures beyond the business scope of
the enterprises or prohibited by laws and regulations; (ii) making securities investment or other investments (except for banks’
principal-secured products); (iii) granting loans to non-affiliated enterprises, except as expressly permitted in the business license;
and (iv) purchasing non-self-used real estate (except for the foreign-invested real estate enterprises).

 

In
January 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness
and Compliance Verification,
 or SAFE Circular 3, which stipulates several capital control measures with respect to the outbound
remittance of profit from domestic entities to offshore entities, including (i) under the principle of genuine transaction, banks shall
check board resolutions regarding profit distribution, the original version of tax filing records, and audited financial statements;
and (ii) domestic entities shall hold income to account for previous years’ losses before remitting the profits. Further, pursuant
to SAFE Circular 3, domestic entities shall make detailed explanations of the sources of capital and utilization arrangements, and provide
board resolutions, contracts and other proof when completing the registration procedures in connection with an outbound investment.

  

On
October 23, 2019, SAFE issued the Circular of the State Administration of Foreign Exchange on Further Promoting the Facilitation
of Cross-border Trade and Investment
, or SAFE Circular 28, which allows non-investment foreign-invested enterprises to make domestic
equity investment with their capital funds in accordance with the law under the premise that such investment does not violate the existing
special administrative measures (negative list) for foreign investment and the project invested in China is authentic and compliant.
Pursuant to SAFE Circular 28, upon receiving the payment of consideration from a foreign investor for the equity transfer under foreign
direct investment, the domestic transferor, with relevant registration certificates, can process the formalities for account opening,
fund receipt, and foreign exchange settlement and use directly at the bank. The foreign investor’s deposit remitted from overseas
or transferred from domestic accounts can be directly used for its lawful domestic capital contribution as well as domestic and overseas
payment after the transaction is concluded.

 

On
April 10, 2020, SAFE issued the Circular on Optimizing Administration of Foreign Exchange to Support the Development of Foreign-related
Business
, or SAFE Circular 8, pursuant to which, eligible enterprises are allowed to use the income under capital account, from such
sources as capital funds, foreign debt and overseas listing, for domestic payment without having to provide supporting authentication
materials to the banks for every transaction in advance, but the use of funds shall be true and compliant as well as conform to the existing
administration regulations regarding use of income under capital account. The concerned bank shall conduct spot checking in accordance
with the relevant requirements.

 

 

Regulations
Related to Dividend Distribution

 

The
principal regulations governing the distribution of dividends paid by WFOEs include the Company Law of PRC, which applies
to both PRC domestic companies and foreign-invested companies, and the Foreign Investment Law and its implementing rules, which apply
to foreign-invested companies. Under these regulations, WFOEs in China may pay dividends only out of their accumulated profits, if any,
as determined in accordance with PRC accounting standards and regulations. In addition, a WFOE in China is required to set aside at least
10% of its after-tax profits based on PRC accounting standards each year to its general reserves until its cumulative total reserve funds
reaches 50% of its registered capital. These reserve funds, however, may not be distributed as cash dividends.

 

Regulations
Related to Foreign Exchange Registration of Offshore Investment by PRC Residents

 

In
July 2014, SAFE issued the Circular of the State Administration of Foreign Exchange on Issues concerning Foreign Exchange Administration
over the Overseas Investment and Financing and Round-trip Investment by Domestic Residents via Special Purpose Vehicles
, or SAFE
Circular 37 which was most recently amended on June 15, 2018 and has replaced the Notice on Relevant Issues Concerning Foreign Exchange
Administration for Domestic Residents’ Financing and Roundtrip Investment Through Offshore Special Purpose Vehicles (known as Circular
75). SAFE Circular 37 regulates foreign exchange matters in relation to the use of special purpose vehicles, or “SPVs,” by
PRC residents or entities to seek offshore investment and financing or conduct round trip investment in China. Under SAFE Circular 37,
an SPV refers to an offshore entity established or controlled, directly or indirectly, by PRC residents or entities for the purpose of
seeking offshore financing or making offshore investment, using legitimate domestic or offshore assets or interests, while “round
trip investment” refers to the direct investment in China by PRC residents or entities through SPVs, namely, establishing foreign-invested
enterprises to obtain the ownership, control rights and management rights. Circular 37 requires that, before making contribution into
an SPV, PRC residents or entities are required to complete foreign exchange registration with SAFE or its local branch.

 

In
February 2015, SAFE promulgated the SAFE Circular 13. SAFE Circular 13 has amended SAFE Circular 37 by requiring PRC residents or entities
to register with qualified banks instead of SAFE or its local branch in connection with their establishment of an SPV.

 

In
addition, pursuant to SAFE Circular 37, an amendment to registration or subsequent filing with qualified banks by such PRC resident is
also required if there is a material change with respect to the capital of the offshore company, such as any change of basic information
(including change of such PRC residents, change of name and operation term of the SPV), increases or decreases in investment amount,
transfers or exchanges of shares, or mergers or divisions. Failure to comply with the registration requirements as set forth in SAFE
Circular 37 and SAFE Circular 13, misrepresent on or failure to disclose controllers of foreign-invested enterprises that are established
by round-trip investment may result in bans on the foreign exchange activities of the relevant onshore company, including the payment
of dividends and other distributions to its offshore parent or affiliates, and may also subject relevant PRC residents to penalties under
the Foreign Exchange Administration Regulations of the PRC.

 

Regulations
Related to Foreign Debt

 

As
an offshore holding company, we may make additional capital contributions to WFOE subject to approval from the local department of commerce
and the SAFE, with no limitation on the amount of capital contributions. We may also make loans to WFOE subject to the approval from
SAFE or its local office and the limitation on the amount of loans.

 

By
means of making loans, WFOE is subject to the relevant PRC laws and regulation relating to foreign debts. On January 8, 2003, the State
Development Planning Commission, SAFE, and Ministry of Finance, or MOF, jointly promulgated the Circular on the Interim Provisions
on the Management of Foreign Debts
, or the Foreign Debts Provisions, which became effective on March 1, 2003, and was partially abolished
on May 10, 2015. Pursuant to Foreign Debts Provisions, the total amount of foreign loans received by a foreign-invested company shall
not exceed the difference between the total investment in projects as approved by the MOFCOM or its local counterpart and the amount
of registered capital of such foreign-invested company. In addition, on January 12, 2017, the People’s Bank of China, or PBOC,
issued the Circular on Full-Coverage Macro-Prudent Management of Cross-Border Financing, or the PBOC Circular 9, which sets
out the statutory upper limit on the foreign debts for PRC non-financial entities, including both foreign-invested companies and domestic-invested
companies, and the macro-prudential adjustment parameter is 1. Pursuant to the PBOC Circular 9, the foreign debt upper limit for both
foreign-invested companies and domestic-invested companies is calculated as twice the net asset of such companies. As to net assets,
the companies shall take the net assets value stated in their latest audited financial statement. On March 11, 2020, the PBOC and SAFE
promulgated the Circular of the People’s Bank of China and the State Administration of Foreign Exchange on Adjusting the
Macro-prudential Regulation Parameter for Full-covered Cross-border Financing,
 which provides that based on the current macro
economy and international balance of payments, the macro-prudential regulation parameter as set forth in the PBOC Circular 9 is updated
from 1 to 1.25.

 

 

The
PBOC Circular 9 does not supersede the Foreign Debts Provisions. It provides a one-year transitional period from January 11, 2017, for
foreign-invested companies, during which foreign-invested companies, such as WFOE, could adopt their calculation method of foreign debt
upper limit based on either the Foreign Debts Provisions or the PBOC Circular 9. The transitional period ended on January 11, 2018. Upon
its expiry, pursuant to the PBOC Circular 9, PBOC and SAFE shall reevaluate the calculation method for foreign-invested companies and
determine what the applicable calculation method would be. As of the date of this annual report, neither the PBOC nor SAFE has promulgated
and made public any further rules, regulations, notices, or circulars in this regard.

 

Regulations
Related to Tax

 

Enterprise
Income Tax

 

On
March 16, 2007, the SCNPC promulgated the EIT Lawwhich was recently amended on December 29, 2018. On December 6, 2007,
the State Council enacted the Regulations for the Implementation of the Enterprise Income Tax Law, which was amended on April
23, 2019. Under the EIT Law and relevant implementation regulations, both resident enterprises and non-resident enterprises are subject
to the enterprise income tax so long as their income is generated within the territory of PRC. “Resident enterprises” are
defined as enterprises that are established in China in accordance with PRC laws, or that are established in accordance with the laws
of foreign countries but are actually or in effect controlled from within the PRC. “Non-resident enterprises” are defined
as enterprises that are organized under the laws of foreign countries and whose actual management is conducted outside the PRC, but have
established institutions or premises in the PRC, or have no such established institutions or premises but have income generated from
inside the PRC. Under the EIT Law and relevant implementing regulations, a uniform corporate income tax rate of 25% is applied. If non-resident
enterprises have not formed permanent establishments or premises in the PRC, or if they have formed permanent establishment or premises
in the PRC but there is no actual relationship between the relevant income derived in the PRC and the established institutions or premises
set up by them, however, enterprise income tax is set at the rate of 10% with respect to their income sourced from inside the PRC.

 

The
EIT Law and its implementation rules permit certain “high and new technology enterprises strongly supported by the state”
that independently own core intellectual property and meet statutory criteria, to enjoy a reduced 15% enterprise income tax rate.

 

According
to the Administrative Rules for the Certification of High Tech Enterprises, effective on January 1, 2008 and amended on January
29, 2016 (effective as of January 1, 2016), for each entity accredited as High Tech Enterprise, such status is valid for three years
if it meets the qualifications for High Tech Enterprise on a continuing basis during such period.

 

Value-Added
Tax (“VAT”)

 

The Provisional
Regulations of the PRC on Value-added Tax
 was promulgated by the State Council on December 13, 1993, and most recently amended
on November 19, 2017. The Detailed Rules for the Implementation of the Provisional Regulations of the PRC on Value-added Tax
(Revised in 2011)
 were promulgated by the MOF on December 25, 1993, and were recently amended on October 28, 2011 (collectively
with the VAT Regulations, the VAT Law). On April 4, 2018, MOF and SAT jointly promulgated the Circular on Adjustment of Value-Added Tax
Rates, or MOF and SAT Circular 32. On March 20, 2019, MOF, SAT and General Administration of Customs, or GAC, jointly issued a Circular
on Relevant Polices for Deepening Value-added Tax Reform
, or MOF, SAT and GAC Circular 39, which became effective from April 1, 2019.
According to the abovementioned laws and circulars, all enterprises and individuals engaged in the sale of goods, the provision of processing,
repair and replacement services, sales of services, intangible assets, real property and the importation of goods within the territory
of the PRC are the taxpayers of VAT. The VAT tax rates generally applicable are simplified as 13%, 9%, 6% and 0%, and the VAT tax rate
applicable to the small-scale taxpayers is 3%.

 

 

Withholding
Tax

 

The Enterprise
Income Tax Law of the PRC
 provides that since January 1, 2008, an income tax rate of 10% will normally be applicable to dividends
declared to non-PRC resident investors which do not have an establishment or place of business in the PRC, or which have such establishment
or place of business but the relevant income is not effectively connected with the establishment or place of business, to the extent
such dividends are derived from sources within the PRC.

 

Pursuant
to an Arrangement Between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation
and the Prevention of Fiscal Evasion with Respect to Taxes on Incomes
, or the Double Tax Avoidance Arrangement, and other applicable
PRC laws, if a Hong Kong resident enterprise is determined by the competent PRC tax authority to have satisfied the relevant conditions
and requirements under such Double Tax Avoidance Arrangement and other applicable laws, the 10% withholding tax on the dividends the
Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5%. Based on the Circular on Certain
Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties
, or the SAT Circular 81, issued on February 20, 2009,
by the SAT, however, if the relevant PRC tax authorities determine, in their discretion, that a company benefits from such reduced income
tax rate due to a structure or arrangement that is primarily tax-driven, such PRC tax authorities may adjust the preferential tax treatment.
According to the Circular on Several Questions regarding the “Beneficial Owner” in Tax Treaties, which was issued
on February 3, 2018, by the SAT and took effect on April 1, 2018, when determining the applicant’s status of the “beneficial
owner” regarding tax treatments in connection with dividends, interests or royalties in the tax treaties, several factors, including
without limitation, whether the applicant is obligated to pay more than 50% of his or her income in 12 months to residents in third country
or region, whether the business operated by the applicant constitutes the actual business activities, and whether the counterparty country
or region to the tax treaties does not levy any tax or grant tax exemption on relevant incomes or levy tax at an extremely low rate,
will be taken into account, and it will be analyzed according to the actual circumstances of the specific cases. This circular further
provides that applicants who intend to prove his or her status of the “beneficial owner” shall submit the relevant documents
to the relevant tax bureau according to the Announcement on Issuing the Measures for the Administration of Non-Resident Taxpayers’
Enjoyment of the Treatment under Tax Agreements
.

 

Tax
on Indirect Transfer

 

On
February 3, 2015, the SAT issued the Circular on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC Resident
Enterprises
, or SAT Circular 7. Pursuant to SAT Circular 7, an “indirect transfer” of assets, including equity interests
in a PRC resident enterprise, by non-PRC resident enterprises, may be re-characterized and treated as a direct transfer of PRC taxable
assets, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of
PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax. When determining
whether there is a “reasonable commercial purpose” of the transaction arrangement, features to be taken into consideration
include, inter alia, whether the main value of the equity interest of the relevant offshore enterprise derives directly or indirectly
from PRC taxable assets; whether the assets of the relevant offshore enterprise mainly consist of direct or indirect investment in China
or if its income is mainly derived from China; and whether the offshore enterprise and its subsidiaries directly or indirectly holding
PRC taxable assets have real commercial nature which is evidenced by their actual function and risk exposure. According to SAT Circular
7, where the transferee fails to withhold any or sufficient tax, the transferor shall declare and pay such tax to the tax authority by
itself within the statutory time limit. Late payment of applicable tax will subject the transferor to default interest. SAT Circular
7 does not apply to transactions of sale of shares by investors through a public stock exchange where such shares were acquired on a
public stock exchange. On October 17, 2017, the SAT issued the Circular on Issues of Tax Withholding regarding Non-PRC Resident
Enterprise Income Tax
, or SAT Circular 37, which further elaborates the relevant implemental rules regarding the calculation, reporting
and payment obligations of the withholding tax by the non-resident enterprises. Nonetheless, there remain uncertainties as to the interpretation
and application of SAT Circular 7. SAT Circular 7 may be determined by the tax authorities to be applicable to our offshore transactions
or sale of our shares or those of our offshore subsidiaries where non-resident enterprises, being the transferors, were involved.

 

 

Regulations
Related to Employment and Social Welfare

 

Employment

 

The Labor
Law of the PRC
, which was promulgated on July 5, 1994, effective since January 1, 1995, and most recently amended on December 29,
2018, the Labor Contract Law of the PRC, which was promulgated on June 29, 2007, and amended on December 28, 2012, and the Implementation
Regulations of the Labor Contract Law of the PRC
, which was promulgated on September 18, 2008, are the principal regulations that
govern employment and labor matters in the PRC. Under the above regulations, labor contracts shall be concluded in writing if labor relationships
are to be or have been established between employers and the employees. Employers are prohibited from forcing employees to work above
certain time limit and employers shall pay employees for overtime work in accordance to national regulations. In addition, wages may
not be lower than the local minimum wage. Employers must establish a system for labor safety and sanitation, strictly abide by state
standards, and provide relevant education to its employees. Employees are also required to work in safe and sanitary conditions.

 

Social
Insurance and Housing Fund

 

Under
the Social Insurance Law of the PRC that was promulgated by the SCNPC on October 28, 2010, and came into force as of
July 1, 2011, and was most recently amended on December 29, 2018 (also the effective date), together with other laws and regulations,
employers are required to pay basic pension insurance, unemployment insurance, basic medical insurance, employment injury insurance,
maternity insurance, and other social insurance for its employees at specified percentages of the salaries of the employees, up to a
maximum amount specified by the local government regulations from time to time. When an employer fails to fully pay social insurance
premiums, relevant social insurance collection agency shall order it to make up for any shortfall within a prescribed time limit, and
may impose a late payment fee at the rate of 0.05% per day of the outstanding amount from the due date. If such employer still fails
to make up for the shortfalls within the prescribed time limit, the relevant administrative authorities shall impose a fine of one to
three times the outstanding amount upon such employer.

 

In
accordance with the Regulations on the Management of Housing Fund which was promulgated by the State Council in 1999
and most recently amended in March 2019 (which became effective as of March 24th 2019), employers must register at the
designated administrative centers and open bank accounts for depositing employees’ housing funds. Employer and employee are also
required to pay and deposit housing funds, with an amount no less than 5% of the monthly average salary of the employee in the preceding
year in full and on time.

 

The Company failed to deposit adequate contributions
to the housing funds for all of its employees, but has not received any notice of warning or been subject to penalties or other disciplinary
action from the relevant governmental authorities for non-compliance on labor-related laws and regulations. The Company expects to remediate
such non-compliance by paying the relevant penalties and deposit the adequate contributions to the housing funds from third quarter of
2021.

 

Regulations
Related to Mergers and Acquisitions and Overseas Listings

 

On
August 8, 2006, six PRC governmental and regulatory agencies, including MOFCOM and the China Securities Regulatory Commission, or the
CSRC, promulgated the Rules on Acquisition of Domestic Enterprises by Foreign Investors, or the M&A Rules, governing
the mergers and acquisitions of domestic enterprises by foreign investors that became effective on September 8, 2006, and was amended
on June 22, 2009. The M&A Rules, among other things, requires that offshore SPVs that are controlled by PRC companies or individuals
and that have been formed for overseas listing purposes through acquisitions of PRC domestic interest held by such PRC companies or individuals,
to obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock exchange.

 

Regulations
Related to Consultancy Business

 

There
are no separate mandatory legal provisions on the consultancy business model in the PRC. Companies and individual businesses may engage
is this business as long as they have registered with the commerce departments in accordance with the laws, and include “consultancy”
in the business scope on their business license.

 

 

Intellectual
Property

 

As
of the date of this registration statement, we own the following trademarks registered or acquired in the PRC:

 

No.   Name of trademarks in English   Name of trademarks in Original Language   Place of registration
1   FU   FU   PRC
2   Chui Da Xian   炊大仙   PRC
3   Wu Shui   兀水   PRC
4   Mei Fei Se Wu   眉飞色舞   PRC
5   Zhi Yao Ai Shang Ni   只要爱上你   PRC
6   Jin dao bo   金稻伯   PRC
7   Qin Ben Jing Ji   亲本靓丽   PRC

 

Other than the Company’s
above-mentioned trademarks that we own in China, we do not currently hold any other intellectual property rights. While we use reasonable
efforts to protect our trade and business secrets, we cannot assure you that our employees, consultants, contractors or advisors will
not, unintentionally or willfully, disclose our trade secrets to competitors or other third parties.

 

Property

 

We lease 2,891 square
feet office space in China at Suite 907, Saigao City Plaza Building 2, No. 170, Weiyang Road Xi’an, China. Our rent
for the office space in Xi’an, China, is $51,823 per year, with a lease term of 3 years which terminates in July 2024. We believe
that our current offices are suitable and adequate to operate our business at this time. We do not own any real property.

 

We
believe that our facilities, which are of varying ages and are of different construction types, have been satisfactorily maintained.
They are in good conditions and are suitable for our operations and generally provide sufficient capacity to meet our production and
operational requirements.

 

Employees

 

As
of June 30, 2021, we employed approximately 22 employees as follows, 5 in management, 4 in sales and customer services, 4 in finance
department, 6 in administration, and 3 in products department.

 

We
maintain a satisfactory working relationship with our employees, and we have not experienced any significant labor disputes or any difficulty
in recruiting employees for our operations. None of our employees are represented by a labor union.

 

Our
employees are all in China and participate in the state pension plan organized by the Chinese municipal and provincial government. We
are required by Chinese law to cover employees in China with various types of social insurance. We believe that we are in material compliance
with the relevant PRC laws.

 

Legal
Proceedings

 

From
time to time, we may become party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business.
The Company is not currently a party, as plaintiff or defendant, to any legal proceedings that we believe to be material or which, individually
or in the aggregate, would be expected to have a material effect on our business, financial condition or results of operation if determined
adversely to us.

 

 

Smaller
Reporting Company

 

The
Company is a “smaller reporting company” as defined in Rule 12b-2 under the Exchange Act. There are certain exemptions available
to us as a smaller reporting company, including: (1) not being required to comply with the auditor attestation requirements of Section
404(b) of the Sarbanes Oxley Act; (2) scaled executive compensation disclosures; and (3) the requirement to provide only two years of
audited financial statements, instead of three years. As long as we maintain our status as a “smaller reporting company”,
these exemptions will continue to be available to us.

 

Emerging
Growth Company

 

As
a public company with less than $1,070,000,000 in revenue during our last fiscal year, we qualify as an “emerging growth company”
under the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”). An emerging growth company may take advantage of
certain reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable
to public companies, and can avail itself to various exemptions such as an exemption from Section 404(b) of the Sarbanes-Oxley Act of
2002 and Section 14(a) and (b) of the Securities Exchange Act of 1934.

 

In
particular, as an emerging growth company we:

 

are
not required to obtain an attestation and report from our auditors on our management’s assessment of our internal control over
financial reporting pursuant to the Sarbanes-Oxley Act of 2002;

 

are
not required to provide a detailed narrative disclosure discussing our compensation principles, objectives and elements and analyzing
how those elements fit with our principles and objectives (commonly referred to as “compensation discussion and analysis”);

 

are
not required to obtain a non-binding advisory vote from our stockholders on executive compensation or golden parachute arrangements (commonly
referred to as the “say-on-pay,” “say-on-frequency” and “say-on-golden-parachute” votes);

 

are
exempt from certain executive compensation disclosure provisions requiring a pay-for-performance graph and CEO pay ratio disclosure;

 

may
present only two years of audited financial statements and only two years of related Management’s Discussion & Analysis of
Financial Condition and Results of Operations (“MD&A”); and

 

are
eligible to claim longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS
Act.

 

We
intend to take advantage of all of these reduced reporting requirements and exemptions, including the longer phase-in periods for the
adoption of new or revised financial accounting standards under §107 of the JOBS Act. Our election to use the phase-in periods may
make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that
have opted out of the phase-in periods under §107 of the JOBS Act.

 

Certain
of these reduced reporting requirements and exemptions were already available to us due to the fact that we also qualify as a “smaller
reporting company” under SEC rules. For instance, smaller reporting companies are not required to obtain an auditor attestation
and report regarding management’s assessment of internal control over financial reporting; are not required to provide a compensation
discussion and analysis; are not required to provide a pay-for-performance graph or Chief Executive Officer pay ratio disclosure; and
may present only two years of audited financial statements and related MD&A disclosure.

 

Under
the JOBS Act, we may take advantage of the above-described reduced reporting requirements and exemptions for up to five years after our
initial sale of common equity pursuant to a registration statement declared effective under the Securities Act of 1933, as amended (the
“Securities Act”), or such earlier time that we no longer meet the definition of an emerging growth company. In this regard,
the JOBS Act provides that we would cease to be an “emerging growth company” if we have more than $1,070,000,000 in annual
revenues, have more than $700 million in market value of our Common stock held by non-affiliates, or issue more than $1.0 billion in
principal amount of non-convertible debt over a three-year period. We would cease to be an emerging growth company on the last day of
the fiscal year following the date of the fifth anniversary of our first sale of common equity securities under an effective registration
statement or a fiscal year in which we have $1 billion in gross revenues. Further, under current SEC rules we will continue to qualify
as a “smaller reporting company” for so long as we have a public float (i.e., the market value of common equity held by non-affiliates)
of less than $250 million as of the last business day of our most recently completed second fiscal quarter.

 

 

ITEM
1A. RISK FACTORS.

 

An
investment in our common stock involves a high degree of risk.  You should carefully consider the risks described below, together
with all of the other information included in this report, before making an investment decision.  If any of the following risks
actually occur, our business, financial condition or results of operations could suffer.  In that case, the trading price of
our common stock could decline, and you may lose all or part of your investment.  You should read the section entitled “Special
Note Regarding Forward Looking Statements” above for a discussion of what types of statements are forward-looking statements, as
well as the significance of such statements in the context of this report.

 

Risks
Relating to Our Business and Industry.

 

We
have a limited operating history and are subject to the risks encountered by development-stage companies.

 

We
have been in business since October 2019 as a consulting company. We have only been profitable since the year ended December 31, 2019.
As a development-stage company, our business strategies and model are constantly being tested by the market and operating results, and
we work to adjust our allocation of resources accordingly. As such, our business may be subject to significant fluctuations in operating
results in terms of amounts of revenues and the percentages of the total revenue with respect to the business segments.

 

We
are, and expect for the foreseeable future to be, subject to all the risks and uncertainties, inherent in a development-stage business.
As a result, we must establish many functions necessary to operate a business, including expanding our managerial and administrative
structure, assessing and implementing our marketing program, implementing financial systems and controls and personnel recruitment. There
are risks in light of the costs, uncertainties, delays and difficulties frequently encountered by companies with a limited operating
history. These risks and challenges are, among other things:

 

we
operate in industries that are or may in the future be subject to increasing regulation by various governmental agencies in China; 
   
we
may require additional capital to develop and expand our operations which may not be available to us when we require it;
   
our
marketing and growth strategy may not be successful;
   
our
business may be subject to significant fluctuations in operating results; and
   
we
may not be able to attract, retain and motivate qualified professionals.

 

Our
future growth will depend substantially on our ability to address these and the other risks described in this registration statement.
If we do not successfully address these risks, our business would be significantly harmed.

 

 

Our
historical financial results may not be indicative of our future performance.

 

Our
business has achieved rapid growth since we launched our new business model of providing digital marketing consultation in 2019. Our
net revenue was $918,931 and $9,187,023 for the years ended December 31, 2019 and 2020, respectively. Our net income was $142,204 and
$4,968,070 for the year ended December 31, 2019 and 2020, respectively. However, our historical growth rate and the limited history of
operation make it difficult to evaluate our future prospects. We may not be able to sustain our historically growth or may not be able
to grow our business at all.

 

If
we cannot manage our growth effectively and efficiently, our results of operations or profitability could be adversely affected.

 

We
have been in business since October 2019 as a consulting company. Our revenue for the year ended December 31, 2019 was only $918,931,
and the revenue significantly increased to $9,187,023 at the year end of 2020. It was because of our continuing expansion of our services
and operations. For example, to complement and expand our existing consulting services, we started to provide KOL Training Coordination
service in 2020 by cooperating with other training agencies. Such plan has been adopted by the executive in 2020 and will continue to
place, substantial demands on our managerial, operational, technological and other resources. Our planned expansion will also place significant
demands on us to maintain the quality of our consulting services to ensure that our brand does not suffer as a result of any deviations,
whether actual or perceived, in the quality of our services. In order to manage and support our growth, we must continue to improve our
existing operational and administrative systems and our quality control, and recruit, train and retain additional qualified professionals
as well as other administrative and sales and marketing personnel. We may not be able to effectively and efficiently manage the growth
of our operations, recruit and retain qualified personnel and integrate new expansion into our operations. As a result, our quality of
service may deteriorate and our results of operations or profitability could be adversely affected.

 

We
may not be successful in implementing important new strategic initiatives, which may have an adverse impact on our business and financial
results.

 

There
is no assurance that we will be able to implement important strategic initiatives in accordance with our expectations, which may result
in an adverse impact on our business and financial results. For example, our KOL training program in Influencer Marketing may not be
able to train trainees to become KOLs. Our management may lack required experience, knowledge, insight, or human and capital resources
to carry out the effective implementation to expand into new spaces outside of our current focuses. As such, we may not be able to realize
our expected growth, and our business and financial results will be adversely impacted.

 

Increasing
competition within our industries could have an impact on our business prospects.

 

The
digital marketing consulting business and KOL training academy business are industries where new competitors can easily enter into since
there are no significant barriers to entry. We also face many competitors in the marketing consulting industry where a number of competitors
have been in business longer than us. Competing companies may have significantly greater financial and other resources than we have and
may offer services that are more attractive to prospective clients; increased competition would have a negative impact on both our revenues
and our profit margins.

 

We
may be required to obtain and maintain additional approvals, licenses or permits applicable to our business, which could have a material
adverse impact on our business, financial conditions and results of operations.

 

Our
business is subject to governmental supervision and regulation by the relevant PRC governmental authorities, including the Ministry of
Commerce, or MOFCOM, and other governmental authorities in charge of the relevant categories of services offered by us.

 

 

If
we fail to hire, train or retain qualified managerial and other employees, our business and results of operations could be materially
and adversely affected.

 

We
place substantial reliance on the digital marketing consulting service industry experience and knowledge of our senior management team
as well as their relationships with other industry participants. The loss of the services of one or more members of our senior management
could hinder our ability to effectively manage our business and implement our growth strategies. Finding suitable replacements for our
current senior management could be difficult, and competition for such personnel of similar experience is intense. If we fail to retain
our senior management, our business and results of operations could be materially and adversely affected.

 

Our
personnel are critical to maintaining the quality and consistency of our services, brand and reputation. It is important for us to attract
qualified managerial and other employees who have experience in consulting services and are committed to our service approach. There
may be a limited supply of such qualified individuals. We must hire and train qualified managerial and other employees on a timely basis
to keep pace with our rapid growth while maintaining consistent quality of services across our operations. We must also provide continuous
training to our managerial and other employees so that they are equipped with up-to-date knowledge of various aspects of our operations
and can meet our demand for high-quality services. If we fail to do so, the quality of our services may decrease, which in turn, may
cause a negative perception of our brand and adversely affect our business.

 

Risks
associated with doing business in China

 

A
severe or prolonged downturn in the global or Chinese economy could materially and adversely affect our business and our financial condition.

 

Although
the Chinese economy has grown steadily in the past decade, there is considerable uncertainty over the long-term effects of the expansionary
monetary and fiscal policies adopted by the People’s Bank of China and financial authorities of some of the world’s leading
economies, including the United States and China. There have been concerns over unrest and terrorist threats in the Middle East, Europe
and Africa, which have resulted in volatility in oil and other markets. There have also been concerns on the relationship among China
and other Asian countries, which may result in or intensify potential conflicts in relation to territorial disputes. Economic conditions
in China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected
or perceived overall economic growth rate in China. Any severe or prolonged slowdown in the global or Chinese economy may materially
and adversely affect our business, results of operations and financial condition.

 

We
face risks related to health epidemics such as the COVID-19 coronavirus outbreak originated in Wuhan city at the end of 2019, and other
outbreaks, which has significantly disrupted our operations and may continue to adversely affect our business, financial condition and
results of operations.

 

Our
business has been significantly disrupted and may continue to be materially and adversely affected by health epidemics such as the COVID-19
coronavirus outbreak originated in Wuhan city at the end of 2019 and other outbreaks affecting the PRC. Our business operations depend
on China’s overall economy and demand for our services, which could be disrupted by health epidemics. As of April 2020, the outbreak
in China has been generally stabilized, however large-scale offline activities are not yet permitted by the government in some cities
as of the date of this registration statement. However, revenues from our consulting services are expected to increase due to our extra
efforts in promoting our marketing consulting business, as well as providing more live video streaming programs during the lock-down.
A new Delta Covid-19 had been found in certain cities in PRC in the second quarter of 2021, such coronavirus may cause another outbreak
which affects our business. We expect the aforementioned negative impact on our business to gradually mitigate in the coming seasons
when the outbreak becomes more stabilized in China and other regions in the world. However, there remains much uncertainty as to what
extent the impact could have on our long-term business outlook as a prolonged outbreak could significantly affect the Chinese economy
and decrease the demand for our services, which could lead to more disruptions to our operations and adversely affect our financial condition
and results of operations.

 

Changes
in the policies of the PRC government could have a significant impact upon our ability to operate profitably in the PRC. 

 

Currently,
most of our businesses are conducted in the PRC, and 99%   of our revenue is generated in the PRC for the year ended December
31, 2020. Accordingly, economic, political and legal developments in the PRC will continue to significantly affect our business, financial
condition, results of operations and prospects. Policies of the PRC government can have significant effects on economic conditions in
the PRC and the ability of businesses to operate profitably. Our ability to operate profitably in the PRC may be adversely affected by
changes in policies by the PRC government, including changes in laws, regulations or their interpretation that may affect our ability
to operate as currently contemplated.

 

 

Because
our business is dependent upon government policies that encourage a market-based economy, change in the political or economic climate
in the PRC may impair our ability to operate profitably, if at all. 

 

Although
the PRC government has been pursuing a number of economic reform policies for more than two decades, the PRC government continues to
exercise significant control over economic growth in the PRC. Because of the nature of our business, we are dependent upon the PRC government
pursuing policies that encourage private ownership of businesses. We cannot assure you that the PRC government will continue to pursue
policies favoring a market-oriented economy or that existing policies will not be significantly altered, especially in the event of a
change in leadership, social or political disruption, or other circumstances affecting political, economic and social life in the PRC.

 

Changes
in China’s economic, political or social conditions or government policies may have a material adverse effect on our business and
operations.

 

Substantially
all of our assets and operations are located in China. Accordingly, our business, financial condition, results of operations and prospects
have been and will be influenced to a significant degree by political, economic and social conditions in China generally. The Chinese
economy differs from the economies of most developed countries in many respects, including the level of government involvement, level
of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented
measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and
the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still
owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development
by imposing industrial policies. The Chinese government also exercises significant control over China’s economic growth through
allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential
treatment to particular industries or companies.

 

While
the Chinese economy has experienced significant growth over past three decades, growth has been uneven, both geographically and among
various sectors of the economy. Any adverse changes in economic conditions in China, in the policies of the Chinese government or in
the laws and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments could
adversely affect our business and operating results, lead to a reduction in demand for our products and adversely affect our competitive
position. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources.
Some of these measures may benefit the overall Chinese economy, but may have a negative effect on us. For example, our financial condition
and results of operations may be adversely affected by government control over capital investments or changes in tax regulations. In
addition, in the past the Chinese government has implemented certain measures, including interest rate adjustment, to control the pace
of economic growth. These measures may cause decreased economic activity in China, which may adversely affect our business and operating
results.

 

The
PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil
law system may be cited for reference but have limited precedential value. Therefore, the Company’s susceptibility to such laws
is unknown.

 

In
1979, the PRC government began to promulgate a comprehensive system of laws, rules and regulations governing economic matters in general.
The overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of
foreign investment in China. However, China has not developed a fully integrated legal system, and recently enacted laws, rules and regulations
may not sufficiently cover all aspects of economic activities in China or may be subject to significant degrees of interpretation by
PRC regulatory agencies. In particular, because these laws, rules and regulations are relatively new, and because of the limited number
of published decisions and the nonbinding nature of such decisions, and because the laws, rules and regulations often give the relevant
regulator significant discretion in how to enforce them, the interpretation and enforcement of these laws, rules and regulations involve
uncertainties and can be inconsistent and unpredictable. In addition, the PRC legal system is based in part on government policies and
internal rules, some of which are not published on a timely basis or at all, and which may have a retroactive effect. As a result, we
may not be aware of our violation of these policies and rules until after the occurrence of the violation.

 

 

Any
administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management
attention. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and
contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection
we enjoy than in more developed legal systems. These uncertainties may impede our ability to enforce the contracts we have entered and
could materially and adversely affect our business, financial condition and results of operations.

 

Chinese
law prohibits or restricts companies belonging to foreign countries from operating some certain businesses.

 

According
to Chinese law, some businesses are not allowed to be operated by the companies whose ownership is not a Chinese company. We are a US
company registered in Nevada. Each company in our organization chart is a subsidiary. The legality and effectiveness of this control
method are accorded with Chinese laws and regulations. On December 27, 2020, China’s National Development and Reform Commission
(NDRC) and the Ministry of Commerce (MOFCOM) issued the 2020 edition of the Catalogue of Encouraged Industries for Foreign Investment
(“FI encouraged catalogue”). According to the FI encouraged catalogue, Article 8, Section 425, foreign investment on the
business of consulting services is encouraged, effective on January 27, 2021. However, we are uncertain that the laws will remain to
allow foreign owned Chinese companies to engage in consultancy services business.

 

We
may be subject to liability for placing advertisements with content that is deemed inappropriate or misleading under PRC laws.

 

According
to Chinese law, if any advertisement issued by the Company infringes the rights and interests of a third party, the Company shall bear
the liability for compensation, which may cause us financial loss.

 

We
may be subject to additional contributions of social insurance and housing fund and late payments and fines imposed by relevant governmental
authorities. Non-compliance with labor-related laws and regulations of the PRC may have an adverse impact on our financial condition
and results of operation.

 

In
accordance with the PRC Social Insurance Law and the Regulations on the Administration of Housing Fund and other relevant laws and regulations,
China establishes a social insurance system and other employee benefits including basic pension insurance, basic medical insurance, work-related
injury insurance, unemployment insurance, maternity insurance, housing fund, and a handicapped employment security fund, or collectively
the Employee Benefits. An employer shall pay the Employee Benefits for its employees in accordance with the rates provided under relevant
regulations and shall withhold the social insurance and other Employee Benefits that should be assumed by the employees. For example,
an employer that has not made social insurance contributions at a rate and based on an amount prescribed by the law, or at all, may be
ordered to rectify the non-compliance and pay the required contributions within a stipulated deadline and be subject to a late fee of
up to 0.05% or 0.2% per day, as the case may be. If the employer still fails to rectify the failure to make social insurance contributions
within the stipulated deadline, it may be subject to a fine ranging from one to three times of the amount overdue.

  

As
the interpretation and implementation of labor-related laws and regulations are still evolving, we cannot assure you that our employment
practice does not and will not violate labor-related laws and regulations in China, which may subject us to labor disputes or government
investigations. If we are deemed to have violated relevant labor laws and regulations, we could be required to provide additional compensation
to our employees and our business, financial condition and results of operations could be materially and adversely affected.

 

 

PRC
laws and regulations governing our current business operations are sometimes vague and uncertain and any changes in such laws and regulations
may impair our ability to operate profitably. 

 

There
are substantial uncertainties regarding the interpretation and application of PRC laws and regulations including, but not limited to,
the laws and regulations governing our business and the enforcement and performance of our arrangements with customers in certain circumstances.
The laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement
may involve substantial uncertainty. The effectiveness and interpretation of newly enacted laws or regulations, including amendments
to existing laws and regulations, may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently
adopted or interpreted in a manner different from our understanding of these laws and regulations. New laws and regulations that affect
existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing
or new PRC laws or regulations may have on our business.

 

Because
our business is conducted in RMB and the price of our Ordinary Shares is quoted in United States dollars, changes in currency conversion
rates may affect the value of the Company.

 

Our
business is conducted in the PRC, our books and records are maintained in RMB, which is the lawful currency of the PRC, and the financial
statements that we file with the SEC and provide to our shareholders are presented in United States dollar. Changes in the exchange rate
between the RMB and United States dollar affect the value of our assets and the results of our operations in United States dollar. The
value of the RMB against the United States dollar and other currencies may fluctuate and is affected by, among other things, changes
in the PRC’s political and economic conditions and perceived changes in the economy of the PRC and the United States. Any significant
revaluation of the RMB may materially and adversely affect our cash flows, revenue and financial condition.

 

Under
the PRC Enterprise Income Tax Law, or the EIT Law, we may be classified as a “resident enterprise” of China, which could
result in unfavorable tax consequences to us and our non-PRC shareholders. 

 

The
EIT Law and its implementing rules provide that enterprises established outside of China whose “de facto management bodies”
are located in China are considered “resident enterprises” under PRC tax laws. The implementing rules promulgated under the
EIT Law define the term “de facto management bodies” as a management body which substantially manages, or has control over
the business, personnel, finance and assets of an enterprise. In April 2009, the State Administration of Taxation, or SAT, issued the
Circular on Issues Concerning the Identification of Chinese-Controlled Overseas Registered Enterprises as Resident Enterprises in Accordance
With the Actual Standards of Organizational Management, known as SAT Circular 82, which has been revised by the Decision of the State
Administration of Taxation on Issuing the Lists of Invalid and Abolished Tax Departmental Rules and Taxation Normative Documents on December
29, 2017 and by the Decision of the State Council on Cancellation and Delegation of a Batch of Administrative Examination and Approval
Items on November 8, 2013. Circular 82 has provided certain specific criteria for determining whether the “de facto management
bodies” of a PRC-controlled enterprise that is incorporated offshore is located in China. Although this circular only applies to
offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the
criteria set forth in the circular may reflect the SAT’s general position on how the “de facto management body” text
should be applied in determining the tax resident status of all offshore enterprises. According to SAT Circular 82, a Chinese-controlled
offshore incorporated enterprise will be regarded as a PRC tax resident by virtue of having a “de facto management body”
in China and will be subject to PRC enterprise income tax on its worldwide income only if all of the following criteria are met: (i)
the places where senior management and senior management departments that are responsible for daily production, operation and management
of the enterprise perform their duties are mainly located within the territory of China; (ii) financial decisions (such as money borrowing,
lending, financing and financial risk management) and personnel decisions (such as appointment, dismissal, salary and wages) are made
or need to be made by organizations or persons located within the territory of China; (iii) main property, accounting books, corporate
seal, the board of directors and files of the minutes of shareholders’ meetings of the enterprise are located or preserved within
the territory of China; and (iv) one half (or more) of the directors or senior management staff having the right to vote habitually reside
within the territory of China.

 

 

If we are deemed as a PRC “resident enterprise”
by PRC tax authorities, we will be subject to PRC enterprise income tax on our worldwide income at a uniform tax rate of 25%, although
dividends distributed to us from our existing PRC subsidiary and any other PRC subsidiaries which we may establish from time to time
could be exempt from the PRC dividend withholding tax due to our PRC “resident recipient” status. This could have a material
and adverse effect on our overall effective tax rate, our income tax expenses and our net income. Furthermore, dividends, if any, paid
to our shareholders may be decreased as a result of the decrease in distributable profits. In addition, if we were considered a PRC “resident
enterprise”, any dividends we pay to our non-PRC investors, and the gains realized from the transfer of our Ordinary Shares may
be considered income derived from sources within the PRC and be subject to PRC tax, at a rate of 10% in the case of non-PRC enterprises
or 20% in the case of non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty). It is unclear whether
holders of our Ordinary Shares would be able to claim the benefits of any tax treaties between their country of tax residence and the
PRC in the event that we are treated as a PRC resident enterprise. This could have a material and adverse effect on the value of the
price of our Ordinary Shares.

 

There are significant uncertainties under
the EIT Law relating to the withholding tax liabilities of our PRC subsidiary, and dividends payable by our PRC subsidiary to our offshore
subsidiaries may not qualify to enjoy certain t
reaty benefits.

 

Under the EIT Law and its implementation rules,
the profits of a foreign invested enterprise generated through operations, which are distributed to its immediate holding company outside
the PRC, will be subject to a withholding tax rate of 10%. Pursuant to the Arrangement between the Mainland China and the Hong
Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income
, or the Double Tax Avoidance Arrangement,
a withholding tax rate of 10% may be lowered to 5% if the PRC enterprise is at least 25% held by a Hong Kong enterprise for at least 12
consecutive months prior to distribution of the dividends and is determined by the relevant PRC tax authority to have satisfied other
conditions and requirements under the Double Tax Avoidance Arrangement and other applicable PRC laws.

 

However, based on the Circular on Certain
Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties
, or the SAT Circular 81, which became effective on February
20, 2009, if the relevant PRC tax authorities determine, in their discretion, that a company benefits from such reduced income tax rate
due to a structure or arrangement that is primarily tax-driven, such PRC tax authorities may adjust the preferential tax treatment. According
to Circular on Several Issues regarding the “Beneficial Owner” in Tax Treaties, which became effective as of April
1, 2018, when determining an applicant’s status as the “beneficial owner” regarding tax treatments in connection with
dividends, interests, or royalties in the tax treaties, several factors will be taken into account. Such factors include whether the business
operated by the applicant constitutes actual business activities, and whether the counterparty country or region to the tax treaties does
not levy any tax, grant tax exemption on relevant incomes, or levy tax at an extremely low rate. This circular further requires any applicant
who intends to be proved of being the “beneficial owner” to file relevant documents with the relevant tax authorities. Our
PRC subsidiary is wholly owned by our Hong Kong subsidiary. However, we cannot assure you that our determination regarding our qualification
to enjoy the preferential tax treatment will not be challenged by the relevant PRC tax authority or we will be able to complete the necessary
filings with the relevant PRC tax authority and enjoy the preferential withholding tax rate of 5% under the Double Tax Avoidance Arrangement
with respect to dividends to be paid by our PRC subsidiary to our EWT HK, in which case, we would be subject to the higher withdrawing
tax rate of 10% on dividends received.

 

PRC regulation of loans to and direct investment
in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from making loans
or additional capital contributions to our PRC subsidiary, which could materially and adversely affect our liquidity and our ability to
fund and expand our business.

 

We are an offshore holding company conducting
our operations in China through our PRC subsidiary. We may make loans to our PRC subsidiary, or we may make additional capital contributions
to our PRC subsidiary. Any capital contributions or loans that we, as an offshore entity, make to our PRC subsidiary, are subject to PRC
regulations. For example, loans to our PRC subsidiary cannot exceed statutory limits and are subject to foreign exchange loan registrations.
Our capital contributions to our PRC subsidiary must be registered with the MOFCOM or its local counterpart.

 

In light of the various requirements imposed by
of PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will
be able to complete the necessary government registrations or obtain the necessary government approvals or filings on a timely basis,
if at all, with respect to future loans by us to our PRC subsidiary or with respect to future capital contributions by us to our PRC subsidiary.
If we fail to complete such registrations or obtain such approvals on a timely basis or at all, our ability to capitalize or otherwise
fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund
and expand our business.

 

 

Government control in currency conversion
may adversely affect our financial condition, our ability to remit dividends, and the value of your investment.

 

The PRC government imposes controls on the convertibility
of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of
our revenues in Renminbi. Under our current corporate structure, our holding companies may rely on dividend payments from our PRC subsidiaries
to fund any cash and financing requirements we may have.

 

Under existing PRC foreign exchange regulations,
Renminbi cannot be freely converted into any foreign currency, and conversion and remittance of foreign currencies are subject to PRC
foreign exchange regulations. It cannot be guaranteed that under a certain exchange rate, we will have sufficient foreign exchange to
meet our foreign exchange requirements. Under the current PRC foreign exchange control system, foreign exchange transactions under the
current account conducted by us, including the payment of dividends, do not require advance approval from SAFE, but we are required to
present documentary evidence of such transactions and conduct such transactions at designated foreign exchange banks within China that
have the licenses to carry out foreign exchange business. Foreign exchange transactions under the capital account conducted by us, however,
must be approved in advance by SAFE.

 

Under existing foreign exchange regulations, we
will be able to pay dividends in foreign currencies without prior approval from SAFE by complying with certain procedural requirements.
However, we cannot assure you that these foreign exchange policies regarding payment of dividends in foreign currencies will continue
in the future.

 

In fact, in light of the flood of capital outflows
of China in 2016 due to the weakening Renminbi, the PRC government has imposed more restrictive foreign exchange policies and stepped
up scrutiny of major outbound capital movement including overseas direct investment. More restrictions and substantial vetting process
are put in place by SAFE to regulate cross-border transactions falling under the capital account. If any of our shareholders regulated
by such policies fails to satisfy the applicable overseas direct investment filing or approval requirement timely or at all, it may be
subject to penalties from the relevant PRC authorities. The PRC government may at its discretion further restrict access in the future
to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign
currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including
holders of the Ordinary Shares. Our capital expenditure plans and our business, operating results and financial condition may be materially
and adversely affected.

 

If we become directly subject to the scrutiny,
criticism and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and
resolve the matter which could harm our business operations, stock price and reputation.

 

U.S. public companies that have substantially
all of their operations in China have been the subject of intense scrutiny, criticism and negative publicity by investors, financial commentators
and regulatory agencies, such as the SEC. Much of the scrutiny, criticism and negative publicity has centered on financial and accounting
irregularities and mistakes, a lack of effective internal controls over financial accounting, inadequate corporate governance policies
or a lack of adherence thereto and, in many cases, allegations of fraud. As a result of the scrutiny, criticism and negative publicity,
the publicly traded stock of many U.S. listed Chinese companies sharply decreased in value and, in some cases, has become virtually worthless.
Many of these companies are now subject to shareholder lawsuits and SEC enforcement actions and are conducting internal and external investigations
into the allegations. It is not clear what effect this sector-wide scrutiny, criticism and negative publicity will have on us, our business
and our stock price. If we become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue,
we will have to expend significant resources to investigate such allegations and/or defend our company. This situation will be costly
and time consuming and distract our management from growing our business. If such allegations are not proven to be groundless, we and
our business operations will be severely affected.

 

 

The disclosures in our reports and other
filings with the SEC and our other public pronouncements are not subject to the scrutiny of any regulatory bodies in the PRC.

 

We are regulated by the SEC and our reports and
other filings with the SEC are subject to SEC review in accordance with the rules and regulations promulgated by the SEC under the Securities
Act and the Exchange Act. Our SEC reports and other disclosures and public pronouncements are not subject to the review or scrutiny of
any PRC regulatory authority. For example, the disclosure in our SEC reports and other filings are not subject to the review by the China
Securities Regulatory Commission, a PRC regulator that is responsible for oversight of the capital markets in China. Accordingly, reader
should review our SEC reports, filings and our other public pronouncements with the understanding that no local regulator has done any
review of us, our SEC reports, other filings or any of our other public pronouncements.

 

We are not in compliance with the PRC’s
regulations relating to offshore investment activities by PRC residents, and as a result, the Company and its shareholders may be subject
to severe penalties if we are not able to remediate the non-compliance.

 

In July 2014, SAFE promulgated the Circular on
Issues Concerning Foreign Exchange Administration Over the Overseas Investment and Financing and Roundtrip Investment by Domestic Residents
Via Special Purpose Vehicles, or Circular 37, which replaced Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’
Corporate Financing and Roundtrip Investment through Offshore Special Purpose Vehicles, or Circular 75. Circular 37 requires PRC residents
to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, referred
to in Circular 37 as a “special purpose vehicle” for the purpose of holding domestic or offshore assets or interests. Circular
37 further requires amendment to a PRC resident’s registration in the event of any significant changes with respect to the special
purpose vehicle, such as an increase or decrease in the capital contributed by PRC individuals, share transfer or exchange, merger, division
or other material event. Under these regulations, PRC residents’ failure to comply with specified registration procedures may result
in restrictions being imposed on the foreign exchange activities of the relevant PRC entity, including the payment of dividends and other
distributions to its offshore parent, as well as restrictions on capital inflows from the offshore entity to the PRC entity, including
restrictions on its ability to contribute additional capital to its PRC subsidiaries. Further, failure to comply with the SAFE registration
requirements could result in penalties under PRC law for evasion of foreign exchange regulations.

 

Guolin Tao and Ying Sun, each, a “Beneficial
Owner,” and together, the “Beneficial Owners”), who are our major beneficial owners and are PRC residents, have not
completed the initial foreign exchange registrations. We have also requested our shareholders who are Chinese residents to make the necessary
applications, filings, and amendments as required under Circular 37 and other related rules. However, there is uncertainty concerning
under what circumstances residents of other countries and regions can be classified as a PRC resident. The PRC government authorities
may interpret our beneficial owners’ status differently or their status may change in the future. Moreover, we may not be fully
informed of the identities of our beneficial owners and we cannot assure you that all of our PRC resident beneficial owners will comply
with SAFE regulations. Any failure of our beneficial owners who are PRC residents to make any required registrations may subject us to
fines and legal sanctions, and prevent us from being able to make distributions or pay dividends, as a result of which our business operations
and our ability to distribute profits to you could be materially adversely affected.

 

Although we believe that our agreements relating
to our structure are in compliance with current PRC regulations, we cannot assure you that the PRC government would agree that these contractual
arrangements comply with PRC licensing, registration or other regulatory requirements, with existing policies or with requirements or
policies that may be adopted in the future.

 

Increases in labor costs in the PRC may
adversely affect our business and our profitability.

 

China’s economy has experienced increases
in labor costs in recent years, which is expected to continue to grow. The average wage level for our employees will also need to be increased
in order to keep them. We expect that our labor costs, including wages and employee benefits, will continue to increase. Unless we are
able to pass on these increased labor costs to our customers by increasing prices for our products or services, our profitability and
results of operations may be materially and adversely affected.

 

In addition, we have been subject to stricter
regulatory requirements in terms of entering into labor contracts with our employees and paying various statutory employee benefits, including
pensions, housing fund, medical insurance, work-related injury insurance, unemployment insurance and childbearing insurance to designated
government agencies for the benefits of our employees. Pursuant to the PRC Labor Contract Law, or the Labor Contract Law, that became
effective in January 2008 and its implementing rules that became effective in September 2008 and its amendments that became effective
in July 2013, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration,
determining the term of employees’ probation and unilaterally terminating labor contracts. In the event that we decide to terminate
some of our employees or otherwise change our employment or labor practices, the Labor Contract Law and its implementation rules may limit
our ability to effect those changes in a desirable or cost-effective manner, which could adversely affect our business and results of
operations.

 

 

As the interpretation and implementation of labor-related
laws and regulations are still evolving, we cannot assure that our employment practice does not and will not violate labor-related laws
and regulations in China, which may subject us to labor disputes or government investigations. If we are deemed to have violated relevant
labor laws and regulations, we could be required to provide additional compensation to our employees and our business, financial condition
and results of operations could be materially and adversely affected.

 

We may be involved from time to time in
legal proceedings and commercial or contractual disputes, which could have a material adverse effect on our business, results of operations
and financial condition.

 

From time to time, we may be involved in legal
proceedings and commercial disputes. Such proceedings or disputes are typically claims that arise in the ordinary course of business,
including, without limitation, commercial or contractual disputes, and other disputes with customers and suppliers, intellectual property
matters, tax matters and employment matters. There can be no assurance that such proceedings and claims, should they arise, will not have
a material adverse effect on our business, results of operations and financial condition.

 

The equity holders, directors and executive
officers of the subsidiaries, as well as our employees who execute other strategic initiatives may have potential conflicts of interests
with the Company.

 

If any of the equity holders, directors and executive
officers of the Company’s subsidiaries, as well as our employees who execute other strategic initiatives, have a conflict of interests
with the Company, they may bring an opportunity elsewhere. Thereby, the Company would lose out on the business.

 

Under PRC law, legal documents for corporate
transactions, including agreements and contracts are executed using the chop or seal of the signing entity or with the signature of a
legal representative whose designation is registered and filed with relevant PRC industry and commerce authorities.

 

To ensure the use of our seals and seals, we have
established internal control procedures and rules for the use of these seals and seals. If a seal and seal are to be used, the responsible
person will submit an application through our office automation system, and the application will be verified and approved by an authorized
employee in accordance with our internal control procedures and rules. In addition, in order to maintain the physical security of the
seals, we usually store them in a secure location that only authorized employees can access. Although we monitor these authorized employees,
these procedures may not be sufficient to prevent all abuse or negligence. Our employees are at risk of abuse of authority. For example,
any employee who acquires, abuses or misappropriates our seals and seals or other controlling intangible assets for any reason, we may
suffer from disruption of normal business operations, and we may have to take a company or legal action, this can cost a lot of time and
money.

 

Future inflation in China may inhibit our
ability to conduct business in China.

 

In recent years, the Chinese economy has experienced
periods of rapid expansion and highly fluctuating rates of inflation. During the past ten years, the rate of inflation in China has been
significant. These factors have led to the adoption by the Chinese government, from time to time, of various corrective measures designed
to restrict the availability of credit or regulate growth and contain inflation. High inflation may in the future cause the Chinese government
to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China, and thereby harm
the market for our products and our company.

 

Claims against the Company or its management
may be hard to initiate and to enforce. Even if successful, claims against the Company or its management may be nearly impossible to collect
upon.

 

While the Company’s service of process provider,
National Registered Agent, Inc., is located at 701 Carson Street, Suite 200, Carson City, NV 89701, USA, there is no guarantee that service
of process can be successfully completed against the Company or its management, as they are based in China. Even with successful service
of process to National Registered Agent, you may be unable to enforce a court judgment against the Company or its management, as they
have no property in the United States, to which such judgment could be attached.

 

 

You may face difficulties in effecting service
of legal process, enforcing foreign judgments or bringing actions in China against us or our management named in this registration statement
based on foreign laws.

 

We conduct our business in China, and our assets
are located in China. In addition, all of our senior executive officers are PRC nationals and they have lived in China for a significant
portion of time. As a result, it may be difficult or impossible for you to bring an action against us or against our management named
in this registration statement in the United States in the event that you believe that your rights have been infringed under the U.S.
federal securities laws or otherwise as it may be difficult for our shareholders to effect service of process upon us or those persons
inside China. Furthermore, China does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts
with many other countries and regions. Therefore, recognition and enforcement in China of judgments of a court in any of these non-PRC jurisdictions
in relation to any matter not subject to a binding arbitration provision may be difficult or impossible. Even if you are successful
in bringing an action of this kind, the laws of China may render you unable to enforce a judgment against our assets or the assets of
our directors and officers.

 

Furthermore, as a matter of law or practicality,
it is generally difficult to pursue shareholder claims including securities law class actions and fraud claims in China, which are contrarily
common in the United States. For example, you may experience significant legal and practical obstacles to obtaining necessary information
for shareholder investigations or litigations outside China or with respect to foreign entities. Although the local authorities in China
may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement
cross-border supervision and administration, so far no such cooperation has been established with the United States securities regulatory
authorities. In addition, Article 177 of the PRC Securities Law which became effective in March 2020 promulgated that no overseas securities
regulator is allowed to conduct investigation or evidence collection activities directly in the PRC. Therefore, without approval from
the competent PRC securities regulators and relevant authorities, no organization or individual may provide documents and materials relating
to the securities activities to overseas entities. While detailed interpretation of or implementation rules under Article 177 has yet
to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities
within China may further increase the difficulties you face in protecting your interests.

 

Restrictions on currency exchange under
PRC laws may limit our ability to convert cash derived from our operating activities into foreign currencies and may materially and adversely
affect the value of the ordinary shares.

 

The PRC government imposes controls on the convertibility
of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. We receive our revenue in Renminbi.
Under our current corporate structure, our income is primarily derived from dividend payments from Entrepreneurship World Consultants,
the EWC WFOE. Shortages in the availability of foreign currency may restrict the ability of EWC WFOE to remit sufficient foreign currency
to pay dividends or other payments to us, or otherwise satisfy their foreign currency denominated obligations, if any. Under existing
PRC foreign exchange regulations, conversion of Renminbi is permitted, without prior approval from the SAFE, for current account transactions,
including profit distributions, interest payments and expenditures from trade-related transactions, as long as certain procedural requirements
are complied with. However, any existing and future restrictions on currency exchange in China may limit our ability to convert cash derived
from our operating activities into foreign currencies to fund expenditures denominated in foreign currencies. If the foreign exchange
restrictions in China prevent us from obtaining U.S. dollars or other foreign currencies as required, we may not be able to pay dividends
in U.S. dollars or other foreign currencies to our Shareholders.

 

Our auditors, based in Hong Kong, China,
like other independent registered public accounting firms operating in China and to the extent their audit clients have operations in
China, is not permitted to be subject to full inspection by the Public Company Accounting Oversight Board and, as such, you may be deprived
of the benefits of such inspection. In addition, as a result of the enactment of the Holding Foreign Companies Accountable Act, we
could be delisted if we were unable to cure the situation to meet the PCAOB inspection requirement in time.

 

Our independent registered public accounting firms
that issued the audit reports included in our annual reports filed with the SEC, as auditors of companies that are traded publicly in
the United States and a firm registered with the US Public Company Accounting Oversight Board (United States), or PCAOB, are required
by the laws of the United States to undergo regular inspections by the PCAOB to assess their compliance with the laws of the United States
and professional standards. However, our operations are solely located in the PRC, a jurisdiction where PCAOB is currently unable to conduct
inspections without the approval of the PRC authorities. Our independent registered public accounting firm, like others operating in China
(and Hong Kong, to the extent their audit clients have operations in China), is currently not subject to inspection conducted by the PCAOB.
Inspections of other firms that the PCAOB has conducted outside China have identified deficiencies in those firms’ audit procedures
and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The inability
of the PCAOB to conduct full inspections of auditors operating in China makes it more difficult to evaluate our auditors’ audit
procedures or quality control procedures. As a result, investors may be deprived of the benefits of PCAOB inspections.

 

 

In December 2012, the SEC instituted proceedings
under Rule 102(e)(1)(iii) of the SEC’s Rules of Practice against five PRC-based accounting firms, alleging that these firms had
violated U.S. securities laws and the SEC’s rules and regulations thereunder by failing to provide to the SEC the firms’ work
papers related to their audits of certain PRC-based companies that are publicly traded in the United States. Rule 102(e)(1)(iii) grants
to the SEC the authority to deny to any person, temporarily or permanently, the ability to practice before the SEC who is found by the
SEC, after notice and opportunity for a hearing, to have wilfully violated, or wilfully aided and abetted the violation of, any such laws
or rules and regulations. On January 22, 2014, an initial administrative law decision was issued, sanctioning four of these accounting
firms and suspending them from practicing before the SEC for a period of six months. The sanction will not take effect until there is
an order of effectiveness issued by the SEC. In February 2014, four of these PRC-based accounting firms filed a petition for review of
the initial decision. In February 2015, each of these four accounting firms agreed to a censure and to pay fine to the SEC to settle the
dispute with the SEC. The settlement stays the current proceeding for four years, during which time the firms are required to follow detailed
procedures to seek to provide the SEC with access to Chinese firms’ audit documents via the CSRC. If a firm does not follow the
procedures, the SEC would impose penalties such as suspensions, or commence a new, expedited administrative proceeding against the non-compliant
firm or it could restart the administrative proceeding against all four firms. The four-year mark occurred on February 6, 2019.

 

As part of a continued regulatory focus in the
United States on access to audit and other information currently protected by national law, in particular China’s, on December 18,
2020, the Holding Foreign Companies Accountable Act was signed into law. This act amends the Sarbanes-Oxley Act of 2002
to direct the SEC to prohibit securities of any registrant from being listed on any of the U.S. securities exchanges or traded “over-the-counter”
if the auditor of the registrant’s financial statements is not subject to PCAOB inspection for three consecutive years after the
law becomes effective. On March 24, 2021, SEC announced it has adopted interim final amendments to implement congressionally mandated
submission and disclosure requirements of the Act. The interim final amendments will apply to registrants that the SEC identifies as having
filed an annual report on Forms 10-K, 20-F, 40-F or N-CSR with an audit report issued by a registered public accounting firm that is located
in a foreign jurisdiction and that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken
by an authority in that jurisdiction. As a result, we could be suspended trading on OTC Pink Sheets if we are unable to cure the situation
to meet the PCAOB inspection requirement in time.

 

Risks Related to the Market for our Stock

 

Our CEO owns a significant percentage of
our shares and will be able to exert significant control over matters subject to shareholder approval.

 

Our CEO and majority shareholder, Mr. Guolin Tao,
has beneficial ownership of 1,030,916,276 Ordinary Shares of the Company. These shares represent ownership of approximately 60.60% of
our Ordinary Shares as of June 29, 2021. Mr. Tao may be able to determine all matters requiring shareholder approval. For example, Mr.
Tao may be able to control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets,
or other major corporate transaction. This may prevent or discourage unsolicited transaction proposals or offers for our Ordinary Shares
that you may believe are in your best interest as one of our shareholders.

 

Since we are traded on the OTC Pink Sheets,
an active, liquid trading market for our common stock may not develop or be sustained. If and when an active market develops the price
of our common stock may be volatile.

 

Presently, our common stock is traded on the Over-The-Counter
(“OTC”) Pink Sheets. Presently there is limited trading in our stock and in the absence of an active trading market investors
may have difficulty buying and selling or obtaining market quotations, market visibility for shares of our common stock may be limited,
and a lack of visibility for shares of our common stock may have a depressive effect on the market price for shares of our common stock.

 

The lack of an active market impairs your ability
to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also
reduce the fair market value of your shares. An inactive market may also impair our ability to raise capital to continue to fund operations
by selling shares.

 

Trading in stocks quoted on the OTC Pink Sheets
is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations
or business prospects. The securities market has from time to time experienced significant price and volume fluctuations that are not
related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market
price of shares of our common stock. Moreover, the OTC Pink Sheets is not a stock exchange, and trading of securities is often more sporadic
than the trading of securities listed on a quotation system like Nasdaq or a national stock exchange like the NYSE. Accordingly, stockholders
may have difficulty reselling any shares of common stock.

 

Our Board of Directors may authorize and
issue shares of new classes of stock that could be superior to or adversely affect you as a holder of our common stock

 

Our board of directors has the power to authorize
and issue shares of classes of stock, including preferred stock that have voting powers, designations, preferences, limitations and special
rights, including preferred distribution rights, conversion rights, redemption rights and liquidation rights without further shareholder
approval which could adversely affect the rights of the holders of our common stock. In addition, our board could authorize the issuance
of a series of preferred stock that has greater voting power than our common stock or that is convertible into our common stock, which
could decrease the relative voting power of our common stock or result in dilution to our existing common stockholders.

 

 

Any of these actions could significantly adversely
affect the investment made by holders of our common stock. Holders of common stock could potentially not receive dividends that they might
otherwise have received. In addition, holders of our common stock could receive less proceeds in connection with any future sale of the
Company, whether in liquidation or on any other basis.

 

There is a limited public market for our
common stock.

 

There is currently a limited public market for
the common stock. Holders of our common stock may, therefore, have difficulty selling their common stock, should they decide to do so.
In addition, there can be no assurances that such markets will continue or that any shares of common stock will be able to be sold without
incurring a loss. Any such market price of the common stock may not necessarily bear any relationship to our book value, assets, past
operating results, financial condition or any other established criteria of value, and may not be indicative of the market price for the
common stock in the future. Further, the market price for the common stock may be volatile depending on a number of factors, including
business performance, industry dynamics, news announcements or changes in general.

 

We may, in the future, issue additional
common shares, which would reduce investors’ percent of ownership and may dilute our share value.

 

Our Articles of Incorporation authorizes the issuance
of 1,800,000,000 shares of common stock. As of June 29, 2021, we have 1,701,181,423 shares of common stock issued and outstanding. The
future issuance of common stock will result in substantial dilution in the percentage of our common stock held by our then existing shareholders.
We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions
or other corporate actions may have the effect of diluting the value of the shares held by our investors and might have an adverse effect
on any trading market for our common stock.

 

There is a limited market for our common
stock, which may make it difficult for holders of our common stock to sell their stock.

 

Our common stock currently trades on the OTC Pink
Sheets under the symbol “EUBG” and currently there is minimal trading in our common stock. There can be no assurance as to
the liquidity of any markets that may develop for our common stock, the ability of holders of our common stock to sell our common stock,
or the prices at which holders may be able to sell our common stock. Further, many brokerage firms will not process transactions involving
low price stocks, especially those that come within the definition of a “penny stock.” If we cease to be quoted, holders of
our common stock may find it more difficult to dispose of, or to obtain accurate quotations as to the market value of our common stock,
and the market value of our common stock would likely decline.

 

The trading price of our common stock is
likely to be volatile, which could result in substantial losses to investors.

 

The trading price of our common stock is likely
to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors,
including the performance and fluctuation of the market prices of other companies with business operations located outside of the United
States. In addition to market and industry factors, the price and trading volume for our common stock may be highly volatile for factors
specific to our own operations, including the following:

 

variations in our revenues, earnings and cash
flow;

 

announcements of new investments, acquisitions,
strategic partnerships or joint ventures by us or our competitors;

 

announcements of new offerings, solutions and
expansions by us or our competitors;

 

changes in financial estimates by securities
analysts;

 

detrimental adverse publicity about us, our brand,
our services or our industry;

 

additions or departures of key personnel;

 

sales of additional equity securities; and

 

potential litigation or regulatory investigations.

 

Any of these factors may result in large and sudden
changes in the volume and price at which our common stock will trade.

 

In the past, shareholders of public companies
have often brought securities class action suits against those companies following periods of instability in the market price of their
securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other
resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results
of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital
in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have
a material adverse effect on our financial condition and results of operations.

 

 

Lack of market and state blue sky laws may
make shares of our common stock more difficult to sell.

 

Investors may have difficulty in reselling their
shares due to the lack of market or state Blue Sky laws. The holders of our shares of common stock and persons who desire to purchase
them in any trading market that might develop in the future should be aware that there may be significant state law restrictions upon
the ability of investors to resell our shares. Accordingly, even if we are successful in having the shares available for trading on the
OTC, investors should consider any secondary market for our securities to be a limited one. We intend to seek coverage and publication
of information regarding our Company in an accepted publication which permits a “manual exemption.” This manual exemption
permits a security to be distributed in a particular state without being registered if the company issuing the security has a listing
for that security in a securities manual recognized by the state. However, it is not enough for the security to be listed in a recognized
manual. The listing entry must contain (1) the names of issuers, officers, and directors, (2) an issuer’s balance sheet, and (3)
a profit and loss statement for either the fiscal year preceding the balance sheet or for the most recent fiscal year of operations. We
may not be able to secure a listing containing all of this information. Furthermore, the manual exemption is a non-issuer exemption restricted
to secondary trading transactions, making it unavailable for issuers selling newly issued securities. Most of the accepted manuals are
those published in Standard and Poor’s, Moody’s Investor Service, Fitch’s Investment Service, and Best’s Insurance
Reports, and many states expressly recognize these manuals. A smaller number of states declare that they “recognize securities manuals”
but do not specify the recognized manuals. The following states do not have any provisions and therefore do not expressly recognize the
manual exemption: Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont, and Wisconsin.

 

Accordingly, our shares of Common Stock should
be considered totally illiquid, which inhibits investors’ ability to resell their shares.

 

We are subject to the penny stock rules,
which will make shares of our common stock more difficult to sell.

 

We will be subject to penny stock regulations
and restrictions and you may have difficulty selling shares of our common stock. The SEC has adopted regulations which generally define
so-called “penny stocks” to be an equity security that has a market price less than $5.00 per share or an exercise price of
less than $5.00 per share, subject to certain exemptions. We anticipate that our common stock will become a “penny stock”,
and we will become subject to Rule 15g-9 under the Exchange Act, or the “Penny Stock Rule”. This rule imposes additional sales
practice requirements on broker-dealers that sell such securities to persons other than established customers. For transactions covered
by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s
written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities
and may affect the ability of purchasers to sell any of our securities in the secondary market.

 

For any transaction involving a penny stock, unless
exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the SEC relating to
the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered
representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price
information for the penny stock held in the account and information on the limited market in penny stock.

 

We do not anticipate that our common stock will
qualify for exemption from the Penny Stock Rule. In any event, even if our common stock were exempt from the Penny Stock Rule, we would
remain subject to Section 15(b)(6) of the Exchange Act, which gives the Commission the authority to restrict any person from participating
in a distribution of penny stock, if the Commission finds that such a restriction would be in the public interest.

 

Shares of our common stock that have not
been registered under federal securities laws are subject to resale restrictions imposed by Rule 144, including those set forth in Rule
144(i) which apply to a former “shell company.”

 

We were deemed a “shell company” under
applicable SEC rules and regulations because we had no or nominal operations and either no or nominal assets, assets consisting solely
of cash and cash equivalents, or assets consisting of any amount of cash and cash equivalents and nominal other assets. Pursuant to Rule
144 promulgated under the Securities Act, sales of the securities of a former shell company, such as us, under that rule are not permitted
unless at the time of a proposed sale, we have filed Form 10 information with the SEC, we are subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act and have filed all reports and other materials required to be filed by Section 13 or 15(d) of
the Exchange Act, as applicable, during the preceding 12 months, other than Form 8-K reports. Additionally, our previous status as a shell
company could also limit our use of our securities to pay for any acquisitions we may seek to pursue in the future. The lack of liquidity
of our securities as a result of the inability to sell under Rule 144 for a longer period of time than a non-former shell company could
cause the market price of our securities to decline. There can be no assurance that we will ever meet these conditions and any purchases
of our shares are subject to these restrictions on resale.

 

We currently do not have an audit or compensation
committee

 

Because we do not have an audit or compensation
committee, stockholders will have to rely on our entire Board of Directors, none of which are independent, to perform these functions.
Since we do not have an audit or compensation committee comprised of independent directors, these functions are performed by our Board
of Directors as a whole. Thus, there is a potential conflict in that Board members who are also part of management will participate in
discussions concerning management compensation and audit issues that may affect management decisions.

 

 

We are subject to compliance with Security
laws exposure

 

We are subject to compliance with securities laws,
which exposes us to potential liabilities, including potential rescission rights. We may offer to sell our shares of our common stock
to investors pursuant to certain exemptions from the registration requirements of the Securities Act, as well as those of various state
securities laws. The basis for relying on such exemptions is factual; that is, the applicability of such exemptions depends upon our conduct
and that of those persons contacting prospective investors and making the offering. We may not seek any legal opinion to the effect that
any such offering would be exempt from registration under any federal or state law. Instead, we may elect to relay upon the operative
facts as the basis for such exemption, including information provided by investor themselves.

 

If any such offering did not qualify for such
exemption, an investor would have the right to rescind its purchase of the securities if it so desired. It is possible that if an investor
should seek rescission, such investor would succeed. A similar situation prevails under state law in those states where the securities
may be offered without registration in reliance on the partial preemption from the registration or qualification provisions of such state
statutes under the National Securities Markets Improvement Act of 1996. If investors were successful in seeking rescission, we would face
severe financial demands that could adversely affect our business and operations. Additionally, if we did not in fact qualify for the
exemptions upon which we have relied, we may become subject to significant fines and penalties imposed by the Commission and state securities
agencies.

 

There is no assurance that we will be able
to pay dividends to our shareholders, which means that you could receive little or no return on your investment.

 

Because we do not intend to pay any cash dividends
on shares of our common stock, our stockholders will not be able to receive a return on their shares unless they sell them. We intend
to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends
on shares of our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return
on their shares unless they sell them. There is no assurance that stockholders will be able to sell shares of our common stock when desired.

 

Compliance with the Sarbanes-Oxley Act of
2002 will require substantial financial and management resources and may increase the time and costs of completing an acquisition.

 

Section 404 of the Sarbanes-Oxley
Act of 2002 requires that we evaluate and report on our system of internal controls and may require us to have such system audited by
an independent registered public accounting firm. If we fail to maintain the adequacy of our internal controls, we could be subject to
regulatory scrutiny, civil or criminal penalties and/or shareholder litigation. Any inability to provide reliable financial reports could
harm our business. Furthermore, any failure to implement required new or improved controls, or difficulties encountered in the implementation
of adequate controls over our financial processes and reporting in the future, could harm our operating results or cause us to fail to
meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information,
which could have a negative effect on the trading price of our securities.

 

We are an “emerging growth company”
and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our securities less
attractive to investors.

 

We are an “emerging
growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. We will remain an “emerging
growth company” for up to five years. However, if our non-convertible debt issued within a three-year period exceeds $1.0 billion
or revenues exceed $1.07 billion, or the market value of our ordinary shares that are held by non-affiliates exceeds $700 million on the
last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the following fiscal
year. As an emerging growth company, we are not being required to comply with the auditor attestation requirements of section 404 of the
Sarbanes-Oxley Act, we have reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,
and we are exempt from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any
golden parachute payments not previously approved. Additionally, as an emerging growth company, we have elected to delay the adoption
of new or revised accounting standards that have different effective dates for public and private companies until those standards apply
to private companies. As such, our financial statements may not be comparable to companies that comply with public company effective dates.
We cannot predict if investors will find our shares less attractive because we may rely on these provisions. If some investors find our
shares less attractive as a result, there may be a less active trading market for our shares and our share price may be more volatile.

 

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth
companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that
have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange
Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to
opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an
election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard
is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, will not
adopt the new or revised standard until the time private companies are required to adopt the new or revised standard. This may make comparison
of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which
has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards
used.

 

 

ITEM 2. FINANCIAL INFORMATION

 

Management’s Discussion and Analysis of Financial Condition
and Results of Operations

 

The
following management’s discussion and analysis should be read in conjunction with our financial statements and the notes thereto
and the other financial information appearing elsewhere in this report. Our financial statements are prepared in U.S. dollars and in accordance
with U.S. GAAP. You should read the following discussion of our results of operations and financial condition in conjunction with
the “Risk Factors” included in Item 1A and our Consolidated Financial Statements and related Notes thereto included in
Item 13 of this Form 10 registration statement.  See also the discussion of “Forward-Looking Statements”
immediately preceding Item 1 of this registration statement.

 

Impact of COVID-19

 

The spread of the coronavirus
(“COVID-19”) around the world has caused significant business disruption in year 2020. In March 2020, the World Health Organization
declared the outbreak of COVID-19 as a global pandemic, which continues to spread around the world. There is significant uncertainty around
the breadth and duration of business disruptions related to COVID-19, as well as its impact on China and global economy. While it is difficult
to estimate the financial impact of COVID-19 on the Company’s operations, management believes that COVID-19 could have a material
impact on its financial results in year 2021.

 

Overview

 

Prior to the Transaction on May 15, 2019, we were
inactive from 2007 to 2019, and did not have any active business activities. In May of 2019, the new major shareholders rejuvenated marketing
consultancy services and e-commerce business to the Company and its subsidiaries.

 

Results of Operations

 

Results of Operations during the year ended
December 31, 2020 as compared to the year ended December 31, 2019

 

The following table sets forth key components
of our results of operations for the years ended December 31, 2020 and 2019:

 

    2020     2019  
Revenue   $ 9,187,023     $ 918,931  
Cost of revenue     (661,462 )     (201,602 )
Gross profit     8,525,561       717,329  
Selling expenses     (188,900 )     (140,051 )
General and administrative expenses     (935,302 )     (351,715 )
Other income (expense), net     71,556       106,861  
Income before income tax     7,472,915       332,424  
Income tax expense     (2,504,845 )     (190,220 )
Net income   $ 4,968,070     $ 142,204  

 

Revenue and cost of revenue

 

We began providing consulting services and sourcing
and marketing services to our clients since October 2019. During the year ended December 31, 2020, we generated revenue of $9,187,023
compared to $918,931   for the year ended December 31, 2019. The increase of revenue is mainly due to the combination effect
of broadened consultancy services launched in 2020 and there were only 3 months operation in 2019. Cost of revenue, mainly represented
staff costs associated with our consultancy services and souring and marketing service, was $661,462 for the year ended December 31, 2020
compared to $201,602 for the year ended December 31, 2019.

 

Selling expenses

 

During the year ended December 31, 2020, we incurred
$188,900 selling expenses compared to $140,051 for the year ended December 31, 2019. Selling expenses incurred generally in relation to
various conventions and meetings held with our business partners.

 

General and administrative expenses

 

During the year ended December 31, 2020, we incurred
$935,302 general and administrative expenses compared to $351,715 for the year ended December 31, 2019. Our general and administrative
expenses consisted mainly of professional fees, payroll expenses and consultancy fees. The increase of general and administrative expenses
was mainly due to the expansion of operations for the year ended December 31, 2020.

 

 

Other income (expense), net

 

During the year ended December 31, 2020, we generated
net other income of $71,556 compared to $106,861 for the year ended December 31, 2019. Our other income mainly consisted of bank interest
income, exchange rate differences and certain sundry incomes.

 

Income tax expense

 

During the year ended December 31, 2020, we incurred
income tax expense of $2,504,845 compared to $190,220 for the year ended December 31, 2019. The income tax expense consisted of income
taxes charged in China and Hong Kong.

 

Net income

 

As a result of the above, we generated a net income
of $4,968,070 and $142,204 for the years ended December 31, 2020 and 2019, respectively.

 

Liquidity and Capital Resources

 

Working Capital

 

    December 31,  
    2020     2019  
Cash and cash equivalents   $ 3,846,470     $ 399,878  
Total current assets     7,343,796       815,413  
Total assets     7,725,020       844,193  
Total liabilities     2,153,999       571,037  
Accumulated deficit     (1,443,803 )     (6,380,682 )
Total equity     5,571,021       273,156  

 

The following table sets forth a summary of our
cash flows for the periods indicated:

 

    Years ended December 31,  
    2020     2019  
Net cash generated from operating activities   $ 6,484,220     $ 420,195  
Net cash used in investing activities     (3,414,622 )     (29,122 )
Net cash provided by financing activities     170,198       13,695  
Effect of exchange rate changes on cash and cash equivalents     206,796       (4,890 )
Cash and cash equivalents, beginning of year     399,878        
Cash and cash equivalents, end of year   $ 3,846,470     $ 399,878  

 

Cash generated from operating activities

 

Net cash generated from operating activities for
the year ended December 31, 2020 was 6,484,220, as compared to $420,195 for the year ended December 31, 2019. The net cash generated from
operating activities for the years ended December 31, 2020 and 2019 were mainly due to our net income of $4,968,070 for the year ended
December 31, 2020, as compared to $142,204 for the year ended December 31, 2019. For the year ended December 31, 2020, the cash inflow
from net income is mainly adjusted for deferred tax, amount due from a related company, other payables and accrued liabilities and tax
payables of $552,005, $235,930, $395,583, $415,984, respectively. For the year ended December 31, 2019, the cash inflow from net income
is mainly adjusted for other payables and accrued liabilities and tax payables of $208,211 and $148,485, respectively.

 

 

Cash used in investing activities

 

Net cash used in investing activities for the
years ended December 31, 2020 and 2019 were $3,414,622 and $29,122, respectively. The net cash used in investing activities for the year
ended December 31, 2020 were for the acquisition of debt products of $2,897,689 from bank to utilize the excessive cash generated from
its operations. As of the date of this report, we have already redeemed such products which we have a return of $14,518.

 

Cash generated from financing activities

 

Net cash generated from financing activities
for the year ended December 31, 2020 was $170,198, as compared to $13,695 for the year ended December 31, 2019. The net cash generated
from financing activities for the year ended December 31, 2020 was mainly attributed to the proceeds from borrowings of $128,927.

 

Future Capital Requirements

 

We believe that our ability to generate cash
from operations are adequate to fund working capital, capital spending and other cash needs for at least the next 12 months. Our ability
to generate adequate cash from operations in the future, however, will depend on, among other things, our ability to successfully implement
our business strategies while continuing to tightly control our expenses, and to manage the impact of changes to the PRC regulatory environment.
We can give no assurance that we will be able to successfully implement those strategies and cost control initiatives, or successfully
adjust to any changes to PRC laws and regulations impacting our business. In addition, changes in our operating plans, lower than anticipated
sales, increased expenses, interest rate increases, acquisitions or other events may cause us to seek additional debt or equity financing
in future periods. We can give no assurance that financing will be available on acceptable terms or at all. Additional equity financing
could be dilutive to holders of our common stock; debt financing, if available, could impose additional cash payment obligations and
additional covenants and operating restrictions.

 

Contractual Obligations

 

As a
“smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

 

Critical Accounting Policies and Estimates

 

We regularly evaluate the accounting policies
and estimates that we use to make budgetary and financial statement assumptions. A complete summary of these policies is included in the
notes to our financial statements. In general, management’s estimates are based on historical experience, on information from third
party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results
could differ from those estimates made by management. The discussion of our critical accounting policies contained in Note 2 to our consolidated
financial statements, “Summary of Significant Accounting Policies,” is incorporated herein by reference.

 

Recent Accounting Pronouncements

 

For further information on recently issued accounting
pronouncements, see Note 2—Summary of Significant Accounting Policies in the accompanying notes to consolidated financial statements
included herein at “Item 13, Financial Statements and Supplementary Data” of this registration statement.

 

Off-Balance Sheet Arrangements

 

As of December 31, 2020 and 2019, we did not have
any off-balance sheet arrangements as defined in Item 303(a) (4) (ii) of Regulation S-K promulgated under the Securities Act of 1934.

 

 

ITEM 3. PROPERTIES.

 

We lease 2,891 square meter office space in China
at Suite 907, Saigao City Plaza Building 2, No. 170 Weiyang Road, Xi’an, China. Our rent for the office space in Xi’an, China,
is $51,823 per year, with a lease term of 3 years, which terminates in July 2024.

 

ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

 

The following table
sets forth as of June 29, 2021   , the number of shares
of the Company’s common stock owned on record or beneficially by each person known to be the beneficial owner of 5% or more of
the issued and outstanding shares of the Company’s voting stock, and by each of the Company’s directors and executive officers
and by all its directors and executive officers as a group. Unless otherwise indicated, the
business address of each of our directors and executive offices is
Suite 907, Saigao City Plaza Building 2, No. 170 Weiyang Road,
Xi’an, China.

 

Name of Beneficial Owner   Amount and
Nature of
Beneficial
Ownership(1)
    Percentage
of Beneficial
Ownership(2)
 
Directors and Officers:            
Guolin Tao(3)     1,030,916,276       60.6 %
All executive officers and directors as a group (1 person)     1,030,916,276 (3)     60.6 %
5% Holders:                

Tethys Fountain Limited(3)

Vistra Corporate Services Center

Wickhams Cay II, Road Town

Tortola, VG 1110, British Virgin Island

    1,030,916,276       60.6 %

New Finance Consultants Limited(4)

957
Road Town

Tortola, British Virgin Island

    140,899,285       8.3 %

 

(1) Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through
any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote,
or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares.
Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the
power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire
the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing
the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned
by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any
person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number
of shares of common stock actually outstanding.

 

(2) Based upon 1,701,181,423 shares of common stock issued and outstanding.

 

(3) Guolin Tao is the indirect beneficial owner of 1,030,916,276
shares of common stock of the Company through Tethys Fountain Limited,
of which Guolin Tao is the indirect beneficial owner of 100% of its share capital.

 

(4) Sun Ying is the indirect beneficial owner of 140,899,285 shares
of common stock of the Company through New Finance Consultants Limited,
of which Sun Ying is the indirect beneficial owner of 100% of its share capital.

 

 

ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.

 

The following information sets forth the names, ages, and positions
of our current directors and executive officers.

 

Name   Age   Position(s)
Guolin Tao   45   Chairman of the Board of Directors, Chief Executive Officer, and Chief Financial Officer (principal executive officer and principal financial officer)
Jiangjun Li   38   Director
Lijun Yuan   56   Director

 

Set forth below is a brief description of the background and business
experience of each of our current executive officers and directors.

 

GUOLIN TAO – Chairman of the Board, Chief Executive Officer,
and Chief Financial Officer

 

Mr. Tao has more than 20 years of professional
experience in business consultation, operations, management and in the marketing industry. From 2015 to now, he is the chairmen of two
non-profit organizations. Mr. Tao serves as CEO, CFO of Entrepreneur Universe Bright Group (EUBG) and also serves as the CFOs of the subsidiaries
of EUBG in Hong Kong and China. He focuses his arears in digital marketing, brands marketing and consumer economics. He is the authors
of “The Power of Consuming”, “No Names”, and “Winning in the System”, which are the popular marketing
books in China. He has led a sales teams of 2 million salespersons in China, and created more than 100 million sales in China. Mr. Tao
graduated from Beijing Institute of Technology with a BS degree, and was graduated from Beijing University of Posts and Telecommunications
with MBA degree.

 

JIANYONG LI – Director

 

Mr. Li is known as a startup
team operation specialist and problem-solver for emergencies event coordinator & management specialist in China. He has served several
times as the chairperson of conference and organize hundreds of Charity Fundraising Event. Mr. Li graduated from Beijing Institute of
Technology with Bachelor’s degree in Business Administration. He is currently the CEO of Entrepreneurship World Technology Holding
Group Company Limited, the subsidiary of the Company in Hong Kong. He was the deputy secretary-general of Qiming Public Welfare Foundation
responsible for carrying out public service activities in education, career for people with disabilities, and social welfare during the
tenure. He has rich experiences as a marketing manager and led thousands of marketing teams which attained annual sales of more than billions
of dollars in China. Mr. Li has been named as a team operations leader in the Asia-Pacific region in the marketing industry. He was awarded
by China Annual Economic Summit as 2020 Top Ten Economic (Industry) Innovative Entrepreneurs.

 

LIJUN YUAN – Director

 

Mr. Yuan is currently the CEO of Xian Yunchuang
Space Information Technology Co., Ltd., the subsidiary of the Company in China. He worked for Jucheng Group which ranked first in the
training industry in China, as Group Chief Operator. He worked as president for Shengshi Impact Education and Training Group, Shanghai
Huiju International Education Group, Shengshang (Beijing) Holding Group Limited, and Beijing Shengshang Education&Tech Co. Ltd. in
the past 10 years. He was awarded a Master’s degree of Business Administration from Xi’an Jiaotong University. Mr. Yuan was honored
as 2016 Top Ten Innovators Award in Shaanxi Province, and 2020 Most Influential People of Chinese National Brand.

 

Term of Office

 

Our Directors are appointed for a one-year term
to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our
officers are appointed by our board of directors and hold office until removed by the board, subject to their respective employment agreements.

 

Significant Employees

 

Tao Guolin is considered a significant employee. Mr. Tao has more than
20 years of professional experience in business consultation, operations, management and in the marketing industry. Mr. Tao serves as
the CEO, CFO of the Company and also serves as the CFOs of the subsidiaries of EUBG in Hong Kong and China. The employment contract is
attached as Exhibit to this Form.

 

 

Family Relationships

 

There are no family relationships between or among
the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.

 

Involvement in Certain Legal Proceedings

 

During the past 10 years, none of our current
directors, nominees for directors or current executive officers has been involved in any legal proceeding identified in Item 401(f) of
Regulation S-K.

 

Audit Committee

 

We have not adopted an audit committee charter.  Our
board of directors will serve the function of the audit committee.  The board of directors in the future intends to establish
an audit committee.

 

Compensation Committee and Governance and
Nomination Committee

 

We have not adopted a compensation committee
and governance committee charters.  The board of directors currently serves these functions.  The board of directors
will consider establishing a compensation committee and governance committee in the future.

 

Code of Conduct and Ethics

 

We have not adopted a Code of Conduct for
our executive officers, directors and our employees.

 

ITEM 6. EXECUTIVE COMPENSATION.

 

The following summary
compensation table sets forth all compensation awarded to, earned by, or paid to our named executive officers paid by us during the
years ended December 31, 2020 and 2019.

 

          Annual Compensation     Long Term
Compensation Awards
       
                      Other     Restricted     Securities        
                      Annual     Stock     Underlying     Total  
Name and Principal         Salary     Bonus     Compensation     Award(s)     Options     Compensation  
Position   Year     ($)     ($)     ($)     ($)     ($)     ($)  
                                           
Tao Guolin, Chairman,     2020       191,245       26,154       121,462                   338,861  
CEO, and CFO(1)     2019       53,903             8,094                   61,997  

 

(1) Paid by the subsidiaries Entrepreneurship World Technology Holding Group Company Limited and Xi’an Entrepreneurship World Consultants
Limited in Hong Kong and China.

 

Employment Agreement

 

The Company entered into an employment agreement with Mr. Tao Guolin
in his capacity of the CEO and director of the Company, effective as of October 15, 2019. Pursuant to the employment agreement signed
between Xian Yunchuang Space Information Technology Co., Ltd.   (formerly known as “Entrepreneurship World Consultants
Limited”) and Mr. Tao.

 

Options/SAR Grants

 

During the last fiscal year, we have not granted
any stock options or Stock Appreciation Rights (“SARS”) to any executive officers or other individuals.

 

Aggregated Option/SAR exercised and Fiscal
year-end Option/SAR value table

 

Neither our executive officers nor the other
individuals listed in the tables above, exercised options or SARs during the last fiscal year.

 

Stock Option Plan

 

We have not adopted a stock option plan.

 

 

Long-term incentive plans

 

We have not adopted long term incentive plan.

 

Defined benefit or actuarial plan disclosure

 

As required by Chinese law, our Chinese subsidiaries
contribute 10% of an individual employee’s monthly salary to pension insurance.

 

Compensation of Directors

 

We do not have any non-executive directors
and currently no compensation arrangements are in place for the compensation of directors.

 

Employment contracts and termination of
employment and change-in-control arrangements

 

None of our officers or employees is under
an employment contract or has contractual rights triggered by a change in control of the company.

 

Compensation Committee Interlocks and Insider
Participation

 

We have not established a Compensation Committee
and our board of directors will serve this function.  No interlocking relationship exists between our board of directors and
the board of directors or compensation committee of any other entity.

 

ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.

 

Transactions with Related Parties   

 

SEC regulations define the related person transactions
that require disclosure to include any transaction, arrangement or relationship in which the amount involved exceeds the lesser of $120,000
or one percent of the average of our total assets at year-end for the last two completed fiscal years in which we were or are to be a
participant and in which a related person had or will have a direct or indirect material interest. A related person is: (i) an executive
officer, director or director nominee, (ii) a beneficial owner of more than 5% of our common stock, (iii) an immediate family member of
an executive officer, director or director nominee or beneficial owner of more than 5% of our common stock, or (iv) any entity that is
owned or controlled by any of the foregoing persons or in which any of the foregoing persons has a substantial ownership interest or control.

 

The following is the list of the related parties
with which the Company had transactions in the past two years:

 

(a) XTC Inc. (“XTC”), a company incorporated in the United States, was a former shareholder of
the Company which previously held 10,000 shares of common stocks of the Company. XTC was also the custodian of the Company from September
4, 2018 to April 24, 2019.
     
(b) MXD Inc. (“MXD”) is a company incorporated in the State of Colorado. As the president of XTC
is also the president of MXD, the Company considered that the XTC and MXD are under common control.
     
(c) Xian CNT, a company incorporated in the PRC, is owned by several close relatives of Mr. Tao, the CEO of
the Company. The shareholders of Xi’an CNT are 90% owned by certain family members of Mr. Tao, among them – 31.5% is owned by the
wife of Mr. Tao, Ms. Hanyue Chang, 13.5% is owned by the sister of Mr. Tao, Ms. Zhiyan Tao, and 45% is owned by the brother-in-law of
Mr. Tao, Mr. Pan Chang.
     
(d) Baiyin Wujinxia Cultural Communication Co., Ltd. (“Baiyin Wujinxia”) – a company incorporated
in the PRC. The CEO of the Company, Mr Tao held 60% equity interest from October 31, 2019 to January 25, 2021 and such equity interest
was fully transferred to Hanyue Chang, the spouse of Mr. Tao, on January 26, 2021.
     
(e) Chong Yong, the father in law of Mr. Tao
     
(f) Li, Jianyong, a director of the Company.

 

Described below are certain transactions or series
of transactions between us and certain related persons.

 

Transactions with XTC and MXD  

 

On December 28, 2018,
we entered into a Sale and Purchase Agreement (the “SPA”) with XTC to transfer 1,000 common shares of REE-CO to XTC at nil
cash consideration (with XTC assuming all of the obligations and liabilities of REE-CO). Pursuant to the SPA, all the assets and liabilities
previously reported our financial statements were acquired by XTC and all the continuing obligations assumed were taken up by XTC. Since
the closing of the SPA, REE-CO ceasing being our subsidiary, and we no longer had any assets, liabilities and business.

 

 

In consideration of the payments made to revive
the Company and get current by XTC and MXD, we issued 1,000,000 shares of Series A Preferred Stock to MXD on December 11, 2018 and issued
50,000 shares of Series B Preferred Stock to XTC on February 27, 2019, respectively. XTC was discharged as custodian of the Company on
April 24, 2019. Details of the transactions are further disclosed in note 11 of our audited financial statements included under “Item
13. Financial Statements and Supplementary Data” of this registration statement.

 

On May 15, 2019, 1,590,605,141
shares of our common stock was issued to MXD (the “Issuance”) as consideration for its services to revive the Company and
get current. On the same date, MXD and XTC agreed to voluntarily retire 1,000,000 Series A Preferred Stock and 50,000 shares of Series
B Preferred Stock, respectively.

 

Immediately after the Issuance, MXD entered into
certain Sale and Purchase Agreements, dated May 15, 2019 (the “Stock Purchase Agreements”), with Tethys Fountain Limited,
New Finance Consultants Limited, Jia Wang, Jianyong Li, Haijun Jiang, Xuebin Wu and Fanfan Chen (collectively, the “Purchasers”),
to transfer all its 1,590,605,141 shares of our common stock to the Purchasers in exchange for an aggregate purchase price of $135,000.00.
Upon the closing of the Stock Purchase Agreements, the Purchasers collectively owned 93.5% of the issued and outstanding shares of the
Company’s common stock, and Tethys Fountain Limited became the controlling shareholder of the Company. The aggregate purchase price
of $135,000 was considered as the fair value of our shares of the common stock issued to MXD. The amount of $135,000 was recognised as
share-based payments for the year ended December 31, 2019.

 

Related party transaction

 

1. During the year ended December 31, 2019, the Company entered into two (2) sourcing and marketing agreements
with a related company, Xian CNT, services fee of $49,259 and $512,154 were recorded as revenue earned from Xian CNT for the years ended
December 31, 2020 and 2019, respectively.

 

2. During the year ended December 31, 2019, the Company paid expenses of $41,094 in relation to the access
of Xian CNT’s platform.

 

3. During the year ended December 31, 2020, the Company purchased three (3) motor vehicles from Chang Hayue,
Chong Yong and Li, Jianyong. The acquisition cost of these motor vehicles are $86,931, $45,639 and $28,977, respectively.

 

4. On November 1, 2019, the Company entered into a loan agreement with Baiyin Wujinxia in the amount of $305,804
(RMB2,000,000) for a period from November 1, 2019 to June 30, 2021. The loan is unsecured and bears fixed interest at 4.75% per annum.
The total loan amount (including principle and interest) was fully repaid to the Company on June 18, 2021, and the loan agreement was
terminated on the same date.

 

Procedures for Approval of Related Party Transactions

 

Our Board of Directors is charged with reviewing
and approving all potential related party transactions. We have not adopted other procedures or policy for review, or standards for approval,
of such transactions, but instead review them on a case-by-case basis. Any Related Party Transaction
that is not approved by the non-interested directors prior to its effectiveness or consummation and that is not subsequently ratified
by non-interested directors shall be voidable at the option of the non-interested directors and all persons subject to this principal
shall take all necessary action to unwind any Related Party Transaction voided by the non-interested directors on terms that are fair
to the Company and its shareholders.

 

ITEM 8. LEGAL PROCEEDINGS.

 

We may from time to time be involved in various
claims and legal proceedings of a nature we believe are normal and incidental to our business. These matters may include product liability,
intellectual property, employment, personal injury cause by our employees, and other general claims. We are not presently a party to any
legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of
outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other
factors.

 

 

ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE
REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

 

Market Information

 

Our common stock is currently quoted on the OTC
market “Pink Sheets” under the symbol EUBG. Any over-the-counter market quotations reflect inter-dealer prices, without retail
mark-up, mark-down, or commission and may not necessarily represent actual transactions.

 

Holders

 

As of June 29, 2021, we had 156 holders of record
of our common stock. The number of record holders was determined from the records of our transfer agent and does not include beneficial
owners of common stock whose shares are held in the names of various security brokers, dealers or registered clearing agencies.

 

Common and Preferred Stock

 

Our authorized capital stock consists of 1,800,000,000
shares of common stock, par value $0.0001 per share, and 1,100,000 shares of preferred stock, par value $0.0001 per share. As of June
29, 2021  , there were 1,701,181,423 shares of our common stock
issued and outstanding and 0 shares of our preferred stock issued and outstanding.

 

Options and Warrants

 

None.

 

Debt Securities

 

None.

 

Dividends

 

The Company has not declared any cash dividends
since inception and does not anticipate paying any cash dividends in the foreseeable future. The payment of cash dividends is within the
discretion of the Board of Directors and will depend on the Company’s earnings, capital requirements, financial condition, and other
relevant factors. There are no restrictions that currently limit the Company’s ability to pay cash, or other, dividends on its common
stock other than those generally imposed by applicable state law.

 

Equity Compensation Plans

 

We have no equity compensation plans.

 

ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.

 

The following information represents securities
sold by the Company since the January 1, 2018, which were not registered under the Securities Act. Included are sales of reacquired securities,
as well as new issues, securities issued in exchange for property, services, or other securities, and new securities resulting from the
modification of outstanding securities.

 

The Company issued 1,000,000
shares of Series A Preferred Stock to MXD on December 11, 2018, and issued 50,000 shares of Series B Preferred Stock to XTC on February
27, 2019, respectively.

 

 

On May 15, 2019, 1,590,605,141
shares of our common stock was issued to MXD for payment for its services to assist in the Company’s filings and services for revival.
On the same date, MXD and XTC agreed to voluntarily retire 1,000,000 Series A Preferred Stock and 50,000 shares of Series B Preferred
Stock, respectively.

   

The sales and issuances of the securities described above were made
pursuant to the exemptions from registration contained in Section 4(a)(2) of the Securities Act.

 

ITEM 11. DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED.

 

General

 

Our authorized capital stock consists of 1,800,000,000
shares of common stock, par value $0.0001 per share, and 1,100,000 shares of preferred stock, par value $0.0001 per share. As of June
29, 2021, there were 1,701,181,423 shares of our common stock issued and outstanding and no shares of our preferred stock issued and outstanding.

 

Common Stock

 

Our common stock is entitled to one vote per share
on all matters submitted to a vote of the stockholders, including the election of directors. Except as otherwise required by law or provided
in any resolution adopted by our board of directors with respect to any series of preferred stock, the holders of our common stock will
possess all voting power. Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election
of directors, by a plurality) of the votes entitled to be cast by all shares of our common stock that are present in person or represented
by proxy, subject to any voting rights granted to holders of any preferred stock. Holders of our common stock representing fifty percent
(50%) of our capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a
quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain
fundamental corporate changes such as liquidation, merger or an amendment to our Articles of Incorporation. Our Articles of Incorporation
do not provide for cumulative voting in the election of directors.

 

Subject to any preferential rights of any outstanding series of preferred
stock created by our board of directors from time to time, the holders of shares of our common stock will be entitled to such cash dividends
as may be declared from time to time by our board of directors from funds available therefore.

 

Subject to any preferential rights of any outstanding series of preferred
stock created from time to time by our board of directors, upon liquidation, dissolution or winding up, the holders of shares of our common
stock will be entitled to receive pro rata all assets available for distribution to such holders.

 

In the event of any merger or consolidation with or into another company
in connection with which shares of our common stock are converted into or exchangeable for shares of stock, other securities or property
(including cash), all holders of our common stock will be entitled to receive the same kind and amount of shares of stock and other securities
and property (including cash). Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption
provisions applicable to our common stock.

 

Preferred Stock

 

Our board of directors has expressly granted authority, without shareholder
action, to authorize preferred shares of stock and to divide the authorized shares of our preferred stock into one or more series, each
of which must be so designated as to distinguish the shares of each series of preferred stock from the shares of all other series and
classes. Our board of directors is authorized, within any limitations prescribed by law and our articles of incorporation, to fix and
determine the designations, rights, qualifications, preferences, limitations and terms of the shares of any series of preferred stock
including, but not limited to, the following:

 

(1) Designate in whole or in part, the powers, preferences, limitations, and relative rights, of any class of shares before the issuance
of any shares of that class;

 

(2) Create one or more series within a class of shares, fix the number of shares of each such series, and designate, in whole or in part,
the powers, preferences, limitations, and relative rights of any class of shares before the issuance of any shares of that series;

 

(3) Alter or revoke the powers, preferences limitations, and relative rights granted to or imposed upon any wholly unissued class of shares
or any wholly unissued series of any class of shares;

 

 

(4) Increase or decrease the number of shares constituting any series, the number of shares of which was originally fixed by the board
of directors, either before or after the issuance of shares of the series: provided that, the number may not be decreased below the number
of shares of the series then outstanding or increased above the total number of authorized shares of the applicable class of shares available
for designation as a part of the series;

 

(5) Determine the dividend rate on the shares of any class of shares or series of shares, whether dividends will be cumulative, and if
so, from which date(s), and the relative rights of priority, if any, payment of dividends on shares of that class of shares or series
of shares;

 

(6) Determine whether that class of shares or series of shares will have voting rights, in addition to the voting rights provided by law,
and, if, so, the terms of such voting;

 

(7) Determine whether or not these shares of that class of shares or series of shares will have conversion privileges and, if, so, the
terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as the board of directors
determines;

 

(8) Determine whether or not these shares of that class of shares or series of shares will be redeemable and, if, so, the terms and conditions
of such redemption, including the date or date upon or after which they were redeemable, and the amount per share payable in case of redemption,
which amount may vary under different conditions and at different redemption dates;

 

(9) Determine whether or not these shares of that class of shares or series of shares will have a sinking fund for that redemption or
purchase of shares of that class of shares or series of shares and, if, so, the terms and amount of such sinking fund;

 

(10) Determine the rights of the shares of that class of shares of series of shares in the event of voluntary liquidation, dissolution
or winding up of the Corporation and the relative rights of priority, if any, of apayment of shares of that class of shares or series
of shares; and

 

(11) Determine any other relative rights, preference and limitation of that class of shares or series of shares.

 

Provisions in Our Articles of Incorporation and By-Laws That Would
Delay, Defer or Prevent a Change in Control

 

Our articles of incorporation
authorize our board of directors to issue a class of preferred stock commonly known as a “blank check” preferred stock. Specifically,
the preferred stock may be issued from time to time by the board of directors as shares of one (1) or more classes or series. Our board
of directors, subject to the provisions of our Articles of Incorporation and limitations imposed by law, is authorized to adopt resolutions;
to issue the shares; to fix the number of shares; to change the number of shares constituting any series; and to provide for or change
the following: the voting powers; designations; preferences; and relative, participating, optional or other special rights, qualifications,
limitations or restrictions, including the following: dividend rights, including whether dividends are cumulative; dividend rates; terms
of redemption, including sinking fund provisions; redemption prices; conversion rights and liquidation preferences of the shares constituting
any class or series of the preferred stock.

 

In each such case, we will
not need any further action or vote by our shareholders. One of the effects of undesignated preferred stock may be to enable the board
of directors to render more difficult or to discourage an attempt to obtain control of us by means of a tender offer, proxy contest, merger
or otherwise, and thereby to protect the continuity of our management. The issuance of shares of preferred stock pursuant to the board
of director’s authority described above may adversely affect the rights of holders of common stock. For example, preferred stock
issued by us may rank prior to the common stock as to dividend rights, liquidation preference or both, may have full or limited voting
rights and may be convertible into shares of common stock. Accordingly, the issuance of shares of preferred stock may discourage bids
for the common stock at a premium or may otherwise adversely affect the market price of the common stock.

 

Share Purchase Warrants

 

We have no outstanding warrants
to purchase our securities.

 

Options

 

We have no outstanding options
to purchase our securities.

 

Convertible Securities

 

We have not issued and do
not have outstanding any securities convertible into shares of our common stock or any rights convertible or exchangeable into shares
of our common stock.

 

 

Certain Anti-Takeover Provisions

 

Nevada Revised Statutes sections
78.378 to 78.379 provide state regulation over the acquisition of a controlling interest in certain Nevada corporations unless the articles
of incorporation or bylaws of the corporation provide that the provisions of these sections do not apply. Our articles of incorporation
and bylaws do not state that these provisions do not apply. The statute creates a number of restrictions on the ability of a person or
entity to acquire control of a Nevada company by setting down certain rules of conduct and voting restrictions in any acquisition attempt,
among other things. The statute is limited to corporations that are organized in the state of Nevada and that have 200 or more stockholders,
at least 100 of whom are stockholders of record and residents of the State of Nevada; and does business in the State of Nevada directly
or through an affiliated corporation. Because of these conditions, the statute currently does not apply to our company.

 

Debt Securities

 

None.

 

Other Securities to be Registered

 

None.

 

Transfer Agent

 

The Company’s transfer
agent is Pacific Stock Transfer Company located at 6725 Via Austi Pkwy, Suite 300, Las Vegas, Nevada 89119 with a phone number at (800)
785-7782.

 

ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

 

Our articles of incorporation
and by-laws provide that each person who was or is made a party or is threatened to be made a party to or is otherwise involved (including,
without limitation, as a witness) in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he or she is or was a director or an officer of EUBG or, in the case of a director, is or was serving at our request
as a director, officer, or trustee of another corporation, or of a partnership, joint venture, trust or other enterprise, including service
with respect to an employee benefit plan, whether the basis of such proceeding is alleged action in an official capacity as a director,
officer or trustee or in any other capacity while serving as a director, officer or trustee, shall be indemnified and held harmless by
us to the fullest extent authorized by the Nevada General Corporation Law against all expense, liability and loss reasonably incurred
or suffered by such.

 

Section 145 of the Nevada
General Corporation Law permits a corporation to indemnify any director or officer of the corporation against expenses (including attorney’s
fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with any action, suit or proceeding
brought by reason of the fact that such person is or was a director or officer of the corporation, if such person acted in good faith
and in a manner that he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect
to any criminal action or proceeding, if he or she had no reason to believe his or her conduct was unlawful. In a derivative action, (i.e.,
one brought by or on behalf of the corporation), indemnification may be provided only for expenses actually and reasonably incurred by
any director or officer in connection with the defense or settlement of such an action or suit if such person acted in good faith and
in a manner that he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, except that no indemnification
shall be provided if such person shall have been adjudged to be liable to the corporation, unless and only to the extent that the court
in which the action or suit was brought shall determine that the defendant is fairly and reasonably entitled to indemnity for such expenses
despite such adjudication of liability.

 

Pursuant to Section 102(b)(7)
of the Nevada General Corporation Law, Article Seven of our articles of incorporation eliminates the liability of a director to us for
monetary damages for such a breach of fiduciary duty as a director, except for liabilities arising:

 

from any breach of the director’s duty of loyalty to us;

 

from acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;

 

under Section 174 of the Nevada General Corporation Law; and

 

from any transaction from which the director derived an improper personal benefit.

 

 

ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

The financial statements required by this Item begin on page F-1.

 

TABLE OF CONTENTS

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

 

To the Stockholders and the Board of Directors of Entrepreneur Universe
Bright Group

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated
balance sheets of Entrepreneur Universe Bright Group and subsidiaries (the “Company”) as of December 31, 2020 and 2019, and
the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity (deficit) and
cash flows for each of the two years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated
financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated
financial position of the Company as of December 31, 2020 and 2019, and the consolidated results of its operations and its cash flows
for each of the two years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

 

Basis for Opinion

 

These consolidated financial statements are the
responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.

  

We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess
the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable
basis for our opinion.

 

Critical Audit Matters

 

The critical audit matters communicated below
are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated
to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and
(2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit
matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

 

 

/s/ Centurion ZD CPA & Co.  
Centurion ZD CPA & Co.  
   
We have served as the Company’s auditor since 2020.  
   
Hong Kong, China  
   
June 30, 2021  

 

 

ENTREPRENEUR UNIVERSE BRIGHT GROUP

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2020 and 2019

(In U.S. dollars) 

 

    2020     2019  
             
ASSETS            
CURRENT ASSETS            
Cash and cash equivalents   $ 3,846,470     $ 399,878  
Debt products     3,058,041        
Accounts receivable     202,183       161,264  
Other receivables and prepayments     50,306       20,849  
Amount due from a related company           233,422  
Loan to a related company     186,796        
Total current assets     7,343,796       815,413  
                 
NON-CURRENT ASSETS                
Plant and equipment, net     355,609        
Loan to a related company           28,780  
Operating lease right-of-use assets, net     25,615        
Total non-current assets     381,224       28,780  
                 
TOTAL ASSETS   $ 7,725,020     $ 844,193  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
                 
CURRENT LIABILITIES                
Accounts payable   $     $ 57,338  
Other payables and accrued liabilities     618,508       206,533  
Contract liabilities           87,136  
Receipt in advance     50,369       18,426  
Operating lease liabilities, current     29,933        
Tax payables     595,338       146,737  
Amount due to a shareholder     53,000        
Amount due to a director     51,309       13,623  
Borrowings     128,996        
Total current liabilities     1,527,453       529,793  
                 
NON-CURRENT LIABILITY                
Deferred tax liabilities     626,546       41,244  
                 
TOTAL LIABILITIES     2,153,999       571,037  
                 
COMMITMENTS AND CONTINGENCIES                
                 
STOCKHOLDERS’ EQUITY                
Preferred stock, par value $0.0001 per share, 1,100,000 shares authorized, Nil (2019: Nil) shares issued and outstanding as of December 31, 2020            
Common stock, par value $0.0001 per share; 1,800,000,000 shares authorized, 1,701,181,423 (December 31, 2019: 1,701,181,423) shares issued and outstanding as of December 31, 2020     170,118       170,118  
Additional paid-in capital     6,453,048       6,453,048  
Statutory reserves     65,911       34,720  
Accumulated deficit     (1,443,803 )     (6,380,682 )
Accumulated other comprehensive income (losses)     325,747       (4,048 )
Total stockholders’ equity     5,571,021       273,156  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 7,725,020     $ 844,193  

 

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

 

 

ENTREPRENEUR UNIVERSE BRIGHT GROUP

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (LOSS)

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(In U.S. dollars, except for number of shares)

 

    2020     2019  
Revenue   $ 9,187,023     $ 918,931  
Cost of revenue     (661,462 )     (201,602 )
Gross profit     8,525,561       717,329  
Selling expenses     (188,900 )     (140,051 )
General and administrative expenses     (935,302 )     (351,715 )
Profit from operations     7,401,359       225,563  
Other income (expenses):                
Interest income     36,721       197  
Exchange loss     (813 )     (1,433 )
Sundry income     35,648       108,097  
Total other income, net     71,556       106,861  
Income before income tax     7,472,915       332,424  
Income tax expense     (2,504,845 )     (190,220 )
Net income   $ 4,968,070     $ 142,204  
Other comprehensive income (loss)                
Foreign currency translation adjustment     329,795       (4,048 )
Total comprehensive income   $ 5,297,865     $ 138,156  
                 
Net income per share – Basic and diluted   $ 0.00 *   $ 0.00 *
Weighted average number of common shares outstanding                
– Basic     1,701,181,423       1,112,875,412  
– Diluted     1,701,181,423       1,114,077,332  

 

* Less than $0.01 per share

 

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

 

 

ENTREPRENEUR UNIVERSE BRIGHT GROUP

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’
EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(In U.S. dollars except for number of shares) 

 

    Common
Stock
    Additional     Preferred
stock
            Accumulated
Other
    Total
Stockholders’
 
    Number
of
Shares
    Amount     Paid-In
Capital
    Number
of
Shares
    Amount     Statutory
Reserve
    Accumulated
Deficit
    Comprehensive
Income (Loss)
    Equity
(Deficit)
 
                                                       
Balance
as of January 1, 2019
    110,576,282     $ 11,058     $ 6,477,008       1,000,000     $ 100     $     $ (6,488,166 )   $     $  
                                                                         
Common
Stock issued
    1,590,605,141       159,060       (24,060 )                                   135,000  
Preferred
Stock issued
                (5 )     50,000       5                          
Retirement
of preferred stock
                105       (1,050,000 )     (105 )                        
Net
income
                                        142,204             142,204  
Foreign
currency translation adjustment
                                              (4,048 )     (4,048 )
Statutory
reserve
                                  34,720       (34,720 )            
                                                                         
Balance
as of January 1, 2020
    1,701,181,423     $ 170,118     $ 6,453,048           $     $ 34,720     $ (6,380,682 )   $ (4,048 )   $ 273,156  
                                                                         
Net
income
                                        4,968,070             4,968,070  
Foreign
currency translation adjustment
                                              329,795       329,795  
Statutory
reserve
                                  31,191       (31,191 )            
                                                                         
Balance
as of December 31, 2020
    1,701,181,423     $ 170,118     $ 6,453,048           $     $ 65,911     $ (1,443,803 )   $ 325,747     $ 5,571,021  

 

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

 

 

ENTREPRENEUR UNIVERSE BRIGHT GROUP

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(In U.S. dollars)

 

    2020     2019  
             
Cash flows from operating activities            
Net income   $ 4,968,070     $ 142,204  
Adjustments to reconcile net income to cash used in operating activities:                
Depreciation     32,059        
Amortization of operating lease right-of-use assets     31,350        
Equity settled share-based payments           135,000  
Deferred tax     552,005       41,735  
Changes in operating assets and liabilities:                
Other receivables and prepayments     (27,577 )     (21,115 )
Account receivables     (28,585 )     (163,182 )
Amount due from a related company     235,930       (236,199 )
Advance from a shareholder     53,000        
Account payables     (57,954 )     58,020  
Other payables and accrued liabilities     395,583       208,211  
Tax payables     415,984       148,485  
Contract liabilities     (87,490 )     88,391  
Receipt in advance     29,104       18,645  
Operating lease liabilities     (27,259 )      
Net cash generated from operating activities     6,484,220       420,195  
                 
Cash flows from investing activities                
Purchase of property, plant and equipment     (369,021 )      
Acquisition of debt products     (2,897,689 )      
Loan to a related company     (147,912 )     (29,122 )
Net cash used in investing activities     (3,414,622 )     (29,122 )
                 
Cash flows from financing activities                
Proceed from borrowings     128,927        
Advance from a director     41,271       13,695  
Net cash generated from financing activities     170,198       13,695  
                 
Effect of exchange rates on cash     206,796       (4,890 )
                 
Net increase in cash and cash equivalents     3,446,592       399,878  
                 
Cash and cash equivalents at beginning of year     399,878        
                 
Cash and cash equivalents at end of year   $ 3,846,470     $ 399,878  
                 
Supplemental cash flow information                
Cash paid during the year for:                
Income taxes   $ 1,536,857     $  
                 
Non-cash financing activities:                
Operating lease assets obtained in exchange for operating lease obligations   $ 383,906     $  

 

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

 

 

ENTREPRENEUR UNIVERSE BRIGHT GROUP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

 

NOTE 1 – ORGANIZATION AND BUSINESS

 

Entrepreneur Universe Bright Group (“EUBG”
or the “Company”), formerly known as Ketcher Industries LLC and REE International, Inc., was incorporated in the State of
Nevada on April 21, 1999 under the name LE GOURMET CO, INC. Since its inception, the Company had the following name changes: On March
17, 2003, to Estelle Reyna, Inc.; on September 11, 2003 to Karma Media, Inc.; on July 8, 2005 to Pitboss Entertainment, Inc.; on March
3, 2006 to US Energy Holdings, Inc.; on December 20, 2006 to Lonestar Group Holdings Company; on November 9, 2007 to Guardian Angel Group,
Inc.; on May 18, 2011 to REE International, Inc.; and on March 23, 2020, the Company filed a Certificate of Amendment to the Nevada Secretary
of State amending Article I of its Articles of Incorporation changing the Company’s name to Entrepreneur Universe Bright Group,
with an effective date of April 3, 2020.

 

Lonestar Group Holdings Company was a voluntary
filer and filed a Form 15 with the Securities and Exchange Commission (“SEC”) on August 20, 2007.

 

In July 2018, XTC Inc. (“XTC”), a
shareholder of the Company, petitioned the Eight Judicial District Court in Clark County, Nevada (the “Court”), for appointment
as custodian of the Company. On September 4, 2018, the Court granted XTC custodianship of the Company with the right to appoint officers
and directors, negotiate and compromise debt, execute contracts, issue stock and authorize new classes of stock (“Custodianship”).

 

Since the Form 15 filing on August 20, 2007 and
prior to the Custodianship, the management believes that the Company was inactive with no business operations. In December 2018, XTC filed
a Certificate of Revival for a revival of its charter, effective December 13, 2018, with the Nevada Secretary of State. XTC acted together
with MXD Inc. (“MXD”) to revive the Company and to get current. MXD is a private company incorporated in the State of Colorado.
As the president of XTC is also the president of MXD, the Company considered that the XTC and MXD are under common control.

 

XTC and MXD performed the following actions in
its capacity as custodian:

 

Funded
all expenses of the Company including paying off all outstanding liabilities discovered;
Brought
the Company back in compliance with the Nevada Secretary of State, resident agent, transfer
agent, OTC Markets Group;
Brought
in and paid for accounting professionals as well as securities counsel.

 

On December 18, 2018, the Company formed REE International,
Inc. Colorado (“REE-CO”). On December 21, 2018, the Company entered into an Agreement for Divestiture of Assets to Subsidiary
with REE-CO, where the Company transferred all assets, liabilities, and business to REE-CO. in exchange for 1,000 shares of REE-CO, and
became the parent company of REE-CO. Since then, the Company has no assets, liabilities and business.

 

On December 28, 2018, the Company entered into
a Sale and Purchase Agreement (the “SPA”) with XTC to transfer 1,000 common shares of REE-CO to XTC at nil cash consideration
(with XTC assuming all of the obligations and liabilities of REE-CO). Pursuant to the SPA, all the assets and liabilities previously reported
in the Company’s financial statements were acquired by XTC and all the continuing obligations assumed were taken up by XTC. The
gain on disposal of $328,423 was recognised in additional paid-up capital for the year ended December 31, 2018. Since the closing of the
SPA, REE-CO ceased to be a subsidiary of the Company on the same date, and the Company no longer had any assets, liabilities and business.

 

In consideration of the payments made to revive
the Company and get current by the XTC and MXD, the Company issued 1,000,000 shares of Series A Preferred Stock to MXD on December 11,
2018 and issued 50,000 shares of Series B Preferred Stock to XTC on February 27, 2019, respectively. Details of the transactions are further
disclosed in note 11.

 

On March 5, 2019 the total authorized common stock
was increased to 1,800,000,000.

 

On April 24, 2019, XTC was discharged as custodian
of the Company. Prior to the Custodianship and immediately before May 15, 2019, the Company has abandoned all of its business operations.

 

On May 15, 2019, 1,590,605,141 shares of common
stock of the Company was issued to MXD (the “Issuance”) as consideration for its services to revive the Company and get current,
at an aggregate fair value of $135,000, which was recognised as share-based payments for the year ended December 31, 2019. On the same
date, MXD and XTC agreed to voluntarily retire 1,000,000 shares of Series A Preferred Stock and 50,000 shares of Series B Preferred Stock,
respectively.

 

 

Immediately after the Issuance, MXD entered into
certain Sale and Purchase Agreements, dated May 15, 2019 (the “Stock Purchase Agreements”), with Tethys Fountain Limited,
New Finance Consultants Limited, Jia Wang, Jianyong Li, Haijun Jiang, Xuebin Wu and Fanfan Chen (collectively, the “Purchasers”),
to transfer all its 1,590,605,141 shares of common stock of the Company to the Purchasers in exchange for an aggregate purchase price
of $135,000. Upon the closing of the Stock Purchase Agreements, the Purchasers collectively owned 93.5% of the issued and outstanding
shares of the Company’s common stock, and Tethys Fountain Limited became the controlling shareholder of the Company.

 

The Company currently trades on the Pink Sheet
under the symbol “EUBG”. The Company’s fiscal year end is December 31st.

 

The Company, through it’s wholly owned subsidiaries,
mainly engages in provision of digital marketing consultation services in Hong Kong and China.

 

Company name   Place/date of incorporation   Principal activities
         
1. Entrepreneurship World Technology Holding Group Company Limited   Hong Kong/May 15, 2019   Provision of consulting and promotional services
         
2. Xian Yunchuang Space Information Technology Co., Ltd. (formerly known as “Entrepreneurship World Consultants Limited”)  

The People’s Republic of China (“PRC”)/

October 18, 2019

  Provision of digital marketing consultation services
         
3. Xian Yunchuang Space Information Technology Co., Ltd, BaiYin Branch (formerly Entrepreneurship World Consultants Limited, BaiYin Branch)   PRC/May 7, 2020   Provision of digital marketing consultation services

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying consolidated financial statements
have been prepared in accordance with United States of America generally accepted accounting principles (“U.S. GAAP”).

 

Use of Estimates

 

The preparation of these financial statements
in conformity with U.S. GAAP requires management of the Company to make estimates and judgments that affect the reported amounts
of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, the Company evaluates its estimates
based on historical experience and on various other assumptions that are believed to be 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 under different assumptions or conditions. Identified below are the accounting
policies that reflect the Company’s most significant estimates and judgments, and those that the Company believes are the most critical
to fully understanding and evaluating its consolidated financial statements.

 

The COVID-19 pandemic
has created and may continue to create significant uncertainty in macroeconomic conditions, which may cause further business slowdowns
or shutdowns, depress demand for the Company’s business, and adversely impact its results of operations. During the year ended
December 31, 2020, the Company faced increasing uncertainties around its estimates of revenue collectability and accounts receivable
credit losses. The Company expects uncertainties around its key accounting estimates to continue to evolve depending on the duration and
degree of impact associated with the COVID-19 pandemic. Its estimates may change as new events occur and additional information
emerges, and such changes are recognized or disclosed in its consolidated financial statements.

 

 

Significant Accounting Policies – Leases

 

On January 1, 2019, the Company adopted Topic
842 using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application.
Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period
amounts have not been adjusted and continue to be reported in accordance with our historical accounting under Topic 840.

 

The Company elected the package of practical expedients
permitted under the transition guidance, which allowed us to carry forward our historical lease classification, our assessment on whether
a contract was or contains a lease, and our initial direct costs for any leases that existed prior to January 1, 2019. The Company also
elected to combine our lease and non-lease components and to keep leases with an initial term of 12 months or less off the balance sheet
and recognize the associated lease payments in the consolidated statements of income on a straight-line basis over the lease term.

 

Upon adoption, no right-of-use (ROU) assets and
corresponding liabilities were recognized because the Company has no leases existing at the date of initial application.

 

Accounting Pronouncements Issued But Not Yet
Adopted

 

In June 2016, the FASB issued ASU No. 2016-13,
Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held
at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the
existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. Adoption
of the ASUs is on a modified retrospective basis. As a smaller reporting company, the standard will be effective for the Company for interim
and annual reporting periods beginning after December 15, 2022. The Company is currently evaluating the impact that the standard will
have on its consolidated financial statements and related disclosures.

 

In May 2019, the Financial Accounting Standards
Board (“FASB”) issued ASU 2019-05, which is an update to ASU Update No. 2016-13, Financial Instruments—Credit Losses
(Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement
of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. The amendments
in Update 2016-13 added Topic 326, Financial Instruments—Credit Losses, and made several consequential amendments to the Codification.
Update 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually assessed for credit losses
when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial Instruments— Credit Losses—Available-for-Sale
Debt Securities. The amendments in this ASU address those stakeholders’ concerns by providing an option to irrevocably elect the
fair value option for certain financial assets previously measured at amortized cost basis. For those entities, the targeted transition
relief will increase comparability of financial statement information by providing an option to align measurement methodologies for similar
financial assets. Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments
in Update 2016-13 while still providing financial statement users with decision-useful information. ASU 2019-05 is effective for “smaller
reporting companies” for fiscal year beginning after December 15, 2022. The Company is currently evaluating the impact of this
new standard on its consolidated financial statements and related disclosures.

 

 

In December 2019, the FASB issued ASU 2019-12:
Simplifying the Accounting for Income Taxes (Topic 740), which removes certain exceptions to the general principles in Topic 740 and improves
consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective
for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, with early adoption permitted. The
Company is evaluating the effect of adopting this new accounting guidance but does not expect adoption will have a material impact on
the Company’s consolidated financial statements and related disclosures.

 

In March 2020, the FASB issued ASU 2020-04, Reference
Rate Reform (Topic 848) (“ASU 2020-04”). ASU 2020-04 contains practical expedients for reference rate reform related activities
that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference
rate reform activities occur. The Company continues to evaluate the impact of the guidance and may apply the elections as applicable as
changes in the market occur.

 

In August 2020, the FASB issued ASU 2020-06, Debt
– Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic
815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies
the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting
for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion
and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately
from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding
financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’
equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share,
to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition,
entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares.

 

For SEC filers, excluding smaller reporting companies,
ASU 2020-06 is effective for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years. Early
adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-06 is effective
for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Entities should adopt the guidance
as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. The Company is currently
evaluating the impact that ASU 2020-06 may have on its consolidated financial statements and related disclosures.

 

Except for the above-mentioned pronouncements,
there are no new recent issued accounting standards that will have material impact on the consolidated financial position, statements
of operations and cash flows.

 

Basis of Consolidation and Noncontrolling
Interests

 

The consolidated financial statements include
the financial statements of the Company and its subsidiaries. All significant inter-company balances and transactions within the Company
have been eliminated upon consolidation.

 

A subsidiary is an entity in which (i) the
Company directly or indirectly controls more than 50% of the voting power; or (ii) the Company has the power to appoint or remove
the majority of the members of the board of directors or to cast a majority of votes at the meeting of the board of directors or to govern
the financial and operating policies of the investee pursuant to a statute or under an agreement among the shareholders or equity holders.

 

Cash and Cash Equivalents

 

For purposes of the statement of cash flows, the
Company considers cash, money market funds, investments in interest bearing demand deposit accounts, time deposits and all highly liquid
investments with an original maturity of three months or less to be cash equivalents. 

 

 

Accounts receivable

 

Accounts receivable are recorded at the invoiced
amount, net of allowances for doubtful accounts and sales returns. The allowance for doubtful accounts is the Company’s best estimate
of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based
on historical write-off experience, customer specific facts and economic conditions.

 

Outstanding accounts receivable balances are reviewed
individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted
and the potential for recovery is considered remote.

 

Debt products

 

All debt products are carried
at fair value at the end of each reporting period. Changes in the carrying amount of debt products relating to interest income calculated
using the effective interest method are recognized in consolidated statement of profit or loss. Other changes in the carrying amount of
these products, net of any related tax effects, are excluded form earnings and are included in other comprehensive income or loss and
reported as a separate component of stockholders’ equity or deficit until realized. Realized gains and losses and declines in value
judged to be other than temporary, if any, on debt products are included in other income (expense), net.

 

The Company regularly reviews
all of its investments for other-than-temporary declines in estimated fair value. Its review includes the consideration of the cause of
the impairment, including the creditworthiness of the security issuers, the number of securities in an unrealized loss position, the severity
and duration of the unrealized losses, whether the Company has the intent to sell the securities and whether it is more likely than not
that the Company will be required to sell the securities before the recovery of their amortized cost basis. When the Company determines
that the decline in estimated fair value of an investment is below the amortized cost basis and the decline is other-than-temporary, it
reduces the carrying value of the security and record a loss for the amount of such decline. The Company has not recorded any declines
in value judged to be other than temporary on its investments in debt securities.

 

Plant and equipment

 

Plant and equipment are recorded at cost less
accumulated depreciation and accumulated impairment. Depreciation is computed using the straight-line method over the estimated useful
lives of the assets.

 

    Estimated
useful
lives
(years)
Motor vehicle   4 – 5

 

The gain or loss on the disposal of plant and
equipment is the difference between the net sales proceeds and the lower of the carrying value or fair value less cost to sell the relevant
assets and is recognized in general and administrative expenses in the consolidated statements of comprehensive income.

 

Impairment of Long-lived Assets

 

In accordance with ASC 360-10-35, we review the
carrying values of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an
asset may not be recoverable. The Company assesses the recover-ability of the assets based on the non-discounted future cash flows the
assets are expected to generate and recognize an impairment loss when estimated discounted future cash flows expected to result from the
use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an
impairment is identified, the Company would reduce the carrying amount of the asset to its estimated fair value based on a discounted
cash flows approach or, when available and appropriate, to comparable market values. No impairment has been recorded by the Company as
of December 31, 2020 and 2019.

 

 

Revenue Recognition

 

The Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration
which it expects to receive in exchange for those goods. The Company recognizes revenues following the five step model prescribed under
ASU No. 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine
the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues
when (or as) we satisfy the performance obligation. 

 

The Company evaluates if it is a principal or
an agent in a transaction to determine whether revenue should be recorded on a gross or net basis. The Company is acting as the principal
if it obtains control over the goods and services before they are transferred to customers. When the Company is primarily obligated in
a transaction, is generally subject to inventory risk, has latitude in establishing prices, or has several but not all of these indicators,
the Company acts as the principal and revenue is recorded on a gross basis. When the Company is not primarily obligated in a transaction,
does not generally bear the inventory risk and does not have the ability to establish the price, the Company acts as the agent and revenue
is recorded on a net basis

 

The Company derives its revenue primarily from
net transaction services, including consultancy services and sourcing and marketing services.

 

Consultancy services

 

The Company generates the majority of its revenues
by providing consulting services to its clients. Most of its consulting service contracts are based on one of the following types of arrangements:

 

Performance-based arrangements represent
forms of variable consideration determined by pre-established fixed rates. In these arrangements, the Company’s fees are based on
the attainment of contractually defined objectives with our client, such as assisting the client in achieving a specific business objective
(e.g. end customer placed an order to buy a product or enroll a course). The Company is entitled a fixed rate on revenue generated by
the client that are related to the scope of respective consultancy services upon client acceptance on the services provided.

 

Fixed-fee arrangements require
the client to pay a pre-established fee in exchange for a pre-determined set of professional services. Generally, the client agrees to
pay a fixed fee prior to contract inception. The Company recognizes revenues for its professional services rendered under these fixed-fee
billing arrangements monthly over the specified contract term.

 

Sourcing and marketing services

 

The Company provides agency-based sourcing and
digital marketing services to connect marketplace operators and merchants. Most of its sourcing and marketing services are based on one
of the following types of arrangements:

 

Agency-based sourcing services represents
product procurement on behalf of marketplace operators. The Company recognized revenues from agency-based sourcing at a fixed rate on
the value of goods that are sourced and delivered to the ultimate customers by the merchants. The Company reports revenues from these
transactions on a net basis because the performance obligation is to facilitate a transaction between marketplace operators and merchants,
for which the Company did not obtain the control over the products before passing on to the end customers. The Company is not primarily
responsible for fulfilling the promise and not exposed to inventory risk.

 

Digital marketing services are
provided to the marketplace to promote designated products or services through social medial influencers engaged by the Company. The Company
is entitled to a fixed rate on the revenue generated by the marketplace that are related to the designated products or services.

 

The post-sale services, goods return and other
kinds of product issue are responsibilities of the merchants. Upon successful delivery to ultimate customers by the merchants, there is
no unfulfilled obligation that could affect the marketplace operators’ and merchants’ acceptance of the services provided.
The acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied.

 

The Company derived services revenues of $8,592,970
and $816,267, for the years ended December 31, 2020 and 2019, respectively, from provision of certain consultancy services and sourcing
and marketing services through the program application (“App”) platform managed by a related company, Xi’an Chuangyetianxia
Network Technology Co., Ltd. (“Xian CNT”). The Company CEO, Mr. Tao, has significant influence over Xian CNT.

 

 

During the years ended December 31, 2019 and 2020,
revenues generated from Xian CNT are disclosed in note 5 of the consolidated financial statements.


Practical expedients and exemption

 

The Company has not occurred any costs to obtain
contracts, and does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one
year or less.

 

Other service income is earned when services have
been rendered.

 

Revenue by major service line

 

    Year ended December 31,  
    2020     2019  
             
Consultancy services     8,984,967       406,777  
Sourcing and marketing services     202,056       512,154  
    $ 9,187,023     $ 918,931  

 

Revenue by recognition over time vs point in time

 

    Year ended December 31,  
    2020     2019  
                 
Revenue recognized at a point in time     9,100,334       874,736  
Revenue recognized over time     86,689       44,195  
    $ 9,187,023     $ 918,931  

 

Revenue recorded on a gross vs net basis

 

    Year ended December 31,  
    2020     2019  
             
Revenue recorded on a gross basis     8,984,967       860,462  
Revenue recorded on a net basis     202,056       58,469  
    $ 9,187,023     $ 918,931  

 

Contract liabilities

 

The Company’s contract liabilities consist
of deferred revenue associated with consultancy fees. The table below presents the activity of the deferred consultancy services revenue
during the years 2019 and 2020, respectively:

 

    2020     2019  
Balance at beginning of period   $ 87,136     $  
Consultancy fees collected           132,586  
Consultancy income earned     (86,689 )     (44,195 )
Exchange realignment     (447 )     (1,255 )
Balance at end of period   $       87,136  

 

Cost of revenue

 

Cost of revenues consists primarily of employee
compensation, service fees and related expenses, which are directly attributable to the provision of services. 

 

Employee benefits

 

Full time employees of the Company in the PRC participate in a government
mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare
benefits are provided to the employees. Chinese labor regulations require that the PRC subsidiary of the Company make contributions to
the government for these benefits based on certain percentages of the employees’ salaries, up to a maximum amount specified by the
local government. The Company has no legal obligation for the benefits beyond the contributions made. Total amounts of such employee benefit
expenses, which were expensed as incurred, were approximately $4,911 and $553 for the years ended December 31, 2020 and 2019, respectively.

 

 

Foreign Currency and Foreign Currency Translation

 

The reporting currency of the Company is the United
States dollar (“US dollar”). The financial records of the Company’s PRC operating subsidiaries are maintained in their
local currency, the Renminbi (“RMB”), which is the functional currency. The financial records of the Company’s Hong
Kong operating subsidiary are maintained in its local currency, the Hong Kong Dollar (“HKD”), which is the functional currency.
Assets and liabilities of the subsidiaries are translated into the reporting currency at the exchange rates at the balance sheet date,
equity accounts are translated at historical exchange rates, and income and expense items are translated using the average rate for the
period. The translation adjustments are recorded in accumulated other comprehensive loss under shareholders’ equity.

 

Monetary assets and liabilities denominated in
currencies other than the applicable functional currencies are translated into the functional currencies at the prevailing rates of exchange
at the balance sheet date. Nonmonetary assets and liabilities are remeasured into the applicable functional currencies at historical exchange
rates. Transactions in currencies other than the applicable functional currencies during the period are converted into the functional
currencies at the applicable rates of exchange prevailing at the transaction dates. Transaction gains and losses are recognized in the
consolidated statements of operations.

 

RMB is not a fully convertible currency. All foreign
exchange transactions involving RMB must take place either through the People’s Bank of China (the “PBOC”) or other
institutions authorized to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions are the rates
of exchange quoted by the PBOC, which are determined largely by supply and demand. Translation of amounts from RMB into US dollars has
been made at the following exchange rates for the respective periods:

 

Year ended December 31, 2019  
Balance sheet, except for equity accounts RMB 6.9762 to US$1.00
Income statement and cash flows RMB 6.8942 to US$1.00
   
Year ended December 31, 2020  
Balance sheet, except for equity accounts RMB 6.5401 to US$1.00
Income statement and cash flows RMB 6.9021 to US$1.00

 

During the periods presented,
HKD is pegged to the U.S. dollar within a narrow range.

 

Income Taxes

 

Income taxes are accounted for using an asset
and liability approach which requires the recognition of income taxes payable or refundable for the current year and deferred tax liabilities
and assets for the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns.
Deferred income taxes are determined based on the differences between the accounting basis and the tax basis of assets and liabilities
and are measured using the currently enacted tax rates and laws. Deferred tax assets are reduced by a valuation allowance, if based on
available evidence, it is considered that it is more likely than not that some portion of or all of the deferred tax assets will not be
realized. In making such determination, the Company considers factors including future reversals of existing taxable temporary differences,
future profitability, and tax planning strategies. If events were to occur in the future that would allow the Company to realize more
of its deferred tax assets than the presently recorded net amount, an adjustment would be made to the deferred tax assets that would increase
income for the period when those events occurred. If events were to occur in the future that would require the Company to realize less
of its deferred tax assets than the presently recorded net amount, an adjustment would be made to the valuation allowance against deferred
tax assets that would decrease income for the period when those events occurred. Significant management judgment is required in determining
income tax expense and deferred tax assets and liabilities.

 

Uncertain Tax Positions

 

Management reviews regularly the adequacy of the
provisions for taxes as they relate to the Company’s income and transactions. In order to assess uncertain tax positions, the Company
applies a more likely than not threshold and a two-step approach for tax position measurement and financial statement recognition. For
the two-step approach, the first step is to evaluate the tax position for recognition by determining if the weight of available evidence
indicates that it is more likely than not that the position will be sustained, including resolution of related appeals or litigation processes,
if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon settlement.
As of December 31, 2020 and 2019, the Company had not recorded any liability for uncertain tax positions. In subsequent periods, any interest
and penalties related to uncertain tax positions will be recognized as a component of income tax expense.

 

 

Net income per Share of Common Stock

 

The Company has adopted ASC Topic 260, “Earnings
per Share,” (“EPS”) which requires presentation of basic EPS on the face of the income statement for all entities with
complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation. In the accompanying
financial statements, basic earnings (loss) per share is computed by dividing net income by the weighted average number of shares of common
stock outstanding during the period.

  

    Year ended December 31,  
    2020     2019  
             
Net income   $ 4,968,070     $ 142,204  
                 
Weighted average number of common stock outstanding                
– basic     1,701,181,423       1,112,875,412  
– diluted     1,701,181,423       1,114,077,332  
                 
Net income per share                
– basic   $ 0.00 *   $ 0.00 *
– diluted   $ 0.00 *   $ 0.00 *

 

* Less than $0.01 per share

 

The calculation of basic net income per share
of common stock is based on the net income for the years ended December 31, 2019 and 2020 and the weighted average number of ordinary
shares outstanding.

 

For the year ended December 31, 2019, 50,000 issued
shares of Series B Preferred stock (note 11) were included in the calculation of diluted income per share of the Company.

 

For the year ended December 31, 2020, the Company
has no potentially dilutive securities, such as options or warrants, currently issued and outstanding.

 

Stock-based compensation

 

Stock-based compensation is accounted for based
on the requirements of the Share-Based Payment topic of ASC Topic 718 (“ASC 718”), which requires recognition in the financial
statements of the cost of employee and director services received in exchange for an award of equity instruments over the vesting period
or immediately if fully vested and non-forfeitable. The Financial Accounting Standards Board (“FASB”) also requires measurement
of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

 

Additionally, ASU No. 2016-09, Improvements to
Employee Share-Based Payment Accounting, permits the election of an accounting policy for forfeitures of share-based payment awards, either
to recognize forfeitures as they occur or estimate forfeitures over the vesting period of the award. The Company has elected to recognize
forfeitures as they occur.

 

In June 2018, the FASB issued ASU No. 2018-07,
“Compensation—Stock Compensation (Topic 718) – Improvements to Nonemployee Share-Based Payment Accounting” (“ASU
2018-07”), which simplifies several aspects of the accounting for nonemployee share-based payment transactions by expanding the
scope of the stock-based compensation guidance in ASC 718 to include share-based payment transactions for acquiring goods and services
from non-employees. ASU 2018-07 is effective for annual periods beginning after December 15, 2018, including interim periods within those
annual periods. The Company adopted ASU 2018-07 on January 1, 2019 and there was no cumulative effect of adoption.

 

All transactions
in which goods or services are received in exchange for equity instruments are accounted for based on the fair value of the consideration
received or the fair value of the equity instrument issued, whichever is more reliably measurable.

 

 

Segments

 

The Company uses the “management approach”
in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s
chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s
reportable segments. Management, including the chief operating decision maker, reviews operating results solely by monthly revenue of
marketing consultation services and operating results of the Company and, as such, the Company has determined that the Company has one
operating segment as defined by ASC Topic 280 “Segment Reporting”.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject
the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable.

 

As of December 31, 2020 and 2019, $3,813,156 and
$339,627 of the Company’s cash and cash equivalents, respectively were held at financial institutions located in the PRC that management
believes to be of high credit quality. The Company has not experienced any losses on cash and cash equivalents to date. The Company does
not require collateral or other securities to support financial instruments that are subject to credit risk.

 

The Company operates principally in the PRC and
Hong Kong and grants credit to its customers in these geographic regions. Although the PRC is economically stable, it is always possible
that unanticipated events in foreign countries could disrupt the Company’s operations.

 

Fair Value of Financial Instruments

 

ASC Topic 820, Fair Value Measurement and Disclosures,
defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal
or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring
fair value. Certain current assets and current liabilities are financial instruments. Management believes their carrying amounts are a
reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization
and, if applicable, their current interest rates are equivalent to interest rates currently available. The three levels of valuation hierarchy
are defined 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 measurement.

 

Valuation of debt products depends upon a number of factors, including
prevailing interest rates for like securities, expected volatility in future interest rates, and other relevant terms of the debt. Other
factors that may be considered include the borrower’s ability to adequately service its debt, the fair market value of the borrower
in relation to the face amount of its outstanding debt and the quality of collateral securing the Company’s debt investments. The
fair value of these debt products classified as Level 2 are established by reference to the prices quoted by respective fund administrators.

 

The carrying amounts of financial assets and liabilities,
such as cash and cash equivalents, account receivables, other receivables, amount due from a related company, loan to a related company,
account payables and other payables, amount due to a director and borrowings approximate their fair values because of the short maturity
of these instruments or the rate of interest of these instruments approximate the market rate of interest.

 

Comprehensive Income

 

Comprehensive income is defined as the change
in equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investments
from owners and distributions to owners. Accumulated other comprehensive income includes cumulative foreign currency translation adjustment.

 

 

NOTE 3 – DEBT PRODUCTS

 

    2020     2019  
             
Debt products issued by bank, at fair value   $ 3,058,041     $          –  

 

Debt products include financial products issued
and managed by a bank in the PRC. The debt products have no maturity date, and bear variable interest rate, currently at 2.35% per annum.
The fair value of these debt products classified as Level 2 are established by reference to the prices quoted by the bank. No fair value
change has been recognized for the year ended December 31, 2020. The debt products have been subsequently redeemed on February 2, 2021.

 

NOTE 4 –PLANT AND EQUIPMENT

 

Plant and equipment as
of December 31, 2020 and 2019 are summarized below:

 

    2020     2019  
             
Motor vehicle   $ 389,443     $  
 Less: Accumulated depreciation     (33,834 )      
Plant and equipment, net   $ 355,609     $  

 

Depreciation expense,
classified as operating expenses, was $32,059 for the year ended December 31, 2020.

 

NOTE 5 –RELATED PARTY TRANSACTIONS

 

The following is the list of the related parties
with which the Company had transactions for the years ended December 31, 2020 and 2019:

 

(a) XTC Inc. (“XTC”), a company incorporated in the United States, a former shareholder of the
Company who previously held 10,000 Common Stocks of the Company. XTC was also the custodian of the Company from September 4, 2018 to April
24, 2019.
(b) MXD Inc. (“MXD”), a company incorporated in the State of Colorado. As the president of XTC
is also the president of MXD, the Company considered that the XTC and MXD are under common control.
(c) Xian CNT – a company incorporated in the PRC, the Company CEO, Mr. Tao, has significant influence
over the company.
(d) Baiyin Wujinxia Cultural Communication Co., Ltd. (“Baiyin Wujinxia”) – a company incorporated
in the PRC, the Company CEO, Mr Tao held 60% equity interest from October 31, 2019 to January 25, 2021 and on January 26, 2021 fully transferred
to Chang Han Ye, spouse of Mr. Tao.
(e) Chang Han Ye, spouse of Mr. Tao.
(f) Chong Yong, father in law of Mr. Tao
(g) Li, Jianyong, a director of the Company.
(h) New Finance Consultants Limited, a shareholder of the Company, holding 8.3% equity interest as of June
30, 2021.

 

Transactions with XTC and MXD

 

On December 28, 2018, the Company entered into
a Sale and Purchase Agreement (the “SPA”) with XTC to transfer 1,000 common shares of REE-CO to XTC at nil cash consideration
(with XTC assuming all of the obligations and liabilities of REE-CO). Pursuant to the SPA, all the assets and liabilities previously reported
in the Company’s financial statements were acquired by XTC and all the continuing obligations assumed were taken up by XTC. Since
the closing of the SPA, REE-CO ceasing being our subsidiary, and we no longer had any assets, liabilities and business and became a target
for acquisition.

 

In consideration of the payments made to revive
the Company and get current by XTC and MXD, the Company issued 1,000,000 shares of Series A Preferred Stock to MXD on December 11, 2018
and issued 50,000 shares of Series B Preferred Stock to XTC on February 27, 2019, respectively. Details of the transactions are further
disclosed in note 11.

 

On April 24, 2019, XTC was discharged as custodian
of the Company.

 

 

On May 15, 2019, 1,590,605,141 shares of common
stock of the Company was issued to MXD as consideration for its services to revive the Company and get current, at an aggregate purchase
price of $135,000, which was recognised as share-based payments for the year ended December 31, 2019. On the same date, MXD and XTC agreed
to voluntarily retire 1,000,000 shares of Series A Preferred Stock and 50,000 shares of Series B Preferred Stock, respectively.

 

Immediately after the transactions, MXD entered
into certain Sale and Purchase Agreements, dated May 15, 2019 (the “Stock Purchase Agreements”), with Tethys Fountain Limited,
New Finance Consultants Limited, Jia Wang, Jianyong Li, Haijun Jiang, Xuebin Wu and Fanfan Chen (the “Purchasers”), to transfer
all its 1,590,605,141 shares of common stock of the Company to the Purchasers in exchange for an aggregate purchase price of $135,000.
Upon the closing of the Stock Purchase Agreements, the Purchasers collectively owned 93.5% of the issued and outstanding shares of the
Company’s common stock, and Tethys Fountain Limited became the controlling shareholder of the Company.

 

Related party transaction

 

    Year ended December 31,  
    2020     2019  
             

Sourcing and marketing services income generated from

– Xian CNT

  $ 49,259     $ 512,154  
                 

Expenses on platform access

– Xian CNT

          41,094  
                 
Purchase of motor vehicles from                
– Chang Han Ye     86,931        
– Chang Yong     45,639        
– Li, Jianyong     28,977        
                 
Interest income                
Baiyin Wujinxia     3,888       112  

 

Sourcing and marketing income were received by
the Company at fees agreed by both parties in accordance with the relevant agreements.

 

Expenses on platform access were paid by the Company
at fees agreed by both parties in accordance with the relevant agreements.

 

The motor vehicles were purchased by the Company
at considerations agreed by both parties.

 

The interest income was charged at an interest
rate agreed by both parties in accordance with a loan agreement.

 

Related party balances

 

    2020     2019  
             
Loan to a related company            
– Baiyin Wujinxia   $ 186,796     $ 28,780  
                 

Amount due from a related company

– Xian CNT

          233,422  
                 
Amount due to a director                
– Tao, Guolin     51,309       13,623  
                 
Amount due to a shareholder                
– New Finance Consultants Limited     53,000        

 

On November 1, 2019, the Company entered into
a loan agreement with Baiyin Wujinxia to loan a total amount of $305,804 (RMB2,000,000) for a period from November 1, 2019 to June 30,
2021. The loan is unsecured and bears fixed interest at 4.75% per annum. The outstanding amount (including loan interest) as at December
31, 2020 was fully repaid on June 18, 2021 and the loan agreement was early terminated on the same date.

 

The amounts due from (to) a related company/ director/
shareholder as of December 31, 2019 and 2020 are unsecured, non-interest bearing and repayable on demand.

 

 

NOTE 6 – ACCOUNTS RECEIVABLE, NET

 

Accounts receivable as of December 31, 2020 and 2019:

    2020     2019  
             
Account receivables   $ 202,183     $ 161,264  
Less: Allowance for doubtful accounts            
    $ 202,183     $ 161,264  

 

NOTE 7 –ACCRUED LIABILITIES AND OTHER
PAYABLES

 

Accrued liabilities and other payables consisted
of the following as of December 31, 2020 and 2019:

 

    2020     2019  
             
Other payables     168,498       26,200  
Salary payable     229,010       110,333  
Accrued audit fees     221,000       70,000  
    $ 618,508     $ 206,533  

 

NOTE 8 –BORROWINGS

 

On April
20, 2020, the Company borrowed a loan of $128,996 (HK$1,000,000) from an unrelated individual. The loan was interest-free, unsecured,
and repaid on April 20, 2021.

 

NOTE 9 – DERIVATIVE FINANCIAL INSTRUMENTS

 

Derivative Financial Instruments

 

The Company has adopted the provisions of ASC
subtopic 825-10, Financial Instruments (“ASC 825-10”). ASC 825-10 defines fair value as the price that would
be received from selling 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 considers assumptions that market participants
would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of non-performance. ASC 825-10 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.

 

Debt derivative – On February
27, 2019, the Company issued 50,000 shares of Series B Preferred Stock to XTC, Inc. Details are described in Note 11. The Series B Preferred
Stock was convertible into common stock, at holders’ option. The Company has identified the embedded derivatives relating to certain
anti-dilutive (reset) provisions in the Series B Preferred Stock. These embedded derivatives included certain conversion features. The
accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception
date of debenture and record the change in fair value as of each subsequent reporting date.

 

As of the inception date of Series B Preferred
Stock, the Company determined a fair value of $7,075 to the Debt derivative. The fair value of the embedded derivatives was determined
by reference to the market capitalisation of the Company at the valuation date and allocated based on total number of dilutive shares.

 

The Debt Derivative had been released upon the
cancellation of Series B Preferred stock on May 15, 2019.

 

 

 NOTE 10 – COMMON STOCK

 

The Company was incorporated on April 21, 1999
with an authorized share capital of 25,000,000 common stock with a par value of $0.001 per share.

 

On March 5, 2019, the total number of authorized
shares were increased to 1,800,000,000 common stock with a par value of $0.0001 per share.

 

On May 15, 2019, 1,590,605,141
shares of common stock of the Company was issued to MXD (the “Issuance”) as consideration for its services to revive the Company
and get current, at an aggregate fair value of $135,000, which was recognised as share-based payments for the year ended December 31,
2019. The Private Placement was completed pursuant to the exemption from registration provided by Regulation S promulgated under the Securities
Act of 1933, as amended.   

 

Immediately after the Issuance, MXD entered into
a certain Sale and Purchase Agreements dated May 15, 2019 (the “Stock Purchase Agreements”) with Tethys Fountain Limited,
New Finance Consultants Limited, Jia Wang, Jianyong Li, Haijun Jiang, Xuebin Wu and Fanfan Chen (collectively the “Purchasers”),
to transfer all its 1,590,605,141 shares of common stock of the Company to the Purchasers in exchange for an aggregate purchase price
of $135,000. Upon the closing of the Stock Purchase Agreements, the Purchasers collectively owned 93.5% of the issued and outstanding
shares of the Company’s common stock, and Tethys Fountain Limited became the controlling shareholder of the Company.

 

NOTE 11 – PREFERRED STOCKS

 

On December 11, 2018, the Company issued 1,000,000
shares of Series A Preferred Stock to MXD, Inc. in consideration of the payments made to revive the Company and get current. The Company
considered the Series A Preferred Stock has no material fair value.

 

On February 27, 2019, the Company issued 50,000
shares of Series B Preferred Stock to XTC, Inc. in consideration of the payments made to revive the Company and get current. The Company
considered that the Series B Preferred Stock contained an embedded derivate with conversion feature. The fair value approach of this embedded
derivative was disclosed in note 9.

 

On May 15, 2019, MXD and XTC agreed to voluntarily
retire 1,000,000 shares of Series A Preferred Stock and 50,000 shares of Series B Preferred Stock, respectively.

 

The major rights, preferences and privileges of
the Preferred Stocks are as follows:

 

Voting Rights

 

The holder of the Series A Preferred Stock shall
have the right to 100,000 vote for each ordinary share into which each outstanding Preferred Share held while the holder of the Series
B Preferred Stock shall have no voting rights.

 

Dividends

 

The holders of the Preferred Stocks shall not
entitle to receive dividends paid on the Common Stock.

 

Liquidation

 

In the event of any liquidation, the holders of
Preferred Stocks shall not entitle to any liquidation preference.

 

Conversion

 

Series A Preferred Stock has no conversion rights
into shares of Common Stock of the Company.

 

Series B Preferred Stock has the rights to convert
each share held into 1,000 shares of Common Stock in the Company, with the restriction that the convertor may not convert and result in
the possession of more than 4.9% of the total issued and outstanding as a result of conversion.

 

Redemption rights

 

The Preferred Stocks shall have not redemption
rights

 

 

Accounting for Preferred Shares

 

Both Series A and Series B Preferred Stock were
issued at the par value of $0.0001 at the date of inception.

 

No fair value was recognised for Series A Preferred
Stock because the holder was not entitled to any dividends or liquidation preference. For Series B Preferred Stock, it contained a debt
derivative, which measured at fair value model, arising from the conversion feature of the Series B Preferred Stock. As of the inception
date of Series B Preferred Stock, the Company determined a fair value of $7,075 to the Debt derivative and the amount was recognised in
profit or loss.

 

Both Series A and Series B Preferred Stocks were
retired on May 15, 2019. Accordingly, the carrying amounts of Preferred Stocks and the relevant debt derivative were realized in additional
paid-up capital and profit or loss, respectively.

 

NOTE 12 – STATUTORY RESERVES

 

As stipulated by the relevant laws and regulations
in the PRC, company established in the PRC (the “PRC subsidiary”) is required to maintain a statutory reserve made out of
profit for the year based on the PRC subsidiary’ statutory financial statements which are prepared in accordance with the accounting
principles generally accepted in the PRC. The amount and allocation basis are decided by the director of the PRC subsidiary annually and
is not to be less than 10% of the profit for the year of the PRC subsidiary. The aggregate amount allocated to the reserves will be limited
to 50% of registered capital for certain subsidiaries. Statutory reserve can be used for expanding the capital base of the PRC subsidiary
by means of capitalization issue.

 

In addition, as a result of the relevant PRC laws
and regulations which impose restriction on distribution or transfer of assets out of the PRC statutory reserve, $31,191 and $34,720 representing
the PRC statutory reserve of the subsidiary as of December 31, 2020 and 2019, respectively, are also considered under restriction for
distribution.

 

NOTE 13 – INCOME TAXES

 

(a) The local (United States) and
foreign components of income (loss) before income taxes were comprised of the following:

 

    Years ended December 31,  
    2020     2019  
             
Tax jurisdictions from:            
–    Local   $ (365,055 )   $ (213,650 )
–    Foreign, representing:                
HK     45,181       (54,149 )
PRC     7,792,789       600,223  
                 
Income before income taxes   $ 7,472,915     $ 332,424  

  

Income is subject to tax in the various countries
in which the Company operates.

 

The Company is incorporated in the State of Nevada
and is subject to the U.S. federal tax and state tax. The Tax Cuts and Jobs Act of (“TCJ Act”) was signed into law in December
2017, and among its many provisions, it imposed a mandatory one-time transition tax on undistributed international earnings and reduced
the U.S. corporate income tax rate to 21%, effective January 1, 2019. No provision for income taxes in the United States has been made
as the Company had no taxable income for the years ended December 31, 2020 and 2019.

 

The Company mainly conducts its operating business
through its subsidiaries in China, including Hong Kong.

 

The subsidiary incorporated in Hong Kong is subject
to Hong Kong taxation on income derived from their activities conducted in Hong Kong. Hong Kong Profits Tax has been calculated at 16.5%
of the estimated assessable profit for the years ended December 31, 2019 and 2020. The provision for Hong Kong Profits Tax is calculated
at 8.25% on assessable profits up to $257,855 (HK$2,000,000) and 16.5% on any part of assessable profits over $257,855 (HK$2,000,000)
for the years ended December 31, 2020 and 2019 and subject to a waiver of 100% of the profits tax under a cap of $1,290 (HK$10,000) and
$2,568 (HK$20,000) for the years ended December 31, 2020 and 2019, respectively.

 

 

The subsidiary incorporated in mainland China
is governed by the Income Tax Law of the PRC concerning foreign invested enterprises and foreign enterprises and various local income
tax laws (the Income Tax Laws), and are subject to 25% tax rate throughout the periods presented.

 

Under the PRC EIT law, withholding income tax
is imposed on dividend paid by PRC entities out of its profits earned since January 1, 2008 to its overseas investors (including
Hong Kong investors). Deferred taxation on the undistributed profits of the PRC subsidiaries has been provided in the consolidated financial
statements to the extent that in the opinion of the directors such profits will be distributed in the foreseeable future. Total undistributed
earnings of the Company’s PRC subsidiaries at December 31, 20120 and 2019 were $626,975 and $41,244, respectively.

 

Income tax expense consists of the following:

 

    Year ended December 31,  
    2020     2019  
             
Current tax:            
Hong Kong   $ 2,433     $ 860  
China     1,950,407       147,625  
                 
Deferred tax                
China     552,005       41,735  
Total   $ 2,504,845     $ 190,220  

 

The provision for income taxes consisted of the
following:

 

    Year ended December 31,  
    2020     2019  
Income before income tax   $ 7,472,915     $ 332,424  
Statutory income tax rate     21 %     21 %
Income tax credit computed at statutory income rate     1,569,312       69,809  
Reconciling items:                
Non-deductible expenses     78,866       19,413  
Share-based payments           28,350  
Effect of tax reliefs granted to Hong Kong subsidiary     (1,289 )      
Rate differential in different tax jurisdictions     305,951       30,913  
Deferred tax provided on dividends withholding tax of PRC subsidiaries     552,005       41,735  
Income tax expense   $ 2,504,845     $ 190,220  

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 31, 2020 and 2019 are presented below:

 

    December 31,  
    2020     2019  
             
Deferred tax assets:            
Accelerated depreciation   $ 429     $