8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 27, 2020

CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.

(Exact name of registrant as specified in its charter)

Nevada	000-31091	47-0925451
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

Unit 609, Shengda Plaza, No. 61 Guoxing Ave., Meilan District, Hainan Province, China	570203
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: +86-4008081155

5-1-1206 Hefeng Jiangan, Nianqing Rd.

Meilan District, Hainan Province, China 570203

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ¨

Cautionary Note Regarding Forward-Looking Statements

This Current Report on Form 8-K and other reports filed by the Company from time to time with the Securities and Exchange Commission (the “SEC”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Registrant’s management. When used in the filings the words “anticipate”, “believe”, “estimate”, “expect”, “future”, “intend”, “plan” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions and other factors relating to the Company’s industry, the Company’s operations and results of operations and any businesses that may be acquired by the Company. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

Throughout this Current Report on Form 8-K, references to “Cang Bao,” “we,” “us,” the “Company,” and the “Registrant” all refer to Cang Bao Tian Xia International Art Trade Center, Inc., and may, if indicated by the context, refer to other entities, including the Cayman Company, or the Target Companies or VIEs (each, as hereinafter defined), as disclosed herein.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results. The following discussion should be read in conjunction with the Company’s unaudited pro forma financial statements and the related notes filed herewith.

Industry Data

This Current Report on Form 8-K includes industry and market data and other information, which we have obtained from, or is based upon, market research, independent industry publications, surveys and studies conducted by third parties or other publicly available information. Although we believe each such source to have been reliable as of its respective date, none guarantees the accuracy or completeness of such information. We have not independently verified the information contained in such sources. Any such data and other information are subject to change based on various factors, including those described below under the heading “Risk Factors” and elsewhere in this Current Report on Form 8-K.

TABLE OF CONTENTS

Item No.	Description of Item	Page No.
Item 1.01	Entry Into a Material Definitive Agreement	1
Item 2.01	Completion of Acquisition or Disposition of Assets	1
Item 3.02	Unregistered Sales of Equity Securities	45
Item 4.01	Changes in Registrant’s Certifying Accountant	46
Item 5.01	Change in Control of Registrant	46
Item 5.06	Change in Shell Company Status	46
Item 9.01	Financial Statements and Exhibits	46

Item 1.01.

Entry Into A Material Definitive Agreement

The disclosure set forth below under Item 2.01 hereof is incorporated by reference into this Item 1.01.

Item 2.01.

Completion of Acquisition or Disposition of Assets

On July 27, 2020 (the “Closing Date”), we entered into a Share Exchange Agreement (the “Exchange Agreement”) by and among (i) the Company, (ii) Zhi Yuan Limited, a Cayman Islands company (“Cayman Company”), and (iii) the three beneficial shareholders of Cayman Company (each, a “Cayman Company Shareholder” and collectively, the “Cayman Company Shareholders”).

Pursuant to the terms of the Exchange Agreement, the Cayman Company Shareholders agreed to sell to Cang Bao, and Cang Bao agreed to purchase, all shares of Cayman Company held by them, which shares represent 100% of the issued and outstanding shares of Cayman Company. In exchange, Cang Bao agreed to issue to the Cayman Company Shareholders an aggregate of 75,000,000 shares of Cang Bao common stock, representing approximately 67.98% of Cang Bao’s total issued and outstanding common stock (the “Share Exchange”).

Our directors approved the Exchange Agreement and the transactions contemplated thereby. Simultaneously, the directors of Cayman Company also approved the Exchange Agreement and the transactions contemplated thereby. The Share Exchange closed on July 27, 2020. Both Yaqin Fu, who is the wife of one of our directors, and Mr. Xingtao Zhou, our President, Chief Executive Officer, Chief Financial Officer, Chairman of the Board and principal shareholder, were Cayman Company Shareholders who exchanged their Cayman Company shares for shares of the Company. After giving effect to the Share Exchange, Mr. Zhou owns 59,839,271 shares of our common stock, which represents 54.24% of our outstanding common stock, and 100% of our issued and outstanding preferred shares.

As a result of the Share Exchange, Cayman Company became our wholly owned subsidiary and we are its public holding company. After giving effect to the Share Exchange, the Company acquired 100% of the assets and operations of Cayman Company and its subsidiaries, the business and operations of which now constitutes our primary business and operations. After giving effect to the Share Exchange, we own 100% of the issued and outstanding shares of capital stock of Cayman Company. Cayman Company is a holding company that owns Cangyun (Hong Kong) Limited (“Hong Kong Company”), which in turn owns and controls Shanghai Cangyun Management Consulting Co., Ltd. (“Management Consulting”), which has entered into contractual agreements to control Hainan Cangbao Tianxia Cultural Relic Co., Ltd. (“Hainan”) and Cangbao Tianxia (Shanghai) Cultural Relic Co., Ltd. (“Tianxia Cultural Relic,” and together with Hainan, the “Target Companies” or “VIEs”).

The Exchange Agreement contains customary representations, warranties, covenants and conditions for a transaction of this type for the benefit of the parties.

For federal income tax purposes, it is intended that the Share Exchange qualify as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). However, we did not obtain any tax opinion and there can be no assurance that our intent that the Share Exchange qualify as a reorganization under the provisions of Section 368(a) of the Code is correct.  Cayman Company is considered the acquirer for accounting and financial reporting purposes. The assets and liabilities of Cayman Company have been brought forward at their book value and no goodwill has been recognized. As a result of the acquisition of all the issued and outstanding shares of Cayman Company, we have now assumed Cayman Company’s business operations as our own.

The description of the Exchange Agreement and the transactions contemplated by the Exchange Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Exchange Agreement filed as Exhibit 2.1 hereto and incorporated herein by reference.

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FORM 10 DISCLOSURES

Immediately prior to the closing of the Share Exchange described above pursuant to which Cayman Company became a wholly owned subsidiary of the Company, the Company was a “shell company,” as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Item 2.01(f) of Form 8-K states that if the registrant was a “shell” company, such as the Company was immediately before the Share Exchange, then the registrant must disclose on a Current Report on Form 8-K the information that would be required if the registrant were filing a general form for registration of securities on Form 10. Accordingly, this Current Report on Form 8-K includes all of the information that would be included in a Form 10.

The Share Exchange was accounted as a business combination under common control, in which all of the combining entities or businesses are ultimately controlled by the same party or parties, both before and after the business combination, and that control is not transitory. The business combination under common control of accounting is based on the historical consolidated financial statements of the Company and Cayman Company. In accordance with ASC 805-50-45-5, for transactions between entities under common control, financial statements and financial information presented for prior periods have been retroactively adjusted to furnish comparative information. The financial statements are presented retrospectively, as though the Share Exchange Agreement between the Company and Cayman Company occurred at the beginning of the first period presented.

BUSINESS

The disclosure in this “Business” section relates primarily to Cayman Company, an operating company that became a wholly owned subsidiary of the Company at the closing of the Share Exchange. From 2011 until the closing of the Share Exchange, the Company did not have any material operations and was a shell company as such term is defined in Rule 12b-2 of the Exchange Act.

Corporate History

Cang Bao

Cang Bao was incorporated in the State of Nevada on March 13, 2002, as Equicap, Inc. (“Equicap”), for the purpose of entering into a merger with and re-domiciling its predecessor, Equicap, Inc., a California corporation ("Equicap California"). Effective January 25, 2005, Equicap California was merged with and into Equicap in a statutory merger based on management's belief that Nevada law is more advantageous to a corporation than California law. Equicap was considered a blank check company until its March 2007 acquisition of Usunco Automotive Limited, a British Virgin Islands company (“Usunco”). Equicap, Inc. changed its name to Zhongchai Machinery, Inc. (“Zhongchai” or the “Company”) on May 21, 2010.

Zhongchai, a Nevada corporation, was a manufacturer and distributor of gears and gearboxes and drive axles that were marketed and sold to equipment manufacturers in China.

On July 6, 2007, the Board of Directors of Zhejiang Zhongchai Machinery Co., Ltd. (“Zhejiang Zhongchai”), the China based and 75% owned subsidiary of the Company, approved and finalized an Exchange Agreement (“Exchange Agreement”) with Xinchang Keyi Machinery Co., Ltd., (“Keyi”) a corporation incorporated in the People’s Republic of China (“PRC”). Pursuant to the Exchange Agreement, Zhejiang Zhongchai purchased all the outstanding equity of Zhejiang Shengte Transmission Co., Ltd. (“Shengte”) from Keyi, the sole owner of Shengte, for approximately $3.7 million.

On March 7, 2007, the Company and Usunco Automotive, Ltd. (“Usunco”), a British Virgin Islands company, entered into an  agreement (the “Usunco Agreement”) which was consummated on March 9, 2007. Under the terms of the Usunco Agreement, the Company acquired all of the outstanding equity securities of Usunco in exchange for 18,323,944 shares of the Company’s common stock.

Because the Company had been a public shell company prior to the Usunco Agreement, that share exchange was treated as a recapitalization of the Company. As such, the historical financial information prior to that share exchange was that of Usunco and its subsidiaries. Historical share amounts were restated to reflect the effect of that share exchange.

On June 18, 2006, Usunco acquired 100% of IBC Automotive Products Inc (“IBC”), a California Corporation as of May 14, 2004 (date of inception), through the issuance of 28% of Usunco’s shares. IBC was considered a “predecessor” business to Usunco as its operations constituted the business activities of Usunco formed to consummate the acquisition of IBC. The consolidated financial statements reflected all predecessor statements of income and cash flow activities from the inception of IBC in May 2004.

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On June 15, 2009, IBC was sold to certain management persons of IBC in exchange for the following: (i) the cancellation of an aggregate of 555,994 shares of common stock of the Company which those individuals owned, and (ii) the payment of $60,000 in installments pursuant to the terms of an unsecured promissory note, the final payment of which was made on November 15, 2010. As part of the transaction, the Company cancelled $428,261 through the closing date, of inter-company debt which funds had been used in the business of IBC prior to the transaction.

On September 22, 2009, Xinchang Xian Lisheng Machinery Co., Ltd. (“Lisheng”) was incorporated by Zhejiang Zhongchai and two individual investors. The total registered capital of Lisheng was RMB 5 million, of which Zhejiang Zhongchai accounted for 60%. The Company started production of die casting products in 2010 for use in gearboxes, diesel engines and other machinery products.

On December 16, 2009, Zhongchai Machinery and its wholly owned subsidiaries, Usunco and Zhongchai Holding (Hong Kong) Limited, a Hong Kong company (“Zhongchai Holding”), took action to approve transfer of the shares of Zhejiang Zhongchai Machinery Co., from Usunco to Zhongchai Holding. The transfer was completed on December 23, 2009. The purpose of the transfer was to take advantage of the tax treaty between the PRC and the Special Administrative Region of Hong Kong which reduces the withholding tax rate of the PRC on payments to entities outside of China. Usunco, which no longer had any assets after transferring all of them to Zhongchai Holding, was subsequently dissolved. The consolidated financial statements accounted for Zhejiang Zhongchai Machinery Co., in the same manner as before the transfer of the ownership. Shareholder approval by the shareholders of Zhongchai Machinery was not required under Nevada law, as there was no sale of all or substantially all the assets of the Company. The shareholder ownership and shareholder rights of Zhongchai Machinery remained the same as before the transaction.

On April 26, 2010, Zhongchai Holding (Hong Kong) Limited. (“Zhongchai Holding”), which owned 75% of the equity in Zhejiang Zhongchai Machinery Co., Ltd. (“Zhejiang Zhongchai”), executed an agreement (the “Zhejiang Agreement”) with Xinchang Keyi Machinery Co., Ltd., (“Keyi”) a corporation incorporated in the PRC. Pursuant to the Zhegiang Agreement, Zhongchai Holding purchased the residual 25% equity of Zhejiang Zhongchai Machinery Co., Ltd. (“Zhejiang Zhongchai”) from Keyi, for $2.6 million. The Zhegiang Agreement was approved by the local government agency and a new business license was issued as a Wholly Foreign Owned Enterprise.

On July 26, 2011, the Company held a Special Meeting of Shareholders. At the Special Meeting, the Company’s shareholders approved the termination the Company’s periodic reporting obligations under the Exchange Act, thereby foregoing many of the expenses associates with operating as a public company subject to SEC reporting obligations. Three days later, the Company terminated its registration with the Securities and Exchange Commission. Following such termination, the Company became dormant.

On July 27, 2011, the Company approved a 1-for-120 reverse stock split of its then outstanding shares of the Company’s Common Stock.

On May 11, 2018, the Eighth Judicial District Court of Nevada appointed Custodian Ventures, LLC as custodian for Zhongchai Machinery, Inc., proper notice having been given to the officers and directors of Zhongchai Machinery, Inc. There was no opposition.

On May 16, 2018, the Company filed a Certificate of Revival with the State of Nevada, appointing David Lazar as President, Secretary, Treasurer and sole Director.  On June 19, 2018, the Company issued 3,096,200 shares of common stock to David Lazar, at par value of $0.001, for services valued at $3,096.20, and  issued 10,000,000 shares of Series A Preferred Stock to David Lazar, at par value of $0.001, for services valued at $4,000,000.

On December 28, 2018, a change of control of the Company took place. Mr. Xingtao Zhou acquired all 10,000,000 shares of Series A Preferred Stock previously owned by Mr. Lazar; and Mr. Zhou and Yaqin Fu acquired, respectively, 2,432,351 and 663,849 common shares previously owned by Mr. Lazar, who resigned as an officer and director and appointed Mr. Zhou as a director, CEO and CFO, and appointed Ms. Fu’s husband, Liang Tan, as a director.

On January 8, 2019, by majority consent of its principal shareholders, the Company changed its corporate name in Nevada from Zhongchai Machinery, Inc. to Cang Bao Tian Xia International Art Trade Center, Inc., its current name; and shortly thereafter, the Company’s trading symbol was changed to TXCB.

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At the closing of the Share Exchange on July 27, 2020, Cayman Company became our wholly owned subsidiary and we are its public holding company. Prior to the Share Exchange, we were a “shell,” as defined in Rule 12b-2 under the Securities Exchange Act of 1934. We had no active business, and virtually no assets.

After giving effect to the Share Exchange, the Company acquired 100% of the assets and operations of Cayman Company and its subsidiaries, the business and operations of which now constitute our primary business and operations. After giving effect to the Share Exchange, we own 100% of the issued and outstanding shares of capital stock of Cayman Company. Cayman Company is a holding company that owns Hong Kong Company, which in turn owns and controls Management Consulting, which has entered into contractual agreements to control the Target Companies.

Cayman Company

Cayman Company was incorporated under the laws of Cayman Islands on April 15, 2019 to serve as an investment holding company, and Hong Kong was incorporated under the laws of Hong Kong by Cayman Company on May 22, 2019.

Overview of Cayman Company Business

Any references to the “Company,” “we,” “us,” “our” or words of similar import in this “Overview of Cayman Company Business” section refer to Cayman Company.

The Cang Bao Tian Xia International Art Trade Center (the “Center”) is a cultural service platform dedicated to creating industry standards for art investment and creating a model of online art exchanges and transactions, which allows collectors, artists, art dealers and owners to access a much larger art trading market, allowing them to engage with a wide range of collectibles or artwork investors. The online platform enables our customers to buy, sell, store and invest in various artworks, mostly antiques and some modern paintings. The words “Cang Bao Tian Xia” in our corporate name mean “Treasure World” in English.

We currently facilitate trading by individual customers of all kinds of collectibles, artworks and commodities on our online platforms, which are owned by the Center. We commenced our operations in March 2019, and our customer trading volume was growing rapidly until the advent of COVID-19.  We currently have approximately 1000 customers who regularly visit our website. Currently, Shanghai and Hainan are the Center’s operating branches.

According to the report of “E-commerce in China 2018” released by Ministry of Commerce of PRC on May 29, 2019, China’s e-commerce continues to grow in 2018 and has ranked the first in global online retail market. Data of National Bureau of Statistics of China indicates that in 2018, the national e-commerce transaction volume reached RMB 31.63 trillion yuan (approximately $4.62 trillion), an increase of 8.5% year-over-year.

China’s e-commerce transaction volume 2011-2018

China’s e-commerce transaction volume (in RMB trillion yuan)

Year-on-year growth rate

Source: National Bureau of Statistics of China

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According to the statistics of the Ministry of Commerce of the PRC, in 2017, e-commerce realized sales growth of 26.8% in China. On many mainstream e-commerce platforms, cultural products such as arts and crafts flourished and developed rapidly, and art e-commerce continues to grow gradually. Online trading has become a major trend of the global collectible and art trade. We provide online and offline supporting services for domestic and international art e-commerce platforms.

We provide customers of our online platform with comprehensive services, including account opening, art investment education, market information, research, real-time customer support, and artwork warehousing services. Most services are delivered online through our proprietary client software and call center. Our client software, which has an app version available for both IOS and Android, provides not only market information and analysis, but also interactive functions including live auction house, live discussion boards, live video conference room, blogs to post and share artwork and instant messaging with other art collectors and customer service representatives, which we believe enhances our customers’ engagement.

Corporate Structure

Our current corporate structure is set forth below:

Our Strategy

We strive to continue building a collectible and artwork trading platform that is highly trusted by individual customers. To achieve this objective, we are implementing the following strategies:

● strengthen our brand and market position;

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● introduce new collectibles and artwork products;

● explore mini-account business;

● selectively explore acquisition opportunities; and

● continue to attract, cultivate and retain talent.

Variable Interest Entity Arrangements

In establishing our business, we have used a variable interest entity (“VIE”) structure. In the PRC, investment activities by foreign investors are principally governed by the Guidance Catalog of Industries for Foreign Investment, which was promulgated and is amended from time to time by the PRC Ministry of Commerce (“MOC”), and the PRC National Development and Reform Commission (the “NDRC”). In June 2018, the Guidance Catalog of Industries for Foreign Investment was replaced by the Special Administrative Measures (Negative List) for Foreign Investment Access (2018 Version) (the “Negative List”). The Negative List divides industries into two categories: restricted and prohibited. Industries not listed in the Negative List are generally open to foreign investment unless specifically restricted by other PRC regulations. Our Company and Management Consulting are considered as foreign investors or foreign invested enterprises under PRC law.

Although the business we conduct or will conduct through each VIE is not within the category in which foreign investment is currently restricted under the Negative List or other PRC Laws, we expect that in the future, the Target Companies will engage in marketing survey services for online marketplaces. Marketing survey services are within the category in which foreign investment is restricted pursuant to the Negative List. In addition, we intend to centralize our management and operation in the PRC to avoid being restricted in conducting certain business activities which are important for our current or future business but are currently restricted or might be restricted in the future. As such, we believe the agreements between Management Consulting and each VIE are necessary and essential for our business operation. These contractual arrangements with each VIE and its shareholders enable us to exercise effective control over the VIEs and hence consolidate their financial results as our VIE.

In our case, Management Consulting effectively assumed management of the business activities of each our VIEs through a series of agreements which are referred to as the VIE Agreements. The VIE Agreements are comprised of a series of agreements, including the Management Consultation Service Agreement, dated August 8, 2019, by and among Management Consulting, the VIEs and the three Cayman Company Shareholders,  (the “Management Agreement”), the Equity Pledge Agreement, dated August 8, 2019,  by and among Management Consulting, the Target Companies and the three Cayman Company Shareholders (the “Pledge Agreement”), the Call Option Agreement, dated August 8, 2019,  by and among Management Consulting, the Target Companies and the three Cayman Company Shareholders  (the “Option Agreement”) and the Proxy Agreement , dated August 8, 2019,  by and among Management Company, the Target Companies and the three Cayman Company Shareholders, (the “Proxy Agreement”). Through the VIE Agreements, Management Consulting has the right to advise, consult, manage and operate the VIEs for an annual consulting service fee in the amount of 100% of the VIEs’ net profit. The shareholders of the VIEs have pledged all of their right, title and equity interest in the VIEs as security for Management Consulting to collect consulting services fees provided to the VIEs through the Pledge Agreement. In order to further reinforce Management Consulting’s right to control and operate the VIEs, the VIEs’ shareholders have granted Management Consulting an exclusive right and option to acquire all of their equity interests in the VIE through the Pledge Agreement.

Management Consulting has entered into a series of VIE agreements with the Target Companies’ shareholders, upon the same material terms as described above. The material terms of the VIE Agreements with the Target Companies are as follows:

Management Consultation Service Agreement. Pursuant to the Management Consultation Service Agreement between (a) Management Consulting, and (b) Hainan Cangbao Tianxia Cultural Relic Co., Ltd. and Cangbao Tianxia (Shanghai) Cultural Relic Co. (the “Target Companies” or “VIEs”), dated August 8, 2019, Management Consulting has the exclusive right to provide consultation and services to the Target Companies in the areas of funding, human resources, technology and intellectual property rights. For such services, the Target Companies have agreed to pay service fees in the amount of 100% of their net income, and also have the obligation to absorb 100% of their own losses. Management Consulting exclusively owns any intellectual property rights arising from the performance of this Management Consultation Service Agreement. The Management Consultation Service Agreement terminates at the same time as the Equity Pledge Agreement, described in the next paragraph.

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Equity Pledge Agreement. Pursuant to the Equity Pledge Agreement dated August 8, 2019, among Management Consulting, the Target Companies, the Target Companies’ shareholders, who are our CEO Mr. Zhou, Yaqin Fu (the wife of Liang Tan, a director of the Company), and Wei Wang (also, the “Pledgors”), each of three persons pledged all of their equity interests in the Target Companies to Management Consulting to guarantee the Target Companies’ performance of relevant obligations and indebtedness under the Management Consultation Service Agreement and the other control agreements (collectively, the “Control Agreements”). If the Pledgors breach their obligations under the Control Agreements, Management Consulting, as pledgee, will be entitled to certain rights, including the right to dispose of the pledged equity interests in order to recover the damages associated with such breaches. The Pledgors’ obligations shall be continuously valid until all of the Pledgors are no longer shareholders of the Target Companies, or until the satisfaction of all of the Pledgors’ obligations under the Control Agreements.

Call Option Agreement. Pursuant to the Call Option Agreement among Management Consulting, the Target Companies and the Pledgors, dated August 8, 2019, Management Consulting has the exclusive right to require that the Pledgors fulfill and complete all approval and registration procedures required under PRC laws for Management Consulting to purchase, or designate one or more persons to purchase, such shareholders’ equity interests in the Target Companies , in one or multiple transactions, at any time or from time to time, at Management Consulting’s sole and absolute discretion. The purchase price shall be the lowest price allowed by PRC laws. The Equity Option Agreements shall remain effective until all the equity interests in the Target Companies owned by the Pledgors have been legally transferred to Management Consulting or its designee(s).

Proxy Agreement. Pursuant to the Proxy Agreement among Management Consulting, the Pledgors and the Target Companies, dated August 8, 2019, the Pledgors irrevocably appointed Management Consulting or Management Consulting’s designee to exercise all of their rights as a shareholder of the Target Companies, including but not limited to the power to exercise all such shareholder’s voting rights with respect to all matters to be discussed and voted in shareholder meetings of the Target Companies. The Proxy Agreement remains effective until all equity interests in the Target Companies owned by the Pledgors have been legally transferred to Management Consulting or its designee(s).

Business Model

Operation Description

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The operation team defined the unique operation mode of "3+1" of Cangbao Tian Xia as the core orientation of the project. The closed loop of project operation was achieved through interlocking organic logic, and the revenue generation prospect of the project is being realized through the close combination of financial means and member ports. Since its inception, Cang Bao Tian Xia has developed from a single offline product line to rapidly growing product diversification in multiple regions in mainland China. The Treasure World-created online App is geared to the needs of the market, as a new window to be multiplied by the rapid development of Internet and the Internet of things change, to the developing trend of our brand platform, thus effectively expanding the flow ports and enhancing the capacity of solid flow, i.e., the flow "member", "collection flow" and "capital flow." At the same time, with the help of cooperative insurance guarantee social credibility behind the brand influence, our professional appraisal team identifies trading opportunities, eventually to form an "objects, people, gold" ideal situation of the inner loop.

We believe that the characteristics and style of the Chinese consumer market will directly determine the “treasure” of the Treasure World, and will create the financial services needed to get the full extent of the consumer market acceptance and highest market sense of affinity, loan products and financial services within the Chinese consumer market demand in the global consumer market.

Becoming a member of the Treasure World is a very low threshold for consumer groups in the market to access the Treasure Circle. We believe that the lowering of entry standards will not have an impact on industry or brand endorsements, and instead, it will introduce our Company as the most professional collection appraisal agency providing appraisal services for collections on the platform and world-class insurance companies providing high-quality assessment guarantees for collections and transactions on the platform. Therefore, with the people-friendly standards of the Treasure World, stronger brand endorsements and market recognition and satisfaction will grow. And at the same time, with our appraisals, transactions and other links performed inside our brand platform, our membership will continue to grow and reflect the significance of the Treasure World.

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We believe that the advantages of membership creation are reflected in several aspects:

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First, the new online app and offline access port makes it easier for unfamiliar persons in the market to become members, and the simple and convenient operation process enhances the members' experience and identity multiples.

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Second, with the credibility of world-class insurance brands behind the Treasure World, the pure collection appraisal trading platform service will become a world-class professional collection comprehensive ecosystem. Through professional guarantees, any member, any collection and any transaction can be carried out in a safe, just and strong environment, increase membership, collections and capital market behavior from hierarchy to another level, to enhance the experience and guarantee protection.

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Third, members can make financial investments in any collection in the platform built by the brand, avoiding the situation of collection value-added income that can only be achieved by owning a collection independently. Membership broadens the traditional restrictions of the industry, and allow any member to effectively invest in any collection in which the member is interested, and receive the corresponding benefits brought by the increase in the value of the collection in the market;

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Fourth, transactions of all collections in which all members of the brand platform to which they belong will be conducted under the effective supervision of the platform, which enhances the protection of member transactions, and at the same time, carries out effective regular flow of capital within the platform. The effective flow of collections under the platform can bring non-member consumer groups in the market organically into the platform, and thus become effective registered members of the platform. At the same time, members in the platform display their collections to the platform, thereby forming the mutual promotional effect of "members pulling new collections, collections carrying new members" positively guiding the organic cycle.

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Fifth, the effective expansion of new members will be guided by the platform's active policy during the operation of the platform, encouraging new members to actively join, thus rapidly-growing and changing the platform as currently established. The platform's evaluation of the number of final members is unpredictable, because the openness of the platform will determine that the port to enter the platform is infinite, because the professionalism of the platform will determine that the endorsement of the platform will occupy the mainstream position in the market, and because the circulation of the platform will determine that the amount of resources lost by the platform will be minimal. Therefore, in terms of the acquisition of new members and the reciprocating operation of various links within the platform, we believe that the operation mechanism of Booty World will make it a leading brand in the global consumer market.

Professional Appraisal

Behind the brand, there are national and internationally recognized professional appraisal experts to ensure that each piece of collection is well-documented and real, after passing the treasure appraisal, and are responsible for each piece of art collection.

Professional Team

Treasure World has what it believes is a very professional appraisal team. We have retained domestic and international talents in the process of forming the team, so that Treasure World is filled with world-class talents in all fields and positions. In terms of warehousing and storage, financial services, operation planning, cross-industry cooperation, etc., high-quality talents have formed an outstanding team. In 2018, the “Treasure World” section of the treasure track recorded by Treasure World began broadcasting on 9 Chinese TV stations across the country, premiering on Saturdays throughout the year and rebroadcasting on Sundays,

In 2019, Treasure World launched this section on television stations in various provinces across the country to better serve global collectors.

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The industry's first to adopt VR 2.0 technology, "3 60 ° + 720 °" display collections, global collections online "touch" collection textures, effectively captures the eyes of global collection experts, collection enthusiasts and outsiders, through offline promotion. This unique model for the industry has effectively reduced the industry threshold for the collection industry. At the same time, we use VR 2.0 technology to achieve part of the transparency of the collection information. The most professional technology products of the society at this stage are used in the Treasure World industry. Psychology collects a large number of new treasure enthusiasts and effectively increases market share.

Profit Model

Our member system is an exclusive online service system created by Treasure World, which responds to the original intention of Treasure World: standardizing the transactions of the collection industry and providing professional art consulting services for collectors. In order to meet the needs of different collectors, Treasure World has comprehensively upgraded its service package system to provide personalized "collection- certification-marketing" services.

A.

Profit model: service package

Including the business of appraisal of treasures, consignment of APPs, etc., the situation of packaging services with different types of services, civilianization of profit points, allowing more people outside the industry to understand and use treasures through the new service model;

B.

Profit model: collection and storage

The Company’s professional storage and custody service allows those who have treasures in their homes, but are limited by venues and conditions, to accept their collections into one of the world's most professional collection management systems, lowering the threshold and making them available to everyone;

C.

Profit model: Treasure consignment

Our Professional appraisal team, professional output resources, etc., enables each piece of collection to be commissioned on the safest, most professional and authoritative platform for agency storage and evaluation transactions;

D.

Profit model: financial loan.

Our authoritative guarantee group and professional financial team can maximize the commercial value of the user's collections within a reasonable range, but also connect users with high-quality financial solutions, thus generating the highest quality services will generate maximum commercial value;

E.

Profit model: underwriting agreement

We provide an integrated service, from the examination of a person’s collection to the docking transaction, and a transaction guarantee after the transaction is completed, to achieve an excellent service experience without worry;

F.

Profit model: All-in-one advertising

Our market resources organically and effectively dock the most cutting-edge market promotion platforms, to maximize market promotion and the most innovative publicity ports. We believe that consumers in the hunting market find us to be an excellent publicity and promotional resource.

G.

Profit model: VR Museum

Our offline VR (virtual reality) museum uses high-tech cutting-edge technology to lead consumer groups outside the industry to understand the collection industry in depth and expand the channels for consumer sources.

Employees

We currently employ 33 employees, consisting of 22 who are employed by Hainan and 11 of whom are employed by Shanghai Cangbao. Eight of the 33 employees at the two locations are management personnel; 11 are employed by the Company’s marketing department, who are responsible for developing new customers and maintaining existing customers; and 14 are support and administrative staff.

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Competition

The art e-commerce market is highly competitive and many traditional art galleries and auction houses may provide a platform for artwork owners to sell their collections. However, we believe that their trading model is substantially different from ours. As of March 31, 2020, we believe that there were at least five active art e-commerce platforms operating nationwide in China. These trading service providers compete with each other for customers and trading volume based on factors including brand, technology, research and customer services.

Although some of our competitors have greater financial resources or larger customer bases than we do, we believe that our proprietary technology platform, our comprehensive customer services and strong brand recognition in the industry will enable us to compete effectively in the fast evolving art e-commerce trading industry in the PRC.

Government Regulation

All of our operations are located in China. Accordingly, our business, prospects, financial condition and results of operations are influenced to a significant degree by political, economic and social conditions in China generally and by continued economic growth in China as a whole, as to which there can be no assurance. See “Risk Factors-Risks Related to Doing Business in China.”

Intellectual Property

The Company owns the intellectual property of an APP and a customized tablet, which enable our customers to communicate and list artworks to trade, as well as to facilitate membership enrollment and artworks trade. The Company also owns the domain name of www.txcb.com.

Research and Development

In the fiscal year ended September 30, 2019, we spent $-0- on research and development of our APP and tablet. Our APP was launched on January 3, 2020, and was purchased from a third party, after research and development had been completed. The third party also provides ongoing technical support and maintenance services.

Marketing Strategy

Our ability to establish effective marketing campaigns is the key to our success. Our advertisements promote our corporate image and our services.  We believe that effectively developing and maintaining awareness of our brand is critical to attracting new and retaining existing clients. Successful promotion of our brand and our ability to attract quality clients depends largely on the effectiveness of our marketing efforts and the success of the channels we use to promote our services. Our efforts to build our brand have caused us to incur marketing and advertising expenses in the amount of approximately$1,600,000 in 2019, which was reduced to approximately $20,000 in the first three months of 2020, the reduction being due to the Chinese New Year and COVID-19. It is likely that our future marketing efforts will require us to incur significant additional expenses as we expand our business.

Corporate Information

Our principal executive offices are located at Unit 609, Shengda Plaza, No. 61, Guoxing Ave. Meilan District, Hainan Province, China 570203.

Our telephone number at this address is (86) 898 66186181. Our registered office in the Cayman Islands is located at Sertus Chambers, Governors Square, Suite# 5-204,23 Lime Tree Bay Avenue, P.O. Box 2547, Grand Cayman, KY1-1104, Cayman Island. Investors should contact us for any inquiries through the address and telephone number of our principal executive offices.

Our website is www.txcb.com. The information contained on, or that can be accessed through, our website is not a part of, and shall not be deemed incorporated into, this Current Report on Form 8-K.

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Reports to Security Holders

We intend to furnish our shareholders annual reports containing financial statements audited by our independent registered public accounting firm and to make available quarterly reports containing unaudited financial statements for each of the first three quarters of each year. We file Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and Current Reports on Form 8-K with the SEC in order to meet our timely and continuous disclosure requirements. We may also file additional documents with the SEC if they become necessary in the course of our company’s operations.

The public may read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is www.sec.gov.

RISK FACTORS

An investment in our common shares involves significant risks. You should carefully consider all of the information in this Current Report on Form 8-K, including the risks and uncertainties described below, before making an investment in our shares. Any of the following risks could have a material adverse effect on our business, financial condition and results of operations. In any such case, the market price of our shares could decline, and you may lose all or part of your investment.

Business interruptions, including any interruptions resulting from COVID-19, could significantly disrupt our operations and could have a material adverse impact on us if the situation continues.

Business interruptions, including any interruptions resulting from COVID-19, could significantly disrupt our operations and could have a material adverse impact on the Company if the situation continues. Business slowed down significantly during the months of February, March and April, 2020, due to COVID-19; however, the Company is in the process of recovering from the negative impact of COVID-19.

Further, all employees, including our technical staff, are working from home or in a virtual environment. The Company always maintains the ability for team members to work virtually, and we will continue to stay virtual, until the Chinese government indicates the environment is safe to return to work.

The ongoing coronavirus outbreak which began in China at the beginning of 2020 has impacted various businesses throughout the world, including travel restrictions and the extended shutdown of certain businesses in impacted geographic regions. If the coronavirus outbreak situation should worsen, we may experience disruptions to our business including, but not limited to equipment, to our workforce, or to our business relationships with other third parties.

The extent to which the coronavirus impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, new information that may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others. Any such disruptions or losses we incur could have a material adverse effect on our financial results and our ability to conduct business as expected.

Risks Related to Our Business

We have a limited operating history in an evolving market, which makes it difficult to evaluate our future prospects.

We launched our Company in 2019, and have a limited operating history. As our business develops, or in response to competition, we may continue to introduce new services or make adjustments to our existing services, or make adjustments to our business model. In connection with the introduction of new services, or in response to general economic conditions, we may impose more stringent customer qualifications to ensure the quality of our customers, which may negatively affect the growth of our business. Any significant change to our business model may not achieve expected results and may have a material and adverse impact on our financial conditions and results of operations. It is therefore difficult to effectively assess our future prospects.

If we fail to educate potential clients about the value of our services, if the market for our marketplace does not develop as we expect, or if we fail to address the needs of our target market, our business and results of operations will be harmed.

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

Our revenues were $5,332,779 for the period from March 1, 2019 (when we commenced operations) through March 31, 2020. However, the limited history of our operations makes it difficult to evaluate our prospects. We may not be able to grow our business at all.

The global economy and the financial markets may negatively affect our business and clients, as well as the supply of and demand for works of art.

Our business is affected by global, national and local economic conditions since the services we provide are discretionary and we depend, to a significant extent, upon a number of factors relating to discretionary consumer spending in China. These factors include economic conditions and perceptions of such conditions by traders of collectibles and artwork, employment rates, the level of their disposable income, business conditions, interest rates, availability of credit and levels of taxation in regional and local markets. There can be no assurance that our services will not be adversely affected by changes in general economic conditions in China and globally.

The art market is influenced over time by the overall strength and stability of the global economy and the financial markets, although this correlation may not be immediately evident. In addition, political conditions and world events may affect our business through their effect on the economy, as well as on the willingness of potential buyers and sellers to invest and sell art in the wake of economic uncertainty.

Changes in international trade policies, trade dispute or the emergence of a trade war, may have an adverse effect on our business.

Political events, international trade disputes, and other business interruptions could harm or disrupt international commerce and the global economy, and could have a material adverse effect on the Company and its customers, logistics providers, network carriers and other channel partners.

International trade disputes, especially the current dispute between China and the United States, could result in tariffs and other protectionist measures that could adversely affect the Company’s business. Tariffs could increase the cost of the goods and products which could affect people’s discretionary spending level and adversely impact our business. Also, political uncertainty surrounding international trade disputes and the potential of the escalation to trade war and global recession could have a negative effect on consumer confidence, which could adversely affect the Company’s business.

If we become subject to additional scrutiny, criticism and negative publicity involving U.S.-listed China-based companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations and our reputation and could result in a loss of an investment in our shares, especially if such matter cannot be addressed and resolved favorably.

Recently, 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. Much of the scrutiny, criticism and negative publicity has centered around financial and accounting irregularities, a lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in some cases, allegations of fraud. As a result of the scrutiny, criticism and negative publicity, the publicly traded stock of many U.S.-listed China-based companies has decreased in value and, in some cases, has become virtually worthless. Many of these companies have been subject to shareholder lawsuits and SEC enforcement actions and have conducted 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 and our business. 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 may be a major distraction to our management. If such allegations are not proven to be groundless, our business operations will be severely hindered and an investment in our shares could be rendered worthless.

The demand for art and collectibles is unpredictable, which may cause significant variability in our results of operations.

The demand for art is influenced not only by overall economic conditions, but also by changing trends in the art market, as to which collecting categories and which artists are most sought after, and by the preferences of individual collectors. These conditions and trends are difficult to predict and may adversely impact our ability to obtain and sell consigned property, potentially causing significant variability in our results of operations from period to period.

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A decline in trading volumes will decrease our trading revenues.

Trading volumes are directly affected by economic, political and market conditions, broad trends in business and finance, unforeseen market closures or other disruptions in trading, the level and volatility of interest rates, inflation, changes in price of collectibles and artwork and the overall level of investor confidence. In recent years, trading volumes across our markets have fluctuated depending on market conditions and other factors beyond our control. Because a significant percentage of our revenues is tied directly to the trading volumes on our markets, it is likely that a general decline in trading volumes would lower revenues and may adversely affect our operating results. Declines in trading volumes may also impact our market share or pricing structures and adversely affect our business and financial condition.

Due to the nature of our business, valuable works of art are stored at our facilities. Such works of art could be subject to damage or theft, which could have a material adverse effect on our operations, reputation and brand.

Valuable works of art are stored at our facilities. Although we maintain security measures at our premises, valuable collectibles and artwork may be subject to damage or theft. The damage or theft of valuable property despite these security measures could have a material adverse impact on our business and reputation.

System limitations or failures could harm our business.

Our businesses depend on the integrity and performance of the technology, computer and communications systems supporting them. If our systems cannot expand to cope with increased demand or otherwise fail to perform, we could experience unanticipated disruptions in service, slower response times and delays in the introduction of new services. These consequences could result in financial losses and decreased customer service and satisfaction. If trading volumes increase unexpectedly or other unanticipated events occur, we may need to expand and upgrade our technology, transaction processing systems and network infrastructure. We do not know whether we will be able to accurately project the rate, timing or cost of any increases, or expand and upgrade our systems and infrastructure to accommodate any increases in a timely manner.

The success of our business depends on our ability to market and advertise the services we provide effectively.

Our ability to establish effective marketing campaigns is the key to our success. Our advertisements promote our corporate image and our services. If we are unable to increase awareness of our brand, the benefits of using our trading platform to invest in collectibles and artwork, and that such investment is secure, we may not be able to attract new traders. Our marketing activities may not be successful in promoting our services or in retaining and increasing our trader base. We cannot assure you that our marketing programs will be adequate to support our future growth, which may result in a material adverse effect on our results of operations.

If we do not compete effectively, our results of operations could be harmed.

The art e-commerce industry is highly fragmented and competitive with relatively low entry barriers. We compete primarily on the basis of our technology, comprehensive customer service and brand recognition. Our competitors compete with us in some or all of the following ways:

· provide services that are similar to ours, or that are more attractive to customers than ours;

· provide products and services we do not offer;

· offer aggressive rebates to gain market share and to promote their businesses;

· adapt at a faster rate to market conditions, new technologies and customer demands;

· offer better, faster and more reliable technology; and

· market, promote and provide their services more effectively.

Although we do not compete against other trading service providers solely based on prices, if our competitors offer their services at lower prices, we may be forced to provide aggressive discounts or rebates to our customers and our commission and fees may decrease. Reduction in commissions and fees without a commensurate reduction in expenses would lower our profitability.

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In addition, we know of at least five art e-commerce platforms operating in China, through which individual customers can open accounts and trade all kinds of artworks on those exchanges. Recently, certain Internet companies also launched art e-commerce trading services.

Many of these competitors have greater financial resources or a larger customer base than we do, and if we fail to compete effectively, our market position, business prospects and results of operations would be adversely affected.

The art e-commerce market is highly competitive and many traditional art galleries and auction houses may provide a platform for artwork owners to sell their collections. However, their trading model is substantially different from ours. As of June 2020, there were more than three active art e-commerce platforms operating nationwide in China. The trading service providers compete with each other for customers and trading volume based on factors including brand, technology, research and customer services.

Although some of our competitors have greater financial resources or larger customer bases than we do, we believe that our proprietary technology platform, our comprehensive customer services and strong brand recognition in the industry will enable us to compete effectively in the fast evolving art e-commerce trading industry in the PRC.

Our competitors operate with different business models, have different cost structures, or participate selectively in different market segments. They may ultimately prove more successful or more adaptable to new regulatory, technological and other developments. Many of our current and potential competitors have significantly more financial, technical, marketing and other resources than we do and may be able to devote greater resources to the development, promotion, sale and support of their service offerings. Many of our competitors also have longer operating histories, a more extensive client base, greater brand recognition and brand loyalty and broader partner relationships than us. Additionally, a current or potential competitor may acquire one or more of our existing competitors or form a strategic alliance with one or more of our competitors. Our competitors may be better at developing new products, offering more attractive terms or lower fees, responding faster to new technologies and undertaking more extensive and effective marketing campaigns. In response to competition and in order to grow or maintain the volume of our business, we may have to charge lower fees, which could materially and adversely affect our business and results of operations. If we are unable to compete with such companies and meet the need for innovation in our industry, the demand for our services and products could stagnate or substantially decline, we could experience reduced revenues or our marketplace could fail to achieve or maintain more widespread market acceptance, any of which could harm our business and results of operations.

Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business.

Our quarterly results of operations, including the levels of our net revenues, expenses, net (loss)/income and other key metrics, may vary significantly in the future due to a variety of factors, some of which are outside of our control, and period-to-period comparisons of our operating results may not be meaningful, especially given our limited operating history. Accordingly, the results for any one quarter are not necessarily an indication of future performance. Fluctuations in quarterly results may adversely affect the market price of our shares. Factors that may cause fluctuations in our quarterly financial results include:

· our ability to attract new clients and retain existing clients;

· changes in our mix of services and introduction of new services;

· the amount and timing of operating expenses related to the maintenance and expansion of our business, operations and infrastructure;

· our decision to manage client volume growth during the period;

· the impact of competitors or competitive products and services;

· increases in our costs and expenses that we may incur to grow and expand our operations and to remain competitive;

· network outages or security breaches;

· changes in the legal or regulatory environment or proceedings, including with respect to security, privacy, or enforcement by government regulators, including fines, orders or consent decrees;

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· general economic, industry and market conditions, including changes in Chinese or global business or macroeconomic conditions; and

· the timing of expenses related to the development or acquisition of technologies or businesses.

Despite our marketing efforts, we may not be able to promote and maintain our brand in an effective and cost-efficient way and our business and results of operations may be harmed accordingly.

We believe that effectively developing and maintaining awareness of our brand is critical to attracting new and retaining existing clients. Successful promotion of our brand and our ability to attract quality clients depends largely on the effectiveness of our marketing efforts and the success of the channels we use to promote our services. Our efforts to build our brand have caused us to incur marketing and advertising expenses in the amount of approximately $1,600,000 in 2019. It is likely that our future marketing efforts will require us to incur significant additional expenses as we expand our business. These efforts may not result in increased revenues in the immediate future or at all and, even if they do, any increases in revenues may not offset the expenses incurred. If we fail to successfully promote and maintain our brand while incurring substantial expenses, our results of operations and financial condition would be adversely affected, which may impair our ability to grow our business.

Fraudulent activity in our marketplace could negatively impact our operating results, brand and reputation and cause the use of our services to decrease.

We are subject to the risk of fraudulent activity both in our marketplace and associated with traders and third parties handling their information. Our resources, technologies and fraud detection tools may be insufficient to accurately detect and prevent fraud. Increases in fraudulent activity, either in our marketplace or associated with participants of our marketplace, could negatively impact our brand and reputation, reduce the volume of transactions facilitated through our platform and lead us to take additional steps to reduce fraud risk, which could increase our costs. High profile fraudulent activity could even lead to regulatory intervention, and may divert our management’s attention and cause us to incur additional expenses and costs. Although we have not experienced any material business or reputational harm as a result of fraudulent activities in the past, we cannot rule out the possibility that any of the foregoing may occur, causing harm to our business or reputation in the future. If any of the foregoing were to occur, our results of operations and financial conditions could be materially and adversely affected.  

We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position.

We regard our trademarks, domain names, know-how, proprietary technologies and similar intellectual property as critical to our success, and we rely on a combination of intellectual property laws and contractual arrangements, including confidentiality and non-compete agreements with our employees and others, to protect our proprietary rights. See “Business—Intellectual Property” and “Regulation”. We cannot assure you that any of our intellectual property rights will not be challenged, invalidated, circumvented or misappropriated, or such intellectual property will be sufficient to provide us with competitive advantages. In addition, because of the rapid pace of technological change, parts of our business rely on technologies developed or licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties on reasonable terms, or at all.

It is often difficult to register, maintain and enforce intellectual property rights in China. Statutory laws and regulations are subject to judicial interpretation and enforcement and may not be applied consistently due to the lack of clear guidance on statutory interpretation. Confidentiality, invention assignment and non-compete agreements may be breached by counterparties, and there may not be adequate remedies available to us for any such breach. Accordingly, we may not be able to effectively protect our intellectual property rights or to enforce our contractual rights in China. Preventing any unauthorized use of our intellectual property is difficult and costly and the steps we take may be inadequate to prevent the misappropriation of our intellectual property. In the event that we resort to litigation to enforce our intellectual property rights, such litigation could result in substantial costs and a diversion of our managerial and financial resources. We can provide no assurance that we will prevail in such litigation. In addition, our trade secrets may be leaked or otherwise become available to, or be independently discovered by, our competitors. To the extent that our employees or consultants use intellectual property owned by others in their work for us, disputes may arise as to the rights in related know-how and inventions. Any failure in protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition and results of operations.

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Our annual effective income tax rate can change significantly as a result of a combination of changes in our foreign earnings and other factors, including changes in tax laws or changes made by regulatory authorities.

Our consolidated effective income tax rate is equal to our total income tax expense (benefit) as a percentage of total book income (loss) before tax. Losses in one jurisdiction may not be used to offset profits in other jurisdictions and may cause an increase in our tax rate. Changes in statutory income tax rates and laws, as well as initiation of tax audits by local and foreign authorities, could impact the amount of income tax liability and income taxes we are required to pay. In addition, any fluctuation in the earnings (or losses) of the jurisdictions and assumptions used in the calculation of income taxes could have a significant effect on our consolidated effective income tax rate. Furthermore, our effective tax rate could increase if we are unable to generate sufficient future taxable income in certain jurisdictions, or if we are otherwise required to increase our valuation allowances against our deferred tax assets.

We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.

We cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate trademarks, patents, copyrights, know-how or other intellectual property rights held by third parties. We may be from time to time in the future subject to legal proceedings and claims relating to the intellectual property rights of others. In addition, there may be third-party trademarks, patents, copyrights, know-how or other intellectual property rights that are infringed by our products, services or other aspects of our business without our awareness. Holders of such intellectual property rights may seek to enforce such intellectual property rights against us in China or other jurisdictions. If any third-party infringement claims are brought against us, we may be forced to divert management’s time and other resources from our business and operations to defend against these claims, regardless of their merits.

Additionally, the application and interpretation of China’s intellectual property laws and the procedures and standards for granting trademarks, patents, copyrights, know-how or other intellectual property rights in China are still evolving and are uncertain, and we cannot assure you that PRC courts or regulatory authorities would agree with our analysis. If we were found to have violated the intellectual property rights of others, we may be subject to liability for our infringement activities or may be prohibited from using such intellectual property, and we may incur licensing fees or be forced to develop alternatives of our own. As a result, our business and results of operations may be materially and adversely affected.

From time to time we may evaluate and potentially consummate strategic investments or acquisitions, which could require significant management attention, disrupt our business and adversely affect our financial results.

We may evaluate and consider strategic investments, combinations, acquisitions or alliances to further increase the value of our marketplace and better serve our clients. These transactions could be material to our financial condition and results of operations if consummated. If we are able to identify an appropriate business opportunity, we may not be able to successfully consummate the transaction and, even if we do consummate such a transaction, we may be unable to obtain the benefits or avoid the difficulties and risks of such transaction.

Strategic investments or acquisitions will involve risks commonly encountered in business relationships, including:

· difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, products and services of the acquired business;

· inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits;

· difficulties in retaining, training, motivating and integrating key personnel;

· diversion of management’s time and resources from our normal daily operations;

· difficulties in successfully incorporating licensed or acquired technology and rights into our service offerings to customers;

· difficulties in maintaining uniform standards, controls, procedures and policies within the combined organizations;

· difficulties in retaining relationships with clients, employees and suppliers of the acquired business;

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· risks of entering markets in which we have limited or no prior experience;

· regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business;

· assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk for liability;

· failure to successfully further develop the acquired technology;

· liability for activities of the acquired business before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities;

· potential disruptions to our ongoing businesses; and

· unexpected costs and unknown risks and liabilities associated with strategic investments or acquisitions.

We may not make any investments or acquisitions, or any future investments or acquisitions may not be successful, may not benefit our business strategy, may not generate sufficient revenues to offset the associated acquisition costs or may not otherwise result in the intended benefits. In addition, we cannot assure you that any future investment in or acquisition of new businesses or technology will lead to the successful development of new or enhanced products and services or that any new or enhanced products and services, if developed, will achieve market acceptance or prove to be profitable.

Our business depends on the continued efforts of our CEO, Mr. Zhou. If Mr. Zhou becomes unable or unwilling to continue with the Company, our business would be severely disrupted.

Our business operations depend on the continued services of our CEO and principal shareholder Mr. Xingtao Zhou. Although Mr. Zhou has indicated that he has no intention to leave the Company, we cannot assure you that he will stay with the Company. If he leaves or becomes unable to continue with the Company for any reason, we may not be able to replace him easily or at all, in which case our future growth would be constrained, our business would be severely disrupted and our financial condition and results of operations would be materially and adversely affected, and we may incur additional expenses to recruit, train and retain his replacement. In addition, we have not entered into confidentiality and non-competition agreements with any employees,, and there is no assurance that any of our employees, some of whom have considerable information about the workings of our Company, will not join our competitors or form a competing business. If any dispute arises between our current or former employees and us, we may have to incur substantial costs and expenses in order to enforce such agreements in China, or we may be unable to enforce them at all.

We have engaged in transactions with related parties, and such transactions present possible conflicts of interest that could have an adverse effect on our business and results of operations.

We have entered into a number of transactions with related parties, including our shareholders, directors and executive officers. For example, we have entered into several agreements with our CEO and principal shareholder, Xingtao Zhou, and companies controlled by him, including the Target Companies. See “Certain Transactions and Related Party Transactions.” We may in the future enter into additional transactions with entities in which members of our board of directors and other related parties hold ownership interests.

Transactions with the entities in which related parties hold ownership interests present potential for conflicts of interest, as the interests of these entities and their shareholders may not align with the interests of the Company and our shareholders with respect to the negotiation of, and certain other matters related to, our lease and technology services to such entities. Conflicts of interest may also arise in connection with the exercise of contractual remedies under these transactions, such as the treatment of events of default.

Currently, our Board of Directors has not authorized the establishment of an Audit Committee to review and approve related party transactions. Accordingly, we may have achieved more favorable terms if such transactions had not been entered into with related parties and these transactions, individually or in the aggregate, may have an adverse effect on our business and results of operations or may result in government enforcement actions or other litigation.

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The relative lack of public company experience of our management may put us at a competitive disadvantage.

Our management is small in number, and lacks public company experience, which could impair our ability to comply with legal and regulatory requirements such as those imposed by the Sarbanes-Oxley Act of 2002, (“Sarbanes-Oxley”). Mr. Zhou, our CEO, has no experience managing a publicly-traded company except ours, of which he became CEO only in December, 2018. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Accordingly, management may be unable to implement programs and policies in an effective and timely manner or that adequately respond to the increased legal, regulatory and reporting requirements associated with being a publicly traded company. Our failure to comply with all applicable requirements could lead to the imposition of fines and penalties, distract our management from attending to the management and growth of our business, result in a loss of investor confidence in our financial reports, and have an adverse effect on our business and stock price.  

Competition for employees is intense, and we may not be able to attract and retain the qualified and skilled employees needed to support our business.

We believe our success depends on the efforts and talent of our employees, including risk management, information technology, financial and marketing personnel. Our future success depends on our continued ability to attract, develop, motivate and retain qualified and skilled employees. Competition for highly skilled marketing, technical, risk management and financial personnel is extremely intense. We may not be able to hire and retain these personnel at compensation levels consistent with our existing compensation and salary structure. Some of the companies with which we compete for experienced employees have greater resources than we have and may be able to offer more attractive terms of employment.

In addition, we invest significant time and expense in training our employees, which increases their value to competitors who may seek to recruit them. If we fail to retain our employees, we could incur significant expense in hiring and training their replacements, and the quality of our products and services could diminish, resulting in a material adverse effect to our business.

Increases in labor costs in the PRC may adversely affect our business and results of operations.

The economy in China has experienced increases in inflation and labor costs in recent years. As a result, average wages in the PRC are expected to continue to increase. In addition, we are required by PRC laws and regulations to pay various statutory employee benefits, including pension, housing funds, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to designated government agencies for the benefit of our employees. The relevant government agencies may examine whether an employer has made adequate payments to the statutory employee benefits, and those employers who fail to make adequate payments may be subject to late payment fees, fines and/or other penalties. We expect that our labor costs, including wages and employee benefits, will continue to increase. Unless we are able to control our labor costs or pass on these increased labor costs to our users by increasing the fees of our services, our financial condition and results of operations may be adversely affected.

If we cannot maintain our corporate culture as we grow, we could lose the innovation, collaboration and focus that contribute to our business.

We believe that a critical component of our success is our corporate culture, which we believe fosters innovation, encourages teamwork and cultivates creativity. As we develop the infrastructure of a public company and continue to grow, we may find it difficult to maintain these valuable aspects of our corporate culture. Any failure to preserve our culture could negatively impact our future success, including our ability to attract and retain employees, encourage innovation and teamwork and effectively focus on and pursue our corporate objectives.

We do not have any business insurance coverage.

Insurance companies in China currently do not offer as extensive an array of insurance products as insurance companies in more developed economies. Currently, we do not have any business liability or disruption insurance to cover our operations. We have determined that the costs of insuring for these risks and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance. Any uninsured business disruptions may result in our incurring substantial costs and the diversion of resources, which could have an adverse effect on our results of operations and financial condition.  

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Risks Related to Our Corporate Structure

If the PRC government deems that the contractual arrangements in relation to our consolidated variable interest entities do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.

We are a Cayman Islands-exempted company and our PRC subsidiary is considered a foreign invested enterprise. To comply with PRC laws and regulations, we conduct our operations in China through a series of contractual arrangements entered into among Management Consulting, the Target Companies and the Pledgors. As a result of these contractual arrangements, we exert control over our VIEs and consolidate their operating results in our financial statements under U.S. GAAP. For a detailed description of these contractual arrangements, see “Corporate History and Structure.”

In the opinion of our PRC counsel, Yingke Law Firm, our current ownership structure, the ownership structure of our PRC subsidiary and our consolidated VIEs, and the contractual arrangements among Management Consulting, our VIEs and the shareholders of our VIEs are not in violation of existing PRC laws, rules and regulations; and these contractual arrangements are valid, binding and enforceable in accordance with their terms and applicable PRC laws and regulations currently in effect. However, Yingke Law Firm has also advised us that there are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations and there can be no assurance that the PRC government will ultimately take a view that is consistent with the opinion of our PRC counsel.

If the PRC government finds that our contractual arrangements do not comply with its restrictions on foreign investment in the market survey service business, the relevant PRC regulatory authorities, including the China Securities Regulatory Commission (the “CSRC”), would have broad discretion in dealing with such violations or failures, including, without limitation:

· discontinuing or placing restrictions or onerous conditions on our operations;

· imposing fines, confiscating the income from Management Consulting or our VIEs, or imposing other requirements with which we or our VIEs may not be able to comply;

· requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with our VIEs and deregistering the equity pledges of our VIEs, which in turn would affect our ability to consolidate, derive economic interests from, or exert effective control over our VIEs;

· restricting or prohibiting our ability to finance our business and operations in China; or

· taking other regulatory or enforcement actions that could be harmful to our business.

The imposition of any of these penalties would result in a material and adverse effect on our ability to conduct our business. In addition, it is unclear what impact the PRC government actions would have on us and on our ability to consolidate the financial results of our VIEs in our consolidated financial statements, if the PRC government authorities were to find our VIE structure and contractual arrangements to be in violation of PRC laws and regulations. If the imposition of any of these government actions causes us to lose our right to direct the activities of our VIEs or our right to receive substantially all the economic benefits and residual returns from our VIEs and we are not able to restructure our ownership structure and operations in a satisfactory manner, we would no longer be able to consolidate the financial results of our VIEs in our consolidated financial statements. Either of these results, or any other significant penalties that might be imposed on us in this event, would have a material adverse effect on our financial condition and results of operations.  

We rely on contractual arrangements with our VIEs and the shareholders of our VIEs for our business operations, which may not be as effective as direct ownership in providing operational control.

We have relied on, and expect to continue to rely on, contractual arrangements with the Management Consulting, the Target Companies (VIEs), and the Pledgors to operate our business. For a description of these contractual arrangements, see “Variable Interest Entities Arrangements.” These contractual arrangements may not be as effective as direct ownership in providing us with control over our consolidated variable interest entities. For example, our consolidated variable interest entities and their shareholders could breach their contractual arrangements with us by, among other things, failing to conduct their operations, including maintaining our website and using the domain names and trademarks, in an acceptable manner, or taking other actions that are detrimental to our interests.

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If we had direct ownership of our VIEs, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of our VIEs, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational levels. However, under the current contractual arrangements, we rely on the performance by our consolidated variable interest entities and their shareholders of their obligations under the contracts to exercise control over our consolidated variable interest entities. The shareholders of our consolidated variable interest entities may not act in the best interests of our company or may not perform their obligations under these contracts. Such risks exist throughout the period in which we intend to operate our business through the contractual arrangements with our consolidated variable interest entities. Although we have the right to replace any shareholder of our consolidated variable interest entities under the contractual arrangement, if any shareholder of our consolidated variable interest entities is uncooperative or any dispute relating to these contracts remains unresolved, we will have to enforce our rights under these contracts through the operations of PRC laws and arbitration, litigation and other legal proceedings and therefore will be subject to uncertainties in the PRC legal system. See “—Any failure by our consolidated variable interest entities or its shareholders to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business.” Therefore, our contractual arrangements with our consolidated variable interest entities may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership would be.

Any failure by our consolidated VIEs or their shareholders to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business.

If our consolidated VIEs or their shareholders fail to perform their respective obligations under the contractual arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. We may also have to rely on legal remedies under PRC laws, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure you will be effective under PRC laws. For example, if the shareholders of our VIEs were to refuse to transfer their equity interest in the VIEs to us or our designee if we exercise the purchase option pursuant to these contractual arrangements, or if they were otherwise to act in bad faith toward us, then we may have to take legal action to compel them to perform their contractual obligations.

All the agreements under our contractual arrangements are governed by PRC laws and provide for the resolution of disputes through arbitration in China. Accordingly, these contracts would be interpreted in accordance with PRC laws and any disputes would be resolved in accordance with PRC legal procedures. The legal system in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. Meanwhile, there are very few precedents and little formal guidance as to how contractual arrangements in the context of a consolidated VIE should be interpreted or enforced under PRC laws. There remain significant uncertainties regarding the ultimate outcome of such arbitration should legal action become necessary. In addition, under PRC laws, rulings by arbitrators are final and parties cannot appeal arbitration results in court unless such rulings are revoked or determined unenforceable by a competent court. If the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce the arbitration awards in PRC courts through arbitration award recognition proceedings, which would require additional expenses and delay. In the event that we are unable to enforce these contractual arrangements, or if we suffer significant delay or other obstacles in the process of enforcing these contractual arrangements, we may not be able to exert effective control over our consolidated variable interest entities, and our ability to conduct our business may be negatively affected. Uncertainties in the interpretation and enforcement of Chinese laws and regulations could limit the legal protections available to you and us.”

The shareholders of our consolidated VIEs may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.

100% of the equity interests of our VIEs are held by the three Pledgors. Their interests in the VIEs may differ from the interests of our Company as a whole. These shareholders may breach, or cause our consolidated variable interest entities to breach, the existing contractual arrangements we have with them and our consolidated variable interest entities, which would have a material adverse effect on our ability to effectively control our consolidated variable interest entities and receive economic benefits from them. For example, the Pledgors may be able to cause our agreements with the VIEs to be performed in a manner adverse to us by, among other things, failing to remit payments due under the contractual arrangements to us on a timely basis. We cannot assure you that when conflicts of interest arise, any or all of these shareholders will act in the best interests of our company or such conflicts will be resolved in our favor.

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Currently, we do not have any arrangements to address potential conflicts of interest between these shareholders and our company, except that we could exercise our purchase option under the exclusive option agreements with the Pledgors to request them to transfer all of their equity interests in the VIEs to a PRC entity or individual designated by us, to the extent permitted by PRC laws. If we cannot resolve any conflict of interest or dispute between us and the Pledgors, we would have to rely on legal proceedings, which could result in the disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.

Contractual arrangements in relation to our consolidated variable interest entities may be subject to scrutiny by the PRC tax authorities and they may determine that we or our PRC consolidated variable interest entities owe additional taxes, which could negatively affect our financial condition and the value of your investment.

Under applicable PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities within ten years after the taxable year when the transactions are conducted. The PRC enterprise income tax law requires every enterprise in China to submit its annual enterprise income tax return together with a report on transactions with its related parties to the relevant tax authorities. The tax authorities may impose reasonable adjustments on taxation if they have identified any related party transactions that are inconsistent with arm’s length principles. We may face material and adverse tax consequences if the PRC tax authorities determine that the contractual arrangements between Management Consulting, our wholly-owned subsidiary in China, our consolidated VIEs in China, and the shareholders of our VIEs were not entered into on an arm’s length basis in such a way as to result in an impermissible reduction in taxes under applicable PRC laws, rules and regulations, and adjust our VIEs’ income in the form of a transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in a reduction of expense deductions recorded by our VIEs for PRC tax purposes, which could in turn increase its tax liabilities without reducing Management Consulting’s tax expenses. In addition, if Management Consulting requests that the shareholders of our VIEs transfer their equity interests in the VIEs at nominal or no value pursuant to these contractual arrangements, such transfer could be viewed as a gift and subject our VIEs to PRC income tax. Furthermore, the PRC tax authorities may impose late payment fees and other penalties on our VIEs for the adjusted but unpaid taxes according to the applicable regulations. Our financial position could be materially and adversely affected if our consolidated variable interest entities’ tax liabilities increase or if they are required to pay late payment fees and other penalties.  

We may lose the ability to use and enjoy assets held by our consolidated VIEs that are material to the operation of our business if one or more of the entities goes bankrupt or becomes subject to a dissolution or liquidation proceeding.

Our consolidated VIEs hold certain assets that are material to the operation of our business, including domain names and equipment for our online trading platform. Under the contractual arrangements, our consolidated VIEs may not and their shareholders may not cause them to, in any manner, sell, transfer, mortgage or dispose of their assets or their legal or beneficial interests in the business without our prior consent. However, in the event our consolidated VIEs’ shareholders breach the these contractual arrangements and voluntarily liquidate our consolidated VIEs or our consolidated VIEs declare bankruptcy and all or part of their assets become subject to liens or rights of third-party creditors, or are otherwise disposed of without our consent, we may be unable to continue some or all of our business activities, which could materially and adversely affect our business, financial condition and results of operations. If our consolidated VIEs undergo a voluntary or involuntary liquidation proceeding, independent third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations.

Risks Related to Doing Business in China

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

All of our operations are located in China. Accordingly, our business, prospects, financial condition and results of operations are influenced to a significant degree by political, economic and social conditions in China generally and by continued economic growth in China as a whole, which cannot be assured.

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The Chinese economy differs from the economies of most developed countries in many respects, including the amount 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 are 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 the past decades, growth has been uneven, both geographically and among various sectors of the economy. 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 increases, to control the pace of economic growth. These measures may cause decreased economic activity in China, and since 2012, China’s economic growth has slowed down. Any prolonged slowdown in the Chinese economy may reduce the demand for our products and services and materially and adversely affect our business and results of operations.

Uncertainties in the interpretation and enforcement of Chinese laws and regulations could limit the legal protections available to us.

The PRC legal system is based on written statutes and prior court decisions have limited value as precedents. Since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties.

We cannot rule out the possibility that the PRC government will institute a licensing regime covering our industry at some point in the future. If such a licensing regime were introduced, we cannot assure you that we would be able to obtain any newly required licensing in a timely manner, or at all, which could materially and adversely affect our business and impede our ability to continue our operations.

From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, 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. Furthermore, the PRC legal system is based in part on government policies and internal rules (some of which are not published in a timely manner or at all) that may have retroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. Such uncertainties, including uncertainty over the scope and effect of our contractual, property (including intellectual property) and procedural rights, could materially and adversely affect our business and impede our ability to continue our operations.

Substantial uncertainties exist with respect to the enactment timetable, interpretation and implementation of draft PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.

MOFCOM published discussion drafts of the proposed Foreign Investment Law in January 2015 and December 2018, respectively, aiming to, upon its enactment, replace the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations. The draft Foreign Investment Law embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. MOFCOM is currently soliciting comments on the latest draft and substantial uncertainties exist with respect to its enactment timetable, interpretation and implementation. In the second draft, there are no regulations on contractual arrangements, variable interest entities or actual control, which were explicitly provided in the first draft. However, we cannot confirm whether there will be another draft which would significantly change the regulations regarding these matters. The first draft Foreign Investment Law or a similar draft, if enacted as proposed, may materially impact the viability of our current corporate structure, corporate governance and business operations in many aspects.

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Among other things, the draft Foreign Investment Law or a similar draft expands the definition of foreign investment and introduces the principle of “actual control” in determining whether a company is considered a foreign-invested enterprise, or an FIE. The draft Foreign Investment Law specifically provides that entities established in China but “controlled” by foreign investors will be treated as FIEs. Once an entity is considered an FIE, it may be subject to the foreign investment restrictions or prohibitions set forth in a “Negative List” to be separately issued by the State Council later. If an FIE proposes to conduct business in an industry subject to foreign investment “restrictions” in the “Negative List,” the FIE must go through a market entry clearance by MOFCOM before being established. If an FIE proposes to conduct business in an industry subject to foreign investment “prohibitions” in the “Negative List,” it must not engage in the business. However, an FIE that is subject to foreign investment “restrictions,” upon market entry clearance, may apply in writing to be treated as a PRC domestic investment if it is ultimately “controlled” by PRC government authorities and its affiliates and/or PRC citizens. In this connection, “control” is broadly defined in the draft law to cover the following summarized categories: (i) holding 50% or more of the voting rights of the subject entity; (ii) holding less than 50% of the voting rights of the subject entity but having the power to secure at least 50% of the seats on the board or other equivalent decision-making bodies, or having the voting power to exert material influence on the board, the shareholders’ meetings or other equivalent decision-making bodies; or (iii) having the power to exert decisive influence, via contractual or trust arrangements, over the subject entity’s operations, financial matters or other key aspects of business operations. Once an entity is determined to be an FIE, it will be subject to the foreign investment restrictions or prohibitions set forth in a “Negative List”, if the FIE is engaged in an industry listed in the Negative List. Unless the underlying business of the FIE falls within the Negative List, which calls for market entry clearance by MOFCOM, prior approval from the government authorities as mandated by the existing foreign investment legal regime would no longer be required for establishment of the FIE.  

The “variable interest entity” structure, or VIE structure, has been adopted by many PRC-based companies, including us, to obtain necessary licenses and permits in the industries that are currently subject to foreign investment restrictions in China. See “—Risks Related to Our Corporate Structure” and “Our Corporate History and Structure.” Under the draft Foreign Investment Law, variable interest entities that are controlled via contractual arrangement would also be deemed FIEs, if they are ultimately “controlled” by foreign investors. Therefore, for any companies with a VIE structure in an industry category that is included in the “Negative List”, the VIE structure may be deemed legitimate only if the ultimate controlling person(s) is/are of PRC nationality (either PRC companies or PRC citizens). Conversely, if the actual controlling person(s) is/are of foreign nationalities, then the variable interest entities will be treated as FIEs and any operation in the industry category on the “Negative List” without market entry clearance may be considered illegal.

The draft Foreign Investment Law or a similar draft has not taken a position on what actions will be taken with respect to companies currently employing a VIE structure, whether or not these companies are controlled by Chinese parties, while it is soliciting comments from the public on this point. If the enacted version of the Foreign Investment Law and the “Negative List” mandate further action, such as MOFCOM market entry clearance or certain restructuring of our corporate structure and operations, to be completed by companies with existing VIE structure like us, there may be substantial uncertainties as to whether we can complete these actions in a timely manner, or at all, and our business and financial condition may be materially and adversely affected.

Any lack of requisite approvals, licenses or permits applicable to our business may have a material and adverse impact on our business, financial condition and results of operations.

Our business is subject to governmental supervision and regulation by the relevant PRC governmental authorities. Together, these government authorities promulgate and enforce regulations that cover many aspects of the collectibles and artwork trading and related services exchange platform. As a result, in certain circumstances it may be difficult to determine what actions or omissions may be deemed to be in violation of applicable laws and regulations.

We have made efforts to obtain all the applicable licenses and permits. We cannot assure you that we have obtained all the permits or licenses required for conducting our business in China or will be able to maintain our existing licenses or obtain new ones. If the PRC government determines that we are operating without the proper approvals, licenses or permits or promulgates new laws and regulations that require additional approvals or licenses or imposes additional restrictions on the operation of any part of our business, it has the power, among other things, to levy fines, confiscate our income, revoke our business licenses, and require us to discontinue the relevant parts of our business or to impose restrictions on the affected portion of our business. Any of these actions by the PRC government may have a material adverse effect on our business and results of operations.

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We rely on dividends and other distributions on equity paid by our PRC subsidiary to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiary to make payments to us could have a material adverse effect on our ability to conduct our business.

We are a holding company, and we rely on dividends and other distributions on equity paid by our PRC subsidiary for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. If our PRC subsidiary incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. In addition, the PRC tax authorities may require our PRC subsidiary to adjust its taxable income under the contractual arrangements it currently has in place with our consolidated variable interest entities in a manner that would materially and adversely affect its ability to pay dividends and other distributions to us. Contractual arrangements in relation to our consolidated variable interest entities may be subject to scrutiny by the PRC tax authorities and they may determine that we or our PRC consolidated VIE owe additional taxes, which could negatively affect our financial condition and the value of your investment.”

Under PRC laws and regulations, our PRC subsidiary, as a wholly foreign-owned enterprise in China, may pay dividends only out of its respective accumulated after-tax profits as determined in accordance with PRC accounting standards and regulations. In addition, a wholly foreign-owned enterprise is required to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund certain statutory reserve funds, until the aggregate amount of such funds reaches 50% of its registered capital. At its discretion, a wholly foreign-owned enterprise may allocate a portion of its after-tax profits based on PRC accounting standards to staff welfare and bonus funds. These reserve funds and staff welfare and bonus funds are not distributable as cash dividends.

Any limitation on the ability of our PRC subsidiary to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business. See also “—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.”  

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 to or make additional capital contributions to our PRC subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

Under PRC laws and regulations, we are permitted to fund our PRC subsidiary by making loans to or additional capital contributions to our PRC subsidiary, subject to applicable government registration and approval requirements.

Any loans to our PRC subsidiary, which are treated as foreign-invested enterprises under PRC laws, are subject to PRC regulations and foreign exchange loan registrations. For example, loans by us to our PRC subsidiary to finance its activities cannot exceed statutory limits and must be registered with the local counterpart of the State Administration of Foreign Exchange, or SAFE. The statutory limit for the total amount of foreign debts of a foreign-invested company is the difference between the amount of total investment as approved by MOFCOM or its local counterpart and the amount of registered capital of such foreign-invested company.

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We may also decide to finance our PRC subsidiary by means of capital contributions. These capital contributions must be approved by MOFCOM or its local counterpart. In addition, SAFE issued a circular in September 2008, SAFE Circular 142, regulating the conversion by a foreign-invested enterprise of foreign currency registered capital into RMB by restricting how the converted RMB may be used. SAFE Circular 142 provides that the RMB capital converted from foreign currency registered capital of a foreign-invested enterprise may only be used for purposes within the business scope approved by the applicable government authority and unless otherwise provided by law, may not be used for equity investments within the PRC. Although on July 4, 2014, the SAFE issued the Circular of the SAFE on Relevant Issues Concerning the Pilot Reform in Certain Areas of the Administrative Method of the Conversion of Foreign Exchange Funds by Foreign-invested Enterprises, or SAFE Circular 36, which launched a pilot reform of the administration of the settlement of the foreign exchange capitals of foreign-invested enterprises in certain designated areas from August 4, 2014 and some of the restrictions under SAFE Circular 142 will not apply to the settlement of the foreign exchange capitals of the foreign-invested enterprises established within the designate areas and such enterprises mainly engaging in investment are allowed to use its RMB capital converted from foreign exchange capitals to make equity investment, our PRC subsidiary is not established within the designated areas. On March 30, 2015, SAFE promulgated Circular 19, to expand the reform nationwide. Circular 19 came into force and replaced both Circular 142 and Circular 36 on June 1, 2015. Circular 19 allows foreign-invested enterprises to make equity investments by using RMB fund converted from foreign exchange capital. However, Circular 19 continues to prohibit foreign-invested enterprises from, among other things, using RMB fund converted from its foreign exchange capitals for expenditure beyond its business scope, providing entrusted loans or repaying loans between non-financial enterprises. In addition, SAFE strengthened its oversight of the flow and use of the RMB capital converted from foreign currency registered capital of a foreign-invested company. The use of such RMB capital may not be altered without SAFE’s approval, and such RMB capital may not in any case be used to repay RMB loans if the proceeds of such loans have not been used. Violations of these Circulars could result in severe monetary or other penalties. These circulars may significantly limit our ability to use RMB to fund the establishment of new entities in China by our PRC subsidiary, to invest in or acquire any other PRC companies through our PRC subsidiary, or to establish new variable interest entities in the PRC.

In light of the various requirements imposed by 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 on a timely basis, if at all, with respect to future loans to our PRC subsidiary or future capital contributions by us to our PRC subsidiary. If we fail to complete such registrations or obtain such approvals, 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.  

Fluctuations in exchange rates could have a material adverse effect on our results of operations and the value of your investment.

Our reporting currency is the U.S. dollar while the functional currency for our PRC subsidiary and consolidated VIE is RMB. As a result, fluctuations in the exchange rate between the U.S. dollar and RMB will affect the relative purchasing power in RMB terms of our U.S. dollar assets. Gains and losses from the remeasurement of assets and liabilities that are receivable or payable in RMB are included in our consolidated statements of operations. The remeasurement has caused the U.S. dollar value of our results of operations to vary with exchange rate fluctuations, and the U.S. dollar value of our results of operations will continue to vary with exchange rate fluctuations. A fluctuation in the value of RMB relative to the U.S. dollar could reduce our profits from operations and the translated value of our net assets when reported in U.S. dollars in our financial statements. This could have a negative impact on our business, financial condition or results of operations as reported in U.S. dollars. If we decide to convert our RMB into U.S. dollars for the purpose of making payments for dividends on our shares or for other business purposes, appreciation of the U.S. dollar against the RMB would have a negative effect on the U.S. dollar amount available to us. In addition, fluctuations in currencies relative to the periods in which the earnings are generated may make it more difficult to perform period-to-period comparisons of our reported results of operations.

There remains significant international pressure on the PRC government to adopt a flexible currency policy. Any significant appreciation or depreciation of the RMB may materially and adversely affect our revenues, earnings and financial position, and the value of, and any dividends payable on, our shares in U.S. dollars. For example, to the extent that we need to convert U.S. dollars into RMB to pay our operating expenses, appreciation of the RMB against the U.S. dollar would have an adverse effect on the RMB amount we would receive from the conversion. Conversely, a significant depreciation of the RMB against the U.S. dollar may significantly reduce the U.S. dollar equivalent of our earnings, which in turn could adversely affect the market price of our shares.

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Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currency. As a result, fluctuations in exchange rates may have a material adverse effect on investors’ shareholdings.

Governmental control of currency conversion may limit our ability to utilize our net revenues effectively and affect the value of your investment.

The PRC government imposes controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our net revenues in RMB. Under our current corporate structure, our company in the Cayman Islands relies on dividend payments from our PRC subsidiary to fund any cash and financing requirements we may have. Under existing 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 SAFE by complying with certain procedural requirements. Therefore, our PRC subsidiary is able to pay dividends in foreign currencies to us without prior approval from SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC foreign exchange regulation, such as the overseas investment registrations by the beneficial owners of our company who are PRC residents. But approval from or registration with appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may also at its discretion 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.

Failure to make adequate contributions to various employee benefit plans as required by PRC regulations may subject us to penalties.

We are required under PRC laws and regulations to participate in various government sponsored employee benefit plans, including certain social insurance, housing funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of our employees up to a maximum amount specified by the local government from time to time at locations where we operate our businesses. The requirement of employee benefit plans has not been implemented consistently by the local governments in China given the different levels of economic development in different locations. As of the date of this Form 8-K, we believe that we have made adequate employee benefit payments. If we fail to make adequate payments in the future, we may be required to make up the contributions for these plans in the amount of 110% of the amount in the preceding month. If we fail to make or supplement contributions of social security premiums within the stipulated period, the social security premiums collection agency may enquire into the deposit accounts of the employer with banks and other financial institutions. In an extreme situation, where we failed to contribute social security premiums in full amount and do not provide guarantee, the social security premiums collection agency may apply to a Chinese court for seizure, foreclosure or auction of our properties of value equivalent to the amount of social security premiums payable, and the proceeds from auction shall be used for contribution of social security premiums. If we are subject to deposit, seizure, foreclosure or auction in relation to the underpaid employee benefits, our financial condition and results of operations may be adversely affected.

Our business is susceptible to fluctuations in the art market of China.

We conduct our business primarily in China. Our business depends substantially on the conditions of the PRC art market. Demand for collectibles and artwork in China has grown rapidly in the recent decade but such growth is often coupled with volatility in market conditions and fluctuation in prices. Fluctuations of supply and demand in China’s art market are caused by economic, social, political and other factors. Over the years, governments at both national and local levels have announced and implemented various policies and measures aimed to regulate the art markets. These measures have affected and may continue to affect the conditions of China’s art market and cause fluctuations in collectibles and artwork prices. To the extent fluctuations in the art market may adversely affect the trading volume on our platform, or require us to provide our services on unfavorable terms, our financial condition and results of operations may be materially and adversely affected.

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The legal rights we hold to use certain leased properties could be challenged by property owners or other third parties, which could prevent us from operating our business or increase the costs associated with our business operations.

For all of our business facilities and warehouses, we do not hold property ownership with respect to the premises under which those facilities are operated. Instead, we rely on leases with the property owners. Our general practice requires us to examine the title certificates of the property owners as part of our due diligence before entering into a lease with them. If we fail to identify encumbrances on the titles, our leases of such properties may be challenged or even invalidated by government authority or relevant dispute resolution institution. As a result, the development or operations of our facilities on such properties could be adversely affected.

In addition, we are subject to the risks of other potential disputes with property owners and to the forced closure of our facilities. Such disputes and forced closures, whether resolved in the favor of us, may divert our management attention, harm our reputation, or otherwise disrupt and adversely affect our business.

The approval of the China Securities Regulatory Commission may be required in connection with any proposed listing or offering under a regulation adopted in August 2006, as amended, and, if required, we cannot predict whether we will be able to obtain such approval.

The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory agencies in August 2006 and amended in 2009, requires an overseas special purpose vehicle formed for listing purposes through acquisitions of PRC domestic companies and controlled by PRC companies or individuals to obtain the approval of the China Securities Regulatory Commission, or the CSRC, prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange. In September 2006, the CSRC published a notice on its official website specifying documents and materials required to be submitted to it by a special purpose vehicle seeking CSRC approval of its overseas listings. The application of the M&A Rules remains unclear.

Our PRC counsel, Yingke Law Firm, has advised us based on their understanding of the current PRC laws, rules and regulations that the CSRC’s approval is not required for the listing and trading of our shares on US securities markets in the context of this Form 8-K filing, given that:

· we established our PRC subsidiary, Management Consulting, by means of direct investment rather than by merger with or acquisition of PRC domestic companies; and

· no explicit provision in the M&A Rules classifies the respective contractual arrangements between Management Consulting, the VIEs and their shareholders as a type of acquisition transaction falling under the M&A Rules.

However, there remains some uncertainty as to how the M&A Rules will be interpreted or implemented in the context of an overseas offering, if and when we attempt to do an offering, and the CSRC’s opinions summarized above are subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules. We cannot assure you that relevant PRC government agencies, including the CSRC, would reach the same conclusion as we do. If the CSRC or any other PRC regulatory agencies subsequently determines that we need to obtain the CSRC’s approval for an offering of our securities, or if the CSRC or any other PRC government agencies promulgates any new interpretation or implements rules that would require us to obtain CSRC or other governmental approvals for a future offering, we may face adverse actions or sanctions by the CSRC or other PRC regulatory agencies. Sanctions may include fines and penalties on our operations in the PRC, limitations on our operating privileges in the PRC, delays in or restrictions on the repatriation of the proceeds from an offering into the PRC, restrictions on or prohibition of the payments or remittance of dividends by our PRC subsidiary, or other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our shares. The CSRC or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, to halt this offering before the settlement and delivery of shares in any such offering. Consequently, if you engage in market trading or other activities in anticipation of and prior to the settlement and delivery of shares we might offer in the future, you would be doing so at the risk that the settlement and delivery may not occur. In addition, if the CSRC or other PRC regulatory agencies later promulgate new rules or explanations requiring that we obtain their approvals for a future offering, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties and/or negative publicity regarding such approval requirement could have a material adverse effect on the trading price of our shares.

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The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.

The M&A Rules discussed in the preceding risk factor and some other regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex, including requirements in some instances that MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise. Moreover, the Anti-Monopoly Law requires that MOFCOM be notified in advance of any concentration of undertaking if certain thresholds are triggered. In addition, the security review rules issued by MOFCOM that became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by MOFCOM, and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. In the future, we may grow our business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any required approval processes, including obtaining approval from MOFCOM or its local counterparts may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

PRC regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiary’s ability to increase its registered capital or distribute profits to us or otherwise expose us or our PRC resident beneficial owners to liability and penalties under PRC law.

SAFE promulgated the Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, in July 2014 that requires PRC residents or entities to register with SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. In addition, such PRC residents or entities must update their SAFE registrations when the offshore special purpose vehicle undergoes material events relating to any change of basic information (including change of such PRC citizens or residents, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, or mergers or divisions. SAFE Circular 37 was issued to replace the Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents Engaging in Financing and Roundtrip Investments via Overseas Special Purpose Vehicles, or SAFE Circular 75. SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment in February 2015, which took effect on June 1, 2015. This notice has amended SAFE Circular 37 requiring PRC residents or entities to register with qualified banks rather than SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing.

If our shareholders who are PRC residents or entities do not complete their registration as required, our PRC subsidiary may be prohibited from distributing its profits and proceeds from any reduction in capital, share transfer or liquidation to us, and we may be restricted in our ability to contribute additional capital to our PRC subsidiary. Moreover, failure to comply with the SAFE registration described above could result in liability under PRC laws for evasion of applicable foreign exchange restrictions.

However, we may not be informed of the identities of all the PRC residents or entities holding direct or indirect interest in our company, nor can we compel our beneficial owners to comply with SAFE registration requirements. As a result, we cannot assure you that all of our shareholders or beneficial owners who are PRC residents or entities have complied with, and will in the future make or obtain any applicable registrations or approvals required by, SAFE regulations. Failure by such shareholders or beneficial owners to comply with SAFE regulations, or failure by us to amend the foreign exchange registrations of our PRC subsidiary, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our PRC subsidiary’s ability to make distributions or pay dividends to us or affect our ownership structure, which could adversely affect our business and prospects.  

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Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.

In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly-Listed Company, replacing earlier rules promulgated in March 2007. Pursuant to these rules, PRC citizens and non-PRC citizens who reside in China for a continuous period of not less than one year who participate in any stock incentive plan of an overseas publicly listed company, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be the PRC subsidiary of such overseas listed company, and complete certain other procedures. In addition, an overseas entrusted institution must be retained to handle matters in connection with the exercise or sale of stock options and the purchase or sale of shares and interests. Our executive officer and other employees who are PRC citizens or who have resided in the PRC for a continuous period of not less than one year and who have been granted options or other awards are subject to these regulations. Failure to complete the SAFE registrations may subject them to fines and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiary and limit our PRC subsidiary’s ability to distribute dividends to us. We also face regulatory uncertainties that could restrict our ability to adopt additional incentive plans for our directors, executive officers and employees under PRC law. See “Regulation—Regulations on Stock Incentive Plans.”

If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.

Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with a “de facto management body” within the PRC is considered a resident enterprise and will be subject to the enterprise income tax on its global income at the rate of 25%. The implementation rules define the term “de facto management body” as the body that exercises full and substantial control over and overall management of the business, productions, personnel, accounts and properties of an enterprise. In April 2009, the State Administration of Taxation issued a circular, known as Circular 82, which provides certain specific criteria for determining whether the “de facto management body” 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 like us, the criteria set forth in the circular may reflect the State Administration of Taxation’s general position on how the “de facto management body” test should be applied in determining the tax resident status of all offshore enterprises. According to Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.

We believe none of our entities outside of China is a PRC resident enterprise for PRC tax purposes. See “Taxation—People’s Republic of China Taxation.” However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.” As all of our management members are based in China, it remains unclear how the tax residency rule will apply to our case. If the PRC tax authorities determine that we or any of our subsidiaries outside of China is a PRC resident enterprise for PRC enterprise income tax purposes, then we or such subsidiary could be subject to PRC tax at a rate of 25% on its world-wide income, which could materially reduce our net income. In addition, we will also be subject to PRC enterprise income tax reporting obligations. Furthermore, if the PRC tax authorities determine that we are a PRC resident enterprise for enterprise income tax purposes, gains realized on the sale or other disposition of our shares may 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), if such gains are deemed to be from PRC sources. It is unclear whether non-PRC shareholders of our company 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. Any such tax may reduce the returns on persons who invest in our shares.

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Regulatory bodies of the United States may be limited in their ability to conduct investigations or inspections of our operations in China.

From time to time, we may receive requests from certain U.S. agencies to investigate or inspect the Company’s operations, or to otherwise provide information. While we expect to comply with these requests from these regulators, there is no guarantee that such requests will be honored by those entities who provide services to us or with whom we associate, especially as those entities are located in China. Furthermore, an on-site inspection of our facilities by any of these regulators may be limited or entirely prohibited. Such inspections, though permitted by us and our affiliates, are subject to the unpredictability of the Chinese enforcement authorities, and may therefore be impossible to facilitate.

Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future.

The PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of certain taxable assets, including, in particular, equity interests in a PRC resident enterprise, by a non-resident enterprise by promulgating and implementing SAT Circular 59 and Circular 698, which became effective in January 2008, and a Circular 7 in replacement of some of the existing rules in Circular 698, which became effective in February 2015.

Under Circular 698, where a non-resident enterprise conducts an “indirect transfer” by transferring the equity interests of a PRC “resident enterprise” indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise, being the transferor, may be subject to PRC enterprise income tax, if the indirect transfer is considered to be an abusive use of company structure without reasonable commercial purposes. As a result, gains derived from such indirect transfer may be subject to PRC tax at a rate of up to 10%. Circular 698 also provides that, where a non-PRC resident enterprise transfers its equity interests in a PRC resident enterprise to its related parties at a price lower than the fair market value, the relevant tax authority has the power to make a reasonable adjustment to the taxable income of the transaction.

In February 2015, the SAT issued Circular 7 to replace the rules relating to indirect transfers in Circular 698. Circular 7 has introduced a new tax regime that is significantly different from that under Circular 698. Circular 7 extends its tax jurisdiction to not only indirect transfers set forth under Circular 698 but also transactions involving transfer of other taxable assets, through the offshore transfer of a foreign intermediate holding company. In addition, Circular 7 provides clearer criteria than Circular 698 on how to assess reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. Circular 7 also brings challenges to both the foreign transferor and transferee (or other person who is obligated to pay for the transfer) of the taxable assets. Where a non-resident enterprise conducts an “indirect transfer” by transferring the taxable assets indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise being the transferor, or the transferee, or the PRC entity which directly owned the taxable assets may report to the relevant tax authority such indirect transfer. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise.

We face uncertainties on the reporting and consequences on future private equity financing transactions, share exchange or other transactions involving the transfer of shares in our company by investors that are non-PRC resident enterprises. The PRC tax authorities may pursue such non-resident enterprises with respect to a filing or the transferees with respect to withholding obligation, and request our PRC subsidiaries to assist in the filing. As a result, we and non-resident enterprises in such transactions may become at risk of being subject to filing obligations or being taxed, under Circular 59 or Circular 698 and Circular 7, and may be required to expend valuable resources to comply with Circular 59, Circular 698 and Circular 7 or to establish that we and our non-resident enterprises should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.

The PRC tax authorities have the discretion under SAT Circular 59, Circular 698 and Circular 7 to make adjustments to the taxable capital gains based on the difference between the fair value of the taxable assets transferred and the cost of investment. Although we currently have no plans to pursue any acquisitions in China or elsewhere in the world, we may pursue acquisitions in the future that may involve complex corporate structures. If we are considered a non-resident enterprise under the PRC Enterprise Income Tax Law and if the PRC tax authorities make adjustments to the taxable income of the transactions under SAT Circular 59 or Circular 698 and Circular 7, our income tax costs associated with such potential acquisitions will be increased, which may have an adverse effect on our financial condition and results of operations.

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If we cannot effectively secure our network, customers’ personal information, which we collect through our online platform, may be subject to leakage or theft, and if the regulators believe we have failed to fulfill our network security obligations, our online platform may be required to suspend operations and rectification, which may have a material adverse effect on our operations and financial results due to the large amount of our daily trading conducted online.

On November 7, 2016, the Standing Committee of the National People’s Congress of the PRC (the “NPC”) promulgated the Cybersecurity Law of the PRC (“Cybersecurity Law”) which became effective on June 1, 2017. Under this law, network operators must provide cybersecurity protection and protect the integrity, confidentiality and availability of network data. The Cybersecurity Law also standardizes the collection and usage of personal information and requires network operators to protect users’ privacy security. If a network operator violates the Cybersecurity Law, it can face various penalties, including but not limited to the suspension of related business, winding up, shutting down its websites, and revocation of its business license, all of which may be imposed by the relevant authority, along with fines up to RMB 1 million (approximately $145,985) if severe damage occurred.

We collect and process the personal information of the customers who register on our online platforms, for the purpose of managing and maintaining our customers and their trading information. We will also publish “Investor Information Protection Policy” on our online platform, to help the customers who register on our online platforms understand what, where and how their private information be collected and used by us, and what measures we will take to protect their personal information. Nonetheless, we cannot assure that our cybersecurity protection rules and related technical measures are adequate to prevent network data in our online platform from being breached, stolen or tampered with. If our online platform network is at risk, we may be required by competent cybersecurity supervision authorities to suspend online platforms before rectification and we may be fined up to RMB 1,000,000 if it is found that our online platform has material security risks or if severe cybersecurity events occur due to failure of our network security protection.

On June 13, 2019, the State Internet Information Office of the PRC issued a public comment draft of Private Information Cross-Border Transfer Safety Assessment Measures (“Personal Information Safety Measures (Public Draft)”) which will be enforced by the relevant provincial network information office once it becomes effective. The Personal Information Safety Measures (Public Draft) is formulated in accordance with the Cybersecurity Law and it requires that before the personal information can be transferred out of China, the network operator shall report its request for safety assessment to the provincial network information office, and such office shall complete the safety assessment, typically within 15 working days. A new security assessment shall be carried out every two years, or in the event of a change in purpose of the cross-border transfer of personal information or a change in the type or overseas storage period of such information. Any relevant network information office has the authority to suspend or termination the personal information transfer activities from any network operators, if any of the following situations occur: (i) the network operators or receivers experience a severe data leakage, data abuse and other similar events; (ii) the individuals who provide personal information are unable to protect his/her legitimate rights and interests; or (iii) the network operators or receivers are not capable of protecting personal information safety.  

Risks Related to Our Shares

There has been only a very limited public market for our shares prior to the filing of this Form 8-K, and if an active trading market does not develop you may not be able to resell shares that you own or may purchase at or above the price you paid, or at all.

Prior to the filing of this Form 8-K, there has been a very limited public market for our shares. If an active trading market for our shares does not develop, the market price and liquidity of our shares will be materially adversely affected. You may not be able to sell any shares that you currently own or may purchase, at or above the price you paid or will pay. Accordingly, investors should be prepared to face a complete loss of their investment.

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Our shares are thinly traded, and you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.

Our shares have been, and are expected to continue to be for the reasonably foreseeable future, “thinly-traded”, meaning that the number of persons interested in purchasing our shares at or near bid prices at any given time may be relatively small or non-existent. This situation may be attributable to a number of factors, including the fact that we are relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and might be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. A broad or active public trading market for our shares might not develop or be sustained.  

The market price for our shares may be volatile.

The market price for our shares may be volatile and subject to wide fluctuations due to factors such as:

· the perception of U.S. investors and regulators of U.S. listed Chinese companies;

· actual or anticipated fluctuations in our operating results;

· changes in financial estimates by securities research analysts;

· negative publicity, studies or reports;

· conditions in Chinese art and related service markets;

· our capability to catch up with the technology innovations in the industry;

· changes in the economic performance or market valuations of other collectibles and artwork trading and related services companies;

· announcements by us or our competitors of acquisitions, strategic partnerships, joint ventures or capital commitments;

· addition or departure of key personnel;

· fluctuations of exchange rates between RMB and the U.S. dollar; and

· general economic or political conditions in China.

In addition, 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 our shares.

Volatility in our shares’ price may subject us to securities litigation.

The market for our shares may have, when compared to seasoned issuers, significant price volatility and we expect that our share price may continue to be more volatile than that of a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources.

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In order to raise sufficient funds to enhance operations, we may have to issue additional securities at prices which may result in substantial dilution to our shareholders.

If we raise additional funds through the sale of equity or convertible debt, our current shareholders’ percentage ownership will be reduced. In addition, these transactions may dilute the value of shares outstanding. We may have to issue securities that may have rights, preferences and privileges senior to our shares. We cannot provide assurance that we will be able to raise additional funds on terms acceptable to us, if at all. If future financing is not available or is not available on acceptable terms, we may not be able to fund our future needs, which would have a material adverse effect on our business plans, prospects, results of operations and financial condition.

We are not likely to pay cash dividends in the foreseeable future.

We currently intend to retain any future earnings for use in the operation and expansion of our business. Accordingly, we do not expect to pay any cash dividends in the foreseeable future, but will review this policy as circumstances dictate. Should we determine to pay dividends in the future, our ability to do so will depend upon the receipt of dividends or other payments from Management Consulting. Management Consulting may, from time to time, be subject to restrictions on its ability to make distributions to us, including restrictions on the conversion of RMB into U.S. dollars or other hard currency and other regulatory restrictions.  

You may face difficulties in protecting your interests as a shareholder, as Cayman Islands law provides substantially less protection when compared to the laws of the United States, and it may be difficult for a shareholder of ours to effect service of process or to enforce judgments obtained in the United States courts.

Our corporate affairs are governed by our current memorandum and articles of association and by the Companies Law (2018 Revision) and common law of the Cayman Islands. The rights of shareholders to take legal action against our directors and us, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law. Decisions of the Privy Council (which is the final court of appeal for British overseas territories such as the Cayman Islands) are binding on a court in the Cayman Islands. Decisions of the English courts, and particularly the Supreme Court of the United Kingdom and the Court of Appeal are generally of persuasive authority but are not binding on the courts of the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in the United States. In particular, the Cayman Islands has a less developed body of securities laws as compared to the United States, and thus provides significantly less protection to investors. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action before the United States federal courts. The Cayman Islands courts are also unlikely to impose liabilities against us in original actions brought in the Cayman Islands, based on certain civil liability provisions of United States securities laws.

Currently, all of our operations are conducted outside the United States, and substantially all of our assets are located outside the United States. All of our directors and officers are nationals or residents of jurisdictions other than the United States and a substantial portion of their assets are located outside the United States. As a result, it may be difficult for a shareholder to effect service of process within the United States upon these persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States.

Moreover, Nevada law authorizes the Company to indemnify its officers and directors in many circumstances. Our Articles of Incorporation and Bylaws provide for elimination of any liability of our directors and officers and indemnity of our directors and officers to the fullest extent permitted by Nevada law (see “Legal Proceedings,” herein).

As a result of all of the above, our shareholders may have more difficulty in protecting their interests through actions against us or our officers, directors or major shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.  

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We will incur increased costs as a result of being a public company.

We continue to incur significant legal, accounting and other expenses as a public company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and NASDAQ, impose various requirements on the corporate governance practices of public companies. Compliance with these rules and regulations increases our legal and financial compliance costs and makes some corporate activities more time-consuming and costly. We expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the rules and regulations of the SEC. For example, as a public company, we might in the future be required to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. We might incur additional costs in obtaining director and officer liability insurance. In addition, we will incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers.

Our Chairman will have substantial influence over our company and his interests may not be aligned with the interests of our other shareholders.

As a result of the Share Exchange, Xingtao Zhou, Chairman of our board of directors, beneficially owns 54.24% of our outstanding common shares, and 100% of our Preferred Shares. As a result of his significant shareholding, our Chairman has, and will continue to have, substantial control over our business, including decisions regarding mergers, consolidations and the sale of all or substantially all of our assets, election of directors and other significant corporate actions. Mr. Zhou may take actions that are not in the best interests of us or our other shareholders. This concentration of ownership may discourage, delay or prevent a change in control of our company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company and might reduce the market price of our shares. For more information regarding our principal shareholders and their affiliated entities, see “Principal Shareholders.”

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

The following discussion and analysis of the results of operations and financial condition of Cayman Company and its subsidiaries for the years ended September 30, 2019, and the interim period ended March 31, 2020, should be read in conjunction with the other sections of this Report, including “Risk Factors,” “Description of Business” and the Financial Statements and notes thereto of Cayman Company filed herewith as Exhibit 99.1. The various sections of this discussion contain forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this Report as well as other matters over which we have no control. See “Cautionary Note Regarding Forward-Looking Statements.” Our actual results may differ materially. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Report.

Our audited and unaudited financial statements are stated in United States Dollars and are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).

Overview

We conduct our operations through our two consolidated subsidiaries, Hainan Cangbao Tianxia Cultural Relic Co., Ltd. (“Hainan Cangbao”) and Cangbao Tianxia (Shanghai) Cultural Relic Co.,Ltd.(“Shanghai Cangbao”). These two subsidiaries were incorporated on May 30, 2018 and June 28, 2019 respectively, in PRC, as domestic Chinese limited liability corporations.

We commenced our operations in March 2019, and we intend to make a cultural service platform dedicated to creating industry standards for art investment and creating a model of online art exchanges and transactions, which allows collectors, artists, art dealers and owners to access a much larger art trading market, allowing them to engage with a wide range of collectibles or artwork investors.

Currently we facilitate trading by individual customers of all kinds of collectibles, artworks and commodities on our online platforms, which create two source of income: (1) membership fee income by offering different service packages for members; (2) transaction commission, charging from both the buyer and the seller a commission based on the artwork trading amount upon successfully facilitating artworks transaction.

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Recent Developments

Early in January, 2020, we launched a new application, which enables our customers to communicate and list artworks to trade. We are currently working with a third-party technology company to design a tablet, which will have multiple built-in applications to facilitate membership enrollment and artworks trade. The tablet is now generating advertisement revenue for the Company.

RESULTS OF OPERATIONS

Results of Operations for the year ended September 30, 2019 and six months ended March 31, 2020

The following table sets forth key components of Company’s results of operations for the year ended September 31, 2019 and interim period ended March 31, 2020. The discussion following the table addresses these results.

	For the Six Months Ended March 31,			For the Year Ended September 30,
	2020			2019
Net revenues	$	2,406,047		$	2,986,593
Cost of revenues		835,080			2,278,211
Gross margin		1,570,967			708,382
Operating expenses:
Selling expense		826,419			1,702,820
General and administrative		1,404,706			1,000,945
Total operating expenses		2,231,125			2,703,765
Loss from operations		(660,158	)		(1,995,383	)
Other income/(loss)
Interest income		1,582			577
Interest expense		(92	)		(174	)
Other income (expense)		(35,238	)		70
Total other income(loss)		(33,748	)		473
Operating loss before income taxes		(693,906	)		(1,994,910	)
Provision for income taxes		2,748			41,281
Net loss	$	(696,654	)	$	(2,036,191	)

Revenues. For the six months ended March 31,2020 and the year ended September 30, 2019, we had revenue of $2,406,047 and $2,986,593, respectively, which were derived from service package sales for the members. We have not generated revenue from transaction commission since the beginning of operation in March 2019. As of the filling date, many trading transactions are in progress in our efforts, and we expect to increase our revenue significantly, especially the revenue of transaction commission, in the coming fiscal years.

Cost of Revenue. For the six months ended March 31, 2020 and the year ended September 30, 2019, we had cost of revenue of $835,080 and $2,278,211 respectively, which represent costs of maintaining our platform such as network service. and items prepared as gifts for the member.

Gross Margin. We generated gross profit of $1,570,967 and $708,382 for the six months ended March 31, 2020 and the year ended September 30, 2019, respectively, with a gross margin of 65% and 24% respectively. In the coming fiscal years, our business scale is expected to grow significantly. It demonstrates, based on the experience and study of our business, that the cost of sales remains relatively stable in the short run while our revenue growing rapidly in the long term. Because we are emerging industry leader.

Operating expenses. Operating expenses consist of selling expenses, general and administrative expenses.

For the six months ended March 31, 2020 and the year ended September 30, 2019, we had selling expenses of $826,419 and $1,702,820 respectively, which includes marketing and advertising costs related to the operations and development of the platform. For the six months ended March 31, 2020 and the year ended September 30, 2019, we had general and administrative expenses of $1,404,706 and $1,000,945, respectively which mainly consist of salaries and related employee benefits, office expenses, professional service fees, depreciation expenses, rent, and related costs.

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Loss from Operations. For the six months ended March 31, 2020 and the year ended September 30, 2019, we had loss from operations of $660,158 and $1,995,383 respectively.

Net loss. For the six months ended March 31, 2020 and the year ended September 30, 2019, we had net loss of $696,654 and $2,036,191 respectively.

Liquidity and Capital Resources

Working Capital Deficit. As of March 31, 2020 and September 30, 2019, the Company had working capital deficit of $3,250,896 and $2,763,980.

Cash Flows. The following is a summary of the Company’s cash flows from operating, investing and financing activities:

	Six Months Ended March 31, 2020			Year ended September 30, 2019
Net cash provided by (used in) operating activities	$	(1,479,448	)	$	3,644,518
Net cash used in investing activities		(6,426	)		(462,723	)
Net cash used in financing activities		(528	)		—
Net change in cash and cash equivalents	$	(1,486,402	)	$	3,181,795

Operating Activities.

Net cash used in operating activities was $1,479,447 for the six months ended March 31, 2020. The net cash outflow was primarily the result of the increase of $900,401 in prepayment and other receivable, decrease of $371,890 in tax payable and net loss of $696,654, partly offset by the increase of $679,805 in advance from customer, and the depreciation of $47,691 for the six months ended March 31, 2020.

Net cash provided by operating activities was $3,644,518 for the year ended September 30, 2019. The net cash inflow was primarily the result of the increase of $5,209,900 in account payable, increase of $1,509,499 in advance from customer and increase of $364,129 in tax payable, partly offset by the increase of $1,162,094 in prepayment and other receivable, and the net loss of $2,036,191 for the year ended September 30, 2019.

Investing Activities.

Net cash used in investing activities was $6,426 for the six months ended March 31, 2020. Net cash used in investing activities solely reflect purchase of property and equipment.

Net cash used in investing activities was $462,723 for the year ended September 30, 2019. Net cash used in investing activities mainly reflect purchase of intangible assets.

Financing Activities.

Net cash used in financing activities was $528 for the six months ended March 31, 2020, which referred to the repayment to related parties.

There were no financing activities for the year ended September 30, 2019.

Going Concern

The Company’s financial statements as of September 30, 2019 and March 31, 2020, have been prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues and cash flows sufficient to cover its operating costs and allow it to continue as a going concern. The Company has accumulated net loss of $2,745,795 as of March 31, 2020. These factors among others raise substantial doubt about the ability of the Company to continue as a going concern.

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In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking third party equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Material commitments

As of the date of this Report on Form 8-K, we do not have any material commitments.

Off-balance sheet arrangements

As of the date of this Report on Form 8-K, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Critical Accounting Policies

Basis of Presentation

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

The accompanying consolidated financial statements as of September 30, 2019 and for the year ended September 30, 2019 comprise of the following periods for each entity:

Name	Periods
Zhi Yuan	April 15, 2019 (Inception) – September 30, 2019
Cang Yun HK	May 22, 2019 (Inception) – September 30, 2019
Shanghai Cangyun	July 30, 2019 (Inception) – September 30, 2019
Hainan Cangbao	October 1, 2018 – September 30, 2019
Shanghai Cangbao	June 28, 2019 (Inception) – September 30, 2019

Hainan Cangbao Tianxia Cultural Relic Co., Ltd. (“Hainan Cangbao”) was incorporated on May 30, 2018 but has not commenced any operation for the period from May 30, 2018 (Inception) to March 31, 2019. The comparative financials of Hainan Cangbao as of September 30, 2018 and for the period from May 30, 2018 (Inception) to September 30, 2018; and as of March 31, 2019 and for the period from May 30, 2018 (Inception) to March 31, 2019 are not presented in the consolidated financial statements for comparison purpose.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, its wholly and majority owned subsidiaries, and consolidated VIEs and their subsidiaries for which the Company is the primary beneficiary.

All transactions and balances among the Company, its subsidiaries and consolidated VIEs have been eliminated upon consolidation.

Leases

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities - current, and operating lease liabilities - noncurrent on the balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our balance sheets. The initial lease liability is equal to the future fixed minimum lease payments discounted using the Company’s incremental borrowing rate, on a secured basis. The initial measurement of the right-of-use asset is equal to the initial lease liability plus any initial direct costs and prepayments, less any lease incentives.

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ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Revenue Recognition

The Company adopted ASC 606 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company has concluded that the new guidance did not require any significant change to its revenue recognition processes.

The Company operates an online and offline cultural service platform, through which dedicated to create industry standards for art investment and creating a model of online art exchanges and transactions, which allows collectors, artists, art dealers and owners to access a much larger art trading market, allowing them to engage with a wide range of collectibles or artwork investors.

The service includes trading facilitation, appraisal of treasures, consignment of artworks, storage of artworks and all-in-one advertising service, etc.

The Company derives its revenues from (1) platform membership service fee for member customers and (2) trading commission income, which includes commission from artwork price guarantee service, and artwork ownership transfer facilitate service through the online platform. The Company charges both the buyer and the seller a commission based on the artwork trading amount.

Membership service income

The Company recognizes membership fee revenue as the performance obligations are satisfied over time, usually, recognized on an average over the life of membership. The general contract terms of membership service include timeframe of the service, pricing and payment terms, rights and obligations of parties, performance test criteria, and liability for breach of contract. Membership fees received in advance from customers are recorded as “Deferred revenues” in the consolidated balance sheets. Deferred revenues are recognized as revenue over the passage of time. Such membership fees received are non-refundable.

The cost of revenue consists primarily of platform maintenance expenses which are directly attributable to the membership fee revenue, including but not limited to service charge for cloud computing, items prepared as gifts for the member and related expenses.

Trading commission income

Trading commission income is derived from contracts with customers, which primarily include payment terms, rights and obligations of parties, acceptance criteria, and liability for breach of contract. The Company’s sales arrangements do not contain variable consideration. The Company recognizes revenue at a point in time based on management’s evaluation of when performance obligations under the terms of a contract with the customer are satisfied and the related artworks transactions has been successfully completed.

The Company did not recognize any trading commission income for the year ended September 30, 2019 and for the six months ended March 31, 2020.

Contractual Obligations

As a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, the Company is not required to provide this information.

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DESCRIPTION OF PROPERTY

Prior to the Share Exchange, the Company’s headquarters were located at 5-1-1206 Hefeng Jiangan, Nianqing Rd. Meilan District, Hainan Province, China 570203. Since the Share Exchange, the Company no longer uses the foregoing property.

Effective as of the closing of the Share Exchange, the Company’s principal office is located at Unit 609, Shengda Plaza, No. 61, Guoxing Ave. Meilan District, Hainan Province, China 570203. We rent 2,100 square feet of office space at that location from an unaffiliated landlord. Our lease expires on December 31, 2021; annual rent is $40,000. We also rent an office, which is approximately 1,700 square feet, in Shanghai from an unaffiliated landlord; the annual rent is $34,600 and the lease expires on July 15, 2021.

In addition, we rent space in Shanghai and Chengdu as storage spaces to display our artworks. Our storage space in Shanghai, which is located in the historic town of Zhu Jia Jiao, is approximately 4,300 square feet. Because that space is used as a nonprofit museum, we are able to lease the space from the local township at no cost; that lease expires on December 31, 2020. Our VR museum, which is approximately 7,500 square feet, is located in Chengdu, and is leased from an unaffiliated landlord; the lease expires on March 13, 2022, and annual rent is $336,000.

LEGAL PROCEEDINGS

The Company’s officers and directors are not aware of any threatened or pending litigation to which the Company is a party or which any of its property is the subject and which would have any material, adverse effect on the Company. However, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Please refer to Item 4.01 of this Form 8-K for this information, which is incorporated by reference herein.

DIRECTORS AND OFFICERS

Set forth below is information regarding our directors and executive officers. Pursuant to the terms of the Share Exchange, the current officers and directors will remain unchanged. All directors hold office until the next annual meeting of shareholders and until their successors have been duly elected and qualified. Officers are elected by and serve at the discretion of the Board.

Neither the Company, its property, nor any of its directors or officers is a party to any pending legal proceeding, nor have they been subject to a bankruptcy petition filed against them. None of its officers or directors have been convicted in, nor is subject to, any criminal proceeding.

The names and ages of the directors and executive officers of the Company and their positions with the Company are as follows:

Name	Age	Position
Xingtao Zhou	41	President, Chief Executive Officer, Chief Financial Officer, Chairman of the Board
Liang Tan	57	Director

Xingtao Zhou -- President, Chief Executive Officer, Chief Financial Officer (Principal Accounting Officer), Chairman of the Board of Directors.  Mr. Zhou has served as the chairman and founder of Hainan Cang Bao Tian Xia Artwork Co. Ltd. since 2017 and Cang Bao Ge (Hong Kong) Arts Co., Ltd since 2012. From 2009 to 2012, Mr. Zhou served as the president of Yi Hua Cultural Diffusion Co., Ltd. Mr. Zhou served as the curator of the Yin Yuan Min Su Museum from 2003 to 2009 and as the vice curator from 1999 to 2003. Mr. Zhou received a bachelor’s degree in International Business from Southwestern University of Finance and Economics.

Liang Tan, Director. Liang Tan has served as the general manager of Shanghai Qingsheng Investment Co., Ltd. since 2017. Mr. Tan served as the deputy general manager of Shanghai Daren Asset Management Co., Ltd. from 2013 to 2016.

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Committees of the Board of Directors

The Company does not have a standing audit committee, compensation committee, nomination committee, or committees performing similar functions. Rather, our full board of directors performs the functions of these committees. We do not believe it is necessary for our board of directors to appoint such committees because the volume of matters that come before our board of directors for consideration permits the directors to give sufficient time and attention to such matters to be involved in all decision making. Additionally, because our common stock is not listed for trading or quotation on a national securities exchange, we are not required to have such committees.

Director Independence

We do not have any independent directors, as such term is defined in the listing standards of The NASDAQ Stock Market at this time. The Company’s common stock is not listed or quoted on any exchange that has director independence requirements, or any exchange at all at this time.

Involvement in Certain Legal Proceedings

No executive officer, member of the board of directors or control person of our Company has been involved in any legal proceeding listed in Item 401(f) of Regulation S-K in the past 10 years.

Director Compensation

Our directors are reimbursed for expenses incurred by them in connection with attending Board meetings, but they do not receive any other compensation for serving on the Board.

EXECUTIVE COMPENSATION

The following table summarizes, for each of 2019 and 2018, the compensation awarded, paid to or earned by our President, CEO, CFO and Chairman of the Board of Directors, Xingtao Zhou, and our former CEO, David Lazar, who are compensated for their services to the Company; no other officer receives compensation from the Company.

2019 Summary Compensation Table

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Non-Qualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
Xingtao Zhou (1)	2019	42,372	—	—	—	—	—	—	—
President CEO and CFO	2018	0	—	—	—	—	—	—	—
David Lazar (2)	2019	—	—	—	—	—	—	—	—
former CEO	2018	—	—	4,003,096	—	—	—	—	4,003,096

———————

(1)

Mr. Zhou has received $42,372 in cash compensation from Hainan Cangbao since inception of Hainan Cangbao on March 1, 2019.

(2)

Mr. Lazar resigned as CEO on December 31, 2018, when a change of control was completed, and current management assumed control.

The Company has no stock option, retirement, pension, or profit-sharing programs for the benefit of directors, officers or other employees, but our officers and directors may recommend adoption of one or more such programs in the future. We have no employment agreements with Mr. Zhou or with any of our employees.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

During the six months ended March 31, 2020, the Company advanced a total of $28,053 to Mr. Xingtao Zhou. As of March 31, 2020 and September 30, 2019, the outstanding balance receivable from Mr. Xingtao Zhou was $0.

On March 31, 2019, the Company purchased the membership platform system from Guangdong Cangbaotianxia Art Co., Ltd with a consideration of $432,711.

During the year ended September 30, 2019, the Company prepaid $82,251 to Sichuan Cangbaotianxia Art Co., Ltd, and received $54,834. As of March 31, 2020 and September 30, 2019, the outstanding balance advanced to Sichuan Cangbaotianxia Art Co., Ltd was $27,684 and $27,417 respectively.

During the year ended September 30, 2019, the Company received $518 in advance from Mr. Wei Wang. And the balance of $518 was paid off during the six months ended March 31, 2020. As of March 31, 2020 and September 30, 2019, the outstanding balance payable to Mr. Wei Wang was $0 and $518, respectively.

Conflicts of Interest

Certain potential conflicts of interest are inherent in the relationships between our officers and directors, and the Company.

From time to time, one or more of our affiliates may form or hold an ownership interest in and/or manage other businesses both related and unrelated to the type of business that we own and operate. These persons expect to continue to form, hold an ownership interest in and/or manage additional other businesses which may compete with ours with respect to operations, including financing and marketing, management time and services and potential customers. These activities may give rise to conflicts between or among the interests of us and other businesses with which our affiliates are associated. Our affiliates are in no way prohibited from undertaking such activities, and neither we nor our shareholders will have any right to require participation in such other activities.

Further, because we intend to transact business with some of our officers, directors and affiliates, as well as with firms in which some of our officers, directors or affiliates have a material interest, potential conflicts may arise between the respective interests of us and these related persons or entities. We believe that such transactions will be effected on terms at least as favorable to us as those available from unrelated third parties.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as of the date of this Current Report on Form 8-K after closing of the Share Exchange, with respect to the beneficial ownership of our common stock and preferred stock for (i) each director and named executive officer, (ii) all of our directors and officers as a group, and (iii) each person known to us to own beneficially 5% or more of the outstanding shares of our common stock. As of the date of this Current Report on Form 8-K, there are 110,319,245 shares of common stock issued and outstanding.

Name and Address of Beneficial Owner (1)	Class of Securities	Shares Beneficially Owned	Percentage Owned (4)
Directors and Named Executive Officers
Xingtao Zhou	Preferred Stock	9,920,000	100.0%
	Common Stock	59,839,271	54.2%
Yaqin Fu (2)	Common Stock	15,663,849	14.2%
All Officers and Directors as a group (2 persons)	Common Stock	75,503,120	68.4%
5% Stockholders
Wei Wang (3)	Common Stock	18,000,000	16.3%

———————

(1)	Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act. Pursuant to the rules of the SEC, shares of common stock which an individual or group has a right to acquire within 60 days pursuant to the exercise of options or warrants are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be beneficially owned and outstanding for the purpose of computing the percentage ownership of any other person shown in the table.
(2)	Yaqin Fu is the wife of Liang Tan, a director of the Company, and therefore Mr. Tan may be deemed to be the beneficial owner of the shares owned by Ms. Fu.
(3)	Mr. Wang was one of the Cayman Company Shareholders.
(4)	Based on 110,319,245 shares of our Common Stock issued and outstanding as of the date of this Current Report on Form 8-K.

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DESCRIPTION OF SECURITIES

Authorized Capital Stock

Our authorized stock consists of 500,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of Series A preferred stock, par value $0.001 per share. After the closing of the Share Exchange, there are 110,319,245 outstanding shares of common stock, and 9,920,000 shares of preferred stock. 100% of our preferred shares are owned by our CEO, Xingtao Zhou.

Preferred Stock

Each share of Series A preferred stock has a par value of $0.001 per share. The Series A preferred stock may vote on any matter that may from time to time be submitted to the Company’s shareholders for a vote, on a one-for- one basis. If the Company effects a stock split which either increases or decreases the number of shares of common stock outstanding and entitled to vote, the voting rights of the Series A preferred stock shall not be subject to adjustment unless specifically authorized.

Each share of Series A preferred stock shall be convertible at a rate of $0.0000025 per share of common stock (“Conversion Ratio”), at the option of a holder, at any time and from time to time, from and after the issuance of the Series A preferred stock.

Subject to the rights of any existing series of preferred stock or to the rights of any series of preferred stock which may from time to time hereafter come into existence, the holders of shares of Series A preferred stock shall be entitled to receive dividends, out of any assets legally available therefor, upon any payment of any dividend (payable other than in common stock or other securities and rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of common stock of the Company) on the Company’s common stock, as and if declared by the Board of Directors, as if the Series A preferred stock had been converted into common stock. Subject to the rights of any existing series of preferred stock or to the rights of any series of preferred stock which may from time to time hereafter come into existence, the payment of any dividends on any series or classes of stock of the Company shall be subject to any priority set forth in Paragraph (I)(c)(3) of Article FIFTH of our Articles of Incorporation, as such may from time to time be amended.

In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, subject to the rights of any existing series of preferred stock or to the rights of any series of preferred stock which may from time to time hereafter come into existence, the holders of the Series A preferred stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Company to the holders of common stock by reason of their ownership thereof, an amount per share equal to the price per share actually paid to the Company upon the initial issuance of the Series A preferred stock (each, the “Original Issue Price”) for each share of Series A preferred stock then held by them, plus declared but unpaid dividends. Unless the Company can establish a different Original Issue Price in connection with a particular sale of Series A preferred stock, the Original Issue Price shall be $0.001 per share for the Series A preferred stock. If, upon the occurrence of any liquidation, dissolution or winding up of the Company, the assets and funds thus distributed among the holders of the Series A preferred stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then, subject to the rights of any existing series of preferred stock or to the rights of any series of preferred stock which may from time to time hereafter come into existence, the entire assets and funds of the Company legally available for distribution shall be distributed ratably among the holders of the each series of preferred stock in proportion to the preferential amount each such holder is otherwise entitled to receive.

The Series A preferred stock shares are nonredeemable other than upon the mutual agreement of the Company and the holder of shares to be redeemed, and even in such case only to the extent permitted by the Certificate of Designation, the Company’s Articles of Incorporation and applicable law.

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Common Stock

Holders of common stock are entitled to cast one vote for each share on all matters submitted to a vote of shareholders, including the election of directors. The holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the Board out of funds legally available therefor. See “Dividend Policy” below. Such holders do not have any preemptive or other rights to subscribe for additional shares. All holders of common stock are entitled to share ratably in any assets for distribution to shareholders upon the liquidation, dissolution or winding up of the Company. There are no conversion, redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and nonassessable.

Dividend Policy

We have not paid cash dividends on any class of common equity since formation and we do not anticipate paying any dividends on our outstanding common stock in the foreseeable future. We plan to retain any earnings to finance the development of the business and for general corporate purposes.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company’s common stock is thinly traded on the over-the-counter market under the symbol “TXCB.” There can be no assurance that a liquid market for our securities will ever develop. Transfer of our common stock may also be restricted under the securities laws of various states and foreign jurisdictions. Consequently, investors may not be able to liquidate their shares, and should be prepared to hold the common stock for an indefinite period of time.

Transfer Agent and Registrar

The transfer agent for our common shares and preferred shares is Olde Monmouth Transfer, LLC, located at 200 Memorial Parkway, Atlantic Highlands New Jersey 07716. The transfer agent’s phone number is (732) 872-2727.

RECENT SALES OF UNREGISTERED SECURITIES

Reference is made to Item 3.02 of this Current Report on Form 8-K for a description of recent sales of unregistered securities, which is hereby incorporated by reference.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

Nevada Revised Statute 78.037 permits a corporation to eliminate or limit the personal liability of a director or officer to the corporation or its stockholders for damages relating to breach of fiduciary duty as a director or officer, but such a provision must not eliminate or limit the liability of a director or officer for (a) acts or omissions which involve intentional misconduct, fraud or a knowing violation of law or (b) the payment of distributions in violation of Nevada Revised Statute 78.300.

Nevada Revised Statutes 78.7502 provides as follows with respect to indemnification of directors, officers, employees and agents:

(a) We may indemnify any person who was or is a party or is threatened to be made a party to any action, except an action by us, by reason of the fact that he is or was our director, officer, employee or agent, or is or was serving as a director, officer, employee or agent of any other person at our request, against expenses actually and reasonably incurred by him in connection with the action, suit or proceeding if he: (i) is not liable for breach of his fiduciary duties as a director or officer pursuant to Nevada Revised Statutes 78.138; and (ii) acted in good faith and in a manner which he reasonably believed to be in or not opposed to our best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

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(b) We may indemnify any person who was or is a party or is threatened to be made a party to any action by us, by reason of the fact that he is or was our director, officer, employee or agent, or is or was serving as a director, officer, employee or agent of any other person at our request, against expenses actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he: (i) is not liable for breach of his fiduciary duties pursuant to Nevada Revised Statutes 78.138; and (ii) acted in good faith and in a manner which he reasonably believed to be in or not opposed to our best interest. We may not indemnify him for any claim, issue or matter as to which he has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to us or for amounts paid in settlement to us, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, he is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.

(c) To the extent that our director, officer, employee or agent has been successful on the merits or otherwise in defense of any action, suit or proceeding, or in defense of any claim, issue or matter therein, we are required to indemnify him against expenses, including attorneys’ fees actually and reasonably incurred by him in connection with the defense.

Our Articles of Incorporation and Bylaws provide for elimination of any liability of our directors and officers and indemnity of our directors and officers to the fullest extent permitted by Nevada law.

The above-described provisions relating to the exclusion of liability and indemnification of directors and officers are sufficiently broad to permit the indemnification of such persons in certain circumstances against liabilities arising under the Securities Act of 1933. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors and officers and to persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.

Item 3.02 Unregistered Sales of Equity Securities

In connection with the Exchange Agreement, we issued 75,000,000 shares of common stock to the Cayman Company Shareholders. In exchange, we received 100% of the issued and outstanding shares of Cayman Company from the Cayman Company Shareholders, which resulted in Cayman Company becoming our wholly owned subsidiary. The issuance of such securities was exempt from registration pursuant to Regulation S promulgated under the Securities Act. The Cayman Company Shareholders are not U.S. Persons (as that term is defined in Regulation S and they acquired our shares pursuant to the Share Exchange outside of the United States. In issuing these securities to the Cayman Company Shareholders, we claim an exemption from the registration requirements of the Securities Act for the offering of the shares of our common stock to them pursuant to Regulation S promulgated thereunder, because, among other things, the offer or sale was made in an offshore transaction and no directed selling efforts were made in the United States by the issuer, a distributor, any of their respective affiliates, or any person acting on behalf of any of the foregoing. In addition, each recipient of the shares certified as not being a U.S. person and is not acquiring the securities for the account or benefit of any U.S. person, and agreed to resell such securities only in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act, or pursuant to an available exemption from registration; and each person agreed not to engage in hedging transactions with regard to such securities unless in compliance with the Securities Act.

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Item 4.01 Changes In Registrant’s Certifying Accountant.

On July 27, 2020, our Board dismissed BF Borgers CPA PC (“Borgers”) as our independent registered public accounting firm, and engaged a new independent registered public accounting firm, JLKZ CPA LLP Certified Public Accountants (“JLKZ”), to serve as the Company’s independent auditor. Pursuant to Item 304(a) of Regulation S-K, the Company reports as follows:

(a)	(i)	Borgers was dismissed as our independent registered public accounting firm effective on July 27, 2020.
	(ii)	For the two most recent fiscal years ended June 30, 2019, Borgers’ report on the financial statements did not contain any adverse opinions or disclaimers of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles, other than for a going concern.
	(iii)	We did not have any disagreements with Borgers relating to any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure for the audited financials for the fiscal years ended June 30, 2019 and 2018 and through the date of dismissal, which disagreements, if not resolved to the satisfaction of Borgers, would have caused it to make reference to the subject matter of the disagreements in connection with its reports.
	(iv)	During our fiscal years ended June 30, 2019, and through the date of dismissal, the Company did not experience any reportable events.
	(v)	The Company provided Borgers with a copy of this Form 8-K prior to the time of its filing with the SEC and requested that Borgers furnish us with a letter addressed to the SEC stating whether Borgers agrees with the statements made by us in this Item 4.01(a) and, if not, the respects in which it does not agree. That letter is attached hereto as Exhibit 16.1.

(b)	(i)	On July 27, 2020, our Board engaged JLKZ to serve as our independent registered public accounting firm.
	(ii)	During the Company’s two most recent fiscal years ended June 30, 2019 and 2018, and the subsequent interim period through July 27, 2020, neither the Company nor anyone acting on its behalf consulted with JLKZ regarding any of the matters described in Items 304(a)(2)(i) and (ii) of Regulation S-K.

Item 5.01. Changes in Control of Registrant.

On July 27, 2020, the Company consummated the Share Exchange, pursuant to which Cang Bao issued an aggregate of 75,000,000 shares of common stock to the Cayman Company Shareholders in exchange for 100% of the issued and outstanding shares of Cayman Company, resulting in Cayman Company becoming our wholly owned subsidiary.

Item 5.06 Change in Shell Company Status.

As described in Item 2.01 above, we were a “shell company” (as such term is defined in Rule 12b-2 under the Exchange Act) immediately before the closing of the Share Exchange. As a result of the Share Exchange, Cayman Company became our wholly owned subsidiary and our main operating business. Consequently, we believe that the Share Exchange has caused us to cease to be a shell company. For more information about the Share Exchange, please see the information set forth above under Item 2.01 of this Current Report on Form 8-K, which information is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(a)	Financial statements of business acquired.
	(i) Consolidated financial statements of Zhi Yuan Limited and its subsidiaries as of and for the years ended September 30, 2019 (Audited); and as of and for the six months ended March 31, 2020 (Unaudited) and related notes thereto is attached hereto as Exhibit 99.1.
(b)	Pro forma financial information.
	Unaudited pro forma financial statements and related notes thereto are attached hereto as Exhibit 99.2.

(c) Shell company transactions.   None.

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(d) Exhibits.

EXHIBIT INDEX

Exhibit Number	Description
2.1	Share Exchange Agreement dated July 27, 2020, by and among the registrant, Zhi Yuan Limited and the  Cayman Company Shareholders.
10.1	Call Option Agreement
10.2	Equity Pledge Agreement
10.3	Proxy Agreement
10.4	Management Consultation Agreement
16.1	Borger’s Letter to SEC
99.1	Audited and unaudited consolidated financial statements
99.2	Unaudited pro forma financial statements

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.
Date: July 27, 2020	/s/ Xingtao Zhou
	Name: Xingtao Zhou
	Title: President, Chief Executive Officer and Chief Financial Officer

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EX-2.1

EXHIBIT 2.1

SHARE EXCHANGE AGREEMENT

by and among

CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.,

a Nevada Company

and

ZHI YUAN LIMITED

a Cayman Islands Company

and

THE SHAREHOLDERS OF ZHI YUAN LIMITED

LISTED ON EXHIBIT A

Dated as of July 27, 2020

SHARE EXCHANGE AGREEMENT

THIS SHARE EXCHANGE AGREEMENT (this “ Agreement ”), dated as of July 27, 2020, is by and among Cang Bao Tian Xia International Art Trade Center, Inc., a Nevada corporation (“Cang Bao”), Zhi Yuan Limited, a Cayman Islands company (“ CAYMAN Company ”), and the beneficial shareholders of CAYMAN Company identified on Exhibit A hereto (together referred to herein as the “ CAYMAN Company Shareholders ,” each a “ CAYMAN Company Shareholder ”). Each party to this Agreement is individually referred to herein as a “Party” and collectively, as the “Parties.”

PREMISES

WHEREAS, Cang Bao is a publicly held corporation organized under the laws of the state of Nevada with no significant operations; and

WHEREAS, Xingtao Zhou (the “ Principal Shareholders”) is currently the Principal Shareholder of Cang Bao owning, directly or indirectly, 17,904,771 shares of Cang Bao Common Stock (as defined in Section 2.2 below), representing approximately 50.69% of the issued and outstanding Cang Bao Common Stock as of the date hereof, and 100% of the 9,920,000 issued and outstanding preferred shares; and

WHEREAS, CAYMAN Company is a limited liability company organized under the laws of the Cayman Islands with one (1) share of common stock authorized, which one share was initially issued to Yung Lap Tsang (the “Transferor”), but which share has been transferred by the Transferor, so that, as of the date of this Agreement, the one share of CAYMAN Company is owned, beneficially, by the three CAYMAN Company Shareholders in the percentages set forth on Exhibit A; and

WHEREAS, CAYMAN Company owns 100% of the issued and outstanding capital stock of Cangyun (Hong Kong) Limited, a Hong Kong company (“Hong Kong Company”), and Hong Kong Company is the holder of 100% of the issued and outstanding capital stock of Shanghai Cangyun Management Consulting Co., Ltd. (“WFOE”), a wholly foreign owned enterprise with limited liability incorporated under the People’s Republic of China (the “ PRC ”), with agreements that allow WFOE to control the operations of Hainan Cangbao Tianxia Cultural Relic Co., Ltd and Cangbao Tianxia (Shanghai) Cultural Relic Co., Ltd.; and

WHEREAS , Cang Bao agrees to acquire 100% of the issued and outstanding capital stock of CAYMAN Company in exchange for the issuance of 75,000,000 shares of Cang Bao Common Stock (the “ Exchange ”) to the CAYMAN Company Shareholders, which will represent approximately 67.98% of the common shares outstanding of Cang Bao at the Closing of the Share Exchange, and each CAYMAN Company Shareholder agrees to exchange his beneficial interest in his CAYMAN Company Shares for shares of Cang Bao on the terms described herein; and

WHEREAS, the parties hereto intend for this transaction to constitute a tax-free reorganization pursuant to the provisions of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended.

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AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and intending to be legally bound hereby, the Parties agree as follows:

ARTICLE I

REPRESENTATIONS AND WARRANTIES

OF CAYMAN COMPANY

As an inducement to, and to obtain the reliance of, Cang Bao, and except as set forth in the corresponding disclosure schedules delivered by CAYMAN Company in connection with this Agreement (the “ CAYMAN Company Schedules ”), CAYMAN Company represents and warrants, as of the date hereof and as of the Closing Date (defined in Section 4.2 ”), as defined below, as follows:

1.1 Organization .  CAYMAN Company is a corporation duly organized, validly existing, and in good standing under the laws of Cayman Islands and has the corporate power and is duly authorized under all applicable laws, regulations, ordinances, and orders of public authorities to carry on its business in all material respects as it is now being conducted.  Included in Schedule 1.1 of the CAYMAN Company Schedules are complete and correct copies of the articles of association (such documents, or other equivalent corporate organizational documents, the “ Organizational Documents ”) of CAYMAN Company as in effect on the date hereof. The execution and delivery of this Agreement does not, and the consummation of the Transactions (as defined in Section 1.4 ) will not, violate any provision of CAYMAN Company’ Organizational Documents. CAYMAN Company has full power, authority, and legal right and has taken all action required by law, its Organizational Documents, or otherwise to authorize the execution and delivery of this Agreement and to consummate the Transactions.

1.2 Capitalization .  CAYMAN Company has authorized capital stock consisting of one (1) ordinary share with $1.00 par value (the “ CAYMAN Company Common Stock ”),  which one share is currently issued and outstanding, and which share bas been transferred by duly executed stock power, so that it is now beneficially owned by the three CAYMAN Company Shareholders set forth in Exhibit “A,” attached hereto and made a part hereof. The CAYMAN Company Share is not subject to any preemptive or subscription right, any voting trust agreement or other contract, agreement, arrangement, option, warrant, call, commitment or other right of any character obligating or entitling CAYMAN Company to issue, sell, redeem or purchase any of its securities, and there is no outstanding security of any kind convertible into or exchangeable for CAYMAN Company Common Stock. The CAYMAN Company Share is owned  beneficially by the CAYMAN Company Shareholders, free and clear of any liens, claims, encumbrances, or restrictions of any kind.

1.3 Subsidiaries and Predecessor Corporations. Except as set forth in Schedule 1.3 of the CAYMAN Company Schedules and in this Section 1.3, CAYMAN Company does not have any predecessor corporation(s) or subsidiaries, and does not own, beneficially or of record, any shares of any other corporation.  CAYMAN Company owns 100% of the issued and outstanding capital stock of Cangyun (Hong Kong) Limited, a Hong Kong company (“Hong Kong Company”).  Hong Kong Company is the owner of 100% of the issued and outstanding capital stock of Shanghai Cangyun Management Consulting Co., Ltd. (“WFOE”), a wholly foreign owned enterprise with limited liability incorporated under the People’s Republic of China (the “ PRC ”), with agreements that allow WFOE to control the operations of Hainan Cangbao Tianxia Cultural Relic Co., Ltd and Cangbao Tianxia (Shanghai) Cultural Relic Co., Ltd.;   Hereinafter, the term “CAYMAN Company” also includes those subsidiaries set forth herein and in Schedule 1.3 of the CAYMAN Company Schedules.

1.4 Authority; Execution and Delivery; Enforceability of Agreement . CAYMAN Company has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby (the “Transactions”). The execution and delivery by CAYMAN Company of this Agreement and the consummation by CAYMAN Company of the Transactions have been duly authorized and approved by the board of directors of CAYMAN Company and no other corporate proceedings on the part of CAYMAN Company are necessary to authorize this Agreement and the Transactions. When executed and delivered, this Agreement will be enforceable against CAYMAN Company in accordance with its terms.

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1.5 No Conflict with Other Instruments. The execution of this Agreement and the consummation of the Transactions will not result in the material breach of any term or provision of, constitute a default under, or terminate, accelerate or modify the terms of, any indenture, mortgage, deed of trust, or other material agreement, or instrument to which CAYMAN Company is a party or to which any of its assets, properties or operations are subject.

1.6 Taxes .

(a) CAYMAN Company has timely filed, or has caused to be timely filed on its behalf, all tax returns required to be filed by it, and all such tax returns are true, complete and accurate, except to the extent any failure to file or any inaccuracies in any filed tax returns, individually or in the aggregate, have not had and would not reasonably be expected to have a material adverse effect on CAYMAN Company. All taxes shown to be due on such tax returns, or otherwise owed, have been timely paid, except to the extent that any failure to pay, individually or in the aggregate, has not had and would not reasonably be expected to have a material adverse effect on CAYMAN Company.  There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of CAYMAN Company know of no basis for any such claim.

(b) The CAYMAN Company Financial Statements (as defined in Section 1.15 hereof) reflect an adequate reserve for all taxes payable by CAYMAN Company and its Subsidiaries (in addition to any reserve for deferred taxes to reflect timing differences between book and tax items) for all taxable periods and portions thereof through the date of such financial statements. No deficiency with respect to any taxes has been proposed, asserted or assessed against CAYMAN Company or any of its subsidiaries, and no requests for waivers of the time to assess any such taxes are pending, except to the extent any such deficiency or request for waiver, individually or in the aggregate, has not had and would not reasonably be expected to have a material adverse effect on CAYMAN Company.

1.7    Absence of Certain Changes or Events. Since the date of the most recent CAYMAN Company Balance Sheet (defined in Section 1.15):

(a)  There has not been any material adverse change in the business, operations, properties, assets or condition (financial or otherwise) of CAYMAN Company;

(b)  Except as required by this Agreement, CAYMAN Company has not (i) amended its Organizational Documents; (ii) declared or made, or agreed to declare or make any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchased or redeemed, or agreed to purchase or redeem, any of its capital stock; (iii) made any material change in its method of management, operation or accounting; (iv) entered into any transactions or agreements; or (v) made any increase in or adoption of any profit sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement, made to, for or with its officers, directors, or employees; and

(c)  Except as required by this Agreement, CAYMAN Company has not (i) granted or agreed to grant any options, warrants, or other rights for its stock, bonds, or other corporate securities calling for the issuance thereof; (ii) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent); (iii) sold or transferred, or agreed to sell or transfer, any of its assets, properties, or rights, or canceled, or agreed to cancel, any debts or claims; or (iv) issued, delivered or agreed to issue or deliver, any stocks, bonds or other corporate securities including debentures (whether authorized and unissued or held as treasury stock).

1.8    Litigation. There is no claim, dispute, action, suit, proceeding or investigation pending or to the knowledge of CAYMAN Company after reasonable investigation, threatened by or against CAYMAN Company or any of its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind. CAYMAN Company does not have any knowledge of any material default on its part with respect to any judgment, order, injunction, decree, award, rule, or regulation of any court,

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arbitrator, or governmental agency or instrumentality or of any circumstances which, after reasonable investigation, would result in the discovery of such a default.

1.9   Compliance with Applicable Laws. To the best of its knowledge, CAYMAN Company has conducted its business and operations in compliance with all applicable laws, including those relating to occupational health and safety and the environment, except for instances of noncompliance that, individually and in the aggregate, have not had and would not reasonably be expected to have a material adverse effect on CAYMAN Company.  CAYMAN Company has not received any written communication during the past two years from a governmental entity that alleges that CAYMAN Company is not in compliance in any material respect with any applicable law.

1.10 Brokers’ Fees .  No broker, investment banker, financial advisor or other person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of CAYMAN Company.

1.11 Contracts .

(a) All “material” contracts, agreements, franchises, license agreements, debt instruments or other commitments to which CAYMAN Company is a party or by which it or any of its assets, products, technology, or properties are bound other than those incurred in the ordinary course of business are set forth in Schedule 1.11 of the CAYMAN Company Schedules. A “material” contract, agreement, franchise, license agreement, debt instrument or commitment is one which would be required to be disclosed in connection with a current report on Form 8-K by CAYMAN Company if CAYMAN Company were a registrant subject to Rule 13a-1 and Rule 13a-11 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”);

(b) All contracts, agreements, franchises, license agreements, and other commitments to which CAYMAN Company is a party or by which its properties are bound and which are material to the operations of CAYMAN Company taken as a whole are valid and enforceable by CAYMAN Company in all respects, except as limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and subject to the qualification that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefore may be brought (collectively, “ Bankruptcy and Equity Exceptions ”); and

(c) Except as included or described in Schedule 1.11 of the CAYMAN Company Schedules, CAYMAN Company is not a party to any oral or written (i) contract for the employment of any officer or employee; (ii) profit sharing, bonus, deferred compensation, stock option, severance pay, pension benefit or retirement plan, (iii) agreement, contract, or indenture relating to the borrowing of money, (iv) guaranty of any obligation; (vi) collective bargaining agreement; or (vii) agreement with any present or former officer or director of CAYMAN Company.

1.12   Title to Properties. Except as disclosed in Schedule 1.12, CAYMAN Company does not own any real property.

1.13   Intellectual Property. Except as disclosed in Schedule 1.13, CAYMAN Company does not own, nor is validly licensed nor otherwise has the right to use, any CAYMAN Company property rights. No claims are pending or, to the knowledge of CAYMAN Company, threatened that CAYMAN Company is infringing or otherwise adversely affecting the rights of any person with regard to any Intellectual Property Right.

1.14   Insurance . Except as disclosed in Schedule 1.14, CAYMAN Company does not currently maintain any form of insurance.

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1.15   Financial Statements.

(a) Included in Schedule 1.15 of the CAYMAN Company Schedules are the audited balance sheets of CAYMAN Company, as of September 30, 2019 (the “ CAYMAN Company Balance Sheets ”) and the related audited statements of operations, stockholders’ equity and cash flows for the fiscal years ended September 30, 2018 and September 30, 2019, together with the notes to such financial statements and the opinion of KCCW Accountancy, CPA, independent certified public accountants (the financial statements referred to herein collectively, the “ CAYMAN Company Financial Statements ”).

(b) The CAYMAN Company Financial Statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) consistently applied throughout the periods involved. The CAYMAN Company Balance Sheets are true and accurate and fairly present, as of their respective dates, the financial condition of CAYMAN Company. As of the date of the CAYMAN Company Balance Sheets, except as and to the extent reflected or reserved against therein, CAYMAN Company had no liabilities or obligations (absolute or contingent) which should be reflected in the CAYMAN Company Balance Sheets or the notes thereto prepared in accordance with GAAP, and all assets reflected therein are properly reported and fairly present the value of the assets of CAYMAN Company, in accordance with GAAP. The statements of operations, stockholders’ equity and cash flows included in the CAYMAN Company Financial Statements reflect fairly the information required to be set forth therein by GAAP.

(c) CAYMAN Company has no liabilities with respect to the payment of any federal, state, county, local or other taxes (including any deficiencies, interest or penalties), except for taxes accrued but not yet due and payable.

(d) CAYMAN Company has timely filed all state, federal or local income and/or franchise tax returns required to be filed by it from inception to the date hereof.  Each such income tax return reflects the taxes due for the period covered thereby, except for amounts which, in the aggregate, are immaterial.

(e) All of CAYMAN Company’s assets are reflected on the CAYMAN Company Financial Statements, and, except as set forth in the CAYMAN Company Schedules or the CAYMAN Company Financial Statements, CAYMAN Company has no material liabilities, direct or indirect, matured or unmatured, contingent or otherwise.

1.16 Transactions with Affiliates and Employees . Except as set forth in Schedule 1.16 of the CAYMAN Company Schedules, none of the officers or directors of CAYMAN Company and, to the knowledge of CAYMAN Company, none of the employees of CAYMAN Company is presently a party to any transaction with CAYMAN Company or any of its subsidiaries (other than for services as employees, officers and directors), including any Contract or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of CAYMAN Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

1.17 Investment Company . CAYMAN Company is not, and is not an affiliate of, and immediately following the Closing will not have become, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

1.18 Foreign Corrupt Practices . Neither CAYMAN Company, nor, to CAYMAN Company’s knowledge, any director, officer, agent, employee or other person acting on behalf of CAYMAN Company, in the course of its actions for, or on behalf of, CAYMAN Company (a) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (b) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (c) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (d)

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made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

1.19   Sarbanes-Oxley; Disclose Controls. CAYMAN Company will be in compliance in all material respects with all of the provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it after the Exchange. CAYMAN Company shall establish disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) for CAYMAN Company and design such disclosure controls and procedure to ensure that material information relating to CAYMAN Company is made known to the certifying officers by others within those entities.

1.20  Approval of Agreement . The board of directors of CAYMAN Company has authorized the execution and delivery of this Agreement by CAYMAN Company and has approved this Agreement and the Transactions.

1.21  Valid Obligation . This Agreement and all agreements and other documents executed by CAYMAN Company in connection herewith constitute valid and binding obligations of CAYMAN Company, enforceable in accordance with their respective terms, except as may be limited by Bankruptcy and Equity Exceptions.

ARTICLE II

REPRESENTATIONS AND WARRANTIES

OF CANG BAO

As an inducement to, and to obtain the reliance of CAYMAN Company, and except as set forth in the corresponding disclosure schedules delivered by Cang Bao in connection with this Agreement (the “ Cang Bao Schedules ”), Cang Bao represents and warrants, as of the date hereof and as of the Closing Date (defined in Section 4.2 ”), as defined below, as follows:

2.1            Organization . Cang Bao is a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada and has the corporate power and is duly authorized under all applicable laws, regulations, ordinances, and orders of public authorities to carry on its business in all material respects as it is now being conducted.  Included in Schedule 2.1 of the Cang Bao Disclosure Schedules are complete and correct copies of the Organizational Documents of Cang Bao as in effect on the date hereof. The execution and delivery of this Agreement does not, and the consummation of the Transactions will not, violate any provision of Cang Bao’s Organizational Documents. Cang Bao has full power, authority, and legal right and has taken all action required by law, its Organizational Documents, or otherwise to authorize the execution and delivery of this Agreement and to consummate the Transactions.

2.2            Capitalization .  The authorized capital stock of Cang Bao consists of (a) 10,000,000 Series A Preferred Shares, $.001 par value “Cang Bao Preferred Shares”), of which 9,920,000 shares are issued and outstanding, all of which shares are owned by Xingtao Zhou, and (b) 500,000,000 shares of common stock, par value $0.001 per share (“ Cang Bao Common Stock ”), of which 35,319,245 shares are issued and outstanding immediately prior to the consummation of the  All issued and outstanding shares of Cang Bao Common Stock and Preferred Stock are legally issued, fully paid, non-assessable and not issued in violation of the preemptive or other rights of any person.

2.3    Subsidiaries and Predecessor Corporations .  Except as set forth in Schedule 2.3 of the Cang Bao Schedules, Cang Bao does not have any predecessor corporation(s), no subsidiaries, and does not own, beneficially or of record, any shares of any other corporation.

2.4       Financial Statements .

(a)   Copies of the audited balance sheet of Cang Bao as of June 30, 2019 and the related audited statements of operations, stockholders’ equity and cash flows for the fiscal year ended June 30, 2019, together with the notes to such statements and the opinion of BF Borgers CPA, P.C., independent certified public accountants (the “ Cang Bao Financial Statements ”) have been filed with the SEC.

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(b)  The Cang Bao Financial Statements have been prepared in accordance with GAAP consistently applied throughout the periods involved. The Cang Bao Balance Sheets are true and accurate and fairly present as of their respective dates the financial condition of Cang Bao.  As of the respective dates of the Cang Bao Balance Sheets, except as and to the extent reflected or reserved against therein, Cang Bao had no liabilities or obligations (absolute or contingent) which should be reflected in the Cang Bao Balance Sheets or the notes thereto prepared in accordance with GAAP, and all assets reflected therein are properly reported and fairly present the value of the assets of Cang Bao, in accordance with GAAP. The statements of operations, stockholders’ equity and cash flows in the Cang Bao Financial Statements reflect fairly the information required to be set forth therein by GAAP.

(c)  Cang Bao has no liabilities with respect to the payment of any federal, state, county, local or other taxes (including any deficiencies, interest or penalties), except for taxes accrued but not yet due and payable.

(d)  Cang Bao has timely filed all state, federal or local income and/or franchise tax returns required to be filed by it from inception to the date hereof.  Each such income tax return reflects the taxes due for the period covered thereby, except for amounts which, in the aggregate, are immaterial.

(e)  All of Cang Bao’s assets are reflected on the Cang Bao Financial Statements, and, except as set forth in the Cang Bao Schedules or the Cang Bao Financial Statements, Cang Bao has no material liabilities, direct or indirect, matured or unmatured, contingent or otherwise.

(f)   Except as set forth on the Cang Bao Balance Sheet as of the most recent date, and for liabilities since that date in the ordinary course of business, Cang Bao shall have no liabilities on the Closing Date (as defined in Section 4.2).

2.5    Information .  The information concerning Cang Bao set forth in this Agreement and the Cang Bao Schedules is complete and accurate in all material respects and does not contain any untrue statements of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading.

2.6    Options or Warrants.  Except for the conversion rights in the Cang Bao Preferred Stock, There are no existing options, warrants, calls, or commitments of any character relating to the authorized and unissued capital stock of Cang Bao (including, but not limited to, the Cang Bao Common Stock).

2.7    Absence of Certain Changes or Events .  Since the date of the most recent Cang Bao Balance Sheet:

(a)  There has not been any material adverse change in the business, operations, properties, assets or condition (financial or otherwise) of Cang Bao;

(b)  Except as required by this Agreement, Cang Bao has not (i) amended its Organizational Documents; (ii) declared or made, or agreed to declare or make any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchased or redeemed, or agreed to purchase or redeem, any of its capital stock; (iii) made any material change in its method of management, operation or accounting; (iv) entered into any transactions or agreements; or (v) made any increase in or adoption of any profit sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement, made to, for or with its officers, directors, or employees; and

(c)   Except as required by this Agreement, Cang Bao has not (i) granted or agreed to grant any options, warrants, or other rights for its stock, bonds, or other corporate securities calling for the issuance thereof; (ii) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent); (iii) sold or transferred, or agreed to sell or transfer, any of its assets, properties, or rights, or canceled, or agreed to cancel, any debts or claims; or (iv) issued, delivered or agreed to issue or deliver, any stock, bonds or other corporate securities including debentures (whether authorized and unissued or held as treasury stock).

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2.8    Litigation and Proceedings.  There are no actions, suits, proceedings or investigations pending or, to the knowledge of Cang Bao after reasonable investigation, threatened by or against Cang Bao or affecting Cang Bao or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind.  Cang Bao does not have any knowledge of any default on its part with respect to any judgment, order, writ, injunction, decree, award, rule or regulation of any court, arbitrator, or governmental agency or instrumentality or any circumstance which after reasonable investigation would result in the discovery of such default.

2.9        Contracts .  Except as set forth in Schedule 2.9 of the Cang Bao Schedules, Cang Bao is not a party to, and neither it nor any of its assets, products, technology and properties are bound by:

(a) any contract, agreement, franchise, license, debt instrument, or other commitment, whether such agreement is in writing or oral;

(b) any charter or other corporate restriction, except as set forth in the Organizational Documents of Cang Bao;

(c) any judgment, order, writ, injunction, decree, or award; or

(d) any oral or written (i) contract for the employment of any officer or employee; (ii) profit sharing, bonus, deferred compensation, stock option, severance pay, pension benefit or retirement plan, (iii) agreement, contract, or indenture relating to the borrowing of money, (iv) guaranty of any obligation, (vi) collective bargaining agreement; or (vii) agreement with any present or former officer or director of Cang Bao.

2.10    No Conflict With Other Instruments.  The execution of this Agreement and the consummation of the Transactions will not result in the breach of any term or provision of, constitute a default under, or terminate, accelerate or modify the terms of, any indenture, mortgage, deed of trust, or other material agreement or instrument to which Cang Bao is a party or to which any of its assets, properties or operations are subject.

2.11    Compliance With Laws and Regulations.  To the best of its knowledge, Cang Bao has complied with all applicable statutes and regulations of any federal, state, or other applicable governmental entity or agency thereof.  This compliance includes, but is not limited to, the filing of all reports to date with federal and state securities authorities.

2.12    Approval of Agreement.  The board of directors of Cang Bao has authorized the execution and delivery of this Agreement by Cang Bao and has approved this Agreement and the Transactions.

2.13    Material Transactions or Affiliations.  Except for this Agreement and the contemplated Transactions, there exists no contract, agreement or arrangement between Cang Bao and any predecessor and any person who was at the time of such contract, agreement or arrangement an officer, director, or person owning of record or known by Cang Bao to own beneficially, five percent (5%) or more of the issued and outstanding Cang Bao Common Stock and which is to be performed in whole or in part after the date hereof or was entered into not more than three (3) years prior to the date hereof.  Neither any officer, director, nor five percent (5%) stockholder of Cang Bao has, or has had since inception of Cang Bao, any known interest, direct or indirect, in any such transaction with Cang Bao which was material to the business of Cang Bao.  Cang Bao has no commitment, whether written or oral, to lend any funds to, borrow any money from, or enter into any other transaction with, any such affiliated person.

2.14   Bank Accounts; Power of Attorney.  Set forth in Schedule 2.14 of  the Cang Bao Schedules is a true and complete list of (a) all accounts with banks, money market mutual funds or securities or other financial institutions maintained by Cang Bao within the past twelve (12) months, the account numbers thereof, and all persons authorized to sign or act on behalf of Cang Bao, (b) all safe deposit boxes and other similar custodial arrangements maintained by Cang Bao within the past twelve (12) months, (c) the check ledger for the last twelve (12) months, (d) the names of all persons holding powers of attorney from Cang Bao or who are otherwise

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authorized to act on behalf of Cang Bao with respect to any matter, other than its officers and directors, and a summary of the terms of such powers or authorizations, and (e) a list of all the current officers and directors of Cang Bao.

2.15    Valid Obligation.   This Agreement and all agreements and other documents executed by Cang Bao in connection herewith constitute the valid and binding obligations of Cang Bao, enforceable in accordance with their respective terms, except as may be limited by Bankruptcy and Equity Exceptions.

2.16   Exchange Act Compliance.  Cang Bao has timely filed all reports, statements, and other information required to be filed by it under the Exchange Act; the common shares have been registered under Section 12(g) of the Exchange Act, and Cang Bao is in compliance with all of the requirements under, and imposed by, Section 12(g) of the Exchange Act, except were a failure to so comply is not reasonably likely to have a Material Adverse Effect on Cang Bao.

2.17   Shell Company Status.  As of the date of this Agreement, Cang Bao is a “shell company,” as defined in Rule 12b-2 of the Exchange Act pursuant to the terms of this Share Exchange Agreement.

2.18   OTC Markets.  Cang Bao is currently quoted on the OTC Markets website, with the symbol TXCB, and meets all requirements to be listed on the OTC Markets website.

2.19   SEC Filings; Financial Statements .

(a) Cang Bao has made available to CAYMAN Company a correct and complete copy, or there has been available on EDGAR, copies of each report, registration statement and definitive information statement filed by Cang Bao with the SEC for the 24 months prior to the date of this Agreement (the “ Cang Bao SEC Reports ”), which, to Cang Bao’s knowledge, are all the forms, reports and documents filed by Cang Bao with the SEC for the 36 months prior to the date of this Agreement. As of their respective dates, to Cang Bao’s knowledge, the Cang Bao SEC Reports: (i) were prepared in accordance and complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Cang Bao SEC Reports, and (ii) did not at the time they were filed (and if amended or superseded by a filing prior to the date of this Agreement then on the date of such filing and as so amended or superceded) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

(b) Each set of financial statements (including, in each case, any related notes thereto) contained in the Cang Bao SEC Reports comply as to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with U.S. GAAP applied on a consistent basis throughout the periods involved, and each fairly presents in all material respects the financial position of Cang Bao at the respective dates thereof and the results of its operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal adjustments which were not or are not expected to have a Material Adverse Effect on Cang Bao taken as a whole.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF

THE CAYMAN COMPANY SHAREHOLDERS

Each CAYMAN Company Shareholder hereby represents and warrants, severally and not jointly, to Cang Bao as follows:

3.1   Good Title . The CAYMAN Company Shareholders are the beneficial owners, and have good title to their CAYMAN Company Common Stock, with the right and authority to sell and deliver such CAYMAN Company Common Stock, and upon consummation of the transactions contemplated herein, Cang Bao will acquire from the CAYMAN Company Shareholders good and marketable title of such CAYMAN Company Common

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Stock, free and clear of all liens expecting only such restrictions upon future transfers by Cang Bao, if any, as may be imposed by applicable law.

3.2 Power and Authority . The CAYMAN Company Shareholders have the legal power, capacity and authority to execute and deliver this Agreement to consummate the transactions contemplated by this Agreement, and to perform their obligations under this Agreement.  All acts required to be taken by the CAYMAN Company Shareholders and the Transferor to enter into this Agreement and to carry out the Transactions have been properly taken.  This Agreement constitutes a legal, valid and binding obligation of the CAYMAN Company Shareholders, enforceable against the CAYMAN Company Shareholders in accordance with the terms hereof.

3.3  No Conflicts .  The execution and delivery of this Agreement by the CAYMAN Company Shareholders and the performance by the CAYMAN Company Shareholders of their obligations hereunder in accordance with the terms hereof: (a) will not require the consent of any third party or governmental entity under any laws; (b) will not violate any laws applicable to the CAYMAN Company Shareholders and (c) will not violate or breach any contractual obligation to which the CAYMAN Company Shareholders are a party.

3.4  Finder’s Fee .  The CAYMAN Company Shareholders represents and warrants that they have not created any obligation for any finder’s, investment banker’s or broker’s fee in connection with the Transactions.

3.5  Purchase Entirely for Own Account .  The Exchange Shares (as defined in Section 4.1 ) proposed to be acquired by the CAYMAN Company Shareholders hereunder will be acquired for investment for their own accounts, and not with a view to the resale or distribution of any part thereof, and the CAYMAN Company Shareholders have no present intention of selling or otherwise distributing the Cang Bao Shares, except in compliance with applicable securities laws.

3.6  Sophistication .  Each CAYMAN Company Shareholder is a sophisticated investor, as described in Rule 506(b)(2)(ii) promulgated under the Securities Act and has such experience in business and financial matters such that each is capable of evaluating the merits and risks of an investment in Cang Bao.

3.7  Information . Each CAYMAN Company Shareholder has carefully reviewed such information as such CAYMAN Company Shareholder deemed necessary to evaluate an investment in Cang Bao Common Stock. To the full satisfaction of each CAYMAN Company Shareholder, it has been furnished with all materials that it has requested relating to Cang Bao and the issuance of Cang Bao Shares hereunder, and each Cang Bao Shareholder has been afforded the opportunity to ask questions of representatives of Cang Bao to obtain any information necessary to verify the accuracy of any representations or information made or given to such CAYMAN Company Shareholder. Notwithstanding the following, nothing herein shall derogate from or otherwise modify the representations and warranties of Cang Bao set forth in this Agreement, on which each CAYMAN Company Shareholder has relied in making an exchange of the CAYMAN Company Common Stock for Cang Bao Shares.

3.8  Restricted Securities . Each CAYMAN Company Shareholder understands that the Exchange Shares are characterized as “restricted securities” under the Securities Act inasmuch as this Agreement contemplates that, if acquired by a CAYMAN Company Shareholder pursuant hereto, Exchange Shares would be acquired in a transaction not involving a public offering. The Exchange Shares being issued hereunder have not been registered under the Securities Act or the securities laws of any state of the U.S. and that the issuance of the Exchange Shares is being effected in reliance upon an exemption from registration afforded either under Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering, or Regulation S for offers and sales of securities outside the United States. Each CAYMAN Company Shareholder further acknowledges that if the Exchange Shares are issued to such CAYMAN Company Shareholder in accordance with the provisions of this Agreement, such Exchange Shares may not be resold without registration under the Securities Act or the existence of an exemption therefrom. Each CAYMAN Company Shareholder represents that it is familiar with Rule 144 promulgated under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

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3.9  Acquisition of Exchange Shares for Investment .

(a) Each CAYMAN Company Shareholder is acquiring the Exchange Shares for investment for such CAYMAN Company Shareholder’s own account and not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and each CAYMAN Company Shareholder has no present intention of selling, granting any participation in, or otherwise distributing the same.  Each CAYMAN Company Shareholder further represents that he or she does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of the Exchange Shares.

(b) Each CAYMAN Company Shareholder represents and warrants that it: (i) can bear the economic risk of its respective investments, and (ii) possesses such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the investment in Cang Bao and its securities.

(c) Each CAYMAN Company Shareholder is not a “U.S. Person” as defined in Rule 902(k) of Regulation S of the Securities Act (“ Regulation S ”) (each a “ Non-U.S. Shareholder ”), and understands that the Exchange Shares are not registered under the Securities Act, and further understands that the issuance thereof to such CAYMAN Company Shareholders is intended to be exempt from registration under the Securities Act pursuant to Regulation S.  Each Non-U.S. Shareholder has no intention of becoming a U.S. Person.  At the time of the origination of contact concerning this Agreement and the date of the execution and delivery of this Agreement, each Non-U.S. Shareholder was outside of the United States.  Each certificate representing the Exchange Shares shall be endorsed with the following legends, in addition to any other legend required to be placed thereon by applicable federal or state securities laws:

“THE SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE SECURITIES ACT.”

“TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”

In addition to the foregoing legend, each certificate representing the Exchange Shares issued to such CAYMAN Company Shareholders shall be endorsed with the following legends, in addition to any other legend required to be placed thereon by applicable federal or state securities laws:

 “THIS SECURITY HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), OR APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS.”

“TRANSFER OF THESE SECURITIES IS PROHIBITED UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES ACT WITH RESPECT TO SUCH SECURITY SHALL THEN BE IN EFFECT AND SUCH TRANSFER HAS BEEN QUALIFIED UNDER ALL APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS, OR AN EXEMPTION THEREFROM SHALL BE AVAILABLE UNDER THE ACT AND SUCH LAWS.”

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(e) Each CAYMAN Company Shareholder acknowledges that neither the SEC, nor the securities regulatory body of any state or other jurisdiction, has received, considered or passed upon the accuracy or adequacy of the information and representations made in this Agreement.

(f) Each CAYMAN Company Shareholder acknowledges that he, she or it has carefully reviewed such information as it has deemed necessary to evaluate an investment in Cang Bao and its securities, and with respect to each U.S. Shareholder, that all information required to be disclosed to such CAYMAN Company Shareholder under Regulation D has been furnished to such CAYMAN Company Shareholder by Cang Bao.  To the full satisfaction of each CAYMAN Company Shareholder, he has been furnished all materials that he has requested relating to Cang Bao and the issuance of the Exchange Shares hereunder, and each CAYMAN Company Shareholder has been afforded the opportunity to ask questions of Cang Bao’s representatives to obtain any information necessary to verify the accuracy of any representations or information made or given to the CAYMAN Company Shareholders. Notwithstanding the foregoing, nothing herein shall derogate from or otherwise modify the representations and warranties of Cang Bao set forth in this Agreement, on which each of the CAYMAN Company Shareholders have relied in making an exchange of its shares CAYMAN Company for the Exchange Shares.

(g) Each CAYMAN Company Shareholder understands that the Exchange Shares may not be sold, transferred, or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Exchange Shares or any available exemption from registration under the Securities Act, the Exchange Shares may have to be held indefinitely.  Each CAYMAN Company Shareholder further acknowledges that the Exchange Shares may not be sold pursuant to Rule 144 promulgated under the Securities Act unless all of the conditions of Rule 144 are satisfied (including, without limitation, Cang Bao’s compliance with the reporting requirements under the Securities Exchange Act of 1934, as amended (“ Exchange Act ”)).

(h) Each CAYMAN Company Shareholder agrees that, notwithstanding anything contained herein to the contrary, the warranties, representations, agreements and covenants of such CAYMAN Company Shareholder under this Section 3.09 shall survive the Closing.

3.10   Additional Legend; Consent . Additionally, the Exchange Shares will bear any legend required by the “blue sky” laws of any state to the extent such laws are applicable to the securities represented by the certificate so legended. Each CAYMAN Company Shareholder consents to Cang Bao making a notation on its records or giving instructions to any transfer agent of Exchange Shares in order to implement the restrictions on transfer of the Exchange Shares.

ARTICLE IV

PLAN OF EXCHANGE

4.1   Exchange CAYMAN Company Common Stock for Cang Bao Common Stock . On the terms and subject to the conditions set forth in this Agreement, on the Closing Date and after the consummation of the transaction contemplated herein, the CAYMAN Company Shareholders shall assign, transfer and deliver to Cang Bao, free and clear of all liens, pledges, encumbrances, charges, restrictions or known claims of any kind, nature, or description, all of the shares of CAYMAN Company Shares held by the CAYMAN Company Shareholders, the objective of such Exchange being the acquisition by Cang Bao of not less than 100% of the issued and outstanding CAYMAN Company Common Stock.  In exchange for the transfer of such securities by the CAYMAN Company Shareholders, Cang Bao shall issue to the CAYMAN Company Shareholders 75,000,000 shares of Cang Bao Common Stock, representing approximately 67.98% of the total issued and outstanding Cang Bao Common Stock (the “ Exchange Shares ”) which will be issued and outstanding as of the issuance of the Exchange Shares.  At the closing of the transactions described in this Section 4.1 (the “ Closing ”), the CAYMAN Company Shareholders shall, upon surrender of their interests in the CAYMAN Company Common Stock to Cang Bao or its registrar or transfer agent, be entitled to receive a certificate or certificates evidencing its interest in the Cang Bao Shares.  Upon consummation of the Transactions, all of the shares of capital stock of CAYMAN Company shall be held by Cang Bao.

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4.2  Closing and Actions at Closing .  The closing of the Transactions shall take place at the offices of John B. Lowy, P.C., 575 Lexington Avenue, Fourth Floor, New York, NY 10022, commencing at 9:00 a.m. local time on the second business day following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the Exchange (other than conditions with respect to actions that the respective parties will take at Closing) or such other date and time as the Parties may mutually determine (the “ Closing Date ”).

4.3  Anti-Dilution .  The Cang Bao Shares issuable upon exchange pursuant to Section 4.1 shall be appropriately adjusted to take into account any other stock split, stock dividend, reverse stock split, recapitalization, or similar change in the Cang Bao Common Stock which may occur, between the date of the execution of this Agreement and the Closing Date, as to the Cang Bao Shares.

4.4   Termination .  This Agreement may be terminated by the board of directors of Cang Bao or CAYMAN Company only in the event that Cang Bao or CAYMAN Company do not meet the conditions precedent set forth in Articles VI and VII hereof.  If this Agreement is terminated pursuant this Section 4.4, this Agreement shall be of no further force or effect, and no obligation, right or liability shall arise hereunder.

ARTICLE V

SPECIAL COVENANTS

5.1       Access to Properties and Records .  Cang Bao and CAYMAN Company will each afford to the officers and authorized representatives of the other party full access to the properties, books and records of Cang Bao or CAYMAN Company, as the case may be, in order that each party may have a full opportunity to make such reasonable investigation as it shall desire to make of the affairs of the other party, and each party will furnish to the other party such additional financial and operating data and other information as to the business and properties of Cang Bao or CAYMAN Company, as the case may be, as the other party shall from time to time reasonably request.  Without limiting the foregoing, as soon as practicable after the end of each fiscal quarter (and in any event through the last fiscal quarter prior to the Closing Date), each party shall provide the other party with quarterly internally prepared and unaudited financial statements.

5.2  Delivery of Books and Records .  At the Closing, CAYMAN Company shall deliver to Cang Bao the originals of the corporate minute books, books of account, contracts, records, and all other books or documents of CAYMAN Company now or then in the possession of CAYMAN Company or its representatives. Cang Bao shall deliver to CAYMAN Company the originals of the corporate minute books, books of account, contracts, records, and all other books or documents of Cang Bao now or then in the possession of Cang Bao or its representatives.

5.3   Third Party Consents and Certificates .  Cang Bao and CAYMAN Company agree to cooperate with each other in order to obtain any required third party consents to this Agreement and the Transactions.

5.4   Cang Bao Shareholder Meeting.   Cang Bao shall promptly call a special meeting of stockholders to be held on or prior to the Closing Date, at which meeting the shareholders of Cang Bao shall be requested to approve, and the board of directors of Cang Bao shall recommend the approval of, the terms of this Agreement, the Transactions, and such other matters as shall require stockholder approval hereunder.  In addition, Cang Bao shall promptly file with the SEC all necessary disclosure statements required by federal securities laws.

5.5   Change of Auditor.  On the Closing Date, Cang Bao shall dismiss BF Borgers CPA P.C. as its certified independent auditor (“Auditor”) and appoint JLKZ CPA LLP as its new Auditor.

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5.6   Actions Prior to Closing

(a) From and after the date of this Agreement until the Closing Date and except as set forth in the Cang Bao Schedules or CAYMAN Company Schedules or as permitted or contemplated by this Agreement, Cang Bao (subject to paragraph (b) below) and CAYMAN Company respectively, will each:

(i)   carry on its business in substantially the same manner as it has heretofore;

(ii)   maintain and keep its properties in states of good repair and condition as at present, except for depreciation due to ordinary wear and tear and damage due to casualty;

(iii)    maintain in full force and effect insurance comparable in amount and in scope of coverage to that now maintained by it;

(iv)   perform in all material respects all of its obligations under any material contracts, leases, and instruments relating to or affecting its assets, properties, and business;

(v)   use its best efforts to maintain and preserve intact its business organization, to retain its key employees, and to maintain its relationship with its material suppliers and customers; and

(vi)   fully comply with and perform in all material respects all obligations and duties imposed on it by all federal and state laws and all rules, regulations, and orders imposed by federal or state governmental authorities.

(b) From and after the date of this Agreement until the Closing Date, neither Cang Bao nor CAYMAN Company will:

(i)    make any changes in their Organizational Documents, including any change of name, except as contemplated by this Agreement;

(ii)   take any action described in Section 1.07, in the case of CAYMAN Company, or in Section 2.07, in the case of Cang Bao (all except as permitted therein or as disclosed in the CAYMAN Company Schedules or Cang Bao Schedules, as applicable);

(iii)    enter into or amend any contract, agreement, or other instrument of any of the types described in the CAYMAN Company Schedules or Cang Bao Schedules, except that a party may enter into or amend any contract, agreement, or other instrument in the ordinary course of business involving the sale of goods or services; or

(iv)    sell any assets or discontinue any operations, sell any shares of capital stock or conduct any similar transactions other than in the ordinary course of business.

5.7   The Acquisition of Cang Bao Common Stock.  Cang Bao and CAYMAN Company understand and agree that the consummation of the Transactions, including the issuance of the Cang Bao Common Stock to CAYMAN Company Shareholders in exchange for the CAYMAN Company Common Stock as contemplated herein, constitutes the offer and sale of securities under the Securities Act of 1933, as amended (the “ Securities Act ”) and applicable state statutes. Cang Bao and CAYMAN Company agree that such transactions shall be consummated in reliance on exemptions from the registration and prospectus delivery requirements of such statutes, which depend, among other items, on the circumstances under which such securities are acquired.

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(a) In connection with the Transactions, Cang Bao and CAYMAN Company shall each file, with the assistance of the other party and their respective legal counsel, such notices, applications, reports, or other instruments as may be deemed by them to be necessary or appropriate in an effort to document reliance on such exemptions, and the appropriate regulatory authority in the states where the stockholders of CAYMAN Company reside unless an exemption requiring no filing is available in such jurisdiction, all to the extent and in the manner as may be deemed by such party to be appropriate.

(b) In order to more fully document reliance on the exemptions from registration as provided herein, CAYMAN Company, the CAYMAN Company Shareholders, and Cang Bao shall execute and deliver to the other party, at or prior to the Closing, such further letters of representation, acknowledgment, suitability, or the like as CAYMAN Company or Cang Bao and their respective counsel may reasonably request in connection with reliance on exemptions from registration under such securities laws.

(c) The CAYMAN Company Shareholders acknowledge that the basis for relying on exemptions from registration or qualifications are factual, depending on the conduct of the various parties, and that no legal opinion or other assurance will be required or given to the effect that the Transactions are in fact exempt from registration or qualification.

5.8      Sales of Securities Under Rule 144, If Applicable.

(a)   Cang Bao will use its best efforts to at all times satisfy the current public information requirements of Rule 144 promulgated under the Securities Act so that its stockholders can sell restricted securities that have been held for one (1) year or more after Cang Bao files “Form 10 Information” with the SEC, or such other restricted period as required by Rule 144 as it is from time to time amended.

(b)   Upon being informed in writing by any person holding restricted stock of Cang Bao that such person intends to sell any shares under Rule 144 promulgated under the Securities Act (including any rule adopted in substitution or replacement thereof), and provided that Cang Bao is in compliance with its requirements under Rule 144, Cang Bao will certify in writing to such person that it is compliance with Rule 144 current public information requirement to enable such person to sell such person’s restricted stock under Rule 144, as may be applicable under the circumstances.

(c)   If any certificate representing any such restricted stock is presented to Cang Bao’s transfer agent for registration or transfer in connection with any sales theretofore made under Rule 144, provided such certificate is duly endorsed for transfer by the appropriate person(s) or accompanied by a separate stock power duly executed by the appropriate person(s), in each case with reasonable assurances that such endorsements are genuine and effective and is accompanied by a legal opinion that such transfer has complied with the requirements of Rule 144, as the case may be, Cang Bao will promptly instruct its transfer agent to register such transfer and to issue one or more new certificates representing such shares to the transferee and, if appropriate under the provisions of Rule 144, as the case may be, free of any stop transfer order or restrictive legend.

(d)   This Section 5.10 shall survive the Closing of this Agreement for a period of two (2) years.

5.9         Indemnification.

(a)   CAYMAN Company hereby agrees to indemnify Cang Bao and each of the officers, agents and directors of Cang Bao as of the date of execution of this Agreement against any loss, liability, claim, damage, or expense (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing, or defending against any litigation, commenced or threatened, or any claim whatsoever) (“ Loss ”), to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentations made under Article I .  The indemnification provided for in this paragraph shall survive the Closing and consummation of Transactions and termination of this Agreement for one (1) year following the Closing.

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(b)  The CAYMAN Company Shareholders, agree to indemnify Cang Bao and each of the officers, agents and directors of Cang Bao as of the date of execution of this Agreement against any Loss, to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentations made under Article III .  The indemnification provided for in this paragraph shall survive the Closing and consummation of the contemplated Transactions and termination of this Agreement for one (1) year following the Closing.

(c)  Cang Bao hereby agrees to indemnify CAYMAN Company and each of the officers, agents, and directors of CAYMAN Company and the CAYMAN Company Shareholders as of the date of execution of this Agreement against any Loss to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentation made under Article II .  The indemnification provided for in this paragraph shall survive the Closing and consummation of the contemplated Transactions and termination of this Agreement for one (1) year following the Closing.

ARTICLE VI

CONDITIONS PRECEDENT TO OBLIGATIONS

OF CANG BAO

The obligations of Cang Bao under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions:

6.1   Accuracy of Representations and Performance of Covenants.  The representations and warranties made by CAYMAN Company and the CAYMAN Company Shareholders in this Agreement were true when made and shall be true on the Closing Date with the same force and effect as if such representations and warranties were made on and as of the Closing Date.  CAYMAN Company shall have performed or complied with all covenants and conditions required by this Agreement to be performed or complied with by CAYMAN Company prior to or at the Closing.

6.2   Officer’s Certificate .  Cang Bao shall have been furnished with a certificate dated the Closing Date and signed by a director of CAYMAN Company, certifying that: (a) no litigation, proceeding, investigation, or inquiry is pending, or to the best knowledge of CAYMAN Company, threatened, which might result in an action to enjoin or prevent the consummation of the contemplated Transactions, or, to the extent not disclosed in the CAYMAN Company Schedules, by or against CAYMAN Company, which might result in any material adverse change in any of the assets, properties, business, or operations of CAYMAN Company, and (b) the conditions set forth in Sections 6.1 , 6.4 and 6.5 have been satisfied.

6.3   Good Standing .  Cang Bao shall have received a certificate of good standing from a qualified attorney in the Cayman Islands, dated as of a date prior to the Closing Date certifying that CAYMAN Company is in good standing as a corporation in the Cayman Islands.

6.4    No Governmental Prohibition .  No order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority or instrumentality which prohibits the consummation of the Transactions.

6.5    Consents .  All consents, approvals, waivers or amendments pursuant to all contracts, licenses, permits, trademarks and other intangibles in connection with the Transactions, or for the continued operation of CAYMAN Company after the Closing Date on the basis as presently operated shall have been obtained.

6.6     Other Items .   Cang Bao shall have received such further opinions, documents, certificates or instruments relating to the Transactions as Cang Bao may reasonably request.

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ARTICLE VII

CONDITIONS PRECEDENT TO OBLIGATIONS OF CAYMAN COMPANY

AND THE CAYMAN COMPANY STOCKHOLDERS

The obligations of CAYMAN Company and the CAYMAN Company Shareholders under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions:

7.1    Accuracy of Representations and Performance of Covenants .  The representations and warranties made by Cang Bao in this Agreement and by the Principal Shareholder in the Indemnity Agreement to be delivered on the Closing Date (the “ Indemnity Agreement ”) were true when made and shall be true on the Closing Date with the same force and effect as if such representations and warranties were made on and as of the Closing Date.  Each of Cang Bao and the Principal Shareholder shall have performed and complied with all covenants and conditions required by this Agreement and the Indemnity Agreement to be performed or complied with by Cang Bao and the Principal Shareholder (as the case may be) prior to or at the Closing.

7.2    Officer’s Certificate .  CAYMAN Company shall have been furnished with a certificate dated the Closing Date and signed by a duly authorized officer of Cang Bao, certifying that: (a) no litigation, proceeding, investigation or inquiry is pending, or to the best knowledge of Cang Bao threatened, which might result in an action to enjoin or prevent the consummation of the Transactions, or, to the extent not disclosed in the Cang Bao Schedules, by or against Cang Bao, which might result in any material adverse change in any of the assets, properties or operations of Cang Bao, and (b) the conditions set forth in Sections 7.1 , 7.4 , and 7.5 have been satisfied.

7.3    Good Standing .  CAYMAN Company shall have received a certificate of good standing from the Secretary of State of the State of Nevada, dated as of a date within ten (10) days prior to the Closing Date, certifying that Cang Bao is in good standing as a corporation in the State of Nevada and has filed all tax returns required to have been filed by it to date and has paid all taxes reported as due thereon.

7.4    No Governmental Prohibition .  No order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority or instrumentality which prohibits the consummation of the Transactions.

7.5    Consents .  All consents, approvals, waivers or amendments pursuant to all contracts, licenses, permits, trademarks and other intangibles in connection with the Transactions, or for the continued operation of Cang Bao after the Closing Date on the basis as presently operated shall have been obtained.

7.6    Other Items .  CAYMAN Company and the CAYMAN Company Shareholders shall have received a legal opinion from Cang Bao’s attorneys in the PRC that all of Cang Bao’s legal requirements in accordance with the People’s Republic of China to enable Cang Bao to close the Transactions have been satisfied, together with such further opinions, documents, certificates, or instruments relating to the Transactions as CAYMAN Company and the CAYMAN Company Shareholders may reasonably request.

ARTICLE VIII

MISCELLANEOUS

8.1   Brokers . Except as set forth in the Cang Bao Schedules and CAYMAN Company Schedules, Cang Bao and CAYMAN Company agree that there were no finders or brokers involved in bringing the parties together or who were instrumental in the negotiation or execution of this Agreement or consummation of the Transactions that could cause any obligation whatsoever on the part of CAYMAN Company.  Cang Bao and CAYMAN Company each agree to indemnify the other party against any claim by any third person other than those described above for any commission, brokerage, or finder’s fee arising from the contemplated Transactions based on any alleged agreement or understanding between the indemnifying party and such third person, whether express or implied from the actions of the indemnifying party.

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8.2      Governing Law .  This Agreement shall be governed by, enforced, and construed under and in accordance with the laws of the United States of America and, with respect to the matters of state law, with the laws of the State of Nevada.  Venue for all matters shall be in Nevada, without giving effect to principles of conflicts of law thereunder.  Each of the parties irrevocably consents and agrees that any legal or equitable action or proceedings arising under or in connection with this Agreement shall be brought exclusively in the federal courts of the United States. By execution and delivery of this Agreement, each party hereto irrevocably submits to and accepts, with respect to any such action or proceeding, generally and unconditionally, the jurisdiction of the aforesaid court, and irrevocably waives any and all rights such party may now or hereafter have to object to such jurisdiction.

8.3    Notices .  Any notice or other communications required or permitted hereunder shall be in writing and shall be sufficiently given if sent by email, followed by registered or certified mail, postage prepaid, addressed as follows:

If to CAYMAN Company or CAYMAN Company Shareholders, to:

Zhi Yuan Limited

c/o ___________________________

email: __________________

Address: _____________________

               _____________________

With copies (with shall not constitute notices) to:

_________________, attorneys

Email: ____________________

Address: _____________________

____________________________

If to Cang Bao, to:

Cang Bao Tian Xia Inertnational Art Trade Center, Inc.

Attn.: Xingtao Zhou, CEO

Email: _______________

Address: _________________

_________________________

________________________

With copies (which shall not constitute notices) to:

John B. Lowy

Email: johnl@johnlowylaw.com

575 Lexington Avenue, Fourth Floor

New York, NY 10022

Shareholders of Zhi Yuan Limited:

___________________________

___________________________

___________________________

or such other addresses as shall be furnished in writing by any party in the manner for giving notices hereunder, and any such notice or communication shall be deemed to have been given (a) upon receipt, if personally delivered, (b) on the day after dispatch, if sent by overnight courier, (c) upon dispatch, if transmitted by facsimile and receipt is confirmed by telephone, or (d) three (3) days after mailing, if sent by registered or certified mail.

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8.4   Attorney’s Fees .  In the event that either party institutes any action or suit to enforce this Agreement or to secure relief from any default hereunder or breach hereof, the prevailing party shall be reimbursed by the losing party for all costs, including reasonable attorney’s fees, incurred in connection therewith and in enforcing or collecting any judgment rendered therein.

8.5   Confidentiality .  Each party hereto agrees with the other parties that, unless and until the Transactions have been consummated, it and its representatives will hold in strict confidence all data and information obtained with respect to another party or any subsidiary thereof from any representative, officer, director or employee, or from any books or records or from personal inspection, of such other party, and shall not use such data or information or disclose the same to others, except (a) to the extent such data or information is published, is a matter of public knowledge, or is required by law to be published; or (b) to the extent that such data or information must be used or disclosed in order to consummate the Transactions.  In the event of the termination of this Agreement, each party shall return to the other parties all documents and other materials obtained by it or on its behalf and shall destroy all copies, digests, work papers, abstracts or other materials relating thereto, and each party will continue to comply with the confidentiality provisions set forth herein.

8.6   Public Announcements and Filings .  Unless required by applicable law or regulatory authority, none of the parties will issue any report, statement or press release to the general public, to the trade, to the general trade or trade press, or to any third party (other than its advisors and representatives in connection with the contemplated Transactions) or file any document, relating to this Agreement and contemplated Transactions, except as may be mutually agreed by the parties.  Copies of any such filings, public announcements or disclosures, including any announcements or disclosures mandated by law or regulatory authorities, shall be delivered to each party at least one (1) business day prior to the release thereof.

8.7  Schedules; Knowledge .  The CAYMAN Company Schedules and Cang Bao Schedules referred to herein and delivered pursuant to and attached to this Agreement (collectively, “Schedules”) are integral parts of this Agreement.  Nothing in a Schedule shall be deemed adequate to disclose an exception to a representation or warranty made herein, unless the Schedule identifies the exception with reasonable particularity and describes the relevant facts in reasonable detail, including by cross-reference to another Schedule.  The inclusion of any information in the Schedules shall not be deemed to be an admission or acknowledgment, in and of itself, that such information is required by the terms hereof to be disclosed, is material to the business of CAYMAN Company or Cang Bao, as the case may be, or is outside the ordinary course of business.  CAYMAN Company is responsible for preparing the CAYMAN Company Schedules and Cang Bao is responsible for preparing the Cang Bao Schedules. Each of the CAYMAN Company Schedules and the Cang Bao Schedules will be arranged in paragraphs corresponding to the numbered and lettered paragraphs contained in this Agreement, and the disclosure in any such numbered and lettered section of the CAYMAN Company Schedules or the Cang Bao Schedules, as the case may be, shall qualify and shall be deemed to qualify such other paragraphs in this Agreement to the extent such qualification is reasonably apparent regardless of the absence of any express cross-reference to such other paragraph.  Each party is presumed to have full knowledge of all information set forth in the other party’s Schedules delivered pursuant to this Agreement.

8.8   Third Party Beneficiaries .  This contract is strictly between and among Cang Bao, CAYMAN Company and the CAYMAN Company Shareholders, and, except as specifically provided, no director, officer, stockholder (other than the CAYMAN Company Shareholders), employee, agent, independent contractor or any other person or entity shall be deemed to be a third party beneficiary of this Agreement.

8.9    Expenses .  Subject to Articles VI and VII above, whether or not the Exchange is consummated, each of Cang Bao, the CAYMAN Company Shareholders and CAYMAN Company will bear their own respective expenses, including legal, accounting and professional fees, incurred in connection with the Exchange or any of the other contemplated Transactions.

8.10   Entire Agreement .  This Agreement, together with the Schedules and any certificate or agreements delivered on the Closing Date, represents the entire agreement between the parties relating to the subject matter thereof and supersedes all prior agreements, understandings and negotiations, written or oral, with respect to such subject matter.

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8.11  Survival; Termination .  Except as otherwise set forth in this Agreement, the representations, warranties, and covenants of the respective parties shall survive the Closing Date and the consummation of Transactions for a period of two (2) years.

8.12    Counterparts .  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument.

8.13    Amendment or Waiver .  Every right and remedy provided herein shall be cumulative with every other right and remedy, whether conferred herein, at law, or in equity, and may be enforced concurrently herewith, and no waiver by any party of the performance of any obligation by the other parties shall be construed as a waiver or any other default then, theretofore, or thereafter occurring or existing.  At any time prior to the Closing Date, this Agreement may by amended by a writing signed by all parties hereto, with respect to any of the terms contained herein, and any term or condition of this Agreement may be waived or the time for performance may be extended by a writing signed by the party or parties for whose benefit the provision is intended.

8.14    Best Efforts .  Subject to the terms and conditions herein provided, each party shall use its best efforts to perform or fulfill all conditions and obligations to be performed or fulfilled by it under this Agreement so that the contemplated Transactions shall be consummated as soon as practicable.  Each party also agrees that it shall use its best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective this Agreement and the contemplated Transactions.

8.15    References .  References to Sections, Articles, Schedules or Exhibits in this Agreement shall be to Sections, Articles, Schedules or Exhibits to this Agreement unless explicitly provided otherwise.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first-above written.

CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.

By:	/s/ Xingtao Zhou
Name:  Xingtao Zhou

Title:  CEO

ZHI YUAN LIMITED

By:	/s/ Xingtao Zhou
Name:

Title:

ZHI YUAN LIMITED’S SHAREHOLDERS:

/s/ Xingtao Zhou	/s/ Yaqin Fu	/s/ Wei Wang
Xingtao Zhou	Yaqin Fu	Wei Wang

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EXHIBIT A

CAYMAN COMPANY BENEFICIAL SHAREHOLDERS

Xingtao Zhou-56% [42,000,000 shares]

Yaqin Fu-20% [15,000,000 shares]

Wei Wang-24% [18,000,000 shares]

EX-10.1

EXHIBIT 10.1

CALL OPTION AGREEMENT

This Call Option Agreement (this “Agreement”) is entered into by and among the following parties on August 8, 2019:

(1)

Shanghai Cangyun Management Consulting Co., Ltd. (“Shanghai Cangyun”), a wholly foreign owned enterprise registered in Shanghai, People’s Republic of China (“PRC”) with its address at Room 3166, 3^rd Floor, Building 6, No. 1328, Yixian Road, Baoshan District, Shanghai, PRC;

(2)

Xingtao ZHOU (ID Card No.: 【510106197905196219】) (“Shareholder A”), a PRC citizen with an address at 【No. 2, unit 4, building 8, no. 8, chandian zi youmiao road, jinniu district, chengdu】, PRC;

(3)

Wei WANG (ID Card No.: 【110103197902030930】) (“Shareholder B”), a PRC citizen with an address at 【No. 14, lane 1, dongxiao city, chongwen district, Beijing】, PRC; and

(4)

Yaqin FU (ID Card No.: 【650204196402220028】) (“Shareholder C”, together with Shareholder A and Shareholder B, “Shareholders” and each, a “Shareholder” ), a PRC citizen with an address at 【No. 88, lane 7171, shenjiang road, pudong new area, Shanghai】PRC.

Shanghai Cangyun and Shareholders are hereinafter jointly referred to as the “Parties” and individually, as a “Party”.  Each of Shareholders’ obligations under this Agreement shall be joint and several.

Whereas:

(A)

Shareholder A, Shareholder B and Shareholder C are all of the registered shareholders of Hainan Cangbao Tianxia Cultural Relic Co., Ltd.,Cangbao Tianxia（Shanghai）Cultural Relic Co., Ltd.The former limited liability company registered in Hainan, PRC with its address at Room 609, 6^th Floor, Shengda Plaza, No. 61, Guoxing Ave. Meilan District, Haikou City, Hainan Province, PRC, the later limited liability company registered in shanghai,PRC with its address at room 169, area C, 5th floor, building 1, no.6 kangye road, zhujiajiao town, qingpu district,hereinafter both of them referred to as “Domestic Company”), and respectively hold 56%, 24% and 20% of the equity interests in the two Domestic Companys.  The basic information of Domestic Company as of the date of execution of this Agreement is set forth in Appendix I.

(B)

The Shareholders are willing to transfer to Shanghai Cangyun, and Shanghai Cangyun is willing to accept, all their respective equity interests in the Domestic

Company following the execution hereof to the extent permitted by PRC Law and by the relevant PRC regulators.

(C)

In order to effect the above equity transfer, the Shareholders agree to jointly grant Shanghai Cangyun, and Shanghai Cangyun is willing to receive from the Shareholders, an irrevocable call option (hereinafter the “Call Option” or “Option”), under which the Shareholders shall transfer the Option Equity (as defined below) to Shanghai Cangyun and/or its designated entity(ies) or individual(s) when such Call Option become exercisable and is exercised by Shanghai Cangyun.

Therefore, the Parties enter into this Agreement as follows upon friendly negotiation:

1.

Definitions

1.1

Unless the context otherwise requires, the following terms in this Agreement shall have the following meanings:

“Business Permits” shall mean any approvals, permits, filings, or registrations, which are required for Domestic Company to legally and validly operate all its businesses under the then applicable PRC Law, including, but not limited to, the Business License, Tax Registration Certificate, and the applicable approval or filing regarding trading of cultural relics.

“Domestic Company Assets” shall mean, in respect of Domestic Company, all the tangible and intangible assets which Domestic Company owns or has the right to use during the term of this Agreement, including but not limited to any immoveable and moveable assets, and such intellectual property rights such as trademarks, copyrights, patents, proprietary know-how, domain names and software use rights.

“Option Equity” shall mean the equity interest held by the Shareholders in the Domestic Company.

“PRC Law” shall mean the then valid laws, administrative regulations, administrative rules, local regulations, judicial interpretations and other binding regulatory documents of the PRC.

“Transfer Price” shall mean the price to be paid by Shanghai Cangyun or its designated entity or individual to the Shareholders as consideration for the Option Equity in respect of which the Option is exercised, which shall equal the lowest price permitted by then effective PRC Law.

2

1.2

The references to any PRC Law herein shall be deemed:

(1)

to include references to the amendments, changes, supplements and reenactments of such law, irrespective of whether they take effect before or after the formation of this Agreement; and

(2)

to include references to other decisions, notices or regulations enacted in accordance therewith or effective as a result thereof.

1.3

Unless otherwise stated in the context herein, all references to an Article, clause, item or paragraph shall refer to the relevant article, clause, item or paragraph of this Agreement.

2.

Grant of Call Option

2.1

The Shareholders hereby grant Shanghai Cangyun irrevocably, pursuant to the terms and conditions set out in this Agreement, with a Call Option, under which Shanghai Cangyun shall have the right to require the Shareholders to transfer all or part of the Option Equity to Shanghai Cangyun or its designated entity(ies) or individual(s) to the extent permitted by PRC Law.  

2.2

Shanghai Cangyun hereby accepts the Call Option granted by Shanghai Cangyun pursuant to Article 2.1 above.

3.

Exercise of Option

3.1

To the extent permitted by PRC Law and not specifically dealt with under this Agreement, Shanghai Cangyun shall have the sole discretion to determine the timing and method for exercising the Option.

3.2

To the extent that the then applicable PRC Law permits Shanghai Cangyun and/or its designated entity(ies) or individual(s) to hold all the equity interests in Domestic Company, then Shanghai Cangyun shall have the right to exercise the Call Option in respect of the entire amount of the Option Equity; to the extent that the then applicable PRC Law permits Shanghai Cangyun and/or its designated entity(ies) or individual(s) to hold only part of the equity interests in Domestic Company, Shanghai Cangyun shall have the right to exercise the Call Option in respect of the equity interests in Domestic Company up to the maximum amount permitted by the then applicable PRC Law (hereinafter the “Shareholding Limit”).  In the latter case, Shanghai Cangyun shall have the right to exercise the Call Option at multiple times in line with the gradual deregulation of PRC Law on the Shareholding Limit, and ultimately elect to exercise the Call Option in respect of all the remaining Option Equity when the Shareholding Limit is fully lifted.

3.3

Shanghai Cangyun may, on each occasion, exercise the Call Option by issuing to the Shareholders a notice for exercising the Call Option substantially in the form

3

set forth in Appendix II hereto (hereinafter the “Exercise Notice”).  Notwithstanding the preceding sentence, if and when Shareholder becomes deceased, mentally incapacitated or is otherwise lacking in or has limitations in civil capacity (each a “Trigger Event”), the Call Option shall be deemed automatically exercised upon the occurrence of a Trigger Event and no notice shall be required to be issued by Shanghai Cangyun to the Shareholders.

3.4

The Shareholders hereby undertake that upon the issuance by Shanghai Cangyun of a Exercise Notice or upon the occurrence of a Trigger Event:

(1)

if an appraisal is required by relevant government authorities, they shall engage a qualified valuation firm chosen by Shanghai Cangyun to value the Option Equity specified in writing by Shanghai Cangyun and agree with Shanghai Cangyun the amount of the Transfer Price of such Option Equity within fourteen (14) days of the date of the Exercise Notice or the date of the occurrence of Trigger Event;

(2)

thereafter, and in any event no later than five (5) days following the completion of the matters described in paragraph (1) above, they shall convene a shareholders’ meeting and adopt a shareholders’ resolution at such shareholders’ meeting approving the transfer of the Option Equity at the Transfer Price, and take all other necessary or desirable actions to effect the transfer to Shanghai Cangyun and/or its designated entity(ies) or individual(s) of such Option Equity;

(3)

concurrently with the passing of the shareholders’ resolution described in paragraph (2) above, they shall enter into an equity transfer agreement with Shanghai Cangyun and/or its designated entity(ies) or individual(s) for the transfer of the amount of the Option Equity to Shanghai Cangyun and/or its designated entity(ies) or individual(s) at the Transfer Price; such equity transfer agreement shall be in form and substance satisfactory to Shanghai Cangyun; and

(4)

they shall at all times provide Shanghai Cangyun with full support and cooperation (including providing and executing all the relevant legal documents, processing all the procedures for government approvals and registrations and bearing all the relevant obligations) in accordance with the requirements of Shanghai Cangyun and applicable PRC Law in order to effect the transfer of the Option Equity in accordance with the terms of the equity transfer agreement.

3.5

Shanghai Cangyun or its designated entity(ies) or individual(s) shall pay to the Shareholders the Transfer Price within the time specified in the relevant equity transfer agreement.

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3.6

Upon the execution of this Agreement, each of the Shareholders shall respectively enter into a power of attorney (hereinafter the “Power of Attorney”) to authorize a person acceptable to Shanghai Cangyun to sign, on behalf of such Shareholder and according to this Agreement, any and all legal documents necessary for the transfer of the Option Equity to Shanghai Cangyun or its designated entity or individual upon Shanghai Cangyun’s exercising of the Option.  Such Power of Attorney shall be delivered to Shanghai Cangyun and Shanghai Cangyun may, at any time if necessary, require the Shareholders to respectively execute multiple copies of the Power of Attorney and deliver the same to the relevant government authority.

4.

Representations and Warranties

4.1

Each of the Shareholders hereby represents and warrants as follows:

(a)

Each of the Shareholders is a PRC citizen with power and capacity to execute and perform his obligations under this Agreement.

(b)

The execution and performance of this Agreement by the Shareholders do not violate any laws and regulations or government approvals, authorizations, notices or other governmental documents having binding effect on or affecting Shareholders, nor do they violate any agreements between Shareholders and any third party or any covenants made to any third party.

(c)

This Agreement constitutes the lawful, valid and enforceable obligations of the Shareholders.

(d)

The Shareholders are the only legal owners of the Option Equity, with no existing dispute concerning the ownership of the Option Equity.  The Shareholders have the right to dispose of the Option Equity or any part thereof.

(e)

Except for the pledge created over the Option Equity and the pledgor’s rights set forth under the Equity Pledge Agreement entered into by the Shareholders and Shanghai Cangyun, there is no other encumbrance or third party interest in respect of the Option Equity.

(f)

Domestic Company owns all Business Permits as necessary for its operations and other business relating to its current business structure.  Domestic Company has conducted its business legally since its establishment and has not acted in any way that has violated or may violate the regulations and requirements set forth by the government departments of commerce and industry, tax, education, quality and technology supervision, labor and social security and others; nor has it been involved in any disputes in respect of breach of contract.

5

4.2

Shanghai Cangyun hereby represents and warrants as follows:

(a)

Shanghai Cangyun is a wholly owned foreign enterprise duly registered and existing under PRC Law.

(b)

Shanghai Cangyun has the power to execute and perform its obligations under this Agreement.  The execution and performance of this Agreement by Shanghai Cangyun is in compliance with the articles of association or other organizational documents of Shanghai Cangyun, and Shanghai Cangyun has obtained all necessary and appropriate approvals and authorizations for the execution and performance of this Agreement.

(c)

The execution and performance of this Agreement by Shanghai Cangyun does not violate any laws and regulations or government approvals, authorizations, notices or other governmental documents having binding effect on or affecting Shanghai Cangyun, nor does it violate any agreements between Shanghai Cangyun and any third party or any covenants made to any third party.

(d)

This Agreement constitute lawful, valid and enforceable obligations of Shanghai Cangyun.

5.

Undertakings by the Shareholders

Each of the Shareholders hereby makes the following undertakings:

5.1

During the term of this Agreement, it must take all necessary measures to ensure that Domestic Company has obtained all the Business Permits in a timely manner and all the Business Permits remain effective at all times.

5.2

During the term of this Agreement, without the prior written consent of Shanghai Cangyun:

5.2.1

no Shareholders shall transfer or otherwise dispose of any Option Equity or create any encumbrance or other third party right over any Option Equity;

5.2.2

it shall not increase or decrease the registered capital of Domestic Company;

5.2.3

it shall not dispose of or cause the management of Domestic Company to dispose of any of Domestic Company Assets (except in the ordinary course of business);

6

5.2.4

it shall not appoint or replace any executive directors or members of the board of directors (if any), supervisors or any other management personnel of Domestic Company;

5.2.5

it shall not declare or distribute any profit or dividend;

5.2.6

it shall ensure that Domestic Company maintain its valid existence and prevent Domestic Company from being shut down, liquidated or dissolved;

5.2.7

it shall not amend the Articles of Association of Domestic Company;

5.2.8

it shall not change the business scope, the business model, the market strategy of the Domestic Company or adjust significantly the client relationship; and

5.2.9

it shall ensure that Domestic Company not lend or borrow any money, or provide guarantee or security in any form, or assume any material obligations other than in the ordinary course of business.

5.3

It must make all its efforts during the term of this Agreement to develop the business of Domestic Company, and ensure that the operations of Domestic Company are legal and in compliance with the PRC Law and that it shall not engage in any actions or omissions which might adversely affect Domestic Company Assets, the Domestic Company’s business reputation, or affect the validity of the Business Permits of Domestic Company.

6.

Confidentiality

The Parties acknowledge and confirm that any oral or written information exchanged among them with respect to this Agreement constitutes confidential information.  The Parties shall maintain the confidentiality of all such information.  Without the prior written consent of the Party who had provided such information, none of the Parties shall disclose any confidential information to any third party, except in the following circumstances: (a) such information is or comes into the public domain (through no fault or disclosure by the receiving party); (b) information disclosed as required by applicable laws or rules or regulations of any stock exchange; or (c) information required to be disclosed by any Party to its legal or financial advisors regarding the transactions contemplated hereunder, and such legal or financial advisors are also bound by duties of confidentiality similar to the duties set forth in this Article.  Disclosure of any confidential information by the staff or employee of any Party shall be deemed as disclosure of such confidential information by such Party, for which the Party shall be held liable for breach of this Agreement.  This Article shall survive the termination of this Agreement for any reason.

7

7.

Term of Agreement

This Agreement shall become effective upon the execution of this Agreement by the Parties and shall terminate after all of the Option Equity has been transferred to Shanghai Cangyun and/or its designated entity(ies) or individual(s) in accordance with the provisions contained herein.

8.

Notices

All notices, claims, certificates, requests, demands and other communications under this Agreement shall be made in writing and shall be delivered to either Party hereto by hand or sent by facsimile, or sent, postage prepaid, by reputable overnight courier services at the following addresses (or at such other address for such Party as shall be specified by like notice), and shall be deemed given when so delivered by hand, or if sent by facsimile, upon receipt of a confirmed transmittal receipt, or if sent by overnight courier, five (5) days after delivery to or pickup by the overnight courier service:

If to Shanghai Cangyun:

Shanghai Cangyun Management Consulting Co., Ltd.

Address:

Room 3166, 3^rd Floor, Building 6, No. 1328, Yixian Road, Baoshan District, Shanghai, PRC

Telephone:

【15880203378】

Email:

【martin5033@126.com】

Attention:

【Tsang Yung Lap】

with copies (which shall not constitute notice) to:

Beijing yingke (guangzhou) law firm

Email:

563254315@qq.com

Attention:

Zhiquan Chen

If to Shareholder A:

Xingtaoi ZHOU

Address:  

【No. 2, unit 4, building 8, no. 8, chandian zi youmiao road, jinniu district, chengdu】

Telephone:

【15384445544】

Email:  

【15884445544@163.com】

If to Shareholder B:

Wei WANG

Address:  

【No. 14, lane 1, dongxiao city, chongwen district, Beijing】

Telephone:

【13828776181】

Email:

【1207982029@qq.com】

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If to Shareholder C:

Yaqin Fu

Address:  

【No. 88, lane 7171, shenjiang road, pudong new area, Shanghai】

Telephone:

【13020141771】

Email:

【2448892378@qq.com】

9.

Liability for Default

9.1

The Parties agree and confirm that, if any Party (hereinafter the “Defaulting Party”) breaches substantially any of the provisions herein or fails substantially to perform any of the obligations under this Agreement, it shall constitute a default under this Agreement (hereinafter a “Default”), and any of the non-defaulting parties shall have the right to require the Defaulting Party to rectify such Default or take remedial measures within a reasonable period. If the Defaulting Party fails to rectify such Default or take remedial measures within such reasonable period or within ten (10) days of a non-defaulting party notifying the Defaulting Party in writing and requiring it to rectify the Default, a non-defaulting party shall have the right at its own discretion to select any of the following remedial measures:

(1)

to terminate this Agreement and require the Defaulting Party to indemnify it for all damages suffered; or

(2)

to seek mandatory performance of the obligations of the Defaulting Party hereunder and require the Defaulting Party to indemnify it for all damages suffered.

9.2

The Parties agree and confirm that in no circumstances shall any Shareholder request the termination of this Agreement for any reason.

9.3

The rights and remedies prescribed herein are cumulative, and other rights or remedies prescribed by the law are not precluded.

9.4

Notwithstanding any other provisions herein, the validity of this Article shall not be affected by the suspension or termination of this Agreement.

10.

Applicable Law and Dispute Resolution

10.1

The formation, effect, interpretation, performance, amendment, termination and dispute resolution of this Agreement shall be governed by PRC laws.

10.2

Any dispute arising from the interpretation and performance of this Agreement shall first be resolved through friendly consultations by the Parties.  If the dispute fails to be resolved within thirty (30) days after one Party gives notice requesting consultations to the other Party, either Party may submit such dispute

9

to China International Economic and Trade Arbitration Commission (hereinafter the “CIETAC”) for arbitration in Shanghai in accordance with the then effective arbitration rules of the CIETAC.  The arbitration panel shall consist of four (4) arbitrators who may or may not be on the CIETAC’s list of arbitrators, of which one arbitrator shall be selected by Shanghai Cangyun and one arbitrator shall be jointly selected by the Shareholders.  The fourth arbitrator, who shall be the chairman of the arbitration panel, shall be jointly selected by the two arbitrators selected by the Parties and shall not be a citizen of the United States or the PRC, shall be fluent in both English and Chinese and shall have expertise in the area of the dispute.  The arbitration award shall be final and binding on all Parties.

10.3

During the existence of any dispute, the Parties shall continue to exercise their remaining respective rights, and fulfill their remaining respective obligations under this Agreement, except insofar as the same may relate directly to the matters in dispute.

11.

Miscellaneous

11.1

Shanghai Cangyun may, upon notice to the Shareholders but without Shareholders’ consent, assign Shanghai Cangyun’s rights and/or obligations hereunder to any third party.  The Shareholders may not, without Shanghai Cangyun’s prior written consent, assign any of the Shareholders’ rights, obligations and/or liabilities hereunder to any third party.  Successors or permitted assignees (if any) of the Shareholders shall be bound by, and continue to perform, the obligations of the Shareholders under this Agreement. 

11.2

This Agreement is made in four (4) originals in both English and Chinese.  Each Party shall keep one (1) original of each language version.  The two language versions shall be equally valid.  In the event that there is any discrepancy between the Chinese and English versions, the arbitration panel as constituted pursuant to Article 10.2 shall decide which version more accurately reflects the true intention of the Parties.

11.3

This Agreement may not be amended or modified in any manner except by an instrument in writing signed by the Parties hereto.

11.4

No waiver of any provision of this Agreement shall be effective unless made in writing and signed by the Parties.  The waiver by any Party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by either Party to exercise any right or privilege hereunder shall be deemed a waiver of such Party’s rights or privileges hereunder or shall be deemed a waiver of such Party’s rights to exercise the same at any subsequent time or times hereunder.

11.5

If any provision of this Agreement is deemed or becomes invalid, illegal or unenforceable, such provision shall be construed or deemed amended to conform

10

to applicable laws so as to be valid and enforceable; or, if it cannot be so construed or deemed amended without materially altering the intention of the Parties, it shall be stricken and the remainder of this Agreement shall remain in full force and effect.

11.6

Each Party shall use its commercially reasonable efforts to do and perform, or cause to be done and performed, all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments and documents as may be necessary or desirable to give effect to the terms and intent of this Agreement and any ancillary documents.

**REMAINDER OF PAGE INTENTIONALLY LEFT BLANK**

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IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized representatives of the Parties as of the date first above written.

Shanghai Cangyun Management Consulting Co., Ltd.  

(seal)

By:

/s/ Yung Lap Tsang

Title:

________________________

Shareholders of the Domestic Company:

Xingtao ZHOU: /s/ Xingtao ZHOU

Wei WANG: /s/ Wei Wang

Yaqin FU: /s/ Yaqin FU

[Execution Page of Call Option Agreement Dated _8 August_, 2019]

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Appendix I

Basic Information of the Domestic Company

Company Name:

Hainan Cangbao Tianxia Cultural Relic Co., Ltd.

Registered Address:

Room 609, 6^th Floor, Shengda Plaza, No. 61, Guoxing Ave. Meilan District, Haikou City, Hainan Province,

Registered Capital:

RMB 10,000,000

Equity Structure:

Xingtao ZHOU  – 56%

Wei WANG – 24%

Yaqin FU – 20%

Company Name:

Cangbao Tianxia（Shanghai）Cultural Relic Co., Ltd.

Registered Address:

Room 169, area C, 5th floor, building 1, no.6 kangye road, zhujiajiao town, qingpu district,Shanghai City

Registered Capital:

RMB 33,000,000

Equity Structure:

Xingtao ZHOU  – 56%

Wei WANG – 24%

Yaqin FU – 20%

Appendix II

Form of Option Exercise Notice

To: [Xingtao ZHOU/Wei WANG/Yaqin FU]

We hereby refer to the Call Option Agreement entered into between you and our company as of August 8, 2019 (hereinafter the “Option Agreement”), under which you had agreed to transfer the equity interests you hold in Hainan Cangbao Tianxia Cultural Relic Co., Ltd. (hereinafter the “Domestic Company”) to our company or any third parties designated by our company on demand by our company to the extent as permitted by PRC Law and regulations.

Therefore, we hereby notify you as follows:

Our company hereby exercises the Call Option under the Option Agreement and requires you transfer to [our company / name of entity / individual designated by our company] the equity interests you hold in the Domestic Company totaling [100]% of the total equity interests of the Domestic Company in accordance with the provisions set forth in the Option Agreement.

Best regards,

Shanghai Cangyun Management Consulting Co., Ltd.  (Seal)

By:

/s/ Yung Lap Tsang (signature)

Title:

________________________

Date:

________________________

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EX-10.2

EXHIBIT 10.2

EQUITY PLEDGE AGREEMENT

This Equity Pledge Agreement (this “Agreement”) is entered into by and among the following parties on August 8, 2019:

(1)

Shanghai Cangyun Management Consulting Co., Ltd.  (“Pledgee”), a wholly foreign owned enterprise registered in Shanghai, People’s Republic of China (“PRC”) with its address at Room 3166, 3^rd Floor, Building 6, No. 1328, Yixian Road, Baoshan District, Shanghai, PRC;

(2)

Xingtao ZHOU (ID Card No.: 【510106197905196219】) (“Pledgor A”), a PRC citizen with an address at 【No. 2, unit 4, building 8, no. 8, chandian zi youmiao road, jinniu district, chengdu】, PRC;

(3)

Wei WANG (ID Card No.: 【110103197902030930】) (“Pledgor B”), a PRC citizen with an address at 【No. 14, lane 1, dongxiao city, chongwen district, Beijing】, PRC; and

(4)

Yaqin FU (ID Card No.: 【650204196402220028】) (“Pledgor C”, together with Pledgor A and Pledgor B, “Pledgors” and each, a “Pledgor” ), a PRC citizen with an address at 【No. 88, lane 7171, shenjiang road, pudong new area, Shanghai】, PRC.

Pledgee and Pledgors are hereinafter jointly referred to as the “Parties” and individually, as a “Party”.  Each of Pledgors’ obligations under this Agreement shall be joint and several.

Whereas:

(A)

Pledgor A, Pledgor B and Pledgor C are all of the registered shareholders of Hainan Cangbao Tianxia Cultural Relic Co., Ltd., Cangbao Tianxia（Shanghai）Cultural Relic Co., Ltd.The former limited liability company registered in Hainan, PRC with its address at Room 609, 6^th Floor, Shengda Plaza, No. 61, Guoxing Ave. Meilan District, Haikou City, Hainan Province, PRC, the later limited liability company registered in shanghai,PRC with its address at room 169, area C, 5th floor, building 1, no.6 kangye road, zhujiajiao town, qingpu district,hereinafter both of them referred to as “Domestic Company”), and respectively hold 56%, 24% and 20% of the equity interests in the two Domestic Companys.  The equity structure of Domestic Company as of the date of execution of this Agreement is set forth in Appendix I.

(B)

Pursuant to a Call Option Agreement dated as of August 8, 2019 between the Pledgee and the Pledgors (hereinafter, the “Option Agreement”), the Pledgors have agreed, subject to PRC law, to transfer part or all of the equity interests of

Domestic Company to the Pledgee and/or any other entity or individual designated by the Pledgee at the request of the Pledgee.

(C)

Pursuant to a Proxy Agreement dated as of August 8, 2019 among the Pledgee, the Pledgors and the Domestic Company (hereinafter, the “Proxy Agreement”), the Pledgors had irrevocably appointed the Pledgee as proxy and vested the Pledgee with full power to exercise on their behalf all of their shareholders’ voting rights in respect of Domestic Company.

(D)

As security for performance by the Pledgors of the Contract Obligations (as defined below) and discharge and satisfaction of the Secured Debts (as defined below), the Pledgors agree to pledge all of their equity interests in the Domestic Company to the Pledgee and grants the Pledgee the right to repayment in first priority on and subject to the terms of this Agreement.

Therefore, the Parties enter into this Agreement as follows upon friendly negotiation:

1.

Definitions

1.1

Unless the context otherwise requires, the following terms in this Agreement shall have the following meanings:

“Breaching Event” shall mean any breach by any of the Pledgors of any of his Contract Obligations (as defined below).

“Contract Obligations” shall mean all contractual obligations of the Pledgors under the Option Agreement and the Proxy Agreement; and all contractual obligations of the Pledgors under this Agreement.

“Pledged Equity” shall mean all of the equity interests in Domestic Company which are legally owned by the Pledgors as of the effective date hereof and are to be pledged to the Pledgee pursuant to the provisions hereof as the security for the Secured Debts (as defined below).

“PRC Law” shall mean the then valid laws, administrative regulations, administrative rules, local regulations, judicial interpretations and other binding regulatory documents of the PRC.

“Secured Debts” shall mean all direct, indirect and consequential losses and losses of foreseeable profits suffered by Pledgee due to any Breaching Event of any of the Pledgors; and all fees incurred by Pledgee for the enforcement of the Contract Obligations of the Pledgors.

“Transaction Agreements” shall mean the Option Agreement and the Proxy Agreement.

2

1.2

The references to any PRC Law herein shall be deemed:

(1)

to include references to the amendments, changes, supplements and reenactments of such law, irrespective of whether they take effect before or after the formation of this Agreement; and

(2)

to include references to other decisions, notices or regulations enacted in accordance therewith or effective as a result thereof.

1.3

Unless otherwise stated in the context herein, all references to an Article, clause, item or paragraph shall refer to the relevant article, clause, item or paragraph of this Agreement.

2.

Equity Pledge

2.1

Pledgors shall have been registered at the local branch of State Administration for Industry and Commerce (hereinafter, “SAIC”) as the shareholders of the Domestic Company holding their respective proportions of equity interests in the Domestic Company as set forth in Appendix I above and hold such equity interests free and clear of encumbrances.

2.2

The Pledgors hereby undertake that they will be responsible for, recording the equity pledge arrangement hereunder (hereinafter, the “Equity Pledge”) on the shareholder register of Domestic Company on the date hereof, and will use their best endeavors to register the Equity Pledge with SAIC.

2.3

During the term of this Agreement, the Pledgee shall not be liable in any way for impairment in value of the Pledged Equity, nor shall Pledgors have any right to make any claims against Pledgee for such impairment in value, except where such impairment in value is directly caused by Pledgee’s willful misconduct or gross negligence.

2.4

Subject to Article 2.3 above, in case of any actual or potential impairment in value of the Pledged Equity, the Pledgee may request the Pledgors to provide additional guarantees or security to secure the Contract Obligations and the Secured Debts.  If the Pledgors fail to comply with the said request to the satisfaction of the Pledgee, the Pledgee may in its discretion dispose of the Pledged Equity on behalf of the Pledgors, and apply the proceeds from such sale towards payment of the Secured Debts, or may deposit such proceeds to the local notary institution where the Pledgee is domiciled (any fees incurred in relation thereto shall be borne by the Pledgors).

2.5

Upon the occurrence of any Breaching Event, the Pledgee shall have the right to dispose of the Pledged Equity in the manner set forth in Article 4 hereof.

3

2.6

Without the prior written consent of the Pledgee, the Pledgors shall not increase the registered capital of Domestic Company by contributing additional capital, or allowing any third party to contribute additional capital, to Domestic Company.

2.7

Without the prior written consent of the Pledgee, the Pledgors shall not pass any shareholders’ resolution to by any other means permit the Domestic Company to declare or distribute any dividends or profits.

2.8

Without the prior written consent of the Pledgee, the Pledgors shall not enter into any transactions with Domestic Company.

3.

Release of Pledge

Upon full and complete performance by relevant Pledgors of all of their Contract Obligations or the full discharge and satisfaction of the Secured Debts, the Pledgee shall, at the request of the Pledgors, release the pledge, and shall cooperate with relevant Pledgors to go through the formalities to cancel the record of the Equity Pledge in the shareholder register of Domestic Company, and all expenses reasonably incurred in connection with such release shall be borne by the Pledgors.

4.

Disposal of the Pledged Equity

4.1

The Pledgors and the Pledgee hereby agree that, upon the occurrence of any Breaching Event, the Pledgee shall have the right to exercise, upon giving written notice to Pledgors, all of the rights and powers enjoyed by them under PRC Law, the Transaction Agreements and the terms hereof, including but not limited to being repaid in priority with proceeds from the sale of the Pledged Equity. The Pledgee shall not be liable for any loss as the result of their reasonable exercise of such rights and powers.

4.2

The Pledgee shall have the right to designate in writing its legal counsel or other agents to exercise on its behalf any and all rights and powers referred to above, and the Pledgors shall not raise any objection thereto.

4.3

The reasonable costs incurred by the Pledgee in connection with its exercise of any and all rights and powers set out above shall be borne by the Pledgors, and the Pledgee shall have the right to deduct the costs actually incurred from the proceeds that they acquire from the exercise of its rights and powers.

4.4

The proceeds that the Pledgee acquire from the exercise of its rights and powers shall be applied in the following order of priority:

(1)

first, to pay any cost incurred in connection with the disposal of the Pledged Equity and the exercise by the Pledgee of its rights and powers (including remuneration paid to its legal counsels and agents);

4

(2)

second, to pay any taxes and levies payable for the disposal of the Pledged Equity (for the avoidance of doubt, such taxes do not include any income tax); and

(3)

third, to repay the Pledgee for the Secured Debts.

Any proceeds remaining after payment of the above amounts shall be returned to the Pledgors or other persons entitled thereto according to relevant laws and regulations or deposited with the local notary institution where the Pledgee is domiciled (any fees incurred in relation thereto shall be borne by the Pledgors).

5.

Continuity and No Waiver

The Equity Pledge hereunder is a continuous security, and will continue to be valid until the full performance of the Contract Obligations or the full discharge and satisfaction of the Secured Debts.  Neither exemption or grace period granted by the Pledgee to the Pledgors in respect of any breach, nor delay by the Pledgee in exercising any of its rights under the Transaction Agreements and this Agreement, shall affect the rights of the Pledgee under this Agreement, relevant PRC Law and the Transaction Agreements, the rights of the Pledgee to demand at any time thereafter the strict performance of the Transaction Agreements and this Agreement by the Pledgors or the rights the Pledgee may be entitled to due to any subsequent breach by the Pledgors of their obligations under the Transaction Agreements and/or this Agreement.

6.

Representations and Warranties

6.1

As of the date of this Agreement and during the term of this Agreement through the date of termination or expiration of this Agreement, Pledgors hereby represent and warrant as follows:

(a)

Each of the Pledgors is a PRC citizen with power and capacity to execute and perform his obligations under this Agreement.

(b)

The execution and performance of this Agreement by the Pledgors do not violate any laws and regulations or government approvals, authorizations, notices or other governmental documents having binding effect on or affecting Pledgors, nor do they violate any agreements between Pledgors and any third party or any covenants made to any third party.

(c)

This Agreement constitutes the lawful, valid and enforceable obligations of the Pledgors.

(d)

All reports, documents and information provided by the Pledgors to the Pledgee are true, correct and accurate in all material respects.

5

(e)

The Pledgors constitute the only legal owners of the Pledged Equity, with no existing dispute concerning the ownership of the Pledged Equity.  Except for the restrictions imposed by the Transaction Agreements and this Agreement, the Pledgors have the right to dispose of the Pledged Equity or any part thereof.

(f)

Except for the encumbrance set on the Pledged Equity hereunder and the rights set forth under the Transaction Agreements, there is no other encumbrance or third party interest over the Pledged Equity.

(g)

The Pledged Equity is capable of being pledged or transferred according to PRC Law, and the Pledgors have the full right and power to pledge the Pledged Equity to the Pledgee according to this Agreement.

(h)

Any consent, permission, waiver or authorization by any third person, or any approval, permission or exemption by any government authority, or any registration or filing formalities with any government authority to be effected or obtained in respect of the execution and performance hereof and the creation of the Equity Pledge hereunder have been handled or obtained, and will be fully effective during the term of this Agreement.

(i)

The pledge hereunder constitutes a first pledge on the Pledged Equity.

(j)

All taxes and fees payable in connection with the acquisition of the Pledged Equity have already been paid in full by the Pledgors.

(k)

There is no pending or, to the knowledge of the Pledgor, threatened litigation, legal process or demand by any court or any arbitral tribunal against each Pledgor, or his property, or the Pledged Equity, nor is there any pending or, to the knowledge of the Pledgor, threatened litigation, legal process or demand by any government authority or any administration authority against each Pledgor, or its property, or the Pledged Equity, which would have a material adverse effect on the economic status of each Pledgor or his capability to perform the obligations hereunder and the Contract Obligations or to discharge and satisfy the Secured Debts.

6.2

As of the date of this Agreement and during the term of this Agreement through the date of termination or expiration of this Agreement, Pledgee hereby represents and warrants as follows:

(a)

Pledgee is a Sino-foreign equity joint venture enterprise duly registered and existing under PRC Law.

(b)

Pledgee has the power to execute and perform its obligations under this Agreement.  The execution and performance of this Agreement by

6

Pledgee is in compliance with the articles of association or other organizational documents of Pledgee, and Pledgee has obtained all necessary and appropriate approvals and authorizations for the execution and performance of this Agreement.

(c)

This Agreement shall constitute lawful, valid and enforceable obligations of the Pledgee.

7.

Undertakings by the Pledgors

The Pledgors hereby undertake to the Pledgee as follows:

(a)

Without the prior written consent by the Pledgee, the Pledgors shall not establish or permit to establish any further pledge or any other encumbrance on the Pledged Equity. Any pledge or other encumbrance on all or part of the Pledge Property without such prior written consent shall be null and void.

(b)

Without having the Pledgee’s prior written consent, the Pledgors shall not transfer the Pledged Equity, and any attempt by the Pledgors to transfer the Pledged Equity shall be null and void.  The proceeds from the transfer of the Pledged Equity by the Pledgor shall be used to repay to the Pledgee in advance the Secured Debts or submit the same to the third party agreed with the Pledgee.

(c)

The Pledgors shall promptly notify the Pledgee of any litigation, arbitration, claim or other proceedings which may adversely affect the interest of the Pledgors or the Pledgee under the Transaction Agreements and hereunder or in respect of the Pledged Equity, and shall take all reasonable measures to defend such proceedings and protect the interest of the Pledgee in the Pledged Equity.

(d)

The Pledgors shall not take or permit any act or action which may adversely affect the interest of the Pledgee under the Transaction Agreements and hereunder or in respect of the Pledged Equity.

(e)

The Pledgors shall, within the first month of each calendar quarter, provide the financial statements, including (but not limited to) the balance sheet, the profit statement and the cash flow statement of Domestic Company for the previous calendar quarter.

8.

Change of Circumstances

As supplement and subject to compliance with other terms of the Transaction Agreements and this Agreement, the event of any promulgation or change of any PRC Law, regulations or rules, or change in interpretation or application of such laws, regulations and rules, or the change of the relevant registration procedures which causes the Pledgee to believe that it will be illegal or in conflict with such laws, regulations or rules to further maintain the effectiveness of this Agreement and/or dispose of the

7

Pledged Equity in the manner provided herein, the Pledgors shall, at the written direction of the Pledgee and in accordance with the reasonable request of the Pledgee, promptly take all actions and/or execute any agreement or other document, in order to:

(1)

keep this Agreement valid and effective;

(2)

facilitate the disposal of the Pledged Equity in the manner provided herein; and/or

(3)

maintain or realize the intention or the security established hereunder.

9.

Effectiveness and Term of the Agreement

9.1

This Agreement shall become effective when the Equity Pledge hereunder has been legally recorded in the shareholders’ register of Domestic Company.  The Pledgors shall provide the registration certification of the Equity Pledge being recorded in the shareholders’ register to the Pledgee in a manner satisfactory to Pledgee.

9.2

This Agreement shall continue to be valid until the full performance of the Contract Obligations or the full discharge and satisfaction of the Secured Debts.

10.

Notices

All notices, claims, certificates, requests, demands and other communications under this Agreement shall be made in writing and shall be delivered to either Party hereto by hand or sent by facsimile, or sent, postage prepaid, by reputable overnight courier services at the following addresses (or at such other address for such Party as shall be specified by like notice), and shall be deemed given when so delivered by hand, or if sent by facsimile, upon receipt of a confirmed transmittal receipt, or if sent by overnight courier, five (5) days after delivery to or pickup by the overnight courier service:

If to Pledgee Shanghai Cangyun:

Shanghai Cangyun Management Consulting Co., Ltd.

Address:

Room 3166, 3^rd Floor, Building 6, No. 1328, Yixian Road, Baoshan District, Shanghai, PRC

Telephone:

【15880203378】

Email:

【martin5033@126.com】

Attention:

【Tsang Yung Lap】

with copies (which shall not constitute notice) to:

Beijing yingke (guangzhou) law firm

Email:

563254315@qq.com

Attention:

Zhiquan Chen

8

If to Pledgor A:

Xingtaoi ZHOU

Address:  

【No. 2, unit 4, building 8, no. 8, chandian zi youmiao road, jinniu district, chengdu】

Telephone:

【15384445544】

Email:  

【15884445544@163.com】

If to Pledgor B:

Wei WANG

Address:  

【No. 14, lane 1, dongxiao city, chongwen district, Beijing】

Telephone:

【13828776181】

Email:

【1207982029@qq.com】

If to Pledgor C:

Yaqin Fu

Address:  

【No. 88, lane 7171, shenjiang road, pudong new area, Shanghai】

Telephone:

【13020141771】

Email:

【2448892378@qq.com】

11.

Confidentiality

The Parties acknowledge and confirm that any oral or written information exchanged among them with respect to this Agreement constitutes confidential information.  The Parties shall maintain the confidentiality of all such information.  Without the prior written consent of the Party who had provided such information, none of the Parties shall disclose any confidential information to any third party, except in the following circumstances: (a) such information is or comes into the public domain (through no fault or disclosure by the receiving party); (b) information disclosed as required by applicable laws or rules or regulations of any stock exchange; or (c) information required to be disclosed by any Party to its legal or financial advisors regarding the transactions contemplated hereunder, and such legal or financial advisors are also bound by duties of confidentiality similar to the duties set forth in this Article.  Disclosure of any confidential information by the staff or employee of any Party shall be deemed as disclosure of such confidential information by such Party, for which the Party shall be held liable for breach of this Agreement.  This Article shall survive the termination of this Agreement for any reason.

12.

Applicable Law and Dispute Resolution

12.1

The formation, effect, interpretation, performance, amendment, termination and dispute resolution of this Agreement shall be governed by PRC laws.

9

12.2

Any dispute arising from the interpretation and performance of this Agreement shall first be resolved through friendly consultations by the Parties.  If the dispute fails to be resolved within thirty (30) days after one Party gives notice requesting consultations to the other Party, either Party may submit such dispute to China International Economic and Trade Arbitration Commission (hereinafter, the “CIETAC”) for arbitration in Shanghai in accordance with the then effective arbitration rules of the CIETAC.  The arbitration panel shall consist of three (3) arbitrators who may or may not be on the CIETAC’s list of arbitrators, of which one arbitrator shall be selected by the Pledgee and one arbitrator shall be jointly selected by the Pledgors. The third arbitrator, who shall be the chairman of the arbitration panel, shall be jointly selected by the two arbitrators selected by the Parties and shall not be a citizen of the United States or the PRC, shall be fluent in both English and Chinese and shall have expertise in the area of the dispute.  The arbitration award shall be final and binding on all Parties.

12.3

During the existence of any dispute, the Parties shall continue to exercise their remaining respective rights, and fulfill their remaining respective obligations under this Agreement, except insofar as the same may relate directly to the matters in dispute.

13.

Miscellaneous

13.1

The Pledgee may, upon notice to the Pledgors but without Pledgors’ consent, assign Pledgee’s rights and/or obligations hereunder to any third party.  The Pledgors may not, without the Pledgee’s prior written consent, assign any of the Pledgors’ rights, obligations and/or liabilities hereunder to any third party.  Successors or permitted assignees (if any) of the Pledgors shall be bound by, and continue to perform, the obligations of the Pledgors under this Agreement. 

13.2

The amount of Secured Debts determined by the Pledgee in exercising its rights over the Pledged Equity in accordance with the provisions contained herein shall be conclusive evidence of the amount of the Secured Debts hereunder.

13.3

This Agreement is made in five (5) originals in both English and Chinese.  Each Party shall keep one (1) original of each language version.  The remaining one (1) original shall be submitted to SAIC for registration of the Equity Pledge hereunder.  The two language versions shall be equally valid. In the event that there is any discrepancy between the Chinese and English versions, the arbitration panel as constituted pursuant to Article 12.2 shall decide which version more accurately reflects the true intention of the Parties.

13.4

This Agreement may not be amended or modified in any manner except by an instrument in writing signed by the Parties hereto.

13.5

No waiver of any provision of this Agreement shall be effective unless made in writing and signed by the Parties.  The waiver by any Party of a breach of any

10

provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by either Party to exercise any right or privilege hereunder shall be deemed a waiver of such Party’s rights or privileges hereunder or shall be deemed a waiver of such Party’s rights to exercise the same at any subsequent time or times hereunder.

13.6

If any provision of this Agreement is deemed or becomes invalid, illegal or unenforceable, such provision shall be construed or deemed amended to conform to applicable laws so as to be valid and enforceable; or, if it cannot be so construed or deemed amended without materially altering the intention of the Parties, it shall be stricken and the remainder of this Agreement shall remain in full force and effect.

13.7

Upon the execution of this Agreement, each of the Pledgors shall respectively enter into a power of attorney (hereinafter the “Power of Attorney”) to authorize a person acceptable to Pledgee to sign, on behalf of such Pledgor and according to this Agreement, any and all legal documents necessary for the exercise of the Pledgee’s rights hereunder.  Such Power of Attorney shall be delivered to Pledgee and Pledgee may, at any time if necessary, require the Pledgors to respectively execute multiple copies of the Power of Attorney and deliver the same to the relevant government authority.

13.8

Each Party shall use its commercially reasonable efforts to do and perform, or cause to be done and performed, all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments and documents as may be necessary or desirable to give effect to the terms and intent of this Agreement and any ancillary documents.

**REMAINDER OF PAGE INTENTIONALLY LEFT BLANK**

11

IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized representatives of the Parties as of the date first above written.

Pledgee:

Shanghai Cangyun Management Consulting Co., Ltd.  (seal)

By:

/s/ Yung Lap Tsang

Title:

________________________

Pledgor A:

Xingtao ZHOU  /s/ Xingtao ZHOU

Pledgor B:

Wei WANG  /s/ Wei WANG

Pledgor C:

Yaqin Fu  /s/ Yaqin Fu

[Execution Page of Equity Pledge Agreement Dated __8 August_, 2019]

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Appendix I

Basic Information of the Domestic Company

Company Name:

Hainan Cangbao Tianxia Cultural Relic Co., Ltd.

Registered Address:

Room 609, 6^th Floor, Shengda Plaza, No. 61, Guoxing Ave. Meilan District, Haikou City, Hainan Province,

Registered Capital:

RMB 10,000,000

Equity Structure:

Xingtao ZHOU  – 56%

Wei WANG – 24%

Yaqin FU – 20%

Company Name:

Cangbao Tianxia（Shanghai）Cultural Relic Co., Ltd.

Registered Address:

Room 169, area C, 5th floor, building 1, no.6 kangye road, zhujiajiao town, qingpu district,Shanghai City

Registered Capital:

RMB 33,000,000

Equity Structure:

Xingtao ZHOU  – 56%

Wei WANG – 24%

Yaqin FU – 20%

EX-10.3

EXHIBIT 10.3

PROXY AGREEMENT

This Proxy Agreement (this “Agreement”) is entered into by and among the following parties on August 8, 2019:

(1)

Shanghai Cangyun Management Consulting Co., Ltd.  (“SH Cangyun”), a wholly foreign owned enterprise registered in Shanghai, People’s Republic of China (“PRC”) with its address at Room 3166, 3^rd Floor, Building 6, No. 1328, Yixian Road, Baoshan District, Shanghai, PRC;

(2)

Xingtao ZHOU (ID Card No.: 【510106197905196219】) (“Shareholder A”), a PRC citizen with an address at 【No. 2, unit 4, building 8, no. 8, chandian zi youmiao road, jinniu district, chengdu】, PRC;

(3)

Wei WANG (ID Card No.: 【110103197902030930】) (“Shareholder B”), a PRC citizen with an address at 【No. 14, lane 1, dongxiao city, chongwen district, Beijing】, PRC; and

(4)

Yaqin FU (ID Card No.: 【650204196402220028】) (“Shareholder C”, together with Shareholder A and Shareholder B, “Shareholders” and each, a “Shareholder” ), a PRC citizen with an address at 【No. 88, lane 7171, shenjiang road, pudong new area, Shanghai】PRC; and

(5)

Hainan Cangbao Tianxia Cultural Relic Co., Ltd. (“Domestic Company”),Cangbao Tianxia（Shanghai）Cultural Relic Co., Ltd.The former limited liability company registered in Hainan, PRC with its address at Room 609, 6^th Floor, Shengda Plaza, No. 61, Guoxing Ave. Meilan District, Haikou City, Hainan Province, PRC, the later limited liability company registered in shanghai,PRC with its address at room 169, area C, 5th floor, building 1, no.6 kangye road, zhujiajiao town, qingpu district,hereinafter both of them referred to as “Domestic Company”)

SH Cangyun, Shareholders and Domestic Company are hereinafter jointly referred to as the “Parties” and individually, as a “Party”.  Each of Shareholders’ and Domestic Company’s obligations under this Agreement shall be joint and several.

Whereas:

(A)

Shareholder A, Shareholder B and Shareholder C are all of the registered shareholders of Domestic Company, and respectively hold 56%, 24% and 20% of the equity interests in Domestic Company; and

(B)

The Shareholders wish to entrust SH Cangyun to exercise their voting rights as shareholders of Domestic Company, and SH Cangyun is willing to accept such entrustment.

Therefore, the Parties enter into this Agreement as follows upon friendly negotiation:

1.

Irrevocable Proxy

1.1

Each of the Shareholders hereby irrevocably appoints SH Cangyun, from the date of this Agreement until the termination of this Agreement in accordance with its terms, as his proxy and authorizes SH Cangyun to exercise in SH Cangyun’s absolute discretion the following rights enjoyed by him as a Shareholder of Domestic Company in accordance with the articles of association of Domestic Company then in effect (collectively, the “Proxy Rights”):

(1)

attending shareholders’ meetings as proxy of the Shareholders;

(2)

exercising voting rights on behalf of the Shareholders on all matters being resolved at shareholders’ meetings and sign on behalf of the Shareholders on the Shareholders’ resolutions;

(3)

making proposals to convene interim shareholders’ meetings;

(4)

making proposals on the matters to be discussed and voted on at shareholders’ meetings; and

(5)

exercising Such other shareholder’s rights set forth under the articles of association of Domestic Company (as amended from time to time).

1.2

The Shareholders hereby acknowledge that any and all actions taken by SH Cangyun in exercising the Proxy Rights in accordance with the provisions under this Agreement shall be binding upon them.

1.3

The Shareholders hereby acknowledge that SH Cangyun is not required to seek advice from the Shareholders prior to exercising the Proxy Rights.  However, SH Cangyun shall inform the Shareholders as soon as practicable of any exercise by it of the Proxy Right.

1.4

The Shareholders shall not, in any manner or under any circumstance, exercise the rights which have been entrusted to SH Cangyun under Article 1.1 above, unless expressly permitted by SH Cangyun in writing.

2.

Information Rights and Agreement of Domestic Company

2.1

Domestic Company shall provide copies of any notices or other communications that it sends to the Shareholders to SH Cangyun at the same time as such notices

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or other communications are provided to the Shareholders, and SH Cangyun shall have access to and may inspect and take copies of all information or documents of Domestic Company to which the Shareholders have access.

2.2

Domestic Company acknowledges the Proxy Rights granted herein and agrees to cooperate with SH Cangyun in its exercise of the Proxy Rights.

3.

Exercise of Proxy Rights

3.1

SH Cangyun may from time to time and at any time delegate the exercise of any or all of the Proxy Rights to any of its directors, management or employees without the prior consent of the Shareholders or Domestic Company.

3.2

The Shareholders shall provide SH Cangyun with all assistance required by SH Cangyun in its exercise of the Proxy Rights, including signing on the shareholders’ resolutions or other legal documents when necessary or desirable to meet the requirement of the government authorities from time to time.

3.3

If at any time during the term of this Agreement, the Proxy Rights and exercise of the Proxy Rights under this Agreement become illegal or unenforceable for any reason other than by reason of any Shareholder’s or Domestic Company’s breach of this Agreement, the Parties shall immediately seek and adopt another alternative arrangement and, if necessary or desirable , enter into one or more amendment or supplementary agreements to amend or supplement the provisions herein, in order to ultimately achieve the purpose of this Agreement.

4.

Indemnification

4.1

SH Cangyun shall have no obligation to indemnify either Domestic Company or any of the Shareholders for any loss or damage incurred or likely to be incurred by Domestic Company or any of the Shareholders due to the exercise of the Proxy Rights in accordance with this Agreement, including, without limitation, any loss or damage resulting from any litigation, demand, arbitration or claim initiated or raised by any third party, or any administrative investigation or penalty or sanction imposed by any governmental authorities.

4.2

The Shareholders and Domestic Company shall indemnify SH Cangyun for and hold it harmless against any loss or damage incurred or likely to be incurred by SH Cangyun due to the exercise of the Proxy Rights in accordance with this Agreement, including, without limitation, any loss or damage resulting from any litigation, demand, arbitration or claim initiated or raised by any third party, any administrative investigation or penalty or sanction imposed by any governmental authorities. However, the Shareholders and Domestic Company will not indemnify SH Cangyun for losses incurred or damages suffered due to SH Cangyun’s willful misconduct or gross negligence.

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5.

Representations and Warranties

5.1

Each of the Shareholders hereby represents and warrants as follows:

(a)

Each of the Shareholders is a PRC citizen with power and capacity to execute and perform its obligations under this Agreement.

(b)

The execution and performance of this Agreement by Shareholders do not violate any laws and regulations or government approvals, authorizations, notices or other governmental documents having binding effect on or affecting the Shareholders, nor do they violate any agreements between the Shareholders and any third party or any covenants made to any third party.

(c)

This Agreement constitutes the legal, valid and binding obligations on the Shareholders when it is duly executed by the Shareholders.

(d)

The Shareholders constitute the only legal owners of the equity interests in Domestic Company, with no existing dispute concerning the ownership of the equity interests in Domestic Company.  SH Cangyun may fully and sufficiently exercise the Proxy Rights under this Agreement in accordance with the articles of association of Domestic Company.

(e)

As of the date of this Agreement, there is no effectively existing proxy or power of attorney with respect to any of the Proxy Rights appointed or granted by the Shareholders.

5.2

SH Cangyun hereby represents and warrants as follows:

(a)

SH Cangyun is a wholly foreign owned enterprise duly registered and existing under PRC law.

(b)

SH Cangyun has the power to execute and perform its obligations under this Agreement. The execution and performance of this Agreement by SH Cangyun is in compliance with the articles of association or other organizational documents of SH Cangyun, and SH Cangyun has obtained all necessary and appropriate approvals and authorizations for the execution and performance of this Agreement.

(c)

The execution and performance of this Agreement by SH Cangyun does not violate any laws and regulations or government approvals, authorizations, notices or other governmental documents having binding effect on or affecting SH Cangyun, nor does it violate any agreements between SH Cangyun and any third party or any covenants made to any third party.

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(d)

This Agreement constitutes the lawful, valid and enforceable obligations of SH Cangyun.

5.3

Domestic Company hereby represents and warrants as follows:

(a)

Domestic Companys are limited liability company duly registered and existing under PRC law.

(b)

Each of the Shareholders and Domestic Company has the power to execute and perform his or its obligations under this Agreement.  The execution and performance of this Agreement by Domestic Company is in compliance with the articles of association or other organizational documents of Domestic Company, and Domestic Company has obtained all necessary and appropriate approvals and authorizations for the execution and performance of this Agreement.

(c)

The execution and performance of this Agreement by each of the Shareholders and Domestic Company does not violate any laws and regulations or government approvals, authorizations, notices or other governmental documents having binding effect on or affecting any of the Shareholders or Domestic Company, nor does it violate any agreements between any of the Shareholders or Domestic Company and any third party or any covenants made to any third party.

(d)

This Agreement constitutes the lawful, valid and enforceable obligations of Domestic Company.

(e)

The Shareholders constitute the only legal owners of the equity interests in the Domestic Company. SH Cangyun may fully and sufficiently exercise the Proxy Rights under this Agreement in accordance with the articles of association of Domestic Company.

6.

Confidentiality

The Parties acknowledge and confirm that any oral or written information exchanged among them with respect to this Agreement constitutes confidential information.  The Parties shall maintain the confidentiality of all such information.  Without the prior written consent of the Party who had provided such information, none of the Parties shall disclose any confidential information to any third party, except in the following circumstances: (a) such information is or comes into the public domain (through no fault or disclosure by the receiving party); (b) information disclosed as required by applicable laws or rules or regulations of any stock exchange; or (c) information required to be disclosed by any Party to its legal or financial advisors regarding the transactions contemplated hereunder, and such legal or financial advisors are also bound by duties of confidentiality similar to the duties set forth in this Article.  Disclosure of any confidential information by the staff or employee of any Party shall be deemed as

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disclosure of such confidential information by such Party, for which the Party shall be held liable for breach of this Agreement.  This Article shall survive the termination of this Agreement for any reason.

7.

Term of Agreement

7.1

This Agreement shall become effective upon the execution of this Agreement by the Parties and, unless the Parties terminate the Agreement in writing, this Agreement will remain effective indefinitely as long as at least one of the Shareholders remain shareholder of Domestic Company.

7.2

In the event that a Shareholder transfers all of his equity interests in Domestic Company after securing prior consent from SH Cangyun, such Shareholder shall no longer be a Party to this Agreement, but the obligations and undertakings of the other Parties under this Agreement shall not be adversely affected thereby.

8.

Notices

All notices, claims, certificates, requests, demands and other communications under this Agreement shall be made in writing and shall be delivered to any Party hereto by hand or sent by facsimile, or sent, postage prepaid, by reputable overnight courier services at the following addresses (or at such other address for such Party as shall be specified by like notice), and shall be deemed given when so delivered by hand, or if sent by facsimile, upon receipt of a confirmed transmittal receipt, or if sent by overnight courier, five (5) days after delivery to or pickup by the overnight courier service:

If to SH Cangyun:

Shanghai Cangyun Management Consulting Co., Ltd.  

Address:

Room 3166, 3^rd Floor, Building 6, No. 1328, Yixian Road, Baoshan District, Shanghai, PRC

Telephone:

【15880203378】

Email:

【martin5033@126.com】

Attention:

【Tsang Yung Lap】

with copies (which shall not constitute notice) to:

Beijing yingke (guangzhou) law firm

Email:

563254315@qq.com

Attention:

Zhiquan Chen

If to Shareholder A:

Xingtaoi ZHOU

Address:  

【No. 2, unit 4, building 8, no. 8, chandian zi youmiao road, jinniu district, chengdu】

Telephone:

【15384445544】

Email:  

【15884445544@163.com】

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If to Shareholder B:

Wei WANG

Address:  

【No. 14, lane 1, dongxiao city, chongwen district, Beijing】

Telephone:

【13828776181】

Email:

【1207982029@qq.com】

If to Shareholder C:

Yaqin Fu

Address:  

【No. 88, lane 7171, shenjiang road, pudong new area, Shanghai】

Telephone:

【13020141771】

Email:

【2448892378@qq.com】

9.

Liability for Default

9.1

The Parties agree and confirm that, if any Party (hereinafter the “Defaulting Party”) breaches substantially any of the provisions herein or fails substantially to perform any of the obligations under this Agreement, it shall constitute a default under this Agreement (hereinafter a “Default”), and any of the non-default Parties shall have the right to require the Defaulting Party to rectify such Default or take remedial measures within a reasonable period. If the Defaulting Party fails to rectify such Default or take remedial measures within such reasonable period or within ten (10) days of a non-defaulting Party notifying the Defaulting Party in writing and requiring it to rectify the Default, the non-defaulting Party shall have the right at its own discretion to select any of the following remedial measures:

(1)

to terminate this Agreement and require the Defaulting Party to indemnify it for all damages suffered; or

(2)

to seek mandatory performance of the obligations of the Defaulting Party hereunder and require the Defaulting Party to indemnify it for all damages suffered.

9.2

The Parties agree and confirm that in no circumstances shall any Shareholder request the termination of this Agreement for any reason.

9.3

The rights and remedies prescribed herein are cumulative, and other rights or remedies prescribed by the law are not precluded.

9.4

Notwithstanding any other provisions herein, the validity of this Article shall not be affected by the suspension or termination of this Agreement.

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10.

Applicable Law and Dispute Resolution

10.1

The formation, effect, interpretation, performance, amendment, termination and dispute resolution of this Agreement shall be governed by PRC laws.

10.2

Any dispute arising from the interpretation and performance of this Agreement shall first be resolved through friendly consultations by the Parties.  If the dispute fails to be resolved within thirty (30) days after one Party gives notice requesting consultations to the other Parties, any Party may submit such dispute to China International Economic and Trade Arbitration Commission (hereinafter the “CIETAC”) for arbitration in Shanghai in accordance with then effective arbitration rules of the CIETAC.  The arbitration panel shall consist of three (3) arbitrators who may or may not be on the CIETAC’s list of arbitrators, of which one arbitrator shall be selected by SH Cangyun and one arbitrator shall be jointly selected by Domestic Company and its Shareholders.  The third arbitrator, who shall be the chairman of the arbitration panel, shall be jointly selected by the two arbitrators selected by the Parties and shall not be a citizen of the United States or the PRC, shall be fluent in both English and Chinese and shall have expertise in the area of the dispute.  The arbitration award shall be final and binding on all Parties.

10.3

During the existence of any dispute, the Parties shall continue to exercise their remaining respective rights, and fulfill their remaining respective obligations under this Agreement, except insofar as the same may relate directly to the matters in dispute.

11.

Miscellaneous

11.1

SH Cangyun may, upon notice to the Shareholders but without Shareholders’ consent, assign its rights and/or obligations hereunder to any third party.  The Shareholders may not, without SH Cangyun’s prior written consent, assign the Shareholders’ rights, obligations and/or liabilities hereunder to any third party.  Successors or permitted assignees (if any) of the Shareholders shall be bound by, and continue to perform, the obligations of the Shareholders under this Agreement. 

11.2

This Agreement is made in five (5) originals in both English and Chinese.  Each Party shall keep one (1) original of each language version.  The two language versions shall be equally valid.  In the event that there is any discrepancy between the Chinese and English versions, the arbitration panel as constituted pursuant to Article 10.2 shall decide which version more accurately reflects the true intention of the Parties.

11.3

This Agreement may not be amended or modified in any manner except by an instrument in writing signed by the Parties hereto.

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11.4

No waiver of any provision of this Agreement shall be effective unless made in writing and signed by the Parties.  The waiver by any Party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by any Party to exercise any right or privilege hereunder shall be deemed a waiver of such Party’s rights or privileges hereunder or shall be deemed a waiver of such Party’s rights to exercise the same at any subsequent time or times hereunder.

11.5

If any provision of this Agreement is deemed or becomes invalid, illegal or unenforceable, such provision shall be construed or deemed amended to conform to applicable laws so as to be valid and enforceable; or, if it cannot be so construed or deemed amended without materially altering the intention of the Parties, it shall be stricken and the remainder of this Agreement shall remain in full force and effect.

11.6

Each Party shall use its commercially reasonable efforts to do and perform, or cause to be done and performed, all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments and documents as may be necessary or desirable to give effect to the terms and intent of this Agreement and any ancillary documents.

**REMAINDER OF PAGE INTENTIONALLY LEFT BLANK**

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IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized representatives of the Parties as of the date first above written.

SHANGHAI CANGYUN MANAGEMENT CONSULTING CO., LTD. (seal)

By:

/s/ Yung Lap Tsang

Title:

________________________

Shareholders of the Domestic Company:

Xingtao ZHOU: /s/ Xingtao ZHOU

Wei WANG: /s/ Wei WANG

Yaqin FU: /s/ Yaqin FU

Hainan Cangbao Tianxia Cultural Relic Co., Ltd. (seal)

By:

/s/ Tan Liang

Title:

________________________

Cangbao Tianxia（Shanghai）Cultural Relic Co., Ltd.(seal)

By:

/s/ Tan Liang

Title:

________________________

[Execution Page of Proxy Agreement Dated _8 August__, 2019]

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EX-10.4

EXHIBIT 10.4

上海藏韵管理咨询有限公司和周兴涛、王维、符雅琴及海南藏宝天下艺术品有限公司、藏宝天下（上海）艺术品有限公司

Shanghai Cangyun Management Consulting Co., Ltd.and Xingtao Zhou、Wei wang 、Yaqin FU and

Hainan Cangbao Tianxia Cultural Relic Co., Ltd. 、Cangbao Tianxia（Shanghai）Cultural Relic Co., Ltd.

————————————————————————————————

独家管理咨询服务协议

Exclusive Management Consultation Service Agreement

————————————————————————————————

2019年 8月8日

中华人民共和国  

Dated: 8 August ，2019

The People’s Republic of China

独家管理咨询服务协议

Exclusive Management Consultation Service Agreement

        本独家管理咨询服务协议（“本协议”）由以下各方（单独称为“一方”，统 称为“各方”）于 2019 年 8 月 8 日（“生效日”）在中华人民共和国广州市签署：

This Exclusive Management Consultation Service Agreement (this “Agreement”) is made and entered into, as of (Augut 8^th ，2018) (the “effective  day”), in (Guangzhou City), the People’s Republic of China, by the Parties as follows (the Parties will hereinafter be individually referred to as a “Party” or collectively referred to as the “Parties” or “each Party”):

        （1）上海藏韵管理咨询有限公司(“上海藏韵”)，一家在中华人民共和国(“中国”)上海注册的外商独资企业（WFOE），地址为中国上海市宝山区逸仙路1328号6幢3层3166室；

Shanghai Cangyun Management Consulting Co., Ltd. (“Shanghai Cangyun”), a wholly foreign owned enterprise registered in Shanghai, People’s Republic of China (“PRC”) with its address at Room 3166, 3rd Floor, Building 6, No. 1328, Yixian Road, Baoshan District, Shanghai, PRC;

 (2）海南藏宝天下艺术品有限公司、藏宝天下（上海）艺术品有限公司(均为“目标公司”，前者在中国海南注册、地址为中国海南省海口市美兰区国兴大道61号盛达商务广场6层609房的有限责任公司。后者在中国上海注册、地址为上海市青浦区朱家角镇康业路6号1幢五层C区169室的有限责任公司)

      Hainan Cangbao Tianxia Cultural Relic Co., Ltd., Cangbao Tianxia（Shanghai）Cultural Relic Co., Ltd. The former limited liability company registered in Hainan, PRC with its address at Room 609, 6th Floor, Shengda Plaza, No. 61, Guoxing Ave. Meilan District, Haikou City, Hainan Province, PRC.The later limited liability company registered in shanghai,PRC with its address at room 169, area C, 5th floor, building 1, no.6 kangye road, zhujiajiao town, qingpu district,hereinafter referred to as “Target Company”

(4) 公司股东周兴涛、王维、符雅琴为中华人民共和国公民。

Shareholders  Xingtao Zhou、Wei wang 、Yaqin FU are citizens of the People’s Republic of China.

除另有定义，粗体字的含义皆按本协议附件 A 所定义，该附件属于本协议的一部

分。

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Unless other provisions in this Agreement, the terms in bold shall be referred to as the definitions in the Appendix A in this Agreement which shall be regarded as a portion of this Agreement.  

前言

RECITALS

鉴于以下事实，签订本协议： Whereas:

A.  WFOE 是一家根据中华人民共和国（“中国”）法律有效成立的有限责任公

司。

WFOE is a corporation with limited liability duly organized under the laws of the People’s Republic of China (“China”).

B. 目标公司是由公司股东周兴涛、王维、符雅琴持有 100%股权的有限责任公司。目标公司现在以及将来可能从事的经营业务简称为“业务”。

The Target Company is a corporation with limited liability, in which shareholders Xingtao Zhou、Wei wang 、Yaqin FU jointly holds 100% of the stock equity. The business the Target Company undertakes currently or may undertake in the future will be hereinafter referred to as the “Business”.

有鉴于此，各方基于相互承诺和同意，充分考虑各方的利益，在全面了解和确认的 同时，经过友好协商，在平等互利的基础上，根据相关中国法律法规，各方签订协议如 下：

NOW, THEREFORE, for the mutual commitment and consent, under the consideration of the benefit of all Parties and with comprehensively understanding and acknowledgement, all Parties, after friendly negotiation, based on the principle of mutual benefit, make and enter into, pursuant to relevant laws of China, an agreement as follows:

1.

独家管理服务

Exclusive Management Service

本协议期限内，WFOE 将作为目标公司独家管理服务提供商，且目标公司为此目的 而聘请 WFOE。目标公司同意，本协议期间内，其将不会接受来自任何第三方提供 的相同或相似服务。WFOE 提供的服务范围包括，在 WFOE 股东大会和/或董事会依

2

据本协议条款的监督和授权下，确认并向目标公司提供足够的，能够提供附件 B 所 示服务（“管理服务”）的富有经验的专业管理和财务人员。

Within the term of this Agreement, the WFOE shall act as the exclusive provider to provide the Target Company with management service, and the Target Company shall engage the WFOE for such purpose. The Target Company agrees, within the term of this Agreement, it shall not engage any third party or accept the same or similar service provided by any third party. Within the service scope, the WFOE shall, under the supervision and authorization by the Board of Shareholders and/or Board of Directors of the WFOE pursuant to this Agreement, verify and provide the Target Company with sufficient experienced management and financial personnel who are competent in providing the services (“Management Service”) set forth in the Appendix B of this Agreement  

2.

服务费 Service Fee

(a) 鉴于 WFOE 提供的管理服务，WFOE 有权在本协议期限内向目标公司收取相应 的服务费。在本协议期限内，每一年度的服务费按《购买权协议》 约定的对应年度的股东收益权货币价值收取。

Within the term of this Agreement, the WFOE shall be entitled to charge the management service fees on the Target Company, with an annual service fee which is equivalent of the annual monetary value of the shareholder usufruct stipulated in Shareholder Usufruct Transfer Agreement.

(b) 就每一年度的服务费，目标公司应于每一服务年度结束后的 30 个公历日 内，向 WFOE 一次性支付。

Such annual service fee shall be one time charge which the Target Company shall pay to the WFOE within a period of 30 calendar days which commence from the end of each service year.  

(c) 根据 WFOE、股东和目标公司于 2019年 8月 8日签订的股权质押协议，股东已质押他们所持有的对目标公司注册资本的全部权益，以确保目标公司根 据本协议约定支付服务费。

Pursuant to the Stock Equity Pledge Agreement made and entered into, as of (August 8^th，2019), by the WFOE, the Shareholders and the Target Company, the Shareholders have already made all of the

3

equity of the registered capital of the Target Company they  hold in pledge, to ensure that the Target Company will pay such service fee pursuant to this Agreement.  

3.

业务运营

Business Operation 在本协议的期限内：

Within the term of this Agreement,  

(a)

各方保证： All Parties guarantee that:

(i) 管理服务和本协议所涵盖的业务将包括目标公司的业务以及目 标公司所享有的所有业务机会;

The management service and the business covered  in this Agreement shall include the  business  of the Target Company and all business opportunities  which the Target Company may share;

(ii) 目标公司的所有现金应留存于公司银行账户或根据本协议条款 予以处置；

All of the cash of the Target  Company  shall be reserved in the bank account of such Target  Company, or be disposed pursuant to this Agreement;

(iii) 目标公司所持有的、源于或涉及目标公司业务经营的所 有营业收入、营运资本、应收账款、以及其他资金，应存于公 司银行账户；

All operating revenue, operating capital, accounts receivable and other capital, held by the company or brought about from or relating to the business of the Target Company, shall be deposited in the bank account of such Target Company;

(iv) 所有应付账款、员工补偿金、其他雇用相关支出、以及涉及为 目标公司利益而购置资产或因理赔目标公司责任的支出，应从 公司银行账户的余额支付；以及

4

All accounts payable, compensations  to employees, other expenses relating to employment and the expenses relating to the purchase of the assets for the benefit of the Target Company or to any indemnification to the liability of the Target Company, shall be paid  from the balance of the bank account of the Target Company; and

(v) 未有 WFOE 的事先书面同意，不得采取可能导致部分或全部目 标公司业务委托给他人的行为。

Without prior written consent of the WFOE, any action that may cause part or all of the business of the Target Company entrusted to other person shall not be taken.  

(b)

WFOE 保证： WFOE guarantees that:

(i) 将以经营自身业务所持的谨慎水准建议目标公司所从事的协议 所述业务，并始终遵循其合理商业判断原则，包括不得采取知 晓或根据其合理商业判断应当知晓，会实质性不利于业务经营 所必需的许可、执照以及批准的行为，或者违反中华人民共和 国相应法律法规的行为；以及

The WFOE shall make suggestion on the business conducted by the Target Company set forth in this Agreement in prudence with which the WFOE conducts its own business, and shall abide by any reasonable business judgment principles, including without taking any action, which, it knows or it shall know based on reasonable business judgment, may materially  go against the approval, permit or license necessary for the business, or any action which may violate relevant laws and regulations of the People’s Republic of China; and

(ii) WFOE 应保持目标公司业务和运营的完整性，且不得采取其知 晓或根据其合理商业判断应当知晓，会实质性不利于目标公司 业务、运营和前景的行为。

The WFOE shall preserve and maintain the integrity of the business and operation of the Target Company, and shall not take any action, which, it knows or it shall

5

know based on reasonable business judgment, may materially go against the business, operation and prospects of the Target Company.  

(c)

股东保证： The Shareholders guarantee that:

(i) 确保除非已经向 WFOE 足额支付适用年度的管理服务的服务 费，否则他们中的任何一位都不会在该年度收取其作为目标公 司股东所享有的部分或全部净利润；

The Shareholders shall not obtain any net profit they may have as the shareholders of the Target Company, unless the management service fee in relevant year has been paid in full amount;

(ii) 根据本协议，股东或其代理人、代表人不得采取任何干预业务 运营、或有干预业务运营效果的、或实质性不利于目标公司资 产、运营、业务或前景的行为；

Pursuant to this Agreement, the Shareholders or their agents and representatives shall not take any action which may interfere with the business operation or the result of business operation, or may materially go against the assets, operation, business or prospects of the Target Company;

(iii) 他们将委派并选举 WFOE 根据其管理服务提议的目标公 司的董事人选为董事；

The Shareholders shall appoint and elect the director candidate recommended by the WFOE, according to the management service provided by the WFOE, to the Target Company, to be the director;

(iv) 他们将尽最大努力合作并协助 WFOE 和目标公司有效持有目标 公司业务经营所需的所有许可证、执照、其他授权或批准；以 及

The Shareholders shall strive, in greatest efforts, to cooperate with and assist the WFOE and the Target Company to hold effectively and validly all of the permits, licenses, other authorization or approval

6

necessary for the operation and business of the Target Company; and

(v) 他们将尽最大努力协助 WFOE 及目标公司与相关政府机关及其 代表保持积极和卓有成效的关系。

The Shareholders shall strive, in greatest efforts, to assist the WFOE and the Target Company in preserving and maintaining active and effective relationship with the governmental sectors and their representatives.

(d)

目标公司保证其将： The Target Company guarantees that: (i) 按照本协议第二条中的规定向 WFOE 支付服务费；

The Target Company shall pay the management service  fee to the WFOE pursuant to the Paragraph 2 in  this Agreement;

(ii) 就 WFOE 为履行本协议项下的管理服务，向 WFOE 提供目标公司 各类运营及财务信息（包括但不限于目标公司的月度、季度、年 度财务会计报表、预算安排和商业计划），并在 WFOE 的合理要 求下，就任一事项提供具体说明；

For the management service provided by the WFOE under this Agreement, the Target Company shall provide the WFOE with the operation and financial information and data, including but not limited to the monthly, quarterly, and annual financial statements, budget arrangements and business plan of the Target Company, and shall provide specific notes to any such item at the request of the WFOE.

(iii) 为 WFOE 以及 WFOE 授权的人员为履行本协议进入目标公司的办 公场所及其他业务场所提供协助；

The Target Company shall assist the WFOE and the staff authorized by WFOE in going on site to the office of the Target Company and other places of business for the purpose of this Agreement;

(iv) 在与第三方签订重大合同前通知并获得 WFOE 的书面同意。本 条所指重大合同是指任何与第三方订立的合作、转让股权、融资

7

或其他任何可能影响 WFOE 在本协议中的利益的书面的或口头的 合同、协议、约定或承诺，或可能合理导致目标公司做出任何变 更或提前终止本协议决定的书面的或口头的其他合同、协议、约 定或承诺；

The Target Company shall notify and  obtain written consent from the WFOE prior to making and entering into material contract with a third party. The material contracts in this clause shall refer to as any written or verbal contract, agreement, engagement or commitment entered into by the Target Company and any third  party for cooperation, stock equity transfer, financing or any other purpose which may affect the WFOE’s benefit  in this Agreement, or any other written or verbal contract, agreement, engagement or commitment which may reasonably result in any determination by the Target Company to modify or in advance terminate this Agreement;

(v) 及时通知 WFOE 任何可能合理地影响目标公司的各类司法或仲裁 程序，不论目标公司是否为其中一方，以及任何目标公司可能或 已经接受行政处罚的情况；

The Target Company shall timely notify the WFOE of any legal or arbitration proceeding which may reasonably affect the Target Company, whether the Target Company is involved as a party or not, and of any administrative sanction which the Target Company may receive or has been received.

(vi) 及时通知 WFOE 任何可能或已经影响目标公司正常运营的其他 各类事件；

The Target Company shall timely notify the WFOE of any other event or incident by which the normal and regular operation of the Target Company may be or has been affected;

(vii) 经 WFOE 的合理要求，从有关政府机关处获得目标公司为履行 本协议所必需的各类及全部批准、许可、同意和授权；

The Target Company shall, at the reasonable request of the WFOE, obtain any or all governmental approvals,

8

permits, license, consents and authorization  necessary for performing this Agreement;

(viii)

向 WFOE 提供其与有关政府机关的所有联络往来，包括 从其处获得各类及全部批准、许可、同意和授权的复印件；

The Target Company shall provide to the WFOE with all of the communication with the governmental sectors, including the facsimile copies of all approvals, permits, license, consents and authorization obtained from such governmental sectors;

(ix)

尽其最大努力有效持有目标公司业务经营所需的各类及全部批 准、许可、执照、同意和授权；

The Target Company shall strive, in the greatest efforts, to validly hold all of the approvals, permits, license, consents and authorization necessary for the operation and business of the Target Company;

(x) 在本协议第九条中所作的陈述与保证在本协议期限内持续有效并 准确；以及

The representation and guarantees in the Paragraph 9 in this Agreement shall be continuously valid and accurate within the term of this Agreement; and  

(xi)

董事会聘任 WFOE 根据其管理服务提议高级管理人员（包括但 不限于总经理、财务总监）的人选。

The Board of Directors of the Target Company shall engage the senior officer candidates recommended by the WFOE pursuant to the management service provided by the WFOE, including but not limited to general manager and chief financial officer.

4.

实质行为

Substantial or Material Action

            各方认可并同意，在本协议期限内，未得 WFOE 的事先书面同意，各方保证目标公司及股东不得采取任何实质行为（实质行为的含义见本协议附件 C），但该 等同意要求不得被不合理拖延或拒绝。

9

            All Parties approve and agree, within the term of this Agreement, all Parties guarantee, without prior written consent of the WFOE, the Target Company and Shareholders shall not take  any  substantial or material action which shall be referred to as the definitions in the Appendix C in this Agreement, but such prior written consent shall   not be unreasonably delayed or withheld.

5.

签署承诺函 Commitment Letter

           为进一步确保 WFOE 顺利提供本协议附件 B 所列管理服务，以及股东不实施任 何实质行为，股东同意签署本协议附件 D 所列承诺函。

            The Shareholders agree to execute signatures on the Commitment Letter in the Appendix D of this Agreement, to further ensure that WFOE could successfully provide the management service set forth in the Appendix B of this Agreement and that the Shareholders will not take any substantial or material action.  

6.

优先购买权  Purchase Priority  

           股东同意授予 WFOE 购买其持有的对公司注册资本的全部或部分权益的优先权 利。

      The Shareholders agree to award the WFOE a priority to purchase all or part of the equity of the registered capital of the Target Company owned by the Shareholders.

7.

知识产权的所有权

Ownership of Intellectual Property

 WFOE 提供管理服务过程中所创造的知识产权仅可作为 WFOE 的财产，目标公司不 得所有或使用该知识产权，WFOE 与目标公司就此达成单独协议的除外。

      The intellectual property created by the WFOE in the process to provide management service shall only be deemed as the property of WFOE; the Target Company shall not possess or apply such intellectual   property,

10

unless a separate agreement for such possession or application of such intellectual property is made and entered into by and between the WFOE and the Target Company.

8.

目标公司和股东的陈述与保证

       Representation and Guarantee of the Target Company and Shareholders 目标公司与股东在此为 WFOE 利益做出如下陈述和保证：

The Target Company and shareholders hereby represent and guarantee for the benefit of WFOE as follows:

(a)公司存续和权利 目标公司依据中华人民共和国法律合法有效设立，具备 当前和当前预期开展业务所要求的公司的所有权利以及政府颁发的所有许可 证、授权、同意和批准。股东从未批准或开展，任何旨在解散或清算目标公 司或终止目标公司业务或事务的程序或选举。

     The Existence and Corporate Right of the Company The Target Company is a company duly organized under the  laws  of the People’s Republic of China, with all necessary and required corporate right and approval, authorization, consent and ratification from governmental sectors, to operate the current and prospective business; the shareholders of this Company never approved to and conducted any procedure or election so as to dissolve or liquidate the Target Company, or to terminate the business or operation of the Target Company.

(b)授权；无未决同意 目标公司（i）已采取一切必要公司行为，以签署、交 付和履行本协议和所有相关文件，并具备签署、交付和履行本协议和所有相 关文件的公司权力和授权；（ii）具备绝对和不受限制的权利、权力、授权 和资格，以签署和交付本协议和其他相关文件以及履行本协议和其他相关文 件项下的义务；（iii）关于签署和交付本协议或履行本协议所计划的任何 独家合作安排义务，除已有效发出的通知或征得的同意外，无需向其他任何 人发出通知或征得同意；以及（iv）持有所有必需政府许可，以允许目标公 司按照当前开展和运营业务的方式合法开展和运营其业务，以及按照当前所 有和使用其资产的方式所有和使用其资产。就目标公司所知，任何政府机构 未有以任何方式撤回、撤销和终止该任何政府许可的依据。

     Authorization; No Pending Consent The Target Company (i) has already taken all necessary and required corporate action, and has the power and authorization, to execute, deliver and perform this Agreement  and  all  relevant  documents;  (ii)  has  absolute and

11

unlimited rights, power, authorization, competence and capacity in executing and delivering this Agreement and all relevant documents, and in performing the obligations under this Agreement and all relevant documents; (iii) has no other necessary notification to issue or consent to obtain, besides the notifications and consent effectively issued and obtained, in executing and delivering this Agreement and in performing the obligation of any exclusive cooperation arrangement under this Agreement; and (iv) has all necessary and required governmental approvals so that the Target Company is permitted to legally conduct and operate the business as the current business mode, and to possess and apply the assets as the current mode in possessing and applying such assets. In the acknowledgement of the Target Company, any governmental sector holds no legal source to withdraw, repeal or terminate, in any way, any of such governmental approvals aforementioned.

(c)

不冲突

目标公司签署和履行本协议不会违反、抵触或导致违背

（i）任何目标公司组织文件的规定；（ii）目标公司董事会和股东会通过 的决议；以及（iii）目标公司或任何本协议计划的独家合作安排所遵循的 任何法律法规。

       No Inconsistence The execution and performance of this Agreement by the Target Company result in no violation, conflict, contradiction or contravention (i) against the stipulations  for the Target Company to make a document, (ii) against any resolution approved by the Board of Directors and Board of Shareholders  of the Target Company, and (iii) against any laws and regulations pursuant to which the Target Company or this Agreement make plans for the exclusive cooperation arrangement.

9.

WFOE 的陈述和保证   

       Representation and Guarantee of the WFOE

WFOE 在此为目标公司和股东利益做出如下陈述和保证：

The WFOE hereby represent and guarantee for the benefit of Target Company and shareholders as follows:

(a) 公司的存续和权利 WFOE（i）是按照中华人民共和国法律有效设立 和存在的外商投资公司，具备所有必需的公司权利和政府许可、授权、同意 和批准，以开展当前业务和当前所预期的业务；以及（ii）从未批准或开 展，任何旨在解散或清算 WFOE 或终止 WFOE 业务或事务的程序或选举。

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      The Existence and Corporate Right of the Company  The WFOE (i) is a wholly foreign owned company, duly organized and existing under the laws of the People’s Republic of China, with all necessary and required corporate right and governmental approval, authorization, consent and ratification, to operate the   current and prospective business, and (ii) never approved to and conducted any procedure or election so as to dissolve or liquidate the WFOE, or to terminate the business or operation of the WFOE.

(b) 授权；无未决同意 WFOE（i）已采取一切必要公司行为，以签署、 交付和履行本协议和所有相关文件，并具备签署、交付和履行本协议和所有 相关文件的公司权力和授权；（ii）具备绝对和不受限制的权利、权力、授 权和资格，以签署和交付本协议和其他相关文件以及履行本协议和其他相关 文件项下的义务；（iii）关于签署和交付本协议或履行本协议所计划的任 何独家合作安排义务，除已有效发出的通知或征得的同意外，无需向其他任 何人发出通知或征得同意；以及（iv）持有所有必需政府许可，以允许 WFOE 按照当前开展和运营业务的方式合法开展和运营其业务，以及按照当 前所有和使用其资产的方式所有和使用其资产。就 WFOE 所知，任何政府机 构未有以任何方式撤回、撤销和终止该任何政府许可的依据。

       Authorization; No Pending Consent The WFOE (i) has already taken all necessary and required corporate action, and has the power and authorization, to execute, deliver and execute this Agreement and all relevant documents; (ii) has  absolute and unlimited rights, power, authorization, competence and capacity in executing and delivering this Agreement and all relevant documents, and in performing the obligations under this Agreement and all relevant documents; (iii) has no other necessary notification to issue or consent to obtain, besides the notifications and consent effectively issued and obtained, in executing and delivering this Agreement and in performing the obligation of any exclusive cooperation arrangement under this Agreement; and (iv) has all necessary and required governmental approvals so that the WFOE is permitted to legally conduct and operate the business as the current business mode, and to possess and apply the assets as the current mode in possessing and applying such assets. In the acknowledgement of the WFOE, any governmental sector holds no legal source to withdraw, repeal or terminate, in any way, any of such governmental approvals aforementioned.

(c)

不冲突

WFOE 签署和履行本协议不会违反、抵触或导致违背

（i）任何 WFOE 成立文件的规定；（ii）WFOE 董事会和股东会通过的决

13

议；以及（iii）WFOE 或任何本协议计划的独家合作安排所遵循的任何法律 法规。

       No Inconsistence The execution and performance of this Agreement by the WFOE result in no violation, conflict, contradiction or contravention (i) against the stipulations  for the WFOE to make a document, (ii) against any resolution approved by the Board of Directors and Board of Shareholders of the WFOE, and (iii) against any laws and regulations pursuant to which the WFOE or this Agreement make plans for the exclusive cooperation arrangement.

10.

违约责任，补偿和免责赔偿

       Liability of Breach, Indemnification and Exoneration Compensation

    一方应对违反本协议所导致的协议其他各方的损失或损害承担责任。该等责任 包括所有的直接经济损失、任何可以合理预见到的间接经济损失以及由此产生的相 关费用，包括但不限于律师费、诉讼费、仲裁费以及差旅费用。目标公司与股东将 共同并连带地补偿和确保 WFOE 不遭受任何第三方主张或声称的与本协议预期的交 易相关的任何赔偿、损失或损害，但因 WFOE 违反本协议项下义务，或其随意、放 纵或不法行为所导致的赔偿、损失或损害除外。WFOE 应补偿并确保目标公司或股 东不遭受任何第三方主张或声称与本协议预期的交易相关的任何赔偿、损失或损 害，但因目标公司或股东违反本协议项下义务，或目标公司或股东随意、放纵或不 法行为所导致的赔偿、损失或损害除外。

             A Party shall assume the liability for any loss or damage of any other Party herein caused by its breach of this Agreement. Such liability shall include all direct economic losses,  any indirect economic loss which can be reasonably predicted, and any relating expense brought about from such losses, including but not limited to attorney fee, proceeding fee, arbitration fee and travel expenses. The Target Company and shareholders shall collectively and  jointly indemnify against and protect the WFOE from any compensation, loss or damage relating to any predicted transaction under this Agreement, claimed or asserted by any third party, except for any compensation, loss or damage resulted from the WFOE’s breach of obligation under this Agreement, or its indiscretion, indulgence or inaction; and vice versa.

11.

争议解决

14

       Solution to Dispute

(a) 友好协商 任何源于或关于本协议的解释或履行的争议、分歧或赔 偿请求，以及任何违约或违反此处所创关系的行为，应当通过友好协商解 决。

     Negotiation Any dispute, difference  or  claim for indemnification arising from or relating to this Agreement, and any breach or conduct that may result in any violation against the relationship under this Agreement, shall be settled and solved through friendly negotiation.

(b) 仲裁 由于本协议解释和履行而产生的任何争议应当首先通过各方友好协商解决。如果争议在一方发出要求与其他一方进行协商的通知后三十(30)天内未能解决，任何一方可以将该争议提交中国国际经济贸易仲裁委员会根据该会届时有效的仲裁规则在上海进行仲裁。仲裁庭由三(3)名载于或者未载于中国国际经济贸易仲裁委员会仲裁员名册之上的仲裁员组成，其中上海藏韵指定一名仲裁员，各股东共同指定一名仲裁员，第三名仲裁员担任仲裁庭庭长，由双方选择的仲裁员共同指定，且其不得为美国或者中国公民，并应当中英文流利且具有争议所涉领域的专业知识。仲裁裁决为终局性的且对所有各方具有约束力。

      Arbitration Any dispute arising from the interpretation and performance of this Agreement shall first be resolved through friendly consultations by the Parties.  If the dispute fails to be resolved within thirty (30) days after one Party gives notice requesting consultations to the other Party, either Party may submit such dispute to China International Economic and Trade Arbitration Commission (hereinafter the “CIETAC”) for arbitration in Shanghai in accordance with the then effective arbitration rules of the CIETAC.  The arbitration panel shall consist of four (4) arbitrators who may or may not be on the CIETAC’s list of arbitrators, of which one arbitrator shall be selected by Shanghai Cangyun and one arbitrator shall be jointly selected by the Shareholders.  The fourth arbitrator, who shall be the chairman of the arbitration panel, shall be jointly selected by the two arbitrators selected by the Parties and shall not be a citizen of the United States or the PRC, shall be fluent in both English and Chinese and shall have expertise in the area of the dispute.  The arbitration award shall be final and binding on all Parties.

(i) 仲裁程序应以中文进行。仲裁庭开庭时，如果任何一方或他们 的代理或证人要求英文翻译，翻译可以根据仲裁规则提供，翻译服务 的开支与费用由要求翻译的一方承担。

                    The arbitration shall be conducted in Chinese language. In the session of such arbitration, if a Party or its  agent or witness requires English translation or  interpreting,

15

such translation or interpreting service may be provided pursuant to arbitration rules, with the translation or interpreting fees and expenses assumed by the Party requiring such service.

(ii)

仲裁裁决为终局并有效拘束各方。

                    The adjudication of arbitration shall be a final judgment and be binding on all Parties.

(iii)

争端解决过程中，各方应继续履行本协议项下的其他义务。

                    During the solution of such dispute, all Parties shall proceed with other obligations under this Agreement.

12.

期限

       Term

本协议自各方签署之日起生效，并持续有效至购买权协议终止时终止， 或按以下方式之一终止。本协议有效的期限称为“期限”。

       This Agreement comes into force after the signature of each Party is executed, and will be expired as the Call Option Agreement is expired or in any way as follows. The validity period of this Agreement is referred to as the “Term”

(a)

互相同意

本协议可于任何时间由各方以互相同意的方式终止，互 相同意以各方签字的书面协议为依据。

                  Mutual Consent This Agreement may be terminated, at  any time, by mutual consent, which may be obtained after  the signatures of the Parties are executed in a written agreement.

(b)

违约或破产  WFOE 和目标公司都可根据以下情况立即终止本协议：

（a）另一方实质违反其本协议项下的义务，且未能在违约方发出书面通知 三十（30）个公历日内消除该违约行为；或（b）另一方提出或被提出自愿 或非自愿破产申请，或另一方已破产，或任何置另一方于破产状态法律程序 的开始，或另一方为债权人利益开始任何财产的转让或分配。

       Breach or Bankruptcy This  Agreement  may  be terminated promptly by the WFOE and the Target Company, in the conditions as follows: (a) a Party materially violates the obligations  under this Agreement, and such violation is not eliminated within thirty

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(30) calendar days which commence from the day of the issuance  of a written notification by the non-defaulting Party; (b) the other Party raises or is threatened to raise a voluntary or involuntary bankruptcy petition, or the other Party has already been in bankruptcy, or any legal proceeding resulting in the bankruptcy of the other Party commences, or the other Party, for the benefit of the creditor, commences the transfer or distribution of its property.

(c) 存续 第 10 条的规定（违约责任；补偿和免责赔偿），第 11 条（争 议解决），以及第 13 条（其他事项）不因本协议的终止而失效。尽管协议 按此终止，但任何一方对另一方根据本协议承担的债务自协议终止日仍然有 效。

      Existence The provisions  in  Paragraph  10  (Liability of Breach, Indemnification and Exoneration Compensation),  Paragraph 11 (Solution to Dispute) and Paragraph 13 (Other Particulars) will not be null and void as the expiration of this Agreement. Notwithstanding the expiration of this Agreement, the liability assumed by any Party to the other, under this Agreement, will remain valid after such expiration.

13.

其他事项

Other Particulars

(a)适用法律 本协议的签订、生效、解释、履行、修订与终止应由中国法律 管辖。

             Applicable Laws The execution, validation, interpretation, performance, amendment and termination of this Agreement shall be under the jurisdiction of the laws of China.

(b)生效 本协议在各方正式授权代表签署时即生效并对各方具有约束力。

Validation  This Agreement shall come into force and be  binding on all Parties promptly after the signatures are executed by the officially authorized representatives of all Parties.

(c)修订 除非本协议另有约定，本协议的任何修改均应由各方签署书面协议方 为有效。

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             Amendment Unless other provisions in this Agreement, any amendment to this Agreement shall be in force only after a written agreement is executed by all Parties.

(d)费用 除非中国法律另有规定，目标公司应当支付所有与本协议项下付款相 关的所有的印花、文档登记或其他税收，以及目标公司的实际费用和内部费 用。

             Expenses Unless other provisions under the laws of China the Target Company shall assume all stamp taxes, transcripts and other taxes relating to the loans under this Agreement, and other out-of-pocket expense and internal expenses of the Target Company.

(e)不豁免 任何一方对于另一方因违反本协议或对本协议构成违约而迟延 或疏忽行使任何权、利力或救济不得损及受害方所享有的该等权利、权力或 救济，亦不得解释为受害方对该等违约或随后任何类似违约救济的放弃，或 对该等违约的默认。对任何一方违反本协议或对本协议构成违约的任何部分 的任何种类或必须的放弃、许可、同意或批准，或对任何一方对本协议的任 何规定或条件部分的任何放弃必须以书面的形式做出，且仅在以该等书面形 式中特别规定的范围内有效。本协议或法律或以其它方式赋予各方的全部救 济应为累积的而不是仅可选择的。

             Non-exemption  Any Party’s delay or negligence in the exercise of rights, power or remedy resulted from other Party’s violation or breach of this Agreement, shall not damnify or damage such rights, power or remedy of the injured Party, and shall not be construed as any waiver of the injured Party in the remedy against such breach or any subsequent similar breach, or as the injured Party ’ s pretermission to such breach. Any waiver, approval, consent or ratification, necessary or in any category, of any part of this Agreement under the violation or breach  by any Party, or any waiver of any part or of any provision of this Agreement by any Party, shall be executed in written and only be effective to the extent expressly set forth in such written document. All remedies to each Party provided by this Agreement, laws or otherwise shall be accumulative, rather than to  select one only.

(f)全部协议 本协议及本协议提及的或其明示包含的其他合同及文件构成各 方之间就本协议项下标的签订的完整的协议，并取代各方就本协议项下标的 所达成的任何先前的口头的或书面的协议、合同、承诺和通信。

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             Entire Agreement This  Agreement  and  other  agreements, contracts or documents referred to or overtly involved in this Agreement shall constitute an entire Agreement for the target under this Agreement by all Parties. Such entire Agreement shall substitute any prior verbal or written agreement, contract, commitment and communication for the target under this Agreement by all Parties.

(g)可分割 如果本协议的任何条款在可适用的中国法下被认为非法或者不 具强制执行力，该条款应被视为被从本协议中删除并且不具有效力。本协议 的其他的条款及条件应仍然有效，本协议并应被认为在最初签署时已排除了 该无效条款。

             Severability  If any provision of this Agreement shall be  held as invalid, illegal or unenforceable under applicable laws of China, such provision shall be deemed as eliminated from this Agreement and ineffective. The validity, legality and enforceability of the remaining provisions in this Agreement shall not be affected in any way, and such invalid, illegal or enforceable provision shall also be deemed as eliminated  from this Agreement at the very beginning of the execution of this Agreement.

(h)保密性 自本协议终止之日起至其后 5 年止，每一方均应对保密信息严 格保密并且除为诚信地履行本协议之目的外，不得直接或间接为其他任何目 的披露、使用或利用该信息。

             Confidentiality     Within 5 years which commence from the  day of the termination or expiration of this Agreement, each Party shall maintain secrecy of all confidential data and information. Except for the performance of this Agreement in good faith, such confidential data and information shall not be exposed, used or applied directly or indirectly for any other purpose.

此处“保密信息”指：（i）本协议以及此处所涉及或另外纳入的所有协议 和文件的存在和内容；以及（ii）涉及各方的可能包含非公众信息的任何形 式的任何信息、文件或数据，包括技术信息、数据、工艺和方法、商业秘 密、市场分析、定价信息、客户名单、调查、软件、一般技术、设计和广告 和其他私人或保密的信息或数据以及任何财务结果或信息。

 Such “Confidential Data and Information” shall include: (i) the existence and content of this Agreement and all other agreements and documents relating to or involved by this Agreement; (ii) any

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form of information, document or data relating to each Party, which may include any non-public information, including technical information, data, techniques and method, trade secret, market analysis, pricing data, list of clients or customers, investigation, software, general technology, design and advertisement, other private or confidential information or data and any financial and accounting result and data.

(i)继续有效 在此所作声明、保证、承诺和约定在本协议拟议的交易完成后 继续有效。

             Continued Validity Any declaration, guarantee, commitment and stipulation under this Agreement will remain in validity  after the completion or accomplishment of transaction proposed pursuant to this Agreement.

(j)继承方与转让 除非本协议另有约定，未得任何其他各方事先书面同 意，一方不得出让或转让本协议项下的权利或义务。本协议的条款应对本协 议各方的继受人和经允许的受让人有利并对其具有约束力。

              Successor and Assigns Unless other provisions in  this Agreement, without prior written consent of all other Parties, any Party shall not assign or transfer any right or obligation under this Agreement. The provisions under this Agreement shall inure to the benefit of the successor or permitted assignee of the Parties herein and be binding on such successor or assignee.

(k)语言 本协议由中文及英文书写。两个语言版本同等真实。各方在此确认其 均审阅了两个语言的版本并且两个版本在所有重大方面实质相同。在两个版 本存在差异的情况下，应以中文版为准。

             Language This Agreement is made in Chinese language and English language, which are equally authentic. All Parties hereby confirm that the Agreement in such two  languages  has been reviewed and materially the same with all aspects. In the case of any inconsistence between such two versions, the Chinese version shall prevail.

(l)副本 本协议在中国广州市由各方正式授权代表签署(四)份原件（每份中英 文各一份）。每一方应留存一份原件。

             Counterparts This Agreement is executed, in (Guangzhou City), China, by the officially authorized representatives of each Party,

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in (four copies) in both Chinese language and English language, each of which shall be authentic and each Party shall keep one in both languages.

(m)进一步确认 自本协议签订之日起，应一方要求，接到要求的另一方应签署 并交付为确认、履行并充分实现本协议的意图和目的所合理必需或有益的文 书、文件或其他书面材料。

              Further Confirmation    As from the execution of this Agreement, at the request of any Party, other Party receiving such request shall execute and deliver any writ, document or other written material, reasonably necessary or useful for confirming, performing and fully realizing the intents and goals under this Agreement.

[以下为签字页] [Signatures in Next Page]

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各方在此于段首之日签署本独家管理咨询服务协议，以昭信守。

            The Parties hereby sign and execute this Exclusive Management Consultation Service Agreement as of the date aforementioned at the beginning of this Agreement.

上海藏韵管理咨询有限公司	海南藏宝天下艺术品有限公司
Shanghai Cangyun Management Consulting Co., Ltd.	Hainan Cangbao Tianxia Cultural Relic Co., Ltd.
签字：/s/ Yung Lap Tsang	签字：/s/ Liang Tan
Signature: /s/ Yung Lap Tsang	Signature: /s/ Liang Tan
姓名：	姓名：
Name:	Name:
职务：法定代表人	职务：法定代表人
Position: Legal Representative	Position: Legal Representative
藏宝天下（上海）艺术品有限公司
Cangbao Tianxia（Shanghai）Cultural Relic Co., Ltd.
签字：/s/ Liang Tan
Signature: /s/ Liang Tan
姓名：
Name:
职务：法定代表人
Position: Legal Representative
股东：周兴涛
Shareholders: Xingtao ZHOU
签字：/s/ Xingtao ZHOU
Signature: /s/ Xingtao ZHOU

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股东：王维	股东：符雅琴
Shareholders:Wei WANG	Shareholders:Yaqin FU
签字：/s/ Wei WANG	签字：/s/ Yaqin FU
Signature: /s/ Wei WANG	Signature: /s/ Yaqin FU

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附件 A

Appendix A

定义

Definition

        鉴于 2019年 8 月 8 日，WFOE 、目标公司和股东之间达成的独家管理咨询服务 协议，作为该协议的附件 A，以下术语按如下解释：

         Whereas, WFOE, the Target Company and the Shareholders made and entered into an Exclusive Management Consultation Service Agreement as of (August 8^th，2019), in which the terms shall be defined in this Appendix A of the Agreement as follows:

        “附属公司”应指本协议一方，直接或间接，所有或控制，或共同所有或控制 的法律实体或自然人（就本协议而言，“所有”或“控制”是指直接或间接所有商业企业 超过百分之五十（50%）的带投票权股份，或通过享有任命商业企业董事会超过半数成员 的权利或在其享有任命董事会一半成员权利的董事会中拥有票数相等时的决定性投票权来 控制商业企业）。

         “Affiliated Company” shall be referred to as any legal entity or natural person, directly or indirectly, owned or controlled, or collectively owned or controlled by a Party or Parties in this Agreement (for this Agreement, to “own” or “control” shall refer to directly or indirectly possession of over 50% of the voting stock shares of the commercial cooperation, or to control the commercial cooperation by possessing the right to appoint the majority members of the Board of Directors in such cooperation or by possessing the decisive voting right in the case of tie of votes in the Board of Directors where such Party have the right to appoint the majority members of such BOD).  

        “最大努力”是指一个勤勉、谨慎的人为确保尽其最快地实现某种特定结果的 而为之付出的努力。

         “Greatest Effort” shall refer to the effort made by a diligent and prudent person to ensure to realize or achieve a certain target at the soonest.  

        “商业”的定义见前言。

          “Business” shall be referred to as the definition in the RECITALS.

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         “商业合作协议”是指各方和/或其附属公司达成的以下协议：（a）于 2019

年8月8 日，WFOE、公司和股东之间达成的独家管理咨询服务协议；（b）于 2019年8月8日，WFOE 和股东之间达成的购买权协议；（c）于 2019年8月8日，

WFOE 与股东之间达成的股权质押协议；（d）于 2019年 8月 8 日，WFOE 和股东之间达成的委托协议。  

          “Business Cooperation Agreements” shall refer to the Agreements, made and entered into by all Parties and/or their affiliated company, as follows: (a) an Exclusive Management Service Agreement entered into, as of (August 8^th, 2019), by the WFOE, the Company and shareholders; (b) a Shareholder  Call Option Agreement  entered into, as of (August 8^th, 2019), by and between the WFOE and the shareholders; (c) a Stock Equity Pledge Agreement entered into, as of (August 8^th, 2019), by and between the WFOE and shareholders; and (d) a _Proxy Agreement entered into, as of (August 8^th, 2019), by and between the WFOE and the shareholders.  

        “公司银行账户”是指以 WFOE 的名义在任何银行或者其他金融机构中所持有或 开立的所有账户，无论这些账户是在协议达成时已存在或在协议后新设。

         “Bank Accounts of the Company” shall refer to as all accounts held or opened in any bank or other financial institution in the name of (WFOE), whether such accounts have already been in existence before or are opened after this Agreement is made.

        “同意”是指任何批准、同意、核准、许可、弃权或者授权，包括任何政府机 关授予或许可的任何前述方式。

          “ Consent” refers to any approval, consent, agreement, permit, waiver or authorization, including any of such modes awarded or approved by government or governmental sectors.

        “政府机关”是指国家或政府或任何省或州的下属任何政治分支机构；任何行 使行政、立法、司法权、管理或规划职能的政府或政府附属的实体、机关或团体，包括中 华人民共和国及其下属机构的政府部门机构、部门、机关、董事会、委员会和政府授权、 委托的组织；以及任何法院、法庭、仲裁组织和其他自治组织。

          “Governmental Sectors” refers to any political  subordinate division of the country or government, or of any province or state; any government or government-affiliated entity, office or organization which exercises administrative power, legislative power, judicial power, management or programming power, including the People’s Republic of China and its any subordinate ministry, department, office, board of directors, committee   and

25

any organization authorized or entrusted by government; and any court, arbitration organization and other autonomy organization.

         “知识财产”是指专利、专利申请、商标（无论是否注册和是否涉及公开出 版）、商标申请、商业名称、传统商业名称、服务标志（无论是否注册）、服务标志申 请、著作权（无论是否注册）、著作权申请、掩模作品、掩模作品申请权、商业秘密、专 有技术、特许权、体系、计算机软件、发明、设计、设计蓝图、专有产品、专有权，以及 上述事项的改进，以及其他知识产权和无形财产。

          “Intellectual Property” shall refer to patent, patent application, trademark (whether registered or not; or relating to publication or not), trademark application, brand name, traditional brand name,  service mark (whether registered or not), service mark application, copyright (whether registered or not), copyright application, mask work, mask work application right, trade secret, proprietary technology, concession, system, computer software, invention, design, design blue print, proprietary product, exclusive right, and the improvement of such items, and other intellectual property and intangible property.  

         “法律”是指以下文件中的相应条款：（a）宪法、条约、条例、法律（包括 普通法）、法典、法规、规章、条例或者任何有关政府机关的命令；（b）政府批准；

（c）政府机构的命令、决定、禁令、裁决、法令和协定。

          “Laws” shall include any provisions of the documents as follows: (a) the constitution, treaties, regulations, laws (including common laws), codes, legislations, rules, statutes or any order by governmental sectors; (b) governmental approvals; (c) orders, determinations, prohibitions, adjudications, statutes or protocols of governmental sectors.

         “法定要求”是指由政府机关所发布的、颁布的、采纳的、通过的、同意的、 公布的、制定的、适用的或者通过其他方式使之生效的任何由国家（或联邦）、省、州、 地方、城市、外国或者其他地方的宪法、法律、条例、立法文件、普通法的原则、决议、 条例、法典、法令、行政命令、文告、条约、公约、规则、规章、规定、指令、声明、要 求、规范、决定、决议、主张或者解释。

         “Legal Requirements” refer to any national (or  federal), provincial, state, local, civic, foreign or other place’s constitution, law, regulation, legislative document, principle of common laws, resolution, legislation, code, statute, administrative order, proclamation, treaty, convention, rule, provision, instruction, statement, declaration, standard, determination,  claim  or  interpretation,  which  is  released, promulgated,

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adopted, approved, passed, declared, established, set forth, announced to be applicable, issued by governmental sectors or otherwise effective.

        “优先权”是指抵押、保证、信贷、担保契约、他方权利、保护、抵押、担 保、所有权瑕疵、财产保留协议、租赁、转租、许可、占有协议、地役权、契约诉讼、处 置先行条件、侵占、参与信托协议的表决、优先购买选择权，参与并可以拒绝相关财产的 代理、留置和处置，以及其他类型的限制和约束，包括但不限于任何合同项下所形成的优 先权。

         “Priority” refers to any pledge, guarantee, credit loan, hypothecation, right of other party, protection, mortgage, warranty, defect in title, property reservation agreement, lease, under lease,  approval, possession agreement, servitude, contract lawsuit, antecedent condition of disposal, disseizing, voting in entrustment agreement; priority of  purchase and option; right to participate and reject the property proxy, retention and disposal; and limitation and stipulation otherwise, including but not limited to any priority under any agreement or contract.

        “管理服务”由第 1 条定义。

         “Management Service” shall be referred to as the definition in the Paragraph 1.

       “实质行为”是指附件 C 中所列的行为。

         “Substantial or Material Act” shall refer to the acts or   actions in the Appendix C.

        “净利润”是指由普遍接受的会计准则计算出来的公司净利润。

          “Net Profit” shall be referred to as the net profit of (Company) calculated and reckoned under the generally accepted accounting principles.  

         “人”是指个人、公司、合作伙伴、协会、受托人、或者其他实体、组织，包 括政府或者政治性的分支部门、机关以及机构。

          “Person” shall include individual person, corporation, partner, association, trustee or other entity or organization, including the government or political divisions, offices and institutions.

         “合理的商业判断”是指基于诚信，经过合理的注意而做出的判断。

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           “Reasonable Business Judgment” shall be referred to  as the judgment for good faith made after reasonable attention.

         “销售收入” 是指由普遍接受的会计准则计算出来的目标公司的销售收入。

          “Sales Revenue” shall refer to the  sales  revenue  of Target Company calculated and reckoned under the generally accepted accounting principles.

          “税收申报”是指任何现在、已经或将来需要申报或提交或要求提交给有关政 府机关，且与确定、评估、征收和缴纳税收有关或涉及依据税收的法定要求的管理、执 行、操作的申报（包括任何信息申报）、报告、陈述、声明、评估、时间表、注意、通 知、单据、选择、认证或其他文件和信息。

          “Tax Return” shall refer to any declaration (including any information declaration), report, representation, announcement, assessment, timetable, notice, notification, receipt, option, certification or other document and information, already, currently or prospectively, required to be declared, submitted or required to be submitted to relevant governmental

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附件 B

Appendix B

管理服务

Management Service

      鉴于 2019 年 8 月8 日，WFOE 、目标公司和股东之间达成的独家管理咨询服务协 议，作为该协议的附件 B，“管理咨询服务”意为根据目标公司股东大会和/或董事会最 终监督和指导的涉及以下方面的咨询服务及其他相关服务：

Whereas, the Exclusive Management Consultation Service Agreement  was made and entered into, as of August 8^th ， 2019), by the WFOE, the Target Company and the Shareholders. In this Appendix B of such Agreement, the term “management consultation service” shall be referred to as the consultation service and other relevant services relating to the follows, under the ultimate supervision and instruction by the Board of Shareholders and/or Board of Directors of the Target Company:

(a)所有目标公司的日常经营，包括其与客户的关系、与其他方达成的协议和安排的 履约行为、以及对相关法律法规的遵守；

      All of the daily operation of the Target Company, including the relationship with clients or customers, any performance of the agreement or arrangement made and entered into with other parties, and any relevant legal compliance;

(b)所有目标公司的董事、高级管理人员（包括但不限于总经理、财务总监）、员 工、顾问、代理人和其他目标公司的代表人等各类目标公司的管理人员或员工的任命、雇 佣、报酬（包括任何红利、非货币补偿、附加和其他福利、以及基于股权的报酬）、解雇 和处罚；

       The engagement, appointment, employment, compensation (including any dividend, non-monetary compensation, other welfare and compensation brought about from the stock equity), dismissal and penalty for all management and staff of the Target Company, such as directors, senior officers (including but not limited to general manager and chief financial officer), employees, consultants, agents and other representatives of the Target Company;

(c)为目标公司的任何员工、顾问、代理人、代表人或其他人员利益的任何计划和安 排的制定、维持、终止或取消；

29

       The formulation, maintenance, termination and cancellation of any plan and arrangement for the benefit of any staff, consultant,  agent, representative and other personnel of the Target Company;

(d)关于目标公司所有应收账款、应付账款、资金和投资的管理、控制和授权；

       The management, control and authorization of all of the accounts receivable, accounts payable, capital and investment of the Target Company;

(e)公司银行账户的管理、控制和授权；

      The management, control and authorization of the bank account of the Target Company;

(f)目标公司的所有开支包括资本开支；

      All of the expenses and expenditures of the Target Company, including capital expenses;

(g)目标公司已是或将是一方的任何合同、协议或其他安排的缔结、修改或修正、以 及终止；

      Any conclusion, amendment or modification and termination of any contract, agreement or other arrangement in which the Target Company has already been or may be a party;

(h)目标公司获取、租赁或许可任何资产、供给、不动产或私人财产、或知识产权以 及无形资产；

      Any acquisition, lease, or approval of any assets, supply, real  estate or private property, or intellectual property and intangible assets by the Target Company;

(i)目标公司与其他人获取或进入任何合资企业或其他安排；

      The acquisition or participation in any joint venture or any other arrangement by the Target Company with other person;

(j)目标公司的任何借款，或承担任何性质的责任或义务或致使目标公司资产上设定 优先权的行为；

      Any loans taken by the Target Company, or the assumption of any liability or obligation, or any action resulting in the priority to the assets of the Target Company;

30

(k)任何目标公司所有、收益或控制的资产的销售、租赁、许可或其他处置；

      Any sale, lease, approval or other disposal of any assets possessed, benefited from or controlled by the Target Company;

(l)任何目标公司业务运行所必要执照、许可、和批复的申请、更新或保持有效的任 何措施；

      Any measure to apply for, renew and maintain valid any license, approval and reply necessary for the operation of any Target Company;

(m)目标公司对其与他人的诉讼或其他争议，所开始、实施或才取得协商、仲裁、诉 讼或上诉；

      Any negotiation, arbitration, proceeding or  appeal commenced, implemented or obtained for the proceeding or dispute between the Target Company and other person;

(n)目标公司的利润分红或其他利润分配的宣布或支付；

      The announcement or payment of the dividend or other distribution of profit of the Target Company;

(o)所有税收申报、缴税以及涉及税收的与任何政府机关的法律程序的准备或申请；

      Any preparation of or application for all tax return, tax payment or any legal procedure of governmental sectors relating to taxes.

31

附件 C

Appendix C

实质行为

Substantial or Material Actions

        鉴于 2019 年 8 月 8 日，WFOE 、目标公司和股东之间达成的独家管理咨询服务 协议，作为该协议的附件 C，“实质行为”意为以下任一解释：

        Whereas, the Exclusive Management Consultation Service Agreement was made and entered into, as of (August 8^th ， 2018), by the WFOE, the Target Company and the Shareholders. In this Appendix C of this Agreement, the term “Substantial or Material Actions” shall be referred to as the actions as follows:

(a)目标公司的组织文件或章程文件的任何改动；

       Any modification or amendment to the documents of association or articles of incorporation or bylaws of the Target Company;

（b）目标公司的任何新股份发行，包括任何可转换为目标公司股权的债券、或目标公 司接受任何股权投资、或重购或赎回目标公司的任何股权；

  The issuance of new stocks of the Target Company, including any convertible notes which can be converted into the stock equity of the Target Company, or the Target Company’s acceptance of any equity investment, or the repurchase or redemption of any of the Target Company’s equity;

(c)任何雇佣、解雇或处罚任何目标公司的管理人员或董事；

   Any employment, dismissal or penalty for or to any management or director in the Target Company;

(d)目标公司购置任何重要资产；

   The purchase of any important and essential asset of the Target Company; (e)目标公司对任何重要资产包括但不限于任何目标公司重要知识产权的销售、转

让、许可或设定担保；

32

   Any sale, transfer, approval or enactment of warranty of or to any important and essential asset of the Target Company, including but not limited to any of the important intellectual property of such Target Company;

(f)目标公司已是或将是一方的协议、合同或其他安排的缔结、修改、补充或其他改 变，若该协议、合同或其他安排单独或总合的价值或影响目标公司超过 3,000,000 人民 币；

  Any conclusion, amendment, supplementation or other modification to any agreement, contract or other arrangement in which the Target Company has been or may be a party, if the respective or total value or the influence to the Target Company of such agreement, contract or other arrangement exceeds 3,000,000 RMB;

(g)致使对第三方负担债务或类似义务，或目标公司的资产被设定任何优先权利；

   Any action resulting in any liability to the third party assumed by the Target Company, or similar obligation, or in any priority set to the assets of the Target Company;

(h)以一次或一系列的交易，投资、设立或其他方式创设任何附属公司或合资企业、 或购置或以其他方式购买其他实体或商业机构的任何股票或股权权益，或处置任何上述事 项；

   Any incorporation or establishment of any affiliated company or joint venture in one or a series of transaction, investment, establishment or otherwise, or any purchase or acquisition in otherwise of any stock or stock equity of other entity or commercial institution, or any disposal,  treatment or settlement of such action;

(i)任何目标公司管理人员、顾问或其他代表人的报酬变化；

   Any change or alteration of the compensation of the management, consultant or other representatives in the Target Company;  

(j)目标公司的任何正常商业交易之外的交易、行为或协议；

   Any transaction, action or agreement other than any ordinary or normal commercial transaction of the Target Company;

(k)任何目标公司与其任何股东的任何交易、合同或协议；

33

   Any transaction, contract or agreement between the Target Company  and any of its shareholders;

(l)宣布或对资本股份支付红利或进行任何分配，除非该行为符合界定任何该资本股 份或债券权利的文书的规定；

  The announcement or distribution of any dividend brought about from the capital stock, unless such actions go in accordance with any regulation to the right of such capital stock or bonds;

(m)涉及目标公司的任何诉讼或仲裁的提起和解决；

   Any initiation and settlement of any proceeding or arbitration in which the Target Company is involved;

(n)批准目标公司的年度预算和将来数年商业计划；

   Any approval to the annual budget and business plan for future years of the Target Company;

(o)批准目标公司准备提交给税务机关的目标公司年度调整财务报表和税收申报的最 终审计；

   Any approval of the final audit of the annual financial statement adjustment and tax return of the Target Company which are prepared to  submit to the tax bureau by the Target Company;

(p)任何目标公司的会计或税收政策的重大变化或目标公司独立审计方的变化；以及

   Any material change or alteration in the  accounting  or taxation policies of the Target Company, or in the independent auditor of the Target Company; and

(q)公司董事数量的任何变化，因本协议任何其他规定的运行所导致的变化除外。

   Any change or alteration in the quantity of the directors of the Target Company, except for the change or alteration resulted from the performance of any other provision in this Agreement.

34

EX-16.1

EXHIBIT 16.1

	5400 W Cedar Ave
	Lakewood, CO 80226
	Telephone: 303.953.1454
	Fax: 303.945.7991

July 27, 2020

United States Securities and Exchange Commission

Office of the Chief Accountant

100 F Street, N.E.

Washington, D.C.  20549

Re: Cang Bao Tian Xia International Art Trade Center, Inc.

Ladies and Gentleman:

We have read the statements under item 5.5 in the Form 8-K dated July 20, 2020, of Cang Bao Tian Xia International Art Trade Center, Inc. (the “Company”) to be filed with the Securities and Exchange Commission and we agree with such statements therein as related to our firm. We have no basis to, and therefore, do not agree or disagree with the other statements made by the Company in the Form 8-K.

Sincerely,

BF Borgers CPA PC

Certified Public Accountants

Lakewood, CO

EX-99.1

Exhibit 99.1

ZHI YUAN LIMITED AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

As of and for the year ended September 30, 2019

 As of and for the six months ended March 31, 2020

Table of Contents

Audit Report	F-1
Consolidated Balance Sheets	F-2
Consolidated Statements of Operations and Comprehensive Income	F-3
Consolidated Statements of Changes in Shareholders’ Equity	F-4
Consolidated Statements of Cash Flows	F-5
Notes to the Financial Statements	F-6

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To:

The Board of Directors and Stockholders of

Zhi Yuan Limited

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Zhi Yuan Limited and subsidiaries (collectively, the “Company”) as of September 30, 2019, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended September 30, 2019, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2019, and the results of its operations and its cash flows for the year then ended September 30, 2019, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph Regarding Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has not yet established an ongoing source of revenues and cash flows sufficient to cover its operating costs, which raises substantial doubt about its ability to continue as a going concern. Management’s plan in regards to these matters are described in Note 3. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s 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 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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ JLKZ CPA LLP

JLKZ CPA LLP

http://www.jlkzcpa.com

Flushing, New York

July 27, 2020

We have served as the Company’s auditor since October 2019.

F-1

ZHI YUAN LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	March 31,			September 30,
	2020			2019
	(Unaudited)			(Audited)
ASSETS
Current assets
Cash and cash equivalents	$	1,617,566			3,059,937
Inventory		285,945			310,550
Due from related party		28,053			5,875
Prepayment and other current assets, net		2,071,456			1,149,255
Total current assets		4,003,020			4,525,617
Non-current assets
Property, plant and equipment, net		13,028			8,998
Intangible assets		343,084			384,152
Operating lease right of use asset, net		735,901			916,120
Total non-current assets		1,092,013			1,309,270
Total Assets	$	5,095,033			5,834,887
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expense	$	4,815,560			5,426,079
Deferred revenues		2,139,181			1,451,725
Due to related party		—			518
Operating lease liabilities - current		299,175			411,275
Total current liabilities		7,253,916			7,289,597
Non-current liabilities
Operating lease liabilities - noncurrent		509,061			504,148
Total liabilities		7,762,977			7,793,745
Shareholders' equity
Ordinary Share		1			1
Additional paid-in capital		6,264,312			6,264,312
Shares subscription receivable		(6,264,313	)		(6,264,313	)
Accumulated deficit		(2,745,795	)		(2,049,141	)
Statutory reserves		12,384			12,384
Accumulated other comprehensive income		65,467			77,899
Total shareholders' equity		(2,667,944	)		(1,958,858	)
Total Liabilities and Shareholders' Equity	$	5,095,033			5,834,887

-

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

F-2

ZHI YUAN LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

	For the six months ended March 31, 2020			For the year ended September 30, 2019
	(Unaudited)			(Audited)
Net revenues	$	2,406,047			2,986,593
Cost of revenues		835,080			2,278,211
Gross margin		1,570,967			708,382
Operating expenses:
Selling expense		826,419			1,702,820
General and administrative		1,404,706			1,000,945
Total operating expenses		2,231,125			2,703,765
Loss from operations		(660,158	)		(1,995,383	)
Other income/(loss)
Interest income		1,582			577
Interest expense		(92	)		(174	)
Other income (expense)		(35,238	)		70
Total other income(loss)		(33,748	)		473
Operating loss before income taxes		(693,906	)		(1,994,910	)
Provision for income taxes expense		2,748			41,281
Net loss		(696,654	)		(2,036,191	)
Other comprehensive income (loss)
Net loss		(696,654	)		(2,036,191	)
Foreign currency translation adjustment		(12,432	)		77,772
Total comprehensive income (loss)	$	(709,086	)		(1,958,419	)

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

F-3

ZHI YUAN LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHODERS’ EQUITY

	Ordinary Shares				Additional Paid-In		Shares Subscription			Statutory		Accumulated			Accumulated other Comprehensive
	Shares		Amount		Capital		Receivable			reserves		Deficit			Income			Total
Balance at September 30, 2018			$	—	$	—	$	—		$	—	$	(566	)	$	27		$	(539	)
Issuance of ordinary shares		1		1				(1	)										—
Registered capital subscription						6,264,312		(6,264,312	)
Net Loss											12,384		(2,048,575	)					(2,036,191	)
Foreign Currency Translation Adjustment																77,872			77,872
Balance at September 30, 2019		1		1		6,264,312		(6,264,313	)		12,384		(2,049,141	)		77,899			(1,958,858	)
Net Loss													(696,654	)					(696,654	)
Foreign Currency Translation Adjustment																(12,432	)		(12,432	)
Balance at March 31, 2020 (Unaudited)		1	$	1	$	6,264,312	$	(6,264,313	)	$	12,384	$	(2,745,795	)	$	65,647			(2,667,944	)

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

F-4

ZHI YUAN LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the six months ended March 31, 2020			For the year ended September 30, 2019
	(Unaudited)			(Audited)
Cash flows from operating activities
Net Loss	$	(696,654	)	$	(2,036,191	)
Adjustments to reconcile net loss to net cash from operations:
Depreciation expense		47,691			53,925
Changes in assets and liabilities:
Inventory		27,898			(322,909	)
Account receivable - related party		(19,392	)		(32,898	)
Due from related party		(22,334	)		(6,109	)
Prepayment and other receivables		(900,401	)		(1,162,094	)
Account payable		(354,035	)		5,209,900
Advance from customer		679,805			1,509,499
Tax payable		(371,890	)		364,129
Wages Payable		59,731			65,511
Operating lease liabilities		73,744			(725	)
Other payables		(3,610	)		2,480
Net cash provided by (used in) operating activities	$	(1,479,447	)	$	3,644,518
Cash flows from investing activities
Purchase of intangible asset		—			(452,122	)
Purchases of property, plant and equipment		(6,426	)		(10,601	)
Net cash used in investing activities	$	(6,426	)	$	(462,723	)
Cash flows from financing activities
Repayment to related parties		(528	)		—
Net cash used in financing activities	$	(528	)	$	—
Net change in cash and cash equivalents		(1,486,401	)		3,181,794
Effect of foreign exchange rate changes on cash and cash equivalents		44,029			(121,857	)
Cash and cash equivalents, beginning of the year		3,059,937
Cash and cash equivalents, end of the year	$	1,617,565		$	3,059,937
		—			—
Supplementary non-cash investing and financing activities:
Lease assets and liability recognized	$	—		$	(1,175,840	)
Supplemental cash flow information
Cash paid for interest	$	—		$	—
Cash paid for income taxes	$	—		$	—

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

F-5

ZHI YUAN LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of and for the six months ended March 31, 2020 (Unaudited)

and as of and for the year ended September 30, 2019

NOTE 1 – ORGANIZATION

Zhi Yuan Limited (“Zhi Yuan”) was incorporated on April 15, 2019 under the laws of the Cayman Islands as a holding company. On May 22, 2019, ZhiYuan incorporated a wholly owned subsidiary Cang Yun (Hong Kong) Limited (“Cang Yun HK”) in Hong Kong. On July 30, 2019, Cang Yun HK incorporated a wholly foreign owned enterprise (“WFOE”) Shanghai Cangyun Management Consulting Co., Ltd. (“Shanghai Cangyun”) in Shanghai, China.

On August 8, 2019, Shanghai Cangyun entered into a series of Variable Interest Entity (“VIE”) agreements with the owners of Hainan Cangbao Tianxia Cultural Relic Co., Ltd. (“Hainan Cangbao”) and Cangbao Tianxia (Shanghai) Cultural Relic Co., Ltd. (“Shanghai Cangbao”). Pursuant to the VIE agreements, Hainan Cangbao and Shanghai Cangbao became Shanghai Cangyun’s contractually controlled affiliate. The purpose and effect of the VIE Agreements is to provide Shanghai Cangyun with all management control and net profits earned by Hainan Cangbao and Shanghai Cangbao.

 Hainan Cangbao was incorporated on May 30, 2018 and Shanghai Cangbao was incorporated on June 28, 2019. The entities operate an online and offline cultural exchange service platform, through which dedicated to create industry standards for art investment and creating a model of online art exchanges and transactions, which allows collectors, artists, art dealers and owners to access a much larger art trading market, allowing them to engage with a wide range of collectibles or artwork investors.

Upon executing a series of VIE agreements, Hainan Cangbao and Shanghai Cangbao are considered Variable Interest entities (“VIE”) and Shanghai Cangbao is the primary beneficiary. Accordingly, Hainan Cangbao and Shanghai Cangbao are consolidated under the guidance of FASB Accounting Standards Codification (“ASC”) 810, Consolidation.

Zhi Yuan and its consolidated subsidiaries and VIE are collectively referred to herein as the “Company” unless specific reference is made to an entity.

F-6

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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

The accompanying consolidated financial statements as of September 30, 2019 and for the year ended September 30, 2019 comprise of the following periods for each entity:

Name	Periods
Zhi Yuan	April 15, 2019 (Inception) – September 30, 2019
Cang Yun HK	May 22, 2019 (Inception) – September 30, 2019
Shanghai Cangyun	July 30, 2019 (Inception) – September 30, 2019
Hainan Cangbao	October 1, 2018 – September 30, 2019
Shanghai Cangbao	June 28, 2019 (Inception) – September 30, 2019

Hainan Cangbao Tianxia Cultural Relic Co., Ltd. (“Hainan Cangbao”) was incorporated on May 30, 2018 but has not commenced any operation. The comparative financials of Hainan Cangbao as of September 30, 2018 and for the period from May 30, 2018 (Inception) to September 30, 2018; and as of March 31, 2019 and for the period from May 30, 2018 (Inception) to March 31, 2019 are not presented in the consolidated financial statements for comparison purpose.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, its wholly and majority owned subsidiaries, and consolidated VIE and its subsidiaries for which the Company is the primary beneficiary.

All transactions and balances among the Company, its subsidiaries and consolidated VIE have been eliminated upon consolidation.

The accompanying consolidated financial statements reflect the activities of the following entities:

Name	Background	Ownership
Zhi Yuan Limited (“Zhi Yuan”)	·      A Cayman Island company ·      Incorporated on April 15, 2019 ·      A holding company
Cang Yun (Hong Kong) Limited (“Cang Yun HK”)	·      A Hong Kong company ·      Incorporated on May 22, 2019 ·      A holding company	100% owned by Zhi Yuan
Shanghai Cangyun Management Consulting Co., Ltd. (“Shanghai Cangyun”)	·      A PRC company and deemed a wholly foreign owned enterprise ·     Incorporated on July 30, 2019 ·     Subscribed capital of $10,000 ·     A holding company	100% owned by Cang Yun HK
Hainan Cangbao Tianxia Cultural Relic Co., Ltd. (“Hainan Cangbao”)	·     A PRC limited liability company ·     Incorporated on May 30, 2018 ·     Subscribed capital of $1,454,491 (RMB 10,000,000) ·     Operate online and offline cultural exchange service platform	VIE of Shanghai Cangyun WFOE
Cangbao Tianxia (Shanghai) Cultural Relic Co., Ltd. (“Shanghai Cangbao”)	·     A PRC limited liability company ·     Incorporated on May 30, 2018 ·     Subscribed capital of $4,799,821 (RMB 33,000,000) ·     Operate online and offline cultural exchange service platform	VIE of Shanghai Cangyun WFO

F-7

VIE Agreements with Shanghai Cangyun

Under the laws and regulations of the PRC, foreign persons and foreign companies are restricted from investing directly in certain businesses within the PRC. As such, Hainan Cangbao and Shanghai Cangbao are controlled through VIE Arrangements in lieu of direct equity ownership. Such VIE arrangements consist of a series of four agreements (collectively, the “VIE Arrangements”), which were signed on August 8, 2019. The significant terms of the VIE Arrangements are as follows:

Exclusive Management Consultation Service Agreement

Pursuant to the Exclusive Management Consultation Service Agreement between Management Consulting and Hainan Cangbao Tianxia Cultural Relic Co., Ltd. and Cangbao Tianxia (Shanghai) Cultural Relic Co. (the “Target Companies” or “VIEs”), dated August 8, 2019, Management Consulting has the exclusive right to provide consultation and services to the Target Companies in the areas of funding, human resources, technology and intellectual property rights. For such services, the Target Companies have agreed to pay service fees in the amount of 100% of their net income and also have the obligation to absorb 100% of their own losses. Management Consulting exclusively owns any intellectual property rights arising from the performance of this Management Consultation Service Agreement. The Management Consultation Service Agreement terminates at the same time as the Equity Pledge Agreement, described in the next paragraph.

Equity Pledge Agreement

Pursuant to those Equity Pledge Agreement dated August 8, 2019, among Management Consulting, the Target Companies, the Target Companies’ shareholders, who are our CEO Mr. Zhou, Yaqin Fu (the wife of Liang Tan, a director of the Company), and Wei Wang (collectively, the “Pledgors”), each of three persons pledged all of their equity interests in the Target Companies to Management Consulting to guarantee the Target Companies’ performance of relevant obligations and indebtedness under the Management Consultation Service Agreement and the other control agreements (collectively, the “Control Agreements”). If the Pledgors breach their obligations under the Control Agreements, Management Consulting, as pledgee, will be entitled to certain rights, including the right to dispose of the pledged equity interests in order to recover the damages associated with such breaches. The Pledgors’ obligations shall be continuously valid until all of the Pledgors are no longer shareholders of the Target Companies, or until the satisfaction of all of the Pledgors’ obligations under the Control Agreements.

Call Option Agreement

Pursuant to the Call Option Agreement among Management Consulting, the Target Companies and the Pledgors, dated August 8, 2019, Management Consulting has the exclusive right to require that the Pledgors fulfill and complete all approval and registration procedures required under PRC laws for Management Consulting to purchase, or designate one or more persons to purchase, such shareholders’ equity interests in the Target Companies , in one or multiple transactions, at any time or from time to time, at Management Consulting’s sole and absolute discretion. The purchase price shall be the lowest price allowed by PRC laws. The Equity Option Agreements shall remain effective until all the equity interests in the Target Companies owned by the Pledgors have been legally transferred to Management Consulting or its designee(s).

Proxy Agreement

Pursuant to the Proxy Agreement among Management Consulting, the Pledgors and the Target Companies, dated August 8, 2019, the Pledgors irrevocably appointed Management Consulting or Management Consulting’s designee to exercise all of their rights as a shareholder of the Target Companies, including but not limited to the power to exercise all such shareholder’s voting rights with respect to all matters to be discussed and voted in shareholder meetings of the Target Companies. The Proxy Agreement remains effective until all equity interests in the Target Companies owned by the Pledgors have been legally transferred to Management Consulting or its designee(s).

Based on the foregoing VIE Arrangements, Shanghai Cangyun deemed to have effective control over Hainan Cangbao and Shanghai Cangbao, which enables Shanghai Cangyun to receive all of their expected residual returns and absorb the expected losses of the VIE, and Shanghai Cangyun is deemed the primary beneficiary of Hainan Cangbao and Shanghai Cangbao.

The reorganization through VIE above are accounted as a transaction of entities under common control for accounting purposes where the shareholder of Hainan Cangbao and Shanghai Cangbao are the controlling shareholder of Zhi Yuan before and after the reorganization. Accordingly, the accompanying consolidated financial statements have been prepared as if the current corporate structure had been in existence throughout the periods presented.

F-8

The significant carrying amount and classification of the assets and liabilities of VIE as of March 31, 2020 and September 30, 2019 as follows:

	March 31		September 30,
	2020		2019
	Unaudited		Audited
ASSETS
Current assets
Cash and cash equivalents	$	1,617,566	$	3,059,937
Inventory		285,945		310,550
Due from related party		28,053		5,875
Prepayment and other current assets, net		2,078,282		1,156,016
Total current assets of VIE		4,009,846		4,532,378
Non-current assets
Property, plant and equipment, net		13,028		8,998
Intangible assets		343,084		384,152
Operating lease right of use asset, net		735,901		916,120
Total non-current assets of VIE		1,092,013		1,309,270
Total Assets of VIE	$	5,101,859	$	5,841,648
LIABILITIES
Current liabilities
Accounts payable and accrued expense	$	4,708,680	$	5,426,079
Advance from customer		2,246,061		1,451,725
Loan payable – related party		—		518
Operating lease liabilities - current		299,175		504,148
Total current liabilities if VIE		7,253,916		7,289,597
Non-current liabilities
Operating lease liabilities - noncurrent		509,061		504,148
Total liabilities of VIE	$	7,762,977	$	7,793,745

Foreign Currency Translation

The accompanying consolidated financial statements are presented in United States dollar (“$”), which is the reporting currency of the Company. The functional currency of Cayman Company and Hongkong Company is United States dollar. The functional currency of the Company’s subsidiaries and VIEs located in the PRC is Renminbi (“RMB”). For the entities whose functional currencies are RMB, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. The resulting translation adjustments are included in determining other comprehensive income. Transaction gains and losses are reflected in the consolidated statements of income. The Company had loss of $12,388 and gain of $77,901 for the six months ended March 31, 2020 and for the year ended September 30, 2019, respectively, resulted from foreign currency transactions, which were included in other comprehensive expense.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Significant estimates and assumptions by management include, among others, useful lives and impairment of long-lived assets, allowance for doubtful accounts, income taxes including the valuation allowance for deferred tax assets. While the Company believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary.

F-9

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and cash in time deposits, certificates of deposit and all highly liquid instruments with original maturities of three months or less.

Inventories

Inventories, mainly consisting of stock items prepared as gifts for the member customers, are stated at the lower of cost or net realizable value utilizing the weighted average method. Cost includes all costs of purchase, cost of conversion and other costs incurred to bring the inventories to their present location and condition. Net realizable value is the estimated selling price as gifts in the ordinary course of business less the estimated costs of completion of the service and the estimated costs necessary to delivering the service.

The valuation of inventory requires the Company to estimate excess and slow-moving inventories. The Company evaluates the recoverability of the inventory based on expected demand and market conditions of art trading service.

Impairment of Long-Lived Assets

The Company’s long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of the asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management’s estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial position. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.

Property and Equipment

Property and equipment consist of computer, office furniture and equipment, and leasehold improvement. All property and equipment are stated at historical cost net of accumulated depreciation. Repairs and maintenance are expensed as incurred. Property and equipment are depreciated on a straight-line basis over the following periods:

Depreciation is computed using the straight-line method over the estimated useful lives of the assets.

Electronic equipment	3-5 years
Furniture and Fixture	5 years
Motor vehicles	4years-
Computer software	5 years
Leasehold improvements	5 years

Fair Value of Financial Instruments

The Company adopted ASC 820 “Fair Value Measurements,” which defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosures requirements for fair value measures. Current assets and current liabilities qualified as financial instruments and 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 rate is equivalent to interest rates currently available.

The three levels are defined as follow:

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.

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

As of the balance sheet date, the estimated fair values of the financial instruments approximated their fair values due to the short-term nature of these instruments.

The Company evaluates the hierarchy disclosures each year to determine which category an asset or liability falls within the hierarchy.

Leases

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities - current, and operating lease liabilities - noncurrent on the balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our balance sheets. The initial lease liability is equal to the future fixed minimum lease payments discounted using the Company’s incremental borrowing rate, on a secured basis. The initial measurement of the right-of-use asset is equal to the initial lease liability plus any initial direct costs and prepayments, less any lease incentives.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Revenue Recognition

The Company adopted ASC 606 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company has concluded that the new guidance did not require any significant change to its revenue recognition processes.

The Company operates an online and offline cultural service platform, through which dedicated to create industry standards for art investment and creating a model of online art exchanges and transactions, which allows collectors, artists, art dealers and owners to access a much larger art trading market, allowing them to engage with a wide range of collectibles or artwork investors.

The service includes trading facilitation, appraisal of treasures, consignment of artworks, storage of artworks and all-in-one advertising service, etc.

The Company derives its revenues from (1) platform membership service fee for member customers and (2) trading commission income, which includes commission from artwork price guarantee service, and artwork ownership transfer facilitate service through the online platform. The Company charges both the buyer and the seller a commission based on the artwork trading amount.

Membership service income

The Company recognizes membership fee revenue as the performance obligations are satisfied over time, usually, recognized on an average over the life of membership. The general contract terms of membership service include timeframe of the service, pricing and payment terms, rights and obligations of parties, performance test criteria, and liability for breach of contract. Payments received in advance from customers are recorded as “advance from customers” in the consolidated balance sheets. Advance from customers is recognized as revenue over the passage of time. Such advance payment received are non-refundable.

F-11

The cost of revenue consists primarily of platform maintenance expenses which are directly attributable to the membership fee revenue, including but not limited to service charge for cloud computing, items prepared as gifts for the members, and related expenses.

Trading commission income

Trading commission income is derived from contracts with customers, which primarily include payment terms, rights and obligations of parties, acceptance criteria, and liability for breach of contract. The Company’s sales arrangements do not contain variable consideration. The Company recognizes revenue at a point in time based on management’s evaluation of when performance obligations under the terms of a contract with the customer are satisfied and the related artworks transactions has been successfully completed.

The Company did not recognize any trading commission income for year ended September 30, 2019 and for six months ended March 31, 2020.

Advertising Expenses

Advertising costs, mainly including promotion expense for the APP launching, are expensed as incurred and the total amounts charged to “selling and marketing expenses” in the consolidated statements of income and comprehensive income were $279,984 and $1,444,655 for the six months ended March 31, 2020 and years ended September 30, 2019, respectively.

New Accounting Pronouncements

In February, 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02) “Leases (Topic 842)”. ASU 2016-02 requires a lessee to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. ASU 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted.

For finance leases, a lessee is required to do the following:

·

Recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position

·

Recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of comprehensive income

·

Classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows.

For operating leases, a lessee is required to do the following:

·

Recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position

·

Recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis

·

Classify all cash payments within operating activities in the statement of cash flows.

In July, 2018, the FASB issued Accounting Standards Update No. 2018-11 (ASU 2018-11), which amends ASC 842 so that entities may elect not to recast their comparative periods in transition (the “Comparatives Under 840 Option”). ASU 2018-11 allows entities to change their date of initial application to the beginning of the period of adoption. In doing so, entities would:

·

Apply ASC 840 in the comparative periods

F-12

·

Provide the disclosures required by ASC 840 for all periods that continue to be presented in accordance with ASC 840.

·

Recognize the effects of applying ASC 842 as a cumulative-effect adjustment to retained earnings for the period of adoption.

In addition, the FASB also issued a series of amendments to ASU 2016-02 that address the transition methods available and clarify the guidance for lessor costs and other aspects of the new lease standard.

The management has reviewed the accounting pronouncements and adopted the new standard on January 1, 2019 using the modified retrospective method of adoption.

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material impact on its the consolidated financial position, statements of operations and cash flows.

NOTE 3 – GOING CONCERN

The Company’s financial statements as of March 31, 2020 and September 30, 2019, been prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues and cash flows sufficient to cover its operating costs and allow it to continue as a going concern. The Company has accumulated net loss of $2,745,795 and $2,049,141 as of March 31, 2020 and September 30, 2019 respectively. These factors among others raise substantial doubt about the ability of the company to continue as a going concern for a reasonable period of time.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking third party equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 4 – INVENTORY

Inventory consisted of the following:

	March 31,		September 30,
	2020		2019
Finished goods	$	285,945	$	310,550
Less: allowance for obsolete inventory		—		—
Total, net	$	285,945	$	310,550

Obsolete inventory amounted to $0 and $0 for the six months ended March 31, 2020 and for the year ended September 30, 2019, respectively.

F-13

NOTE 5– PREPAYMENT AND OTHER CURRENT ASSETS

Prepayment and other current assets consisted of the following:

	March 31,		September 30,
	2020		2019
Rent deposits	$	21,523	$	20,084
Advance to employees		25,236		8,392
Prepaid social insurance and housing fund		4,394		3,163
Total other current assets		51,153		31,639
Prepayment for business services		2,020,303		1,117,616
		2,071,456		1,149,255
Less: allowance for doubtful accounts		—		—
Total, net	$	2,071,456	$	1,149,255

The prepayment for business services is payment for business services, supplier purchases, and payment processor service.

NOTE 6 – INTANGIBLE ASSETS

Intangible assets consisted of the following:

	March 31,			September 30,
	2020			2019
Membership management system	$	436,928		$	432,711
Accounting system		2,127			2,105
		439,055			434,816
Less: Accumulated amortization		(95,971	)		(50,664	)
Total, net	$	343,084		$	384,152

Amortization expense amounted to $45,307 and $50,664 for the six months ended March 31, 2020 and for the year ended September 30, 2019, respectively.

The membership management system was acquired from a related party. Refer to Related Party Note 9.

NOTE 7 – PROPERTY & EQUIPMENT

Property and equipment, net, is consisted of the following:

	March 31, 2020			September 30, 2019
Equipment	$	12,797		$	6,646
Furniture and fixtures		3,583			3,548
		16,380			10,194
Less: Accumulate depreciation		(3,352	)		(1,196	)
Total, net	$	13,028		$	8,998

Depreciation expenses was $2,156 and $1,196 for the six months ended March 31, 2020 and for the year ended September 30, 2019, respectively.

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NOTE 8 – LEASE

The Company has operating leases for corporate offices and employees’ accommodation. These leases have remaining lease terms of 1 year to 3 years. The Company has elected to not recognize lease assets and liabilities for leases with a term less than twelve months.

Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to calculate present value is incremental borrowing rate or, if available, the rate implicit in the lease. The Company determines the incremental borrowing rate for each lease based primarily on its lease term in PRC which is approximately 4.75%.

Operating lease expenses were $209,987 and $241,532 for the six months ended March 31, 2020 and for the period from March 1,2019 to September 30, 2019, respectively.

The undiscounted future minimum lease payment schedule as follows:

As of March 31,
2021	$	419,974
2022		346,886
2023		—
Thereafter		—
Total	$	766,860

NOTE 9 – RELATED PARTY TRANSACTIONS

The related parties consisted of the following:

Name of related party	Nature of relationship
Mr. Xingtao Zhou	Majority shareholder of the Company
Mr. Wei Wang	Principal shareholder
Sichuan Cangbaotianxia Art Co., Ltd	A Company with significant influence
Guangdong Cangbaotianxia Art Co., Ltd	A Company with significant influence

During the six months ended March 31, 2020, the Company advanced a total of $28,053 to Mr. Xingtao Zhou. As of March 31, 2020 and September 30, 2019, the outstanding balance receivable from Mr. Xingtao Zhou was $0.

On March 31, 2019, the Company purchased the membership platform system from Guangdong Cangbaotianxia Art Co., Ltd with a consideration of $432,711.

During the year ended September 30, 2019, the Company prepaid $82,251 to Sichuan Cangbaotianxia Art Co., Ltd, and received $54,834. As of March 31, 2020 and September 30, 2019, the outstanding balance advanced to Sichuan Cangbaotianxia Art Co., Ltd was $27,684 and $27,417 respectively.

During the year ended September 30, 2019, the Company received $518 in advance from Mr. Wei Wang. And the balance of $518 was paid off during the six months ended March 31, 2020. As of March 31, 2020 and September 30, 2019, the outstanding balance payable to Mr. Wei Wang was $0 and $518, respectively.

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NOTE 10 – EQUITY

Ordinary share

Zhi Yuan Limited has authorized shares of 1 ordinary share, par value $1 with 1 share issued and outstanding.  

Registered Capital

Shanghai Cangyun has subscribed capital of $10,000 which is not yet paid up by its shareholders. The subscribed capital is due for payment on July 30, 2039.

Hainan Cangbao has subscribed capital of $1,454,491 (RMB10,000,000) which is not yet paid up by its shareholders. The subscribed capital is due for payment on May 30, 2038.

Shanghai Cangbao has subscribed capital of $4,799,821 (RMB33,000,000) which is not yet paid up by its shareholders. The subscribed capital is due for payment on June 5, 2039.

Restricted net assets

The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiary or VIE. Relevant PRC statutory laws and regulations permit payments of dividends by Shanghai Cangyun, Hainan Cangbao, and Shanghai Cangbao only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations and after it has met the PRC requirements for appropriation to statutory reserves. Paid in capital of the PRC subsidiary and VIE and VIE’s subsidiaries included in the Company’s consolidated net assets are also non-distributable for dividend purposes. The results of operations reflected in the accompanying consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of Shanghai Cangyun, Hainan Cangbao, and Shanghai Cangbao. The Company is required to set aside at least 10% of their after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, the Company may allocate a portion of its after-tax profits based on PRC accounting standards to enterprise expansion fund and staff bonus and welfare fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends.

During the year ended September 30, 2019, Shanghai Cangbao generated profit and had retained earnings as of September 30, 2019.  The Company accrued statutory reserve funds of $12,384, which is 10% of the retained earnings of Shanghai Cangbao for the year ended September 30, 2019.

The ability of the Company’s PRC subsidiary and VIE and VIE’s subsidiaries to make dividends and other payments to the Company may also be restricted by changes in applicable foreign exchange and other laws and regulations. Foreign currency exchange regulation in China is primarily governed by the following rules:

·

Foreign Exchange Administration Rules (1996), as amended in August 2008, or the Exchange Rules;

·

Administration Rules of the Settlement, Sale and Payment of Foreign Exchange (1996), or the Administration Rules.

Currently, under the Administration Rules, Renminbi is freely convertible for current account items, including the distribution of dividends, interest payments, trade and service related foreign exchange transactions, but not for capital account items, such as direct investments, loans, repatriation of investments and investments in securities outside of China, unless the prior approval of the State Administration of Foreign Exchange (the “SAFE”) is obtained and prior registration with the SAFE is made. Foreign-invested enterprises like Rise King WFOE that need foreign exchange for the distribution of profits to its shareholders may affect payment from their foreign exchange accounts or purchase and pay foreign exchange rates at the designated foreign exchange banks to their foreign shareholders by producing board resolutions for such profit distribution. Based on their needs, foreign-invested enterprises are permitted to open foreign exchange settlement accounts for current account receipts and payments of foreign exchange along with specialized accounts for capital account receipts and payments of foreign exchange at certain designated foreign exchange banks.

F-16

Although the current Exchange Rules allow the convertibility of Chinese Renminbi into foreign currency for current account items, conversion of Chinese Renminbi into foreign exchange for capital items, such as foreign direct investment, loans or securities, requires the approval of SAFE, which is under the authority of the People’s Bank of China. These approvals, however, do not guarantee the availability of foreign currency conversion. The Company cannot be sure that it will be able to obtain all required conversion approvals for its operations or the Chinese regulatory authorities will not impose greater restrictions on the convertibility of Chinese Renminbi in the future. Currently, most of the Company’s retained earnings are generated in Renminbi. Any future restrictions on currency exchanges may limit the Company’s ability to use its retained earnings generated in Renminbi to make dividends or other payments in U.S. dollars or fund possible business activities outside China.

The Company’s VIE and its subsidiaries in Renminbi included in the Company’ consolidated net assets, aside from statutory reserve funds, that may be affected by increased restrictions on currency exchanges in the future and accordingly may further limit the Company’s PRC subsidiary and VIE and VIE’s subsidiaries’ ability to make dividends or other payments in U.S. dollars to the Company, in addition to restricted net assets as discussed above.

NOTE 11 – INCOME TAX

Cayman Islands

Under the current laws of Cayman Islands, Zhi Yuan Limited is not subject to tax on income or capital gain. In addition, payments of dividends by the Company to their shareholders are not subject to withholding tax in the Cayman Islands.

Hong Kong

Cang Yun (Hong Kong) Limited was incorporated under the Hong Kong tax laws, and the statutory income tax rate was 16.5%. Cang Yun (Hong Kong) Limited has no operating profit or tax liabilities for the six months ended March 31, 2020 and for the period from March 1, 2019 to September 30, 2019.

China, PRC

Shanghai Cangyun Management Consulting Co.,Ltd., Hainan Cangbao Tianxia Cultural Relic Co., Ltd. and Cangbao Tianxia (Shanghai) Cultural Relic Co.,Ltd. were incorporated in the PRC and are subject to PRC Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant PRC income tax laws. On March 16, 2007, the National People’s Congress enacted a new enterprise income tax law, which took effect on January 1, 2008. The law applies a uniform 25% enterprise income tax rate to both foreign invested enterprises and domestic enterprises.

The components of deferred tax assets and liabilities as follows:

	March 31, 2020			September 30, 2019
Net operating losses carry forwards	$	730,320		$	538,271
Valuation allowance		(730,320	)		(538,271	)
Deferred tax asset, net	$	—		$	—

Hainan Cangbao Tianxia Cultural Relic Co., Ltd. incurred an accumulated deficit of $2,921,281 and $2,153,086 as of March 31, 2020 and September 30, 2019, and has not recognized an income tax benefit for its operating losses based on uncertainties concerning its ability to generate taxable in future period.

F-17

The provision for income taxes consists of the following:

	Six Months Ended March 31, 2020			Year Ended September 30, 2019
Net taxable income	$	73,723		$	165,123
Tax rate		25	%		25	%
Income tax expenses		18,430			41,281
Income tax relief		(15,682	)		—
Income tax expense, net	$	2,748		$	41,281

The reconciliation of the statutory tax rate to the effective tax rate as follows:

	Six Months Ended March 31, 2020			Year Ended September 30, 2019
PRC statutory income tax rate		25	%		25	%
Effect of preferential tax relief		(21.3	)%		—	%
Effective tax rate		3.7	%		25	%

Accounting for Uncertainty in Income Taxes

The tax authority of the PRC government conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC after those enterprises complete their relevant tax filings. Therefore, the Company’s PRC entities’ tax filings results are subject to change. It is therefore uncertain as to whether the PRC tax authority may take different views about the Company’s PRC entities’ tax filings, which may lead to additional tax liabilities.

ASC 740 requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. The management evaluated the Company’s tax positions and concluded that no provision for uncertainty in income taxes was necessary as of March 31, 2020 and September 30, 2019.

NOTE 12 – CONCENTRATIONS, RISKS AND UNCERTAINTIES

Credit risk

Cash deposits with banks are held in financial institutions in PRC, which are insured with deposit protection up to RMB500,000 (approximately $70,089). Accordingly, the Company has a concentration of credit risk related to the uninsured part of bank deposits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk.

Concentration

The Company offers membership service for individuals and legal entities. In addition, generates sales commission income upon the success of transactions. During the six months ended March 31, 2020 and 2019, there is no concentration risk related to the sales. However, the Company has a concentration risk related to the suppliers. Failure to maintain existing relationships with the suppliers or to establish new relationships in the future could negatively affect the Company’s ability to generate membership fee income and sales commission sales.

F-18

The concentration on purchases from suppliers’ as follows: 

	Six Months ended March 31, 2020					Year Ended September 30, 2019
	Amount		%			Amount		%
Supplier A	$	205,689		61	%	$	300,206		27	%
Supplier B		89,829		26	%		524,896		46	%
Supplier C		44,076		13	%		N/A		N/A
Supplier D		N/A		N/A			297,676		26	%
	$	339,594		100	%	$	1,133,778		99	%

Risks of Variable Interest Entities Structure

Although the structure the Company has adopted is consistent with longstanding industry practice, and is commonly adopted by comparable companies in China, the PRC government may not agree that these 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. There are uncertainties regarding the interpretation and application of PRC laws and regulations including those that govern the Company’s contractual arrangements, which could limit the Company’s ability to enforce these contractual arrangements. If the Company or any of its variable interest entities are found to be in violation of any existing or future PRC laws, rules or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including levying fines, revoking business and other licenses of the Company’s variable interest entities, requiring the Company to discontinue or restrict its operations, restricting its right to collect revenue, requiring the Company to restructure its operations or taking other regulatory or enforcement actions against the Company. In addition, it is unclear what impact the PRC government actions would have on the Company and on its ability to consolidate the financial results of its variable interest entities in the consolidated financial statements, if the PRC government authorities were to find the Company’s legal structure and contractual arrangements to be in violation of PRC laws, rules and regulations. If the imposition of any of these government actions causes the Company to lose its right to direct the activities of Hainan Cangbao and Shanghai Cangbao or the right to receive their economic benefits, the Company would no longer be able to consolidate the Hainan Cangbao and Shanghai Cangbao.

COVID-19 outbreak

In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. The COVID-19 pandemic has negatively impacted the global economy, workforces, customers, and created significant volatility and disruption of financial markets. It has also disrupted the normal operations of many businesses, including ours. This outbreak could decrease spending, adversely affect demand for our services and harm our business and results of operations. It is not possible for us to predict the duration or magnitude of the adverse results of the outbreak and its effects on our business or results of operations at this time.

NOTE 13 - SUBSEQUENT EVENTS

On July 27, 2020 (the “Closing Date”), beneficial shareholders of Zhi Yuan Limited (the “Shareholders”) entered into a Share Exchange Agreement (the “Exchange Agreement”) with Can Bao Tian Xia International Art Trade Center, Inc. (“Cang Bao”). Pursuant to the terms of the Exchange Agreement, the Shareholders agreed to sell to Cang Bao, and Cang Bao agreed to purchase, all shares of Zhi Yuan Limited held by them, which shares represent 100% of the issued and outstanding shares of Zhi Yuan Limited. In exchange, Cang Bao agreed to issue to the Shareholders an aggregate of 75,000,000 shares of Cang Bao common stock, representing approximately 67.98% of Cang Bao’s total issued and outstanding common stock (the “Share Exchange”).

The Company evaluates subsequent events that have occurred after the balance sheet date but before the financial statements are issued. Based on this evaluation, the Company concluded there are no other subsequent events that would require disclosure to or adjustment to the financial statements other than the ones disclosed above.

F-19

EX-99.3

EXHIBIT 99.3

CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.

PRO FORMA CONDENSED BALANCE SHEET

As of September 30, 2019

(Unaudited)

	Zhi Yuan Limited and Subsidiaries			Cang Bao Tian Xia International Art Trade Center, Inc.			Adjustments			Pro Forma
ASSETS
Current assets
Cash and cash equivalents	$	3,059,937		$	—					$	3,059,937
Inventory		310,550			—						310,550
Due from related party		5,875			—						5,875
Prepayment and other current assets, net		1,149,255			—						1,149,255
Total current assets		4,525,617			—						4,525,617
Non-current assets
Property, plant and equipment, net		8,998			—						8,998
Intangible assets		384,152			—						384,152
Operating lease right of use asset, net		916,120			—						916,120
Total non-current assets		1,309,270			—						1,309,270
Total Assets	$	5,834,887		$	—					$	5,834,887
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expense	$	5,426,079		$	10,650					$	5,436,729
Deferred revenues		1,451,725			—						1,451,725
Due to related party		518			15,856						16,374
Operating lease liabilities - current		411,275			—						411,275
Total current liabilities		7,289,597			26,506						7,316,103
Non-current liabilities
Operating lease liabilities - noncurrent		504,148			—						504,148
Total liabilities		7,793,745			26,506						7,820,251
Shareholders' equity
Preferred stock, Class A					9,992						9,992
Common Stock		1			35,319			75,000			110,319
								(1	)
Subscription Receivable		(6,264,313	)		—						(6,264,313	)
Additional paid-in Capital		6,264,312			20,509,768			(75,000	)		26,770,897
								1
Accumulated deficit		(2,049,141	)		(20,581,585	)					(22,630,726	)
Statutory reserves		12,384			—						12,384
Accumulated other comprehensive income		77,899			—						77,899
Total shareholders' equity		(1,958,858	)								(1,853,364	)
Total Liabilities and Shareholders' Equity	$	5,834,887		$	—					$	5,834,887

The accompanying notes are an integral part of these pro forma financial statements

CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.

PRO FORMA CONDENSED INCOME STATEMENT

For the year ended September 30, 2019

(Unaudited)

	Zhi Yuan Limited and Subsidiaries			Cang Bao Tian Xia International Art Trade Center, Inc.			Adjustments		Pro Forma
Net revenues	$	2,986,593		$	—				$	2,986,593
Cost of revenues		2,278,211			—					2,278,211
Gross margin		708,382			—					708,382
Operating expenses:
Selling expense		1,702,820			—					1,702,820
General and administrative		1,000,945			48,856					1,049,801
Total operating expenses		2,703,765			48,856					2,752,621
Loss from operations		(1,995,383	)							(2,044,239	)
Other income/(loss)
Interest income		577			—					577
Interest expense		(174	)		—					(174	)
Other income (expense)		70			—					70
Total other income(loss)		473			—					473
Operating loss before income taxes		(1,994,910	)							(2,043,766	)
Provision for income taxes expense		41,281			—					41,281
Net loss		(2,036,191	)							(2,085,047	)
Other comprehensive income (loss)
Net loss		(2,036,191	)		—					(2,085,047	)
Foreign currency translation adjustment		77,772			—					77,772
Total comprehensive income	$	(1,958,419	)	$	(48,856	)			$	(2,007,275	)
Loss per share
Basic and Diluted
Weighted average shares outstanding
Basic and Diluted					35,319,245			75,000,000		110,319,245

The accompanying notes are an integral part of these pro forma financial statements

CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.

PRO FORMA CONDENSED BALANCE SHEET

As of March 31, 2020

(Unaudited)

	Zhi Yuan Limited and Subsidiaries			Cang Bao Tian Xia International Art Trade Center, Inc.			Adjustments			Pro Forma
ASSETS
Current assets
Cash and cash equivalents	$	1,617,566		$						$	1,617,566
Inventory		285,945									285,945
Due from related party		28,053									28,053
Prepayment and other current assets, net		2,071,456									2,071,456
Total current assets		4,003,020			—						4,003,020
Non-current assets
Property, plant and equipment, net		13,028									13,028
Intangible assets		343,084									343,084
Operating lease right of use asset, net		735,901									735,901
Total non-current assets		1,092,013									1,092,013
Total Assets	$	5,095,033		$	—					$	5,095,033
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expense	$	4,815,560		$	26,100					$	4,841,660
Deferred revenues		2,139,181									2,139,181
Due to related party		—			25,076						25,076
Operating lease liabilities - current		299,175									299,175
Total current liabilities		7,253,916			51,176						7,305,092
Non-current liabilities
Operating lease liabilities - noncurrent		509,061									509,061
Total liabilities		7,762,977			51,176						7,814,153
Shareholders' equity
Preferred stock, Class A					9,920						9,920
Common Stock		1			35,319			75,000			110,319
								(1	)
Additional Paid-In Capital		6,264,312			20,509,840			(75,000	)		26,770,897
Shares Subscription Receivable		(6,264,313	)								(6,264,313	)
Accumulated deficit		(2,745,795	)		(20,606,255	)					(23,352,050	)
Statutory reserves		12,384									12,384
Accumulated other comprehensive income		65,467									65,467
Total shareholders' equity		(2,667,944	)		(51,176	)					(2,719,120	)
Total Liabilities and Shareholders' Equity	$	5,095,033		$						$	5,095,033

The accompanying notes are an integral part of these pro forma financial statements

CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.

PRO FORMA CONDENSED INCOME STATEMENT

For six months ended March 31, 2020

(Unaudited)

	Zhi Yuan Limited and Subsidiaries			Cang Bao Tian Xia International Art Trade Center, Inc.			Adjustments		Pro Forma
Net revenues	$	2,406,047		$	—				$	2,406,047
Cost of revenues		835,080			—					835,080
Gross margin		1,570,967			—					1,570,967
Operating expenses:
Selling expense		826,419			—					826,419
General and administrative		1,404,706			24,670					1,429,376
Total operating expenses		2,231,125			24,670					2,2551,795
Loss from operations		(660,158	)		(24,670	)				(684,828	)
Other income/(loss)
Interest income		1,582								1,582
Interest expense		(92	)							(92	)
Other income (expense)		(35,238	)							(35,238	)
Total other income(loss)		(33,748	)		—					(33,748	)
Operating loss before income taxes		(693,906	)		(24,670	)				(718,576	)
Provision for income taxes expense		2,748								2,748
Net loss		(696,654	)		(24,670	)				(721,324	)
Other comprehensive income (loss)
Net loss		(696,654	)		(24,670	)				(721,324	)
Foreign currency translation adjustment		(12,432	)							(12,432	)
Total comprehensive income	$	(709,086	)	$	(24,670	)			$	(733,756	)
Loss per share
Basic and Diluted
Weighted average shares outstanding
Basic and Diluted					35,319,245			75,000,000		110,319,245

The accompanying notes are an integral part of these pro forma financial statements

CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.

NOTES TO PRO FORMA FINANCIAL STATEMENTS

As of and for the year ended September 30, 2019

As of and for the six months ended March 31, 2020

NOTE 1 – PRO FORMA AND BASIS OF PRESENTATION

The unaudited pro forma financial statements are based on historical financial statements of Cang Bao Tian Xia International Art Trade Center Inc.(“Cangbao US”) and its subsidiaries, Hainan Cangbao Tianxia Cultural Relic Co., Ltd.(“Hainan Cangbao”) and Cangbao Tianxia (Shanghai) Cultural Relic Co., Ltd (“Shanghai Cangbao”). with the assumption that Cang Bao Tian Xia International Art Trade Center Inc. or its subsidiary would entered into a series of Variable Interest Entity (“VIE”) agreements with Hainan Cangbao and Shanghai Cangbao, through which the Company controls all management responsibilities of Hainan Cangbao and Shanghai Cangbao as if the transactions had closed at the beginning of the year.

For financial reporting purpose, the transaction is classified as a business combination under common control is a business combination in which all of the combining entities or businesses are ultimately controlled by the same party or parties both before and after the business combination, and that control is not transitory.

NOTE 2 – ADJUSTMENTS

(a)

Cangbao US issued 75,000,000 shares of its common stock in exchange for all of the outstanding shares in ZhiYuan.

(b)

To eliminate ZhiYuan and subsidiaries’ historical shares capital amounts, assuming the ZhiYuan 's original stockholders will exchange their shares in ZhiYuan for the Cangbao US shares.