UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 20-F

(Mark One)



| ̈ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------------------



OR



| ̈ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended



OR



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

For the transition period from ___________
to ___________



OR



|x | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------------

Date of event requiring this shell company
report: August 1, 2014



Commission file number: 001-35715



Aquasition Corp.

--------------------------------------------------------------------------------------------------------------------------------------------

(Exact Name of Registrant
as Specified in Its Charter)



Not Applicable

(Translation of Registrant’s Name
Into English)



Republic of the Marshall Islands

(Jurisdiction of Incorporation or Organization)



Xin Fengge Building

Yupu Industrial Park

Shishi City, Fujian Province 362700

People’s Republic of China

--------------------------------------------------------------------------------------------------------------------------------------------

(Address of Principal Executive Offices)



Mr. Keyan Yan, Chief Executive Officer

Xin Fengge Building

Yupu Industrial Park

Shishi City, Fujian Province 362700

People’s Republic of China

Tel: + (86) 595 8889 6198

Fax: (86) 595 8850 5328
--------------------------------------------------------------------------------------------------------------------------------------------

(Name, Telephone, E-mail
and/or Facsimile number and Address of Company Contact Person)



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



Units

(Title of Class)



Common Stock, $0.0001 par value

(Title of Class)



Common Stock Purchase Warrants

(Title of Class)



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



None

(Title of Class)



Securities for which there is a reporting obligation pursuant
to Section 15(d) of the Act.



None

(Title of Class)



On August 7, 2014, the issuer had 25,417,329 shares of common
stock outstanding.



Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. 	 		Yes  ̈ No x



If this report is an annual or transition report, indicate by
check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934. 	Yes  ̈ No  ̈



Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.	Yes x No  ̈



Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit
and post such files). 	Yes x No  ̈



Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, or a non-accelerated filer.



|Large Accelerated Filer o | Accelerated Filer   o | Non-Accelerated Filer x
|------------------------- | --------------------- | -----------------------



Indicate by check mark which basis of accounting the registrant
has used to prepare the financial statements included in this filing:



|U.S. GAAPo | International Financial Reportingx       | Othero
|---------- | ---------------------------------------- | ------
|           | Standards as issued by the International |       
|           | Accounting Standards Board               |       



If “Other” has been checked in response to the previous
question, indicate by check mark which financial statement item the registrant has elected to follow. 	 o
Item 17 o Item 18



If this is an annual report, indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).	Yes o
No o


















TABLE OF CONTENTS





|                                                           |                                                       | Page
|---------------------------------------------------------- | ----------------------------------------------------- | ----
|                                                           |                                                       |     
|PART I                                                     |                                                      
|                                                           |                                                      
|ITEM 1.                                                    | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS | 2   
|                                                           |                                                       |     
|A. Directors and Senior Management                         | 2                                                    
|C. Auditors                                                | 2                                                    
|                                                           |                                                       |     
|ITEM 2.                                                    | OFFER STATISTICS AND EXPECTED TIMETABLE               | 2   
|                                                           |                                                       |     
|A. Offer Statistics                                        | 2                                                    
|B. Method and Expected Timetable                           | 2                                                    
|                                                           |                                                       |     
|ITEM 3.                                                    | KEY INFORMATION                                       | 2   
|                                                           |                                                       |     
|A. Selected Financial Data                                 | 2                                                    
|Selected
Financial Data of Hongri                          | 2                                                    
|B. Capitalization and Indebtedness                         | 3                                                    
|C. Reasons for the Offer and Use of Proceeds               | 3                                                    
|D. Risk Factors                                            | 3                                                    
|                                                           |                                                       |     
|ITEM 4.                                                    | INFORMATION ON THE COMPANY                            | 3   
|                                                           |                                                       |     
|A. History and Development of the Company                  | 3                                                    
|B. Business Overview                                       | 3                                                    
|C. Organizational Structure                                | 4                                                    
|D. Property, Plants and Equipment                          | 4                                                    
|                                                           |                                                       |     
|ITEM 4A.                                                   | UNRESOLVED STAFF COMMENTS                             | 4   
|                                                           |                                                       |     
|ITEM 5.                                                    | OPERATING AND FINANCIAL REVIEW AND PROSPECTS          | 4   
|                                                           |                                                       |     
|ITEM 6.                                                    | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES            | 4   
|                                                           |                                                       |     
|A. Directors and Senior Management                         | 4                                                    
|B. Compensation                                            | 4                                                    
|C. Board Practices                                         | 5                                                    
|D. Employees                                               | 5                                                    
|E. Share Ownership                                         | 5                                                    
|                                                           |                                                       |     
|ITEM 7.                                                    | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS     | 7   
|                                                           |                                                       |     
|A. Major Shareholders                                      | 7                                                    
|B. Related Party Transactions                              | 7                                                    
|C. Interests of Experts and Counsel                        | 8                                                    
|                                                           |                                                       |     
|ITEM 8.                                                    | FINANCIAL INFORMATION                                 | 8   
|                                                           |                                                       |     
|A. Consolidated Statements and Other Financial Information | 8                                                    
|B. Significant Changes                                     | 8                                                    
|                                                           |                                                       |     
|ITEM 9.                                                    | THE OFFER AND LISTING                                 | 8   
|                                                           |                                                       |     
|A. Offer and Listing Details                               | 8                                                    
|B. Plan of Distribution                                    | 8                                                    
|C. Markets                                                 | 8                                                    
|D. Selling Shareholders                                    | 8                                                    
|E. Dilution                                                | 9                                                    
|F. Expenses of the Issue                                   | 9                                                    





i







|ITEM 10.                                  | ADDITIONAL INFORMATION                                     | 9 
|----------------------------------------- | ---------------------------------------------------------- | --
|                                          |                                                            |   
|A. Share Capital                          | 9                                                         
|B. Memorandum and Articles of Association | 9                                                         
|C. Material Contracts                     | 11                                                        
|D. Exchange Controls                      | 11                                                        
|E. Taxation                               | 12                                                        
|F. Dividends and Paying Agents            | 12                                                        
|G. Statement by Experts                   | 13                                                        
|H. Documents on Display                   | 13                                                        
|I. Subsidiary Information                 | 13                                                        
|                                          |                                                            |   
|ITEM 11.                                  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 13
|                                          |                                                            |   
|ITEM 12.                                  | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES     | 14
|                                          |                                                            |   
|PART II                                   |                                                           
|                                          |                                                           
|PART III                                  |                                                           
|                                          |                                                           
|ITEM 17.                                  | FINANCIAL STATEMENTS                                       | 15
|                                          |                                                            |   
|ITEM 18.                                  | FINANCIAL STATEMENTS                                       | 15
|                                          |                                                            |   
|ITEM 19.                                  | EXHIBITS                                                   | 15



ii







INTRODUCTORY NOTES



Use of Certain Defined Terms



Except as otherwise indicated by the context and for the purposes
of this report only, references in this report to:



| | · | ““AQU,” “we,” “us,” “our” and the “Company” are to Aquasition
Corp., a company organized in the Republic of the Marshall Islands;
| | - | ---------------------------------------------------------------------------------------------------------------------------------



| | · | “Hongri” are to Hongri International Holdings Limited, which is our wholly
owned subsidiary and a company organized in the BVI;
| | - | -------------------------------------------------------------------------------------------------------------------------------



| | · | “Business Combination” refers to our acquisition of Hongri on August 1, 2014,
                                                                                                               pursuant to a share exchange transaction among us, KBS International Holdings, Inc. (“KBS”), Hongri and two
                                                                                                               individual shareholders of KBS;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | “Offer Letter” refers to the Offer Letter filed as exhibit (a)(1)(A) to Amendment No.
5 to the Schedule TO we filed with the Securities and Exchange Commission on July 18, 2014;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | “Tender Offer” means our tender offer for our common stock described in the Offer Letter,
which was completed on July 29, 2014.
| | - | -------------------------------------------------------------------------------------------------------------------------------



| | · | “BVI” are to the British Virgin Islands;
| | - | ----------------------------------------



| | · | “Hong Kong” are to the Hong Kong Special Administrative Region of the People’s
Republic of China;
| | - | -------------------------------------------------------------------------------------------------



| | · | “PRC” and “China” are to the People’s Republic of China;
| | - | --------------------------------------------------------



| | · | “SEC” are to the Securities and Exchange Commission;
| | - | ----------------------------------------------------



| | · | “Exchange Act” are to the Securities Exchange Act of 1934, as amended;
| | - | ----------------------------------------------------------------------



| | · | “Securities Act” are to the Securities Act of 1933, as amended;
| | - | ---------------------------------------------------------------



| | · | “Renminbi” and “RMB” are to the legal currency of China; and
| | - | ------------------------------------------------------------



| | · | “U.S. dollars,” “dollars” and “$” are to the legal currency
of the United States.
| | - | ---------------------------------------------------------------------------------



Forward-Looking Information



In addition to historical information,
this report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. We use words such as “believe,” “expect,” “anticipate,” “project,”
“target,” “plan,” “optimistic,” “intend,” “aim,” “will”
or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those
concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales,
earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future
operations; and any statements regarding future economic conditions or performance, as well as all assumptions, expectations, predictions,
intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, as well as assumptions, which, if they were to ever materialize or prove incorrect,
could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements.
Potential risks and uncertainties include, among other things, the possibility that we may not be able to maintain or increase
our net revenues and profits due to our failure to anticipate consumer preferences and develop new menswear products, our failure
to execute our business expansion plan, changes in domestic and foreign laws, regulations and taxes, changes in economic conditions,
uncertainties related to China’s legal system and economic, political and social events in China, a general economic downturn,
a downturn in the securities markets, and other risks and uncertainties which are generally set forth under Item 3 “Key information—D.
Risk Factors” and elsewhere in this report.



Readers are urged to carefully review and
consider the various disclosures made by us in this report and our other filings with the SEC. These reports attempt to advise
interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects.
The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation, except as required
by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or
future events.





1







PART I



| | ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
| | ------- | -----------------------------------------------------



A. Directors and Senior Management



Our directors and executive officers immediately
following the consummation of the Business Combination are described in the Offer Letter under the heading “Management—Post-Acquisition
Management” beginning on page 92, which description is incorporated herein by reference.



B. Advisors



Reeder & Simpson P.C. acts as the Republic
of the Marshall Islands counsel to us. Pillsbury Winthrop Shaw Pittman LLP acts as United States counsel to us.



C. Auditors



From the Company’s inception through
the consummation of the Business Combination, Marcum LLP, an independent registered public accounting firm, 750 Third Avenue, New
York, NY 10017, has acted as the Company’s independent registered public accounting firm.



| | ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE
| | ------- | ---------------------------------------



A. Offer Statistics



Not applicable.



B. Method and Expected Timetable



Not applicable.



| | ITEM 3. | KEY INFORMATION
| | ------- | ---------------



A. Selected Financial Data



Selected Financial Data of AQU



Selected financial information regarding
AQU is included under the heading “Item 3. Key Information –A. Selected Financial Data” of the Company’s
annual report on Form 20-F filed on May 15, 2014, and is incorporated herein by reference.



Selected Financial Data of Hongri



Following the Business Combination, Hongri
 is considered to be our predecessor for accounting purposes, as further described in Item 18 of this report. The
following table presents selected financial data regarding Hongri’s business. It should be read in conjunction
with its consolidated financial statements and related notes contained elsewhere in this report and the information under Item
5 “Operating and Financial Review and Prospects.” The selected consolidated statement income data for the fiscal years
ended December 31, 2013 and 2012, and the selected consolidated balance sheet data as of December 31, 2013 and 2012 have been derived
from Hongri’s audited consolidated financial statements that are included in this report beginning on page
F-1.



Hongri’s consolidated
financial statements were prepared and presented in accordance with International Financial Reporting Standards (“IFRS”)
as issued by the International Accounting Standards Board (“IASB”). The selected financial data information is only
a summary and should be read in conjunction with the historical consolidated financial statements and related notes contained elsewhere
herein. The financial statements contained elsewhere fully represent our financial condition and operations; however, they are
not indicative of our future performance.





2







|                                        |  | Years ended December 31, |            
|--------------------------------------- |  | ------------------------ | -----------
|                                        |  | 2013                     |            
|Statement of Income Data                |  |                          |            
|Total revenue                           |  | $                        | 99,559,814 
|Total cost of sales                     |  |                          | (57,363,839
|Gross profit                            |  |                          | 42,195,975 
|Profit for the year                     |  |                          | 25,795,357 
|Total comprehensive income for the year |  | $                        | 28,392,616 
|Balance Sheet Data                      |  |                          |            
|Cash and cash equivalents               |  | $                        | 39,818,799 
|Working capital                         |  | $                        | 56,155,259 
|Total assets                            |  | $                        | 109,456,732
|Total liabilities                       |  | $                        | 15,994,628 
|Equity                                  |  | $                        | 93,462,104 



B. Capitalization and Indebtedness



Not applicable.



C. Reasons for the Offer and Use of Proceeds



Not applicable.



D. Risk Factors



The risks associated with our business are described in the
Offer Letter under the heading “Risk Factors” beginning on page 15, which descriptions incorporated herein by reference.



| | ITEM 4. | INFORMATION ON THE COMPANY
| | ------- | --------------------------



A. History and Development of the Company



The history and development of AQU are
described in the Offer Letter under the heading “Summary—Background Information” beginning on page 8, the heading
“Information About Aquasition” beginning on page 46, and the heading “KBS Corporate History and Background”
beginning on page 47, which descriptions are incorporated herein by reference.



On March 24, 2014, a Share Exchange
Agreement and Plan of Liquidation (the “Exchange Agreement”) was entered into by and among AQU, KBS International
Holdings, Inc., a Nevada corporation (“KBS”), Hongri International Holdings Ltd., a company organized and
existing under the laws of the British Virgin Islands and wholly owned subsidiary of KBS (“Hongri”), and Cheung
So Wa and Chan Sun Keung, each an individual and shareholder of KBS (each, a “Principal Stockholder”). Upon the
closing of the transactions contemplated in the Exchange Agreement on August 1, 2014, the Company acquired 100% of the issued
and outstanding equity interest in Hongri from KBS in exchange for the transaction consideration consisting of 22,957,455
shares of AQU common stock.



In addition, on July 29, 2014, AQU completed
the Tender Offer related to the Business Combination and redeemed the 4,981,736 shares of common stock validly tendered and not
withdrawn, and on August 1, 2014, it consummated the Business Combination by acquiring Hongri  and issuing 22,957,455
shares of common stock to KBS. As a result, following consummation of the Business Combination, AQU had a total of 25,417,329 shares
of common stock outstanding.



B. Business Overview



As a result of the Business Combination,
all of our business is conducted through Hongri. The business of Hongri  is described in the Offer Letter
under the heading “Target’s Business” beginning on page 51, which description is incorporated herein by reference.





3







C. Organizational Structure



The chart below presents our corporate structure as of the
date of this report.









Aquasition Corp.  (Republic of the Marshall Islands) Roller Rome Limited (British Virgin Islands) Vast Billion Investment Limited (Hong Kong) France Cock (China) Limited (Hong Kong) Hongri International Holdings Limited  (British Virgin Islands) Hongri (Fujian) Sports Goods Co., Ltd. (People’s Republic of China) Anhui Kai Xin Apparel Co. Ltd. (People’s Republic of China) 100% 100% 100% 100% 100 % 100% Shishi Hongri Brand Management  Limited ( People’s  Republic of China) 100 %











D. Property, Plants and Equipment



Information regarding our property, plants
and equipment is described in the Offer Letter under the heading “Target’s Business” beginning on page 51, which
description is incorporated herein by reference.



| | ITEM 4A. | UNRESOLVED STAFF COMMENTS
| | -------- | -------------------------



Not required.



| | ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS
| | ------- | --------------------------------------------



Reference is made to the disclosure contained
in the Offer Letter under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations
of the Target Company” beginning on page 81 and that information is incorporated herein by reference.



| | ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
| | ------- | ------------------------------------------



A. Directors and Senior Management



Our directors and executive officers immediately
following the consummation of the Business Combination are described in the Offer Letter under the heading “Management—Post-Acquisition
Management” beginning on page 92, which description is incorporated herein by reference.





4







B. Compensation



The compensation of our executive officers
and directors is described in the Offer Letter under the heading “Director and Executive Compensation” beginning on
page 95, which description is incorporated herein by reference.



C. Board Practices



The Company’s board of directors
consist of seven members, Keyan Yan, Stanley Wong, Stylianos Stergios Sougioultzoglou,, Y. Tristan Kuo, John Sano, Meng Zhou and
Chi Yee Gaw, who were elected to serve until their successors are duly elected and qualified. Our directors may be elected by the
holders of the shares representing a majority of the total voting power of the then-outstanding capital stock of the Company entitled
to vote generally in the election of directors. Each director so elected holds office for the term, if any, as may be specified
in the resolution appointing him or until his earlier death, disqualification, resignation or removal. The directors may appoint
one or more directors to fill a vacancy on the Board of Directors.



The Board has established three standing
committees: the Audit Committee, the Compensation Committee and the Governance and Nominating Committee. Each of the Audit Committee,
Compensation Committee and Governance and Nominating Committee are comprised entirely of independent directors. From time to time,
the Board may establish other committees.



Audit Committee



Our Audit Committee is currently composed
of three members: Y. Tristan Kuo, Meng Zhou and Chi Yee Gaw. Our Board of Directors determined that each member of the Audit Committee
meets the independence criteria prescribed by applicable regulation and the rules of the SEC for audit committee membership and
is an “independent” director within the meaning of the NASDAQ Marketplace Rules. Each Audit Committee member also meets
NASDAQ’s financial literacy requirements. Mr. Kuo serves as Chair of the Audit Committee.



Our Board of Directors has determined that
Mr. Kuo is the “audit committee financial expert” as such term is defined in Item 407(d) of Regulation S-K promulgated
by the SEC and also meets NASDAQ’s financial sophistication requirements.



Compensation Committee



Our Compensation Committee is currently
composed of three members: Meng Zhou, John Sano and Y. Tristan Kuo, each of whom is “independent” within the meaning
of the NASDAQ Marketplace Rules. Mr. Zhou serves as Chair of the Compensation Committee.



Our Compensation Committee assists the
Board in reviewing and approving the compensation structure of our directors and executive officers, including all forms of compensation
to be provided to our directors and executive officers.



Governance and Nominating Committee



Our Governance and Nominating Committee
is currently composed of three members: John Sano, Y. Tristan Kuo and Meng Zhou, each of whom is “independent” within
the meaning of the NASDAQ Marketplace Rules. Mr. Sano serves as Chair of the Governance and Nominating Committee.



The Governance and Nominating Committee
assists the Board in identifying individuals qualified to become our directors and in determining the composition of the Board
and its committees.



D. Employees



As of the closing of the Business Combination,
we have approximately 350 full-time employees. The information in the Offer Letter under the heading “Target’s Business—Employees”
on page 61 is incorporated herein by reference.



E. Share Ownership



The following table sets forth information
regarding beneficial ownership of each class of our voting securities as of August 7, 2014 (i) by each person who is known by us
to beneficially own more than 5% of our voting securities; (ii) by each of our officers and directors; and (iii) by all of our
officers and directors as a group.





5







|Name                                                                  | Office, If Any                                                   | Title of Class | Amount and Nature of Beneficial Ownership(1) | Percent of Class(2)
|--------------------------------------------------------------------- | ---------------------------------------------------------------- | -------------- | -------------------------------------------- | -------------------
|Officers and Directors                                               
|Keyan Yan(3)                                                          | Chairman, CEO and President                                      | Common Stock   | 13,364,796                                   | 52.6%              
|Stanley Wong                                                          | Chief Financial Officer                                          | Common Stock   | 219,465                                      | *                  
|Stylianos Stergios Sougioultzoglou(4)                                 | Director, Head of Investor Relations and Chief Strategic Officer | Common Stock   | 2,081,500                                    | 8.1%               
|Y. Tristan Kuo                                                        | Director                                                         | Common Stock   | 0                                            | *                  
|John Sano                                                             | Director                                                         | Common Stock   | 0                                            | *                  
|Meng Zhou                                                             | Director                                                         | Common Stock   | 0                                            | *                  
|Chi Yee Gaw                                                           | Director                                                         | Common Stock   | 0                                            | *                  
|All officers and directors as a group
        (7 persons named above) |                                                                  |                | 15,665,761                                   | 60.8%              
|5% Security Holders                                                  
|Chan Sun Keung(3)                                                     |                                                                  | Common Stock   | 13,364,796                                   | 52.6%              
|Aqua Investments Corp.(4)                                             |                                                                  | Common Stock   | 2,081,500                                    | 8.1%               
|Leonidas S. Polemis(4)                                                |                                                                  | Common Stock   | 2,081,500                                    | 8.1%               
|Matthew C. Los(4)                                                     |                                                                  | Common Stock   | 2,081,500                                    | 8.1%               
|Nicholas John Frangos(4)                                              |                                                                  | Common Stock   | 2,081,500                                    | 8.1%               
|Themistoklis Kalapotharakos(4)                                        |                                                                  | Common Stock   | 2,081,500                                    | 8.1%               
|Bay Peak, LLC(5)                                                      |                                                                  | Common Stock   | 1,369,725                                    | 5.4%               
|Cory Roberts (5)                                                      |                                                                  | Common Stock   | 1,369,725                                    | 5.4%               
|China Canadian Opportunity, L.P.(6)                                   |                                                                  | Common Stock   | 1,440,667                                    | 5.7%               
|Ground Floor Capital (China) Inc.(6)                                  |                                                                  | Common Stock   | 1,440,667                                    | 5.7%               
|David Steele(6)(7)                                                    |                                                                  | Common Stock   | 2,704,505                                    | 10.6%              

* Less than 1%



| | (1) | Beneficial Ownership is determined in accordance with the rules of the SEC and generally includes
voting or investment power with respect to securities. Each of the beneficial owners listed above has direct ownership of and sole
voting power and investment power with respect to our ordinary shares.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | As of August 7, 2014, a total of 25,417,329 shares of commons stock are considered to be outstanding
pursuant to SEC Rule 13d-3(d)(1). For each Beneficial Owner above, any securities that are exercisable or convertible within 60
days have been included in the denominator.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | On March 9, 2011, Keyan Yan entered into an option agreement with Mr. Chan Sun Keung, which was
amended on August 1, 2014. Pursuant tot the option agreement, as amended, Mr. Yan has the option to acquire all of the shares of
common stock of the Company that Chan Sun Keung acquired. As a result, Mr. Yan may be deemed to be a beneficial owner of the shares
held by Chan Sun Keung.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | Including 368,000 shares underlying warrants owned by Aqua Investments Corp., control of which is shared by the indicated persons.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------



| | (5) | Mr. Cory Roberts is the principal of Bay Peak, LLC and has voting and investment control over the securities held by it.
| | --- | ------------------------------------------------------------------------------------------------------------------------



| | (6) | China Canadian Opportunity, L.P.’s voting and dispositive decisions with regard to its partnership interests are made
by Ground Floor Capital (China) Inc., its general partner. Ground Floor Capital (China) Inc.’s voting and dispositive decisions
with regard to its shares are made by Mr. David Steele, its President and Director. Therefore, both Ground Floor Capital (China)
Inc. and Mr. Steele may be deemed to have voting and dispositive power with respect to the shares held by China Canadian Opportunity,
L.P.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (7) | Includes 244,630 shares of our common stock held by China - Ground Floor Holdings, L.P, 84,543
shares of our common stock held by China – Ground Floor Holdings VI, L.P., 1,440,667 shares of our common stock held by China
Canadian Opportunity, L.P., 837,169 shares of our common stock held by China Canadian Opportunity VI, L.P., 96,047 shares of our
common stock held by Kema Management (USA), Inc., 181 shares of our common stock held by Kema Management LTD, and 1,268 shares
of our common stock held by Mr. David Steele. China - Ground Floor Holdings, L.P and China – Ground Floor Holdings VI, L.P.’s
voting and dispositive decisions with regard to each entity’s partnership interests are made by Ground Floor Capital, LLC
("Ground Floor LLC"), its general partner. Ground Floor LLC’s voting and dispositive decisions with regard to its
membership interests are made by Mr. David Steele, its sole member. China Canadian Opportunity, L.P.’s voting and dispositive
decisions with regard to its partnership interests are made by Ground Floor Capital (China) Inc. (“Ground Floor Inc.”),
its general partner. Ground Floor Inc.’s voting and dispositive decisions with regard to its shares are made by Mr. David
Steele, its President and Director. China Canadian Opportunity VI, L.P.’s voting and dispositive decisions with regard to
its membership interests are made by Ground Floor Capital (China 88) Inc. (“China 88”), its general partner. China
88’s voting and dispositive decisions with regard to its shares are made by Mr. David Steele, its President and Director.
Each of Kema Management (USA), Inc. and Kema Management LTD’s voting and dispositive decisions with regard to its stock are
made by David Steele, each entity’s President. Therefore, Mr. Steele may be deemed to share voting and dispositive power
with Ground Floor LLC with respect to the shares of our common stock held by China - Ground Floor Holdings, L.P and China –
Ground Floor Holdings VI, L.P.; Mr. Steele may be deemed to share voting and dispositive power with Ground Floor Inc. with respect
to the shares of our common stock held by China Canadian Opportunity, L.P.; Mr. Steele may be deemed to share voting and dispositive
power with China 88 with respect to the shares of our common stock held by China Canadian Opportunity VI, L.P.; and Mr. Steele
may be deemed to have voting and dispositive power with respect to the shares of our common stock held by each of Kema Management
(USA), Inc. and Kema Management LTD.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





6







None of our major shareholders have different
voting rights from other shareholders.



On August 1, 2014, the Company, Aquasition
Investments Corp. (“AQU Investments”), Cheung So Wa and Chan Sun Keung (the “Principal Stockholders”) entered
into a voting agreement (the “Voting Agreement”), under which, during the term of the agreement, AQU Investments and
the Principal Stockholders agree to vote or cause to be voted all of their respective shares of the Company to ensure that the
number of directors constituting the Board will be set and remain at seven directors. In addition, AQU Investments and the Principal
Stockholders agreed to vote or cause to be voted, whether at a meeting of stockholders or by written consent, all of their respective
shares to ensure that the following persons are elected to the Board: (i) three persons nominated by a majority of the shares held
by the Principal Stockholders; (ii) one person nominated by AQU Investments; and (iii) three persons nominated by agreement between
the Principal Stockholders and AQU Investments. Any vacancy among the members of the Board will be filled by the appointment or
election of a person nominated by the persons or groups entitled under the Voting Agreement to designate the vacating member. The
Voting Agreement also provides that any acquisition by the Company or any subsidiary of any entity owned of record or beneficially
more than five percent by either of the Principal Stockholders will require the approval of the director designed by AQU Investments,
which approval will not be unreasonably delayed or withheld.



The Voting Agreement will terminate
upon as to any shareholder party to the Voting Agreement in the event such shareholder party holds less than one-half of the
shares held by it on August 1, 2014.



On August 1, 2014, the Company, AQU Investments,
the Principal Stockholders and certain key personnel of the Company and KBS entered into a resale lock-up agreement (the “Resale
Lock-Up Agreement”). According to the Resale Lock-Up Agreement, for a period of 180 days (for AQU Investments) or one year
(for other shareholder parties to the Resale Lock-Up Agreement) from the date of this Resale Lock-Up Agreement, all of the shareholder
parties to this agreement will not, directly or indirectly, offer, sell, contract to sell, pledge, grant any option for the sale
of, or otherwise dispose of any shares, securities convertible into or exchangeable for shares, options or rights to acquire shares
or publicly announce the intention to do any of the foregoing.



| | ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
| | ------- | -------------------------------------------------



A. Major Shareholders



Please refer to Item 6 “Directors,
Senior Management and Employees—E. Share Ownership.”





7







B. Related Party Transactions



Related party transactions are described
in the Offer Letter under the heading “Certain Relationships and Related Transactions” beginning on page 110, which
description is incorporated herein by reference.



C. Interests of Experts and Counsel



Not applicable.



| | ITEM 8. | FINANCIAL INFORMATION
| | ------- | ---------------------



A. Consolidated Statements and Other Financial
Information



Financial Statements



We have appended consolidated financial statements filed as
part of this report. See Item 18 “Financial Statements.”



Legal Proceedings



We may be subject to legal proceedings,
investigations and claims incidental to the conduct of our business from time to time.  We are currently not party to
any legal or arbitration proceedings, including those relating to bankruptcy, receivership or similar proceedings and those involving
any third party, which may have, or have had in the recent past, significant effects on our financial position or profitability.



Dividend Policy



As required by the Exchange Agreement,
promptly following the consummation of the Business Combination, the Board of Directors will adopt a dividend policy for the payment
of an annual dividend for the first two fiscal years post-closing in an amount equal to at least twenty percent (20%) of our distributable
profits after tax and after compulsory statutory reserves, which can be no less than 10% of after-tax income in China. After the
first two years, the Board of Directors may elect to modify the dividend policy.



B. Significant Changes



The historical financial statements of
Hongri which are included elsewhere in this report have been prepared in accordance with IFRS as issued by the IASB
and presented in US Dollars. The historical financial statements of Aquasition which are included elsewhere in this report have
been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”)
and presented in US Dollars.



| | ITEM 9. | THE OFFER AND LISTING
| | ------- | ---------------------



A. Offer and Listing Details



The price history for our securities is
described in the Offer Letter under the heading “Market Price Information” beginning on page 14, which description
is incorporated herein by reference. A description of the rights of our securities other than equity securities is included under
the heading “Description of Securities” in our registration statement on Form F-1 (File No. 333-180571), initially
filed with the Securities and Exchange Commission on April 4, 2012, as amended, which description is incorporated herein by reference.



B. Plan of Distribution



Not applicable.



C. Markets



See our disclosures above under “A. Offer and Listing
Details.”



D. Selling Shareholders



Not applicable.





8







E. Dilution



Not applicable.



F. Expenses of the Issue



Not applicable.



| | ITEM 10. | ADDITIONAL INFORMATION
| | -------- | ----------------------



A. Share Capital



Our amended and restated articles of incorporation
authorize the issuance of up to 155,000,000 shares with a par value of
$0.0001, consisting of 150,000,000 shares of common stock and 5,000,000 shares of preferred stock.



On August 7, 2014 and December
31, 2013, there were 25,417,329 shares of common stock and 7,305,500 (including 4,995,000 shares that were subject to
redemption) shares of common stock issued and outstanding. We have never issued any preferred stock.



On August 7, 2014 and December 31, 2013,
we had 5,918,000 redeemable warrants outstanding, including 368,000 warrants underlying the placement units. Each redeemable warrant
entitles the holder to purchase one share of common stock at a price of $11.50 and became exercisable on the consummation of the
Business Combination. The warrants included in the placement units are identical to those redeemable warrants sold as part of the
units in our IPO except that such warrants may be exercised on a cashless basis at any time after an acquisition transaction and
even if there is not an effective registration statement relating to the shares underlying the warrants and the placement units
and underlying securities are subject to certain transfer restrictions. We also issued to the representative of the underwriters,
concurrently with our IPO, for a purchase price of $100, an option to purchase 250,000 units, each unit representing one share
of common stock and one redeemable warrant.



B. Memorandum and Articles of Association



The following represents a summary of
certain key provisions of our articles of incorporation and bylaws. The summary does not purport to be a summary of all of the
provisions of our articles of incorporation and bylaws. For more complete information you should read our amended and restated
articles of incorporation and bylaws, each listed as an exhibit to this report.



We were incorporated in the Marshall Islands
on January 26, 2012 under the Marshall Islands Business Corporations Act (“BCA”). The purpose of the Company is to
engage in any lawful act or activity for which corporations may now or hereafter be organized under the BCA. Our amended and restated
articles of incorporation and bylaws do not impose any limitations on the ownership rights of our stockholders.



Description
of Common Stock



Each outstanding
share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders. Upon our dissolution,
liquidation or winding up of the affairs of the Company, after payment in full of all amounts required to be paid to creditors
and to the holders of preferred stock having liquidation preferences, if any, the holders or our common stock will be entitled
to receive pro rata our remaining assets available for distribution. Holders of common stock do not have conversion, redemption
or preemptive rights to subscribe to any of our securities.



Blank
Check Preferred Stock.



Our
Board of Directors is authorized,without any further vote or action by our stockholders,to issue up to 5,000,000 shares of preferred stock in different
classes and series and, with respect to each class or series, to determine the designations, powers, preferences, privileges and
other rights, including dividend rights, conversion rights, terms of redemption and liquidation preferences, any or all of which
may be greater than the powers and rights associated with the ordinary shares, at such times and on such other terms as they think
proper.Our Board of Directors may issue shares of preferred stock on terms calculated
to discourage, delay or prevent a change of control of our company or the removal of our management.





9







Directors



The business and affairs of the Company
are managed by or under the direction of our Board of Directors.



Our directors are elected by the holders
of the shares representing a majority of the total voting power of the then-outstanding capital stock of the Company entitled to
vote generally in the election of directors (“Voting Stock”). Our amended and restated articles of incorporation provide
that cumulative voting shall not be used to elect directors. Each director will be elected to serve until the next annual meeting
of shareholders and until his/her successor shall have been duly elected and qualified, except in the event of his/her death, resignation,
removal or the earlier termination of his/her term of office.



Any director or the entire Board of Directors
may be removed at any time, with or without cause, by the affirmative vote of the holders of at least a majority of the total voting
power of the Voting Stock entitled to vote thereon or with cause by directors constituting at least two-thirds of the entire Board.



Vacancies in the Board of Directors occurring
by death, resignation, the creation of new directorships, the failure of the shareholders to elect the whole board at any annual
election of directors, or, except as herein provided, for any other reason, including removal of directors for cause, may be filled
either by the affirmative vote of a majority of the remaining directors then in office, although less than a quorum, at any special
meeting called for that purpose or at any regular meeting of the Board. Vacancies occurring by removal of directors without cause
may be filled only by vote of the shareholders.



Shareholder Meetings



Annual stockholder meetings will be held
at a time and place selected by our board of directors. The meetings may be held in or outside of the Marshall Islands.



Under our amended and restated articles
of incorporation, special meetings may be called by the board of directors, or by the secretary of the Company requested by stockholders
representing certain amount of voting power. Our board of directors shall
give not less than 15 days and not more than 60 days prior written notice of a shareholders’ meeting to each shareholder
of record entitled to vote thereat and to each shareholder of record who, by reason of any action proposed at such meeting would
be entitled to have his/her shares appraised if such action were taken, and the notice shall include a statement of that purpose
and to that effect.



Our
bylaws provide that a meeting of shareholders is duly constituted if, at the commencement of the meeting, there are shareholders
present in person or by proxy representing not less than a majority of the votes of the shares issued and outstanding andentitled
to vote on resolutions of shareholders to be considered at the meeting.



If a quorum is present, the affirmative
vote of a majority of the shares of stock represented at the meeting will be the act of the shareholders. At any meeting of shareholders,
each shareholder entitled to vote any shares on any manner to be voted upon at such meeting shall be entitled to one vote on such
matter for each such share. Any action required or permitted to be taken at a meeting, may be taken without a meeting if a consent
in writing setting forth the action so taken, is signed by all the shareholders entitled to vote with respect to the subject matter
thereof.



Dissenters’ Rights of Appraisal and Payment.



Under the BCA, our stockholders have the
right to dissent from various corporate actions, including any merger or sale of all or substantially all of our assets not made
in the usual course of our business, and receive payment of the fair value of their shares. However, the right of a dissenting
stockholder to receive payment of the fair value of his or her shares shall not be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation.
In the event of any further amendment of our articles of incorporation, a stockholder also has the right to dissent and receive
payment for his or her shares if the amendment alters certain rights in respect of those shares. The dissenting stockholder must
follow the procedures set forth in the BCA to receive payment. In the event that we and any dissenting stockholder fail to agree
on a price for the shares, the BCA procedures involve, among other things, the institution of proceedings in the circuit court
in the judicial circuit in the Marshall Islands in which our Marshall Islands office is situated. The value of the shares of the
dissenting stockholder is fixed by the court after reference, if the court so elects, to the recommendations of a court-appointed
appraiser.





10







Stockholders' Derivative Actions



Under the BCA, any of our stockholders
may bring an action in our name to procure a judgment in our favor, also known as a derivative action, provided that the stockholder
bringing the action is a holder of common stock both at the time the derivative action is commenced and at the time of the transaction
to which the action relates.



Indemnification of Officers and Directors



The BCA authorizes
corporations to limit or eliminate the personal liability of directors and officers to corporations and their stockholders for
monetary damages for breaches of directors’ fiduciary duties. Our amended and restated articles of incorporation include
a provision that eliminates the personal liability of directors for monetary damages for actions taken as a director to the fullest
extent permitted by law. We must indemnify our directors and officers to the fullest extent authorized by law. We are also expressly
authorized to advance certain expenses (including attorneys’ fees and disbursements and court costs) to our directors and
offices and carry directors’ and officers’ insurance providing indemnification for our directors, officers and certain
employees for some liabilities.



The limitation
of liability and indemnification provisions in our amended and restated articles of incorporation and bylaws may discourage stockholders
from bringing a lawsuit against directors for breach of their fiduciary duty.  These provisions may also have the effect
of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful,
might otherwise benefit us and our stockholders.  In addition, your investment may be adversely affected to the extent
we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.



C. Material Contracts



Information concerning our material contracts
governing the business of the Company is included elsewhere in this report or in the information incorporated by reference herein.



On August 1, 2014, the Company entered
into an employment agreement with Keyan Yan, pursuant to which Mr. Yan agreed to act as the Chief Executive Officer of the Company.
The employment agreement has a term of three years which term may be extended by agreement between Mr. Yan and the Company. The
initial annual base salary of Mr. Yan will be determined by the Board within 30 days following the date of the employment agreement.
His compensation will be reviewed from time to time according to the Company’s policies. Mr. Yan is eligible to participate
in annual performance bonus plans as may be established by the Company from time to time as well as the Company’s equity
incentive plan when and if such a plan is adopted by the Board.



On August 1, 2014, the Company also entered
into an employment agreement with Stanley Wong, pursuant to which Mr. Wong agreed to act as the Chief Financial Officer of the
Company. The employment agreement has a term of three years which term may be extended by agreement between Mr. Wong and the Company.
Same as Mr. Yan, Mr. Wong’s initial annual base salary will be determined by the Board within 30 days following the date
of the employment agreement. He is eligible to participate in annual performance bonus plans as may be established by the Company
from time to time as well as the Company’s equity incentive plan when and if such a plan is adopted by the Board.



See the description of the Voting Agreement
and the Resale Lock-Up Agreement under Item 6E of this report, which is incorporated herein by reference.



D. Exchange Controls



Marshall Islands Exchange Controls



Under Marshall Islands law, there are currently
no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance
of dividends, interest or other payments to nonresident holders of our shares.



BVI Exchange Controls



There are no material exchange controls
restrictions on payment of dividends, interest or other payments to the holders of our ordinary shares or on the conduct of our
operations in the BVI. There are no material BVI laws that impose any material exchange controls on us or that affect the payment
of dividends, interest or other payments to nonresident holders of Hongri ordinary shares. BVI law and Hongri’s
memorandum and articles of association do not impose any material limitations on the right of non-residents or foreign owners to
hold or vote its ordinary shares.





11







PRC Exchange Controls



Under the Foreign Currency Administration
Rules promulgated in 1996 and revised in 1997, and various regulations issued by SAFE and other relevant PRC government authorities,
RMB is convertible into other currencies without prior approval from SAFE only to the extent of current account items, such as
trade related receipts and payments, interest and dividends and after complying with certain procedural requirements. The conversion
of RMB into other currencies and remittance of the converted foreign currency outside PRC for the purpose of capital account items,
such as direct equity investments, loans and repatriation of investment, requires the prior approval from SAFE or its local office.
Payments for transactions that take place within China must be made in RMB. Unless otherwise approved, PRC companies must repatriate
foreign currency payments received from abroad. Foreign-invested enterprises may retain foreign exchange in accounts with designated
foreign exchange banks subject to a cap set by SAFE or its local office.  Unless otherwise approved, domestic enterprises
must convert all of their foreign currency proceeds into RMB.



On October 21, 2005, SAFE issued the Notice
on Issues Relating to the Administration of Foreign Exchange in Fund-raising and Reverse Investment Activities of Domestic Residents
Conducted via Offshore Special Purpose Companies, which became effective as of November 1, 2005. According to the notice, a special
purpose company, or SPV, refers to an offshore company established or indirectly controlled by PRC residents for the special purpose
of carrying out financing of their assets or equity interest in PRC domestic enterprises. Prior to establishing or assuming control
of an SPV, each PRC resident, whether a natural or legal person, must complete the overseas investment foreign exchange registration
procedures with the relevant local SAFE branch. The notice applies retroactively. As a result, PRC residents who have established
or acquired control of these SPVs that previously made onshore investments in China were required to complete the relevant overseas
investment foreign exchange registration procedures by March 31, 2006. These PRC residents must also amend the registration with
the relevant SAFE branch in the following circumstances: (i) the PRC residents have completed the injection of equity investment
or assets of a domestic company into the SPV; (ii) the overseas funding of the SPV has been completed; (iii) there is a material
change in the capital of the SPV. Under the rules, failure to comply with the foreign exchange registration procedures may result
in restrictions being imposed on the foreign exchange activities of the violator, including restrictions on the payment of dividends
and other distributions to its offshore parent company, and may also subject the violators to penalties under the PRC foreign exchange
administration regulations.



On August 29, 2008, SAFE promulgated Notice
142 which regulates the conversion by a foreign-funded enterprise of foreign currency into RMB by restricting how the converted
RMB may be used. Notice 142 requires that RMB funds converted from the foreign currency capital of a foreign-funded enterprise
may only be used for purposes within the business scope approved by the applicable governmental authority and may not be used for
equity investments within the PRC unless specifically provided for otherwise. In addition, SAFE strengthened its supervision over
the flow and use of RMB funds converted from the foreign currency capital of a foreign-funded enterprise. The use of such RMB capital
may not be changed without SAFE’s approval, and may not, in any case, be used to repay or prepay RMB loans if such loans
are outstanding. Violations of Notice 142 will result in severe penalties, such as heavy fines as set out in the relevant foreign
exchange control regulations.



E. Taxation



The material United States federal income
tax consequences of the Business Combination and of owning and disposing of our securities following the Business Combination are
described in the Offer Letter under the heading “Material U.S. Federal Income Tax Consequences” beginning on page 113,
which description is incorporated herein by reference.



F. Dividends and Paying Agents



As required by the Exchange Agreement,
promptly following the consummation of the Business Combination, the Board of Directors will adopt a dividend policy for the payment
of an annual dividend for the first two fiscal years post-closing in an amount equal to at least twenty percent (20%) of our distributable
profits after tax and after compulsory statutory reserves, which can be no less than 10% of after-tax income in China. After the
first two years, the Board of Directors may elect to modify the dividend policy.





12







G. Statement by Experts



Not applicable.



H. Documents on Display



We have filed this report on Form 20-F
with the SEC under the Exchange Act. Statements made in this report as to the contents of any document referred to are not necessarily
complete. With respect to each such document filed as an exhibit to this report, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed qualified in its entirety by such reference.



We are subject to the informational requirements
of the Exchange Act as a foreign private issuer and file reports and other information with the SEC. Reports and other information
filed by us with the SEC, including this report, may be inspected and copied at the public reference room of the SEC at 100 F Street,
N.E., Washington D.C. 20549. You can also obtain copies of this report by mail from the Public Reference Section of the SEC, 100
F. Street, N.E., Washington D.C. 20549, at prescribed rates. Additionally, copies of this material may be obtained from the SEC’s
Internet site at http://www.sec.gov. The SEC’s telephone number is 1-800-SEC-0330.



As a foreign private issuer, we are exempt from the rules under
the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements, and officers, directors and
principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the
Exchange Act.



I. Subsidiary Information



Not applicable.



| | ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
| | -------- | ----------------------------------------------------------



Interest Rate Risk



We deposit surplus funds with Chinese banks
earning daily interest. We do not invest in any instruments for trading purposes. Most of our outstanding debt instruments carry
fixed rates of interest. Our operations generally are not directly sensitive to fluctuations in interest rates and we currently
do not have any long-term debt outstanding. Management monitors the banks’ prime rates in conjunction with our cash requirements
to determine the appropriate level of debt balances relative to other sources of funds. We have not entered into any hedging transactions
in an effort to reduce our exposure to interest rate risk.



Foreign Exchange Risk



While our reporting currency is the U.S.
dollar, substantially all of our consolidated revenues and consolidated costs and expenses are denominated in RMB. Substantially
all of our assets are denominated in RMB. As a result, we are exposed to foreign exchange risk as our revenues and results of operations
may be affected by fluctuations in the exchange rate between the U.S. dollar and the RMB. If the RMB depreciates against the U.S.
dollar, the value of our RMB revenues, earnings and assets as expressed in our U.S. dollar financial statements will decline. Assets
and liabilities are translated at exchange rates at the balance sheet dates and revenue and expenses are translated at the average
exchange rates and equity is translated at historical exchange rates. Any resulting translation adjustments are not included in
determining net income but are included in determining other comprehensive income, a component of equity. An average appreciation
(depreciation) of the RMB against the U.S. dollar of 5% would increase (decrease) our comprehensive income by $4.7 million based
on our outstanding revenues, costs and expenses, assets and liabilities denominated in RMB as of December 31, 2013. As of December
31, 2013, our accumulated other comprehensive income was $4.6 million. We have not entered into any hedging transactions in an
effort to reduce our exposure to foreign exchange risk.



The value of RMB against the U.S. dollar
and other currencies is affected by, among other things, changes in China’s political and economic conditions. Since July
2005, RMB has not been pegged to the U.S. dollar. Although the People’s Bank of China regularly intervenes in the foreign
exchange market to prevent significant short-term fluctuations in the exchange rate, RMB may appreciate or depreciate significantly
in value against the U.S. dollar in the medium to long term. Moreover, it is possible that in the future, PRC authorities may lift
restrictions on fluctuations in RMB exchange rate and lessen intervention in the foreign exchange market.





13







Inflation



Inflationary factors such as increases
in the cost of our product and overhead costs may adversely affect our operating results. Although we do not believe that inflation
has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may
have an adverse effect on our ability to maintain current levels of gross margin and selling, general and administrative expenses
as a percentage of net revenues if the selling prices of our products do not increase with these increased costs.



| | ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
| | -------- | ------------------------------------------------------



A description of the rights of our securities
other than equity securities is included under the heading “Description of Securities” in our registration statement
on Form F-1 (File No. 333-180571), initially filed with the Securities and Exchange Commission on April 4, 2012, as amended, which
description is incorporated herein by reference.





14







PART II



Not Required.

PART III



| | ITEM 17. | FINANCIAL STATEMENTS
| | -------- | --------------------



Not applicable.



| | ITEM 18. | FINANCIAL STATEMENTS
| | -------- | --------------------



The financial statements are filed as part
of this annual report beginning on page F-1.



| | ITEM 19. | EXHIBITS
| | -------- | --------



The list of exhibits in the Exhibit Index to this report is
incorporated herein by reference.







15







SIGNATURE



The registrant hereby
certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this report on its behalf.



|Date: August 7, 2014 | AQUASITION CORP.       
|-------------------- | -----------------------
|                     |                        
|                     | /s/ Keyan Yan          
|                     | Keyan Yan              
|                     | Chief Executive Officer





16







Index
toFINANCIAL STATEMENTS



|                                                                                                                                                                                                                 | Page       
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------
|                                                                                                                                                                                                                 |            
|Aquasition Corp.                                                                                                                                                                                                 |            
|Report of Independent Registered Public Accounting Firm                                                                                                                                                          | F-2        
|Balance Sheets as of December 31, 2013 and 2012                                                                                                                                                                  | F-3        
|Statements of Operations for the year ended December 31, 2013, the period from January 26, 2012 (inception) through December 31, 2012 and the period from January 26, 2012 (inception) through December 31, 2013 | F-4        
|Statements of Changes in Stockholders’ Equity for the period from January 26, 2012 (inception) through December 31, 2013                                                                                         | F-5        
|Statements of Cash Flows for the year ended December 31, 2013, the period from January 26, 2012 (inception) through December 31, 2012 and the period from January 26, 2012 (inception) through December 31, 2013 | F-6        
|Notes to Financial Statements                                                                                                                                                                                    | F-7 - F-15 
|                                                                                                                                                                                                                 |            
|Hongri International Holdings Limited                                                                                                                                                                            |            
|Independent Auditor’s Report                                                                                                                                                                                     | F-18       
|Consolidated Statements of Comprehensive Income                                                                                                                                                                  | F-19       
|Consolidated Statements of Financial Position                                                                                                                                                                    | F-20       
|Consolidated Statements of Changes in Equity                                                                                                                                                                     | F-21       
|Consolidated Statements of Cash Flows                                                                                                                                                                            | F-22       
|Notes to the Consolidated Financial Statements                                                                                                                                                                   | F-24 - F-53
|                                                                                                                                                                                                                 |            
|Unaudited Pro Forma Condensed Combined Financial Statements                                                                                                                                                      |            
|Pro Forma Condensed Combined Balance Sheet                                                                                                                                                                       | F-56       
|Pro Forma Condensed Combined Income Statement                                                                                                                                                                    | F-58       





F-1







REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Audit Committee of the

Board of Directors and Shareholders of

Aquasition Corp.



We have audited the accompanying balance
sheets of Aquasition Corp. (a company in the development stage) (the “Company”) as of December 31, 2013 and 2012,
and the related statements of operations, changes in stockholders’ equity and cash flows for the year ended December 31,
2013, the period from January 26, 2012 (inception) through December 31, 2012 and for the period from January 26, 2012 (inception)
through December 31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility
is to express an opinion on these financial statements based on our audit.



We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. 
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, 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.  An audit also includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We
believe that our audits provide a reasonable basis for our opinion.



In our opinion, the financial statements
referred to above present fairly, in all material respects, the financial position of Aquasition Corp. (a company in the development
stage) as of December 31, 2013 and 2012, and the results of its operations and its cash flows for the year ended December 31,
2013, for the period from January 26, 2012 (inception) through December 31, 2012 and for the period from January 26, 2012 (inception)
through December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.



The accompanying financial statements
have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements,
the Company has no present revenue, and the Company’s cash and working capital as of December 31, 2013 are not sufficient
to complete its planned activities for the upcoming year. These conditions raise substantial doubt about the Company’s ability
to continue as a going concern. Management’s plans regarding these matters are also included in Note 1. The financial statements
do not include any adjustments that might result from the outcome of this uncertainty.



/s/Marcum llp



Marcum LLP

New York, NY

May 15, 2014



F-2







Aquasition
Corp.

(A Company
in the Development Stage)



BALANCE SHEETS



|                                                                                                                                                                                            |  | December 31, |           
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ----------
|                                                                                                                                                                                            |  | 2013         |           
|ASSETS                                                                                                                                                                                      |  |              |           
|Current Assets:                                                                                                                                                                             |  |              |           
|Cash and cash equivalents                                                                                                                                                                   |  | $            | 27,918    
|Prepaid expenses                                                                                                                                                                            |  |              | 14,732    
|Interest on cash held in trust account                                                                                                                                                      |  |              | 7,972     
|Total Current Assets                                                                                                                                                                        |  |              | 50,622    
|Investments held in trust                                                                                                                                                                   |  |              | 57,168,785
|Total Assets                                                                                                                                                                                |  | $            | 57,219,407
|                                                                                                                                                                                            |  |              |           
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                        |  |              |           
|Current Liabilities:                                                                                                                                                                        |  |              |           
|Accounts payable and accrued expenses (includes related party
    payable of $105,000 and $15,000 at December 31, 2013 and 2012, respectively)                                              |  | $            | 131,763   
|Accrued offering costs                                                                                                                                                                      |  |              | -         
|Loan payable - related party                                                                                                                                                                |  |              | -         
|Advances from related party                                                                                                                                                                 |  |              | 69,904    
|Total Current Liabilities                                                                                                                                                                   |  |              | 201,667   
|Warrant liability                                                                                                                                                                           |  |              | 3,432,440 
|Total Liabilities                                                                                                                                                                           |  |              | 3,634,107 
|                                                                                                                                                                                            |  |              |           
|Commitment and Contingencies                                                                                                                                                                |  |              |           
|                                                                                                                                                                                            |  |              |           
|Common stock subject to possible redemption or tender: 4,995,000 shares at redemption
    value                                                                                             |  |              | 51,448,500
|                                                                                                                                                                                            |  |              |           
|Stockholders' Equity:                                                                                                                                                                       |  |              |           
|Preferred stock, $0.0001 par value; 5,000,000 shares authorized; none issued and
    outstanding                                                                                            |  |              | -         
|Common stock, $0.0001 par value; 150,000,000 shares authorized; 2,310,500 shares
    issued and outstanding at December 31, 2013 and 2012, excluding 4,995,000 shares subject to redemption |  |              | 231       
|Additional paid-in capital                                                                                                                                                                  |  |              | 5,621,277 
|Deficit accumulated during the development stage                                                                                                                                            |  |              | (3,484,708
|Total Stockholders' Equity                                                                                                                                                                  |  |              | 2,136,800 
|Total Liabilities and Stockholders' Equity                                                                                                                                                  |  | $            | 57,219,407



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



F-3







Aquasition
Corp.

(A Company
in the Development Stage)



STATEMENTS
OF OPERATIONS



|                                                                            |  |                       |           |   | Period from           |   |            | Period from           | 
|--------------------------------------------------------------------------- |  | --------------------- | --------- | - | --------------------- | - | ---------- | --------------------- | 
|                                                                            |  |                       |           |   | January 26, 2012      |   |            | January 26, 2012      | 
|                                                                            |  | Year Ended            |           |   | (inception) through   |   |            | (inception) through   | 
|                                                                            |  | December
    31, 2013 |           |   | December
    31, 2012 |   |            | December
    31, 2013 | 
|Operating expenses:                                                         |  |                       |           |   |                       |   |            |                       | 
|General
    and administrative expenses (1)                                 |  | $                     | 338,521   |   |                       | $ | 48,388     |                       | 
|Loss from operations                                                        |  |                       | (338,521  | ) |                       |   | (48,388    | )                     | 
|                                                                            |  |                       |           |   |                       |   |            |                       | 
|Other income (expense):                                                     |  |                       |           |   |                       |   |            |                       | 
|Interest income                                                             |  |                       | 7,972     |   |                       |   | 3,785      |                       | 
|Change in fair value of warrants                                            |  |                       | (45,442   | ) |                       |   | (3,064,114 | )                     | 
|Total other expense, net                                                    |  |                       | (37,470   | ) |                       |   | (3,060,329 | )                     | 
|                                                                            |  |                       |           |   |                       |   |            |                       | 
|Net loss                                                                    |  | $                     | (375,991  | ) |                       | $ | (3,108,717 | )                     | 
|                                                                            |  |                       |           |   |                       |   |            |                       | 
|Weighted average number of common shares outstanding, basic
    and diluted |  |                       | 2,310,500 |   |                       |   | 1,548,405  |                       | 
|Net loss per common share outstanding, basic and diluted                    |  | $                     | (0.16     | ) |                       | $ | (2.01      | )                     | 



| | (1) | Includes
                                         related party expenses of $90,000, $15,000 and $105,000 for the year ended December 31,
                                         2013, the period from January 26, 2012 (inception) through December 31, 2012 and the
                                         period from January 26, 2012 (inception) through December 31, 2013, respectively.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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





F-4







Aquasition
Corp.

(A Company
in the Development Stage)



STATEMENTS
OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Period
from January 26, 2012 (Inception) to December 31, 2013



|                                                                                            |  | Common Stock |            |   | Additional Paid- |   |      | Deficit Accumulated During the
    Development |  |   | Total Stockholders' |  
|------------------------------------------------------------------------------------------- |  | ------------ | ---------- | - | ---------------- | - | ---- | ---------------------------------------------- |  | - | ------------------- | -
|                                                                                            |  | Shares       |            |   | Amount           |   |      | in Capital                                     |  |   | Stage               |  
|Sale on March 15, 2012 of common stock to Founders at $0.02 per share                       |  |              | 1,437,500  |   |                  | $ | 144  |                                                |  | $ | 24,856              |  
|Sale on November 1, 2012 of 5,000,000 units at $10.00 per unit                              |  |              | 5,000,000  |   |                  |   | 500  |                                                |  |   | 49,999,500          |  
|Proceeds from private placement of 337,750 units on November 1, 2012 at $10.00
    per unit |  |              | 337,750    |   |                  |   | 34   |                                                |  |   | 3,377,466           |  
|Sale on November 7, 2012 of 550,000 units at $10.00 per unit                                |  |              | 550,000    |   |                  |   | 55   |                                                |  |   | 5,499,945           |  
|Warrant liability recorded on November 7, 2012                                              |  |              | -          |   |                  |   | -    |                                                |  |   | (322,884            | )
|Underwriters' discount and offering expenses                                                |  |              | -          |   |                  |   | -    |                                                |  |   | (1,812,208          | )
|Sale on November 1, 2012 of underwriters unit purchase option                               |  |              | -          |   |                  |   | -    |                                                |  |   | 100                 |  
|Proceeds from private placement of 30,250 units on November 7, 2012 at $10.00 per
    unit  |  |              | 30,250     |   |                  |   | 3    |                                                |  |   | 302,497             |  
|Proceeds subject to possible redemption of 4,500,000 shares on November 1, 2012             |  |              | (4,500,000 | ) |                  |   | (450 | )                                              |  |   | (46,349,550         | )
|Proceeds subject to possible redemption of 495,000 shares on November 7, 2012               |  |              | (495,000   | ) |                  |   | (50  | )                                              |  |   | (5,098,450          | )
|Forfeiture of common stock issued to Founders on December 15, 2012                          |  |              | (50,000    | ) |                  |   | (5   | )                                              |  |   | 5                   |  
|Net loss for the period from January 26, 2012 to December 31, 2012                          |  |              | -          |   |                  |   | -    |                                                |  |   | -                   |  
|Balance as of December 31, 2012                                                             |  |              | 2,310,500  |   |                  |   | 231  |                                                |  |   | 5,621,277           |  
|Net loss                                                                                    |  |              |            |   |                  |   |      |                                                |  |   |                     |  
|Balance as of December 31, 2013                                                             |  |              | 2,310,500  |   |                  | $ | 231  |                                                |  | $ | 5,621,277           |  



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



F-5







Aquasition
Corp.

(A Company
in the Development Stage)



STATEMENTS
OF CASH FLOWS



|                                                                                |  |                       |          |   | Period from           |   |             | Period from           | 
|------------------------------------------------------------------------------- |  | --------------------- | -------- | - | --------------------- | - | ----------- | --------------------- | 
|                                                                                |  |                       |          |   | January 26, 2012      |   |             | January 26, 2012      | 
|                                                                                |  | Year Ended            |          |   | (inception) through   |   |             | (inception) through   | 
|                                                                                |  | December
    31, 2013 |          |   | December
    31, 2012 |   |             | December
    31, 2013 | 
|                                                                                |  |                       |          |   |                       |   |             |                       | 
|Cash Flows from operating activities:                                           |  |                       |          |   |                       |   |             |                       | 
|Net loss                                                                        |  | $                     | (375,991 | ) |                       | $ | (3,108,717  | )                     | 
|Adjustments to reconcile net loss to net cash used in operating
    activities: |  |                       |          |   |                       |   |             |                       | 
|Change in fair value of warrant liability                                       |  |                       | 45,442   |   |                       |   | 3,064,114   |                       | 
|Interest reinvested into Trust Account                                          |  |                       | (7,972   | ) |                       |   | (3,785      | )                     | 
|Changes in operating assets and liabilities:                                    |  |                       |          |   |                       |   |             |                       | 
|Prepaid expenses                                                                |  |                       | (14,732  | ) |                       |   |             |                       | 
|Accounts payable and accrued expenses                                           |  |                       | 110,041  |   |                       |   | 21,722      |                       | 
|Net cash used in operating activities                                           |  |                       | (243,212 | ) |                       |   | (26,666     | )                     | 
|                                                                                |  |                       |          |   |                       |   |             |                       | 
|Cash flows from investing activities:                                           |  |                       |          |   |                       |   |             |                       | 
|Principal deposited in Trust Account                                            |  |                       | -        |   |                       |   | (57,165,000 | )                     | 
|Net cash used in investing activities                                           |  |                       | -        |   |                       |   | (57,165,000 | )                     | 
|                                                                                |  |                       |          |   |                       |   |             |                       | 
|Cash flows from financing activities:                                           |  |                       |          |   |                       |   |             |                       | 
|Proceeds from sale of common stock to sponsor                                   |  |                       | -        |   |                       |   | 25,000      |                       | 
|Proceeds from loan payable - related party                                      |  |                       | -        |   |                       |   | 85,650      |                       | 
|Repayment of loan payable - related party                                       |  |                       | (35,650  | ) |                       |   | (50,000     | )                     | 
|Advance from related party                                                      |  |                       | 50,650   |   |                       |   | 95,934      |                       | 
|Repayment of advance from related party                                         |  |                       | -        |   |                       |   | (76,680     | )                     | 
|Net proceeds from public offering                                               |  |                       | -        |   |                       |   | 53,759,897  |                       | 
|Proceeds from underwriters unit purchase option                                 |  |                       | -        |   |                       |   | 100         |                       | 
|Gross proceeds from private placement                                           |  |                       | -        |   |                       |   | 3,680,000   |                       | 
|Payment of offering costs                                                       |  |                       | (72,105  | ) |                       |   | -           |                       | 
|Net cash (used in) provided by financing
    activities                         |  |                       | (57,105  | ) |                       |   | 57,519,901  |                       | 
|                                                                                |  |                       |          |   |                       |   |             |                       | 
|Increase in cash during period                                                  |  |                       | (300,317 | ) |                       |   | 328,235     |                       | 
|Cash at beginning of period                                                     |  |                       | 328,235  |   |                       |   | -           |                       | 
|Cash at end of period                                                           |  | $                     | 27,918   |   |                       | $ | 328,235     |                       | 
|                                                                                |  |                       |          |   |                       |   |             |                       | 
|Supplemental disclosure of non-cash financing activities:                       |  |                       |          |   |                       |   |             |                       | 
|Accrued offering cost                                                           |  | $                     | -        |   |                       | $ | 72,105      |                       | 



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





F-6







Aquasition
Corp.

(A Company
in the Development Stage)

NOTES TO
FINANCIAL STATEMENTS

DECEMBER
31, 2013 AND 2012



Note 1 - Organization, Plan of
Business Operations and Liquidity



Aquasition
Corp. (a development stage company) (the “Company”) was incorporated in the Marshall Islands on January 26, 2012 as
a blank check company whose objective is to acquire, through a merger, capital stock exchange, asset acquisition, stock purchase
or other similar acquisition transaction, one or more operating businesses or assets (an “Acquisition Transaction”).
The Company’s initial Acquisition Transaction is not limited to any specific geographic region or industry. However, the
Company intends to focus on operating businesses and assets in the international maritime transportation, offshore and related
maritime services industries, especially those requiring energy, commodity, and transportation of logistics expertise. See Note
8 for a discussion of the share exchange agreement entered into on March 24, 2014.



The
accompanying financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles
generally accepted in the United States of America (“GAAP”) and pursuant to the accounting and disclosure rules and
regulations of the U.S. Securities and Exchange Commission (the “SEC”). The Company is a foreign private issuer (“FPI”),
as defined by the rules and regulations of the SEC.



As of December
31, 2013, the Company had not yet commenced operations. All activity through November 1, 2012 relates to the Company’s formation
and the public offering as described below. Subsequent to November 1, 2012, the Company is seeking to identify acquisition targets.



The
Company is considered to be a development stage company and, as such, the Company’s financial statements are prepared in
accordance with the Accounting Standards Codification (“ASC”) Topic 915 “Development Stage Entities.”
The Company is subject to the risks associated with development stage companies.



The
registration statement for the Company’s initial public offering (“Public Offering”) was declared effective
on October 25, 2012. On November 1, 2012, the Company consummated the Public Offering and received proceeds, net of underwriter’s
discount and offering expenses, of $48,187,792 and simultaneously received $3,377,500 from the issuance of 337,750 units (“Placement
Units”) in a private placement (the “Private Placement”) (See Note 3).



The Company granted
the underwriter in the Public Offering a 45-day option to purchase up to an additional 750,000 units (“Units”) solely
to cover over-allotments, if any. On November 7, 2012, the underwriters exercised a portion of their option and the Company sold
an additional 550,000 Units at a price of $10.00 per Unit, generating gross proceeds of $5,500,000. In addition, the Company sold
an additional 30,250 Private Placement Units, generating gross proceeds of $302,500.



The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering
and the Private Placement, although substantially all of the net proceeds are intended to be applied generally toward consummating
an Acquisition Transaction. There is no assurance that the Company will be able to affect an Acquisition Transaction successfully.
Upon the closing of the Public Offering, $57,165,000 ($10.30 per public share sold), including the proceeds of the Private Placement,
was placed in a trust account (the “Trust Account”) and will be invested in United States government treasury bills
having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the
Investment Company Act of 1940, as amended, that invest solely in U.S. treasuries until the earlier of the consummation of the
Company’s initial Acquisition Transaction and the Company’s failure to consummate an Acquisition Transaction within
the prescribed time.



Placing
funds in the Trust Account may not protect those funds from third party claims against the Company. Although the Company will
seek to have all vendors, service providers, prospective target businesses or other entities it engages, execute agreements with
the Company waiving any claim of any kind in or to any monies held in the Trust Account, there is no guarantee that such persons
will execute such agreements. The Company’s sponsor, officers and director’s (collectively referred to as the “Founders”)
have agreed that they will be jointly and severally liable under certain circumstances to ensure that the proceeds in the Trust
Account are not reduced by the claims of target businesses or vendors or other entities that are owed money by the Company for
services rendered, contracted for or products sold to the Company. However, they may not be able to satisfy those obligations
should they arise. The remaining net proceeds (not held in the Trust Account) may be used to pay for business, legal and accounting
due diligence on prospective acquisitions and continuing general and administrative expenses. In addition, (1) interest income
on the funds held in the Trust Account can be released to the Company to pay its income and other tax obligations and (2) interest
income on the funds held in the Trust Account can be released to the Company to pay for its working capital requirements in connection
with searching for an Acquisition Transaction.



F-7







Aquasition
Corp.

(A Company
in the Development Stage)

NOTES TO
FINANCIAL STATEMENTS

DECEMBER
31, 2013 AND 2012



The
Company’s units are listed on the Nasdaq Capital Market (“Nasdaq”). Pursuant to the Nasdaq listing rules, the
target business or businesses that the Company completes an Acquisition Transaction with must collectively have a fair market
value equal to at least 80% of the balance of the funds in the Trust Account (less deferred underwriting discounts and taxes)
at the time of the execution of a definitive agreement for its initial Acquisition Transaction, although the Company may acquire
a target business whose fair market value significantly exceeds 80% of the Trust Account balance.



The
Company was required to determine if it was a FPI under Rule 3b4(d) of the Exchange Act, as of a date within 30 days of the filing
of the Registration Statement with the SEC for the Public Offering. The Company determined it was a FPI prior to the filing of
the Registration Statement. As a FPI, the Company will be required to comply with the tender offer rules in connection with its
initial Acquisition Transaction. The Company is required to determine its status as a FPI on an ongoing basis for all subsequent
fiscal years as of the last day of its most recently completed second fiscal quarter. On such date, if the Company no longer qualifies
as a FPI (as set forth in Rule 3b4 of the Exchange Act), the Company will then become subject to the U.S. domestic issuer rules
as of the first day of its fiscal year following the determination date.



The
Company, after signing a definitive agreement for the acquisition of a target business, is required to provide shareholders who
acquired shares in the Public Offering (“Public Shareholders”) with the opportunity to sell their public shares to
the Company for a pro rata share of the Trust Account by means of a tender offer (or it may have the option of conducting redemptions
in conjunction with a proxy solicitation pursuant to the proxy rules if the Company is no longer a FPI). Each Public Shareholder
will be entitled to receive a full pro rata portion of the amount then in the Trust Account ($10.30 per share, plus any pro rata
interest earned on the funds held in the Trust Account and not previously released to the Company or necessary to pay its taxes).
The Company will consummate an initial Acquisition Transaction only if holders of no more than 90% of the public shares elect
to convert (in the case of a shareholder meeting) or sell their shares to the Company (in the case of a tender offer) and, solely
if the Company seeks shareholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the
Acquisition Transaction. Notwithstanding the foregoing, the Amended and Restated Articles of Incorporation of the Company provides
that a Public Shareholder, together with any other person with whom such Public Shareholder is acting in concert or as a “group”
(within the meaning of Section 13 of the Securities Act of 1934, as amended), will be restricted from seeking conversion rights
with respect to an aggregate of more than 20% of the shares of common stock sold in the Public Offering. A group will be deemed
to exist if the Public Shareholder (i) files a Schedule 13D or 13G indicating the presence of a group or (ii) acknowledge to the
Company that they are acting, or intend to act as a group. In connection with any stockholder vote required to approve an Acquisition
Transaction, the Founders agreed (1) to vote any of their shares in the same manner as a majority of the Public Shareholders who
vote at a meeting called for such purpose and (2) not to redeem any of their shares. In connection with a tender offer, the Founders
will not sell any of their shares to the Company pursuant to any tender offer described above. In addition, the Founders or any
of their affiliates have agreed that if they acquire any shares of common stock in or after the Public Offering, they will vote
all such shares in favor of any Acquisition Transaction presented to the Company’s stockholders by the board of directors,
and not to exercise any redemption rights in connection with any shares of common stock held by such person.



The
Company’s Amended and Restated Articles of Incorporation provide that the Company will continue in existence only until
May 1, 2014 (or August 1, 2014 if certain extension criteria are satisfied). If the Company has not completed an Acquisition Transaction
by such date, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible
release to the Public Shareholders, the aggregate amount then on deposit in the Trust Account, including any interest and the
deferred underwriters discount but net of any taxes payable and any remaining net assets, and (iii) as promptly as possible dissolve
and liquidate, subject (in the case of (ii) and (iii) above) to the Company’s obligations under Marshall Islands law to
provide for claims of creditors and requirements of other applicable law. In such event, the Public Shareholders will be entitled
to receive a pro rata portion of the Trust Account (initially $10.30 per share, plus any pro rata interest earned on the funds
held in the Trust Account not previously released to the Company).



The
Company anticipates that in order to fund its working capital requirements, the Company will need to use all of the remaining
funds not held in the Trust Account, the interest earned on the funds held in the Trust Account, as well as entering into contingent
fee arrangements with its vendors. The Company will need to raise additional capital through loans or additional investments from
its Founders or third parties. None of the Founders are under any obligation to advance funds to, or to invest in, the Company.
Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital,
it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to,
curtailing operations, suspending the pursuit of its business plan, and reducing overhead expenses. The Company cannot provide
any assurance that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial
doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments
that might result from the outcome of these uncertainties.



F-8







Aquasition
Corp.

(A Company
in the Development Stage)

NOTES TO
FINANCIAL STATEMENTS

DECEMBER
31, 2013 AND 2012



Note 2 -
Significant Accounting Policies



Cash
and Cash Equivalents



The
Company considers all short-term investments with a maturity of three months or less when purchased to be cash equivalents.



Investment
Held in Trust



The
amounts held in the Trust Account represent substantially all of the proceeds of the Public Offering and are classified as restricted
assets since such amounts can only be used by the Company in connection with the consummation of an Acquisition Transaction. The
funds held in the Trust Account are invested primarily in highly liquid treasury bills.



Loss
Per Share



Basic
loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the
period. Shares of common stock subject to possible redemption at December 31, 2013 and 2012 of 4,995,000 have been excluded from
the calculation of basic loss per share since such shares, if redeemed, only participate in their pro rata share of the trust
earnings. Loss per share assuming dilution would give effect to dilutive options, warrants, and other potential shares of common
stock outstanding during the period. The Company has not considered the effect of warrants to purchase 5,918,000 shares of common
stock and an option to purchase 250,000 units in the calculation of diluted loss per share, since the exercise of the warrants
and the option is contingent upon the occurrence of future events.



Use
of Estimates



The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting period.



Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect
of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered
in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual
results could differ significantly from our estimates. Significant estimates include the valuation of the warrant liability
and the value of the common stock subject to possible redemption or tender.



Concentration of Credit
Risk



Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,
which at times may exceed the Federal depository insurance coverage of $250,000. As of December 31, 2013, the Company has not
experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.



Income
Taxes



The
Company accounts for income taxes under ASC 740, “Income Taxes” (‘‘ASC 740’’). ASC 740 requires
the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements
and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry
forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a
portion of deferred tax assets will not be realized.



ASC
740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and
prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not
to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest
and penalties, accounting in interim period, disclosure and transition. The Company has identified the Marshall Islands as its
only ‘‘major’’ tax jurisdiction, as defined. Based on the Company’s evaluation, it has been concluded
that there are not significant uncertain tax positions requiring recognition in the Company’s financial statements. The
Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments
that would result in a material changes to its financial position.



F-9







Aquasition
Corp.

(A Company
in the Development Stage)

NOTES TO
FINANCIAL STATEMENTS

DECEMBER
31, 2013 AND 2012



The Company’s
policy for recording interest and penalties associated with audits is to record them at such times as a component of income tax
expense. There were no amounts accrued for penalties or interest as of or during the year ended December 31, 2013 and the period
from January 26, 2012 (inception) through December 31, 2012. Management is currently unaware of any issues under review that could
result in significant payments, accruals or material deviations from its position.



The
Company’s tax returns from inception are open and subject to examination.



Common
Stock subject to possible Redemption or Tender



There
are 4,995,000 shares of common stock sold as part of units (the “Units”) issued in the Public Offering, which shares
contained a redemption feature which allowed for the redemption of shares of common stock under the Company's Liquidation or Tender
Offer/Stockholder Approval provisions. In accordance with ASC 480, “Distinguishing Liabilities from Equity” (“ASC
480”) redemption provisions not solely within the control of the Company require the security to be classified outside of
permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity's equity instruments,
are excluded from the provisions of ASC 480. Although the Company did not specify a maximum redemption threshold, its Amended
and Restated Articles of Incorporation provides that in no event will they redeem its public shares in an amount that would cause
its net tangible assets (stockholders’ equity) to be less than $5,000,001. The Company will consummate an initial Acquisition
Transaction only if holders of no more than 90% of the public shares elect to convert (in the case of a shareholder meeting) or
sell their shares to the Company (in the case of a tender offer) and, solely if the Company seeks shareholder approval, a majority
of the outstanding shares of common stock voted are voted in favor of the Acquisition Transaction.



Accordingly,
at December 31, 2013 and 2012, 4,995,000 of the 5,500,000 public shares were classified outside of permanent equity at its redemption
value because the redemption rights are subject to the occurrence of uncertain events that are outside of the Company’s
control. The redemption value at December 31, 2013 was equal to approximately the pro rata share of the aggregate amount then
on deposit in the Trust Account ($10.30 per share at December 31, 2013 and 2012).



Fair
Value of Financial Instruments



Unless
otherwise disclosed, the fair value of the Company’s assets and liabilities, which qualify as financial instruments under
ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), approximates the carrying amounts represented
in the accompanying balance sheets.



Recent
Accounting Pronouncements



Management
does not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material
effect on the Company’s financial statements.



Subsequent
Events



Management
has evaluated subsequent events that have occurred after the balance sheet date through the date the financial statements were
publically available to determine if events or transactions occurring after the balance sheet date require potential adjustment
to or disclosure in the financial statements and has concluded that no subsequent events have occurred that would require recognition
in the financial statements or disclosure in the notes to the financial statements, except as described in Note 8.



Warrant
Liability



The Company accounts
for the 5,550,000 warrants issued in connection with the Public Offering and the 368,000 warrants issued in connection with the
Private Placement in accordance with the guidance contained in ASC 815, “Derivatives and Hedging,” whereby under that
provision they do not meet the criteria for equity treatment and must be recorded as a liability. Accordingly, the Company classifies
the warrant instruments as a liability at its fair value and adjusts the instruments to fair value at each reporting period. This
liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized
in the Company’s statement of operations.



F-10







Aquasition
Corp.

(A Company
in the Development Stage)

NOTES TO
FINANCIAL STATEMENTS

DECEMBER
31, 2013 AND 2012



Note 3 -
Initial Public Offering



On
November 1, 2012, the Company sold 5,000,000 Units at an offering price of $10.00 per Unit generating gross proceeds of $50,000,000
in the Public Offering. Each Unit consists of one share of common stock of the Company and one warrant to purchase one share of
common stock of the Company (“Redeemable Warrants”). Each Redeemable Warrant entitles the holder to purchase one share
of common stock at a price of $11.50 commencing on the later of the completion of an initial Acquisition Transaction and October
24, 2013 and expiring five years from the completion of an initial Acquisition Transaction, provided that there is an effective
registration statement covering the shares of common stock underlying the Redeemable Warrants. The Company may redeem the Redeemable
Warrants at a price of $0.01 per Redeemable Warrant upon 30 days’ notice, only in the event that the last sale price of
the common stock is at least $17.50 per share for any 20 trading days within a 30-trading day period (“30-Day Trading Period”)
ending on the third day prior to the date on which notice of redemption is given, provided that there is a current registration
statement in effect with respect to the shares of common stock underlying such Redeemable Warrants commencing ten days prior to
the 30-Day Trading Period and continuing each day thereafter until the date of redemption. The Company is required to use its
best efforts to maintain the effectiveness of the registration statement covering the Redeemable Warrants. However, there are
no contractual penalties for failure to deliver securities if a registration statement is not effective at the time of exercise.
Additionally, in the event that a registration statement is not effective at the time of exercise, the holder of such Redeemable
Warrant shall not be entitled to exercise such Redeemable Warrant for cash and in no event (whether in the case of a registration
statement not being effective or otherwise) will the Company be required to net cash settle the Redeemable Warrant exercise.



Simultaneously
with the consummation of the Public Offering, the Company consummated the Private Placement with the sale of 337,750 Placement
Units to its Founders at a price of $10.00 per share, generating total proceeds of $3,377,500. The Placement Units are identical
to the Units sold in the Public Offering except that the warrants included in the Placement Units (i) will not be redeemable by
the Company and (ii) may be exercised for cash or on a cashless basis, so long as they are held by the initial purchaser or any
of its permitted transferees. Additionally, the Placement Units have been placed in escrow and the purchasers have agreed not
to transfer, assign or sell any of the Placement Units, including the underlying securities (except to certain permitted transferees)
until 30 days following the completion of an initial Acquisition Transaction. The securities held in the escrow account will only
be released prior to the end of the escrow period if following the initial Acquisition Transaction, the Company consummates a
subsequent transaction that results in all stockholders having a right to exchange their shares for cash or other consideration.



The
Company sold to the underwriter, for $100, an option to purchase up to 250,000 units at $12.50 per unit. The units issuable upon
exercise of this option are identical to those sold in the Public Offering except that the underlying warrants will expire on
October 25, 2017. The underwriter’s unit purchase option will be exercisable starting on the later of the completion of
an initial Acquisition Transaction and October 24, 2013 and expiring on October 24, 2017. The Company accounted for the fair value
of the unit purchase option, inclusive of the receipt of $100 cash payment, as an expense of the Public Offering resulting in
a charge directly to stockholders’ equity. The Company estimated that the fair value of this unit purchase option is approximately
$617,960 (or $2.47 per unit) using a Black-Scholes option-pricing model. The fair value of the unit purchase option granted to
the underwriter was estimated as of the date of grant using the following assumptions: (1) expected volatility of 35%, (2) risk-free
interest rate of 1.05% and (3) expected life of five years. The unit purchase option may be exercised for cash or on a cashless
basis, at the holder’s option, such that the holder may use the appreciated value of the unit purchase option (the difference
between the exercise prices of the unit purchase option and the underlying Redeemable Warrants and the market price of the Units
and underlying shares of common stock) to exercise the unit purchase option without the payment of any cash. The Company has the
right to redeem the unit purchase option, in whole but not in part, in the event the Company’s shares of common stock trade
in excess of $18.00 for any 20 trading days in a 30-day period following the completion of an initial Acquisition Transaction.
If upon completion of an Acquisition Transaction, the Founders are required to cancel any Founder’s shares or Placement
Units, and such securities are not replaced following the Acquisition Transaction, the number of units that may be purchased upon
the exercise of the unit purchase option will be reduced on a pro-rata basis with the reduction in Founder’s shares and
Placement Units.



The
Company granted the underwriter in the Public Offering a 45-day option to purchase up to an additional 750,000 Units solely to
cover over-allotments, if any. On November 7, 2012, the underwriters exercised a portion of their option and the Company sold
an additional 550,000 Units at a price of $10.00 per Unit generating gross proceeds of $5,500,000. In addition, the Company sold
an additional 30,250 Private Placement Units generating gross proceeds of $302,500.



Note 4 - Commitments



The
Founder and holders of the Private Placement Units (or underlying shares of common stock) are entitled to demand certain registration
rights with respect to the Founders’ shares and the Private Placement Units (or underlying shares of common stock) as well
as any other warrants that may be issued to them (or underlying shares of common stock) pursuant to an agreement signed on the
October 25, 2012.



F-11







Aquasition
Corp.

(A Company
in the Development Stage)

NOTES TO
FINANCIAL STATEMENTS

DECEMBER
31, 2013 AND 2012



The
Company entered into an underwriting agreement with the underwriter of the Public Offering (the “Underwriting Agreement”).
Pursuant to the Underwriting Agreement, the Company paid 2.5% of the gross proceeds of the Public Offering or $1,387,500 as underwriting
discounts and commissions upon closing of the Public Offering. The Company will also pay the underwriter in the Public Offering
a deferred underwriting discount of 2.5% of the gross proceeds of the Public Offering which is held in the Trust Account. The
Underwriters will not receive their portion of their deferred underwriting discount related to redeemed or converted shares in
connection with an Acquisition Transaction.



The
Company presently occupies office space provided by Seacrest Shipping Co. Ltd., an affiliate of the Founders. Such affiliate has
agreed that, until the Company consummates an Acquisition Transaction, it will make such office space, as well as certain office
and secretarial services, available to the Company, as may be required by the Company from time to time. The Company has agreed
to pay such affiliate $7,500 per month for such services commencing on November 1, 2012, provided however, that such affiliate
has agreed that after four months the monthly fee will begin to accrue and will only be payable thereafter upon completion of
an Acquisition Transaction. The Company incurred rent expense of $90,000 and $15,000 under this arrangement for the year ended
December 31, 2013 and for the period from January 26, 2012 (inception) through December 31, 2012, respectively, which is included
in general and administrative expenses in the accompanying statements of operations. The Company had an accrued related party
expense balance under this arrangement of $105,000 and $15,000 as of December 31, 2013 and 2012, respectively, which is included
in accounts payable and accrued expenses in the accompanying balance sheets.





Finder’s and Financial Services Agreements



On September 10, 2013, Aquasition entered
into a Master Finder’s Fee Agreement (as amended from time to time, the “Finder’s Agreement”) with SNV
Global Ltd. (“SNV”), pursuant to which SNV agreed to provide introductions to potential target companies to Aquasition,
including KBS, among other services. Pursuant to an addendum to the Finder’s Agreement, dated February 26, 2014, the parties
agreed that SNV would be entitled to a finder’s fee equal to 1.5% of the pre-closing equity value of Target to be paid in
newly issued shares of the combined company, payable if, and only if, an acquisition transaction with an introduced target is
completed.



On May 8, 2014, Aquasition entered into
an agreement (the “STRH Agreement”) with SunTrust Robinson Humphery, Inc. (“STRH”), pursuant to which
STRH will provide Aquasition certain financial advisory services in connection with the Acquisition. Pursuant to the STRH Agreement,
STRH will be entitled to a cash fee equal to $1,250,000 upon completion of an acquisition transaction prior to August 1, 2014
or during the term of STRH’s engagement. If an acquisition transaction is not completed within such period, then for a period
of 24 months thereafter, if Aquasition is entitled to a breakup fee related to an acquisition transaction, then STRH will be entitled
to 10% of any such breakup fee. In addition, Aquasition will reimburse STRH its out-of-pocket expenses related to the STRH Agreement,
up to a maximum of $50,000.



On May 12, 2014, Aquasition entered into
an agreement (the “EBC Agreement”) with Early Bird Capital, Inc. (“EBC”), pursuant to which EBC will provide
Aquasition certain financial advisory services in connection with the Acquisition. Pursuant to the EBC Agreement, EBC will be
entitled to a cash fee equal to $200,000, equity fee in the amount of 35,000 newly issued shares of the combined company, and
an additional fee equal to 4% of the amount of the gross proceeds held in the trust account at closing of the Acquisition (excluding
amounts attributable to Aquasition’s sponsors or investors introduced by such sponsors), all payable upon closing of the
Acquisition. In addition, Aquasition will reimburse EBC its out-of-pocket expenses related to the EBC Agreement.





Note 5 - Stockholders Equity



Preferred
Stock



The
Company is authorized to issue 5,000,000 preferred shares with a par value of $0.0001 per share with such designation, rights
and preferences as may be determined by the Company’s board of directors. No preferred shares are currently issued or outstanding.



Common
Stock



The
Company is authorized to issue 150,000,000 shares of common stock with a par value of $0.0001 per share.



In connection with
the organization of the Company on March 15, 2012, a total of 1,437,500 shares of common stock were sold to the Founders at a
price of approximately $0.02 per share for an aggregate of $25,000 (the “Initial Shares”). All of these shares were
placed into an escrow account. Subject to certain limited exceptions, these shares will not be released from escrow until one
year after the date of the consummation of an initial Acquisition Transaction or earlier if, subsequent to the Company’s
initial Acquisition Transaction, the Company consummates a subsequent liquidation, merger, share exchange or other similar transaction
which results in all of the Company’s shareholders having the right to exchange their shares of common stock for cash, securities
or other property. The securities held in the escrow account will only be released prior to the end of the escrow period if following
an Acquisition Transaction the Company consummates a subsequent transaction that results in all stockholders having a right to
exchange their shares for cash or other consideration.



On December 15, 2012,
50,000 shares of common stock were forfeited because the underwriter’s over-allotment option was not fully exercised.



F-12







Aquasition
Corp.

(A Company
in the Development Stage)

NOTES TO
FINANCIAL STATEMENTS

DECEMBER
31, 2013 AND 2012



Note 6 - Loan Payable –
Related Party and Advance from Related Party



On
February 27, 2012, the Company issued an aggregate of $85,650 unsecured promissory notes to its officers and directors. The notes
were non-interest bearing and payable on December 31, 2012. In addition, an officer advanced to the Company an additional $95,934.
Due to the short-term nature of the notes and advances, the fair value of the notes and advances approximates the carrying amount.
Such advances are non-interest bearing and are due on demand. During 2012, the Company repaid $50,000 of the unsecured promissory
note and $76,680 of the advance. During the year ended December 31, 2013, the Company repaid $35,650 of the unsecured promissory
note. During the year ended December 31, 2013, an affiliate advanced the Company $50,650. The advance is non-interest bearing
and is due on demand. As of December 31, 2013 and 2012, amounts owed under the promissory notes are $0 and $35,650, respectively,
and amounts owed under the advances are $69,904 and $19,254, respectively.



Note 7 - Fair Value Measurements



The
Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value
at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.



The fair value
of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would
have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly
transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and
liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to
minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities).
The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable
inputs used in order to value the assets and liabilities:



| | Level 1: | Quoted prices in active markets for identical assets or liabilities. An
    active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient
    frequency and volume to provide pricing information on an ongoing basis.
| | -------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs
    include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities
    in markets that are not active.
| | -------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Level 3: | Unobservable inputs based on our assessment of the assumptions that market
    participants would use in pricing the asset or liability.
| | -------- | ----------------------------------------------------------------------------------------------------------------------------------------



The
following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring
basis as of December 31, 2013 and 2012, and indicates the fair value hierarchy of the valuation inputs the Company utilized to
determine such fair value:



|                         |  |       |  | December 31, |           
|------------------------ |  | ----- |  | ------------ | ----------
|Description              |  | Level |  | 2013         |           
|Assets:                  |  |       |  |              |           
|Investment held in trust |  | 1     |  | $            | 57,168,785
|                         |  |       |  |              |           
|Liabilities:             |  |       |  |              |           
|Warrant liability        |  | 3     |  | $            | 3,432,440 



The
table below provides a reconciliation of the beginning and ending balances for the liabilities measured using fair significant
unobservable inputs (Level 3):



|Balance – January 26, 2012 (inception)                    |  | $ | -         |  
|--------------------------------------------------------- |  | - | --------- | -
|Correction of an error                                    |  |   | 3,109,339 |  
|Issuance of warrants as part of Units on November 7, 2012 |  |   | 322,884   |  
|Change in fair value                                      |  |   | (45,225   | )
|Balance – December 31, 2012                               |  | $ | 3,386,998 |  
|Change in fair value                                      |  |   | (45,442   | )
|Balance – December 31, 2013                               |  | $ | 3,432,440 |  



The fair value of warrants was determined
using a binomial-lattice model. This model requires the input of highly subjective assumptions, including price volatility of
the underlying stock. Changes in the subjective input assumptions can materially affect the estimate of fair value of the warrants
and the Company’s results of operations could be impacted. This model is dependent upon several variables such as the instrument's
expected term, expected strike price, expected risk-free interest rate over the expected instrument term, the expected dividend
yield rate over the expected instrument term and the expected volatility of the Company’s stock price over the expected
term. The expected term represents the period of time that the instruments granted are expected to be outstanding. The expected
strike price is based upon a weighted average probability analysis of the strike price changes expected during the term as a result
of the down round protection.  The risk-free rates are based on U.S. Treasury securities with similar maturities as
the expected terms of the options at the date of valuation.  Expected dividend yield is based on historical trends.  The
Company measures volatility using a blended weighted average of the volatility rates for a number of similar publicly-traded companies.For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company's accounting and finance
department determine valuation policies and procedures. Their determinations are approved by the Chief Financial Officer.



F-13







Aquasition
Corp.

(A Company
in the Development Stage)

NOTES TO
FINANCIAL STATEMENTS

DECEMBER
31, 2013 AND 2012



The inputs to the model were as
follows:



|                         |  | December 31, |      
|------------------------ |  | ------------ | -----
|                         |  | 2013         |      
|                         |  |              |      
|Stock Price              |  | $            | 10.20
|Dividend Yield           |  |              | N/A  
|Risk-free Rate           |  |              | 1.75 
|Expected Term (in years) |  |              | 5.0  
|Expected Volatility      |  |              | 20.5 



Note 8 – Subsequent Events



NASDAQ Notification



On March
20, 2014, the Company received a written notice (“Notice”) from the Listing Qualifications Department of The NASDAQ
Stock Market LLC (“Nasdaq”) indicating that the Company was not in compliance with Listing Rule 5550(a)(3) (the “Rule”),
which requires that the Company maintain a minimum of 300 public holders for the continued listing of its securities on Nasdaq.
Pursuant to the Notice, the Company had until May 5, 2014 to submit a plan to regain compliance with the Rule. If the Staff accepts
the Company’s plan to regain compliance, the Staff can grant an extension of up to 180 calendar days from March 20, 2014
for the Company to demonstrate compliance.



On
May 5, 2014, the Company submitted to Nasdaq the Company’s plan to regain compliance. The Company plans to include a tender
offer as part of its plan to regain compliance and while the tender offer will reduce the number of currently public shares outstanding,
the Company believes that the acquisition described below will increase the total number of shares outstanding. The Company has
not yet received a letter from Nasdaq indicating that it has accepted the Company’s plan to regain compliance.



Share Exchange Agreement and
Plan of Liquidation



On March 24, 2014,
the Company entered into a Share Exchange Agreement and Plan of Liquidation(the “Agreement”),
with KBS International Holdings, Inc., a Nevada corporation (“KBS”), Hongri International Holdings Ltd., a company
organized and existing under the laws of the British Virgin Islands and wholly owned subsidiary of KBS (“Hongri” or
the “Target”); and (d) Cheung So Wa and Chan Sun Keung, each an individual and shareholder of KBS (each, a “Principal
Stockholder”). The aquisition is expected to be accounted for as a reverse merger and recapitalization where KBS will be
the acquirer and the Company will be the acquired company.



Upon the closing of the transactions
contemplated in the Agreement, the Company will acquire 100% of the issued and outstanding equity interest in Target from KBS
in exchange for the transaction consideration consisting of shares of the Company’s common stock (the “Acquisition”).
The number of shares comprising the transaction consideration will be (a) (i) EBITDA multiplied by 6, less (ii) the Long Term
Debt less cash held by Target; divided by (b) $10.30; provided, however, that in no event will the transaction consideration be
less than 80%, by vote or value, of the outstanding capital stock of the Company immediately following the Closing (the “Transaction
Consideration”). The Agreement defines EBITDA as Target’s 2013 standalone and adjusted earnings before interest, taxes,
depreciation and amortization, as calculated based upon the audited Target financial statements for the year ended December 31,
2013, and defines “Long Term Debt” Target’s existing net long-term debt as of one business day before the closing
date of the Acquisition. Upon consummation of the Acquisition, KBS will dissolve and distribute all its assets to its shareholders
in liquidation.



The Agreement provides that immediately
after closing, the Company’s board of directors will consist of seven directors, two of whom will be designated by the Principal
Stockholders, and one of which will be designated by Aquasition Investments Corp., a company incorporated in the Republic of the
Marshall Islands (“AQU Invest”). The remaining four directors will be “independent” and have experience
with public companies listed in the United States. Three of the independent directors will be designated by KBS, and the remaining
independent director will be designated by AQU Invest. Concurrently with the closing, the Company, AQU Invest and the Principal
Stockholders will enter into a voting agreement regarding the election of director designees following the closing, and the Company
will purchase director’s and officer’s insurance.



F-14







Aquasition
Corp.

(A Company
in the Development Stage)

NOTES TO
FINANCIAL STATEMENTS

DECEMBER
31, 2013 AND 2012



Prior to closing the Company will conduct a tender offer (the
“Tender Offer”) for any and all of the shares of common stock underlying the units issued in the Company’s initial
public offering in accordance with the requirements of its Amended and Restated Articles of Incorporation and bylaws. The Company
agreed provide the KBS and the Principal Stockholders (the “Warrantors”) notice of any event or development that would
require amendment of the Tender Offer documents. The Company is required to obtain all necessary consents and authorization to
complete the Acquisition including completion of the tender offer with not more than 90% of such shares tendered in the Tender
Offer. Upon closing, the Company will issue the shares representing the Transaction Consideration, and will take all steps necessary
to distribute the funds held in the Trust Account established in connection with the Company’s IPO in accordance with the
Investment Management Trust Agreement governing the Trust Account. The Company will ensure that at least $10 million is available
to the combined companies, excluding the cash and assets of the Target, as of immediately following the Closing.



Consummation of the Agreement and
the acquisition is conditioned on (a) KBS holding at least 80%, by vote or value, of the outstanding capital stock of the Company
immediately following the closing; (b) no conflict with any applicable law or order; (c) no pending third-party action enjoining
or otherwise restricting the closing; (d) the Tender Offer having been duly completed; and (e) there being one or more valid exemptions
to registration of the issuance of the Transaction Consideration, and dissolution and liquidation of KBS following the closing.



F-15









Hongri
International Holdings Limited



Consolidated
Financial Statements



For
the years ended December 31, 2013 and 2012

(Stated
in US dollars)



F-16







|CONTENTS                                            |  | PAGES      
|--------------------------------------------------- |  | -----------
|                                                    |  |            
|CONSOLIDATED
    STATEMENTS OF COMPREHENSIVE INCOME |  | F-19       
|                                                    |  |            
|CONSOLIDATED
    STATEMENTS OF FINANCIAL POSITION   |  | F-20       
|                                                    |  |            
|CONSOLIDATED
    STATEMENTS OF CHANGES IN EQUITY    |  | F-21       
|                                                    |  |            
|CONSOLIDATED
    STATEMENTS OF CASH FLOWS           |  | F-22 - F-23
|                                                    |  |            
|NOTES
    TO THE CONSOLIDATED FINANCIAL STATEMENTS  |  | F-24– F-53 



F-17







Independent
Auditor’s Report



To:
the Board of Directors and Shareholders of Hongri International Holdings Limited



We
have audited the accompanying consolidated statements of financial position of Hongri International Holdings Limited and its subsidiaries
(the “Company”), as of December 31, 2013 and 2012 and the related consolidated statements of comprehensive income,
statements of changes in equity and statements of cash flows for the years then ended. These consolidated financial statements
are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.



We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States), Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, 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. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.



In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of Hongri International Holdings Limited and its subsidiaries at December 31, 2013 and 2012, and the results of its operations
and its cash flows for the years then ended in conformity with International Financial Reporting Standards as issued by the International
Accounting Standards Board.



April
25,2014



|/s/ BDO China Shu Lun Pan Certified Public Accountants
    LLP
|--------------------------------------------------------------
|BDO China Shu Lun Pan Certified Public
    Accountants LLP    
|Shanghai China                                                





F-18







Hongri
International Holdings Limited

Consolidated
statements of comprehensive income

For the years ended December
31, 2012 and 2013

(Stated in US dollars)



|                                        |  |       |    |  | Year ended December 31, | 
|--------------------------------------- |  | ----- | -- |  | ----------------------- | 
|                                        |  | Notes |    |  | 2013                    | 
|                                        |  |       |    |  |                         | 
|Revenue                                 |  |       | 8  |  |                         | 
|Cost of sales                           |  |       | 9  |  |                         | 
|                                        |  |       |    |  |                         | 
|Gross profit                            |  |       |    |  |                         | 
|                                        |  |       |    |  |                         | 
|Other income                            |  |       | 10 |  |                         | 
|Other gains and losses                  |  |       | 11 |  |                         | 
|Distribution and selling expenses       |  |       | 12 |  |                         | 
|Administrative expenses                 |  |       | 13 |  |                         | 
|                                        |  |       |    |  |                         | 
|Profit from operations                  |  |       |    |  |                         | 
|                                        |  |       |    |  |                         | 
|Finance costs                           |  |       | 14 |  |                         | 
|                                        |  |       |    |  |                         | 
|Profit before tax                       |  |       |    |  |                         | 
|Income tax expense                      |  |       | 15 |  |                         | 
|                                        |  |       |    |  |                         | 
|Profit for the year                     |  |       | 16 |  |                         | 
|                                        |  |       |    |  |                         | 
|Other comprehensive income              |  |       |    |  |                         | 
|                                        |  |       |    |  |                         | 
|-currency translation differences       |  |       |    |  |                         | 
|                                        |  |       |    |  |                         | 
|Total comprehensive income for the year |  |       |    |  |                         | 



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



The consolidated financial
statements on pages F-19 to F-50 were approved and authorized for issue by the Board of Directors on April 25, 2014 and are signed
on its behalf by:



|         | 
|-------- | 
|DIRECTOR | 



F-19







Hongri
International Holdings Limited

Consolidated
statements of financial position

For the year ended December
31, 2012 and 2013

(Stated in US dollars)



|                                                |  |       |    |  | As of December 31, | 
|----------------------------------------------- |  | ----- | -- |  | ------------------ | 
|                                                |  | Notes |    |  | 2013               | 
|                                                |  |       |    |  |                    | 
|Non-current assets                              |  |       |    |  |                    | 
|Property, plant and equipment                   |  |       | 20 |  |                    | 
|Prepayments and premiums under operating leases |  |       | 21 |  |                    | 
|Prepayment for construction of new plant        |  |       | 22 |  |                    | 
|Prepayment for acquisition of land use right    |  |       | 23 |  |                    | 
|Prepaid lease payments                          |  |       | 24 |  |                    | 
|                                                |  |       |    |  |                    | 
|                                                |  |       |    |  |                    | 
|Current assets                                  |  |       |    |  |                    | 
|Inventories                                     |  |       | 25 |  |                    | 
|Trade and other receivables                     |  |       | 26 |  |                    | 
|Subsidies prepaid to distributors               |  |       | 27 |  |                    | 
|Prepayments and premiums                        |  |       |    |  |                    | 
|under operating leases                          |  |       | 21 |  |                    | 
|Prepaid lease payments                          |  |       | 24 |  |                    | 
|Related parties receivables                     |  |       | 28 |  |                    | 
|Cash and cash equivalents                       |  |       | 29 |  |                    | 
|                                                |  |       |    |  |                    | 
|                                                |  |       |    |  |                    | 
|Total assets                                    |  |       |    |  |                    | 
|                                                |  |       |    |  |                    | 
|Current liabilities                             |  |       |    |  |                    | 
|Trade and other payables                        |  |       | 30 |  |                    | 
|Related parties payables                        |  |       | 31 |  |                    | 
|Income tax payable                              |  |       |    |  |                    | 
|Short-term loans                                |  |       | 32 |  |                    | 
|                                                |  |       |    |  |                    | 
|                                                |  |       |    |  |                    | 
|Non-current liability                           |  |       |    |  |                    | 
|Total liabilities                               |  |       |    |  |                    | 
|                                                |  |       |    |  |                    | 
|Equity                                          |  |       |    |  |                    | 
|Share capital                                   |  |       | 33 |  |                    | 
|Share premium                                   |  |       | 33 |  |                    | 
|Statutory surplus reserve                       |  |       | 34 |  |                    | 
|Retained profits                                |  |       | 34 |  |                    | 
|Foreign currency translation reserve            |  |       | 34 |  |                    | 
|                                                |  |       |    |  |                    | 
|                                                |  |       |    |  |                    | 
|Total liabilities and equity                    |  |       |    |  |                    | 



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



F-20







Hongri
International Holdings Limited

Consolidated
statements of changes in equity

For the year ended
December 31, 2012 and 2013

(Stated in US dollars)



|                                           |  |               |        |  |               |  |         | Statutory |  |  |           |  |  |                     |            |   |       | 
|------------------------------------------ |  | ------------- | ------ |  | ------------- |  | ------- | --------- |  |  | --------- |  |  | ------------------- | ---------- | - | ----- | 
|                                           |  |               |        |  |               |  |         | surplus   |  |  | Retained  |  |  | Foreign currency    |            |   |       | 
|                                           |  | Share capital |        |  | Share premium |  |         | reserve   |  |  | profits   |  |  | translation reserve |            |   | Total | 
|                                           |  | (Note 33)     |        |  | (Note 33)     |  |         | (Note 34) |  |  | (Note 34) |  |  | (Note 34)           |            |   |       | 
|                                           |  |               |        |  |               |  |         |           |  |  |           |  |  |                     |            |   |       | 
|Balance at January 1, 2012                 |  |               | 20,000 |  |               |  | 760,000 |           |  |  | 469,362   |  |  |                     | 42,245,414 |   |       | 
|Profit for the year                        |  |               | -      |  |               |  | -       |           |  |  | -         |  |  |                     | 19,536,762 |   |       | 
|Other comprehensive income for the year    |  |               | -      |  |               |  | -       |           |  |  | -         |  |  |                     | -          |   |       | 
|Appropriation to statutory surplus reserve |  |               | -      |  |               |  | -       |           |  |  | 1,969,174 |  |  |                     | (1,969,174 | ) |       | 
|Balance at December 31, 2012               |  |               | 20,000 |  |               |  | 760,000 |           |  |  | 2,438,536 |  |  |                     | 59,813,002 |   |       | 
|Profit for the year                        |  |               | -      |  |               |  | -       |           |  |  | -         |  |  |                     | 25,795,357 |   |       | 
|Other comprehensive income for the year    |  |               | -      |  |               |  | -       |           |  |  | -         |  |  |                     | -          |   |       | 
|Appropriation to statutory surplus reserve |  |               | -      |  |               |  | -       |           |  |  | 2,625,370 |  |  |                     | (2,625,370 | ) |       | 
|Balance at December 31, 2013               |  |               | 20,000 |  |               |  | 760,000 |           |  |  | 5,063,906 |  |  |                     | 82,982,989 |   |       | 



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



F-21







Hongri
International Holdings Limited

Consolidated
statements of cash flow

For the year ended December
31, 2012 and 2013

(Stated in US dollars)



|                                                                  |  | Year ended December 31, |            
|----------------------------------------------------------------- |  | ----------------------- | -----------
|                                                                  |  | 2013                    |            
|                                                                  |  |                         |            
|OPERATING ACTIVITIES                                              |  |                         |            
|Profit for the year                                               |  |                         | 25,795,357 
|                                                                  |  |                         |            
|Adjustments for:                                                  |  |                         |            
|Finance cost                                                      |  |                         | 116,421    
|Interest income                                                   |  |                         | (134,267   
|Depreciation of property, plant and equipment                     |  |                         | 1,875,812  
|Amortization of prepaid lease payments                            |  |                         | 15,585     
|Amortization of subsidies prepaid to distributors                 |  |                         | 1,397,789  
|Amortization of prepayments and premiums under operating leases   |  |                         | 1,892,254  
|Provision/ (Reversal) of inventory obsolescence                   |  |                         | 1,994      
|Loss on disposal of property, plant and equipment                 |  |                         | 10,132     
|                                                                  |  |                         |            
|Operating cash flows before movements in working capital          |  |                         | 30,971,077 
|                                                                  |  |                         |            
|Increase in trade and other receivables                           |  |                         | (16,238,046
|Decrease /(Increase)  in related parties receivables              |  |                         | 414,052    
|Decrease in inventories                                           |  |                         | 1,170,209  
|Increase in trade and other payables                              |  |                         | 90,167     
|Increase / (Decrease) in related parties payables                 |  |                         | 421,165    
|Increase in income
                                 tax payable   |  |                         | 105,336    
|                                                                  |  |                         |            
|Prepayments and premiums paid under operating leases              |  |                         | (725,943   
|Withdraw the prepayments and premiums paid under operating leases |  |                         | 1,246,270  
|Subsidies prepaid to distributors                                 |  |                         | (1,253,461 
|                                                                  |  |                         |            
|NET CASH FROM OPERATING ACTIVITIES                                |  |                         | 16,200,826 
|                                                                  |  |                         |            
|INVESTING ACTIVITIES                                              |  |                         |            
|Interest received                                                 |  |                         | 134,267    
|Prepayment for construction of new plant                          |  |                         | -          
|Prepayment for acquisition of land use right                      |  |                         | -          
|Purchase of property, plant and equipment                         |  |                         | (11,288,129
|                                                                  |  |                         |            
|NET CASH USED IN INVESTING ACTIVITIES                             |  |                         | (11,153,862



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



F-22







Hongri International Holdings
Limited

Consolidated
statements of cash flow (continued)

For the year ended December
31, 2012 and 2013

(Stated in US dollars)



|                                                                                    |  | Year ended December 31, |           
|----------------------------------------------------------------------------------- |  | ----------------------- | ----------
|                                                                                    |  | 2013                    |           
|                                                                                    |  |                         |           
|FINANCING ACTIVITIES                                                                |  |                         |           
|Interest paid                                                                       |  |                         | (116,421  
|New bank loans raised                                                               |  |                         | 1,968,213 
|Repayment of borrowings                                                             |  |                         | (807,809  
|                                                                                    |  |                         |           
|NET CASH USED IN FINANCING ACTIVITIES                                               |  |                         | 1,043,983 
|                                                                                    |  |                         |           
|NET INCREASE IN CASH AND CASH EQUIVALENTS                                           |  |                         | 6,090,947 
|Effects of currency translation                                                     |  |                         | 1,579,543 
|                                                                                    |  |                         |           
|CASH AND CASH EQUIVALENTS
    AT BEGINNING OF YEAR                                  |  |                         | 32,148,309
|                                                                                    |  |                         |           
|CASH AND CASH EQUIVALENTS AT END OF YEAR, represented by cash and bank
    balances |  |                         | 39,818,799



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



F-23







Hongri International Holdings
Limited

Notes
to consolidated financial statements



| | 1. | GENERAL INFORMATION
| | -- | -------------------



| | (1) | Hongri International
                                         Holdings Limited (the "Company") formerly known as Wah Ying International Investment
                                         Inc. was incorporated in the British Virgin Islands (the "BVI") on July 8,
                                         2008 as a limited liability company with authorized share capital of $50,000, divided
                                         into 50,000 common shares of $1 per value each of which 10,000 common shares were issued
                                         at par as of December 31, 2010. On January 27, 2011, the Company issued additional 10,000
                                         common shares at a cash consideration of $77 per share. The principal activity of the
                                         Company is investment holding. Wong Chi Hung, Stanley, is the sole director of Hongri
                                         International. Before the acquisition by KBS International Holding Inc. (“KBS International”),
                                         the 20,000 common shares were held as to 30% by Cheung So Wa and 70% by Chan Sun Keung.
                                         On November 16, 2009, Yan Keyan entered into an option agreement with Cheung So Wa and
                                         Chan Sun Keung of which Yan Keyan is entitled an exclusive right to purchase the 100%
                                         equity interest in the Company at a cash consideration equivalent to the nominal value
                                         of issued share capital. Before the execution of the exclusive right by Yan Keyan, the
                                         rights and obligations as a stockholder of the 100% equity interest in the Company are
                                         still vested in Yan Keyan and the appointment of the board of directors and management
                                         is controlled by Yan Keyan. This option agreement was replaced by a new option agreement
                                         on March 9, 2011.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | France Cock (China)
                                         Limited ("France Cock") was incorporated in Hong Kong on September 21, 2005
                                         as a limited liability company with authorized issued and paid up capital of HK$10,000,
                                         divided into 10,000 common shares of HK$1 par value each. The principal activity of France
                                         Cock is trademark holding. The directors of France Cock are Yan Keyan and Wong Chi Hung,
                                         Stanley. Before the acquisition by the Company, the 10,000 common shares were held by
                                         Yan Keyan.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Pursuant
to a trademark transfer agreement dated October 4, 2009, Hongri Fujian agreed to transfer a trademark "KBS" to France
Cock for a consideration of RMB100,000 (approximately $15,250). The trademark transfer procedure has been completed on October
20, 2010 and the Trademark Authority in the People's Republic of China (the "PRC") issued a trademark registration certificate
to France Cock on March 21, 2011.



Pursuant
to a trademark licensing agreement dated December 1, 2005, France Cock agreed to license a trademark "Kabiniao" to Hongri
Fujian for 10 years commencing from January 1, 2006 at a fee of RMB1,000,000 (approximately $152,500) per annum.



Pursuant
to a trademark licensing agreement executed in 2009, France Cock agreed to license a trademark "KBS" to Hongri Fujian
for 5 years commencing from January 1, 2009 at a fee of RMB40,000,000 (approximately $6.1million) per annum. The trademark licensing
agreement was updated on August 1, 2012. In the new agreement, France Cock agreed to waive the license fee from January 1, 2012.



| | (3) | Roller Rome Limited
                                         ("Roller Rome") was incorporated in the BVI on March 28, 2006 as a limited
                                         liability company with authorized share capital of $50,000, divided into 50,000 common
                                         shares of $1 par value each of which 1 share was issued at par. The principal activity
                                         of Roller Rome is the provision of design and development services for sports apparel.
                                         The directors of Roller Rome are Yan Keyan and Wong Chi Hung, Stanley. Before the acquisition
                                         by the Company, the only one issued common share was held by Chen Bizhen.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-24









Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 1. | GENERAL INFORMATION-continued
| | -- | -----------------------------



| | (4) | Vast Billion Investment
                                         Limited ("Vast Billion") was incorporated in Hong Kong on November 25, 2010
                                         as a limited liability company with authorized share capital of HK$10,000 divided into
                                         10,000 ordinary share of HK$1 each of which 1 ordinary share was issued at par. Vast
                                         Billion was a dormant company until the completion of acquisition of 100% equity interest
                                         in Hongri Fujian on February 15, 2011. The directors of Vast Billion are Wong Chi Hung,
                                         Stanley and Chan Sun Keung, the father of Chen Bizhen. Before the acquisition by Hongri
                                         International, 1 ordinary share was held by Chan Sun Keung.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | Hongri (Fujian) Sports
                                         Goods Co. Ltd. ("Hongri Fujian") was established in the People's Republic of
                                         China (the "PRC") on November 17, 2005 with a registered and paid up capital
                                         of RMB 5,000,000 (which are not divided into shares). On March 24, 2011, Hongri Fujian
                                         increased registered capital from RMB 70,000,000 to RMB75,000,000. As of September 30,
                                         2011, the paid up capital was RMB 39,551,860. Hongri Fujian is engaged in the design
                                         manufacture marketing and sale of apparel in the PRC. On August 10, 2011, Chen Bizhen
                                         replaced Wang Feiya as legal representative of Hongri Fujian. Before the acquisition
                                         by Vast Billion, the paid up capital of RMB 5,000,000 was held as to 50% by Yan Keyan
                                         and 50% by Chen Bizhen. On December 18, 2006, Roller Rome entered into a buy back agreement
                                         with Yan Keyan and his wife Chen Bizhen of which Roller Rome is entitled the exclusive
                                         right to acquire all of Yan Keyan's and Chen Bizhen's 100% equity interest in Hongri
                                         Fujian at a consideration equivalent to the paid up capital of Hongri Fujian. Before
                                         the execution of the exclusive right by Roller Rome, i) 100% equity interest in Hongri
                                         Fujian is pledged to Roller Rome as collateral for the annual fee due to Roller Rome;
                                         ii) Roller Rome is entitled the exclusive right to receive all of dividend declared by
                                         Hongri Fujian; and iii) the appointment of the board of directors and management of Hongri
                                         Fujian are controlled by Roller Rome. This buy back agreement was mutually terminated
                                         upon the completion of acquisition of Hongri Fujian by Vast Billion.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (6) | Anhui Kai Xin Apparel
                                         Company Limited ("Anhui Kai Xin") was established in the PRC on March 16, 2011
                                         with a registered and paid up capital of RMB 1,000,000. Anhui Kai Xin is a wholly owned
                                         subsidiary of Hongri Fujian. Anhui Kai Xin provides sub-contracting service for the manufacture
                                         of sports apparel to Hongri Fujian and other brand name owners in the PRC. Yan Keyan
                                         is the director and legal representative of Anhui Kai Xin.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (7) | Shishi Hongri Brand
                                         Management Company Limited ("Brand Management”) was established in the PRC
                                         on October 17, 2011 with a registered and paid up capital of RMB 100,000, Brand Management
                                         is a wholly owned subsidiary of Hongri Fujian and a dormant company in the PRC. Chen
                                         Bizhen is the director and legal representative of Brand Management.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (8) | According to a Design
                                         and Development Agreement entered into between Roller Rome and Hongri Fujian on December
                                         18, 2006, Roller Rome provides design and development services, including market research,
                                         product development, design technical consulting and staff training to Hongri Fujian
                                         for an annual fee ranging from 90% to 99% of Hongri Fujian's net income before tax. The
                                         Design and Development Agreement expired on December 31, 2011.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-25









Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 2. | GROUP REORGANISATION AND BASIS
                                         OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
| | -- | ----------------------------------------------------------------------------------------------------------------------------



To
rationalize the group structure, the Company, KBS International, France Cock, Roller Rome, Vast Billion and Hongri Fujian reorganized
their group structure (the "Reorganization") as follows:



| | (1) | On January 4, 2010, Yan
                                         Keyan's 100% equity interest in France Cock were transferred to Hongri International
                                         at a cash consideration of HK$10, 000, which is the nominal value of issued and paid
                                         up capital of France Cock.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | On January 4, 2010, Chen
                                         Bizhen's 100% equity interest in Roller Rome were transferred to Hongri International
                                         at a cash consideration of $1, which is the nominal value of issued and paid up capital
                                         of Roller Rome.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | On February 14, 2011, Hongri
                                         International acquired 100% equity interest in Vast Billion from Chan Sun Keung at a
                                         cash consideration of HK$1, which is the nominal value of issued and paid up capital
                                         of Vast Billion.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | On February 15, 2011, Yan
                                         Keyan and Chen Bizhen transferred 100% equity interest in Hongri Fujian to Vast Billion
                                         at a cash consideration $756,950 (equivalent to Hongri Fujian's paid up capital of RMB
                                         5 million).
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | On March 11, 2011, KBS
                                         International entered into a share exchange agreement with the shareholders of the Company
                                         to acquire their 100% of the issued and outstanding common shares in the Company by issuance
                                         of the Company's 15,936,820 common shares with par value of $0.0001 each.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (6) | In connection with the share
                                         exchange transaction, Yan Keyan entered into a new option agreement with Chan Sun Keung
                                         on March 9, 2011 pursuant to which Yan Keyan was granted an option to purchase all of
                                         Chan Sun Keung's equity interest in KBS International at a cash consideration of RMB91,986.
                                         Such option will be effective during the period commencing on the date which is six months
                                         after the date on which the first registration statement is filed by KBS International
                                         under the United States Securities Act of 1933, as amended but before the fifth anniversary
                                         of the registration statement effective date.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Upon
the completion of the Reorganization on March 11, 2011, the Company became the immediate holding company of the Roller Rome, France
Cock, Vast Billion, Hongri Fujian, Anhui Kai Xin and Brand Management.



Before
and immediately after the completion of Reorganization, the Company, Roller Rome, France Cock, Vast Billion and Hongri Fujian
are under the common control of Yan Keyan, Chen Bizhen (the wife of Yan Keyan) and Chan Sun Keung (the father of Chen Bizhen).
Upon the completion of reorganization, the Company has controlling interest on all consolidated subsidiaries. Accordingly, accounting
for recapitalization is adopted for the preparation of consolidated financial statements to present the combined results of operations
and financial position of the Company, Roller Rome, France Cock, Vast Billion, Hongri Fujian, Anhui Kai Xin and Brand Management
as if the current group structure had been in existence at the beginning of the reporting period.



F-26







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 2 | GROUP REORGANISATION AND BASIS
                                         OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS-continued
| | - | --------------------------------------------------------------------------------------------------------------------------------------



The
Groupstructureas at the reporting date is as follows:







Theconsolidatedfinancial statements have been prepared in accordance with international financial
reporting standards ("IFRS") as issued by the International Accounting Standards Board.



F-27









Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 3. | APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL
                                         REPORTING STANDARDS ("IFRSs")
| | -- | -----------------------------------------------------------------------------------------------------------------------------



Except
as described below, for the year ended December 31, 2013 the Company has consistently adopted all the new and revised standards,
amendments and interpretations (collectively IFRSs) issued by the International Accounting Standards Board ("IASB")
and the IFRS Interpretations Committee (formerly known as "International Financial Reporting Interpretations Committee"
("IFRIC")) of the IASB that are effective as of December 31,2013 in the preparation of the consolidated financial statements throughout the year.



The
Company has applied the following new and revised standards, amendments or interpretations that have been issued and effective
during the reporting period:



IAS
1 (Amendments) Presentation of Items of Other Comprehensive Income



IFRS
7 (Amendments) Disclosures – Offsetting Financial Assets and Financial Liabilities



IFRS
13	Fair Value Measurement



IAS
19 (Revised 2011) Employee Benefits



Annual
Improvements 2009-2011 cycle



Its
application has had no impact on the consolidated financial statements.



At
the date these consolidated financial statements are authorized for issuance, the IASB has issued the following new and revised
International Accounting Standards ("IASs"), IFRSs, amendments and IFRICs which are not yet effective in respect of
the years. The Company has not early applied the following new and revised standards, amendments or interpretations that have
been issued but are not yet effective:



IAS
27 (Revised 2011) Separate Financial Statements



IAS
28 (Revised 2011) Investments in Associates and Joint Ventures



IFRS
10 Consolidated Financial Statements



IFRS
11 Joint Arrangements



IFRS
12 Disclosure of Interests in Other Entities



IAS
32 (Amendments) Offsetting Financial Assets and Financial Liabilities



IFRIC
20 Stripping Costs in the Production Phase of a Surface Mine



The
directors of the Company anticipate that the application of the new and revised standards, amendments or interpretations will
have no material impact on the consolidated financial statements of the Company.



F-28







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 4. | SIGNIFICANT ACCOUNTINGPOLICIES
| | -- | ------------------------------



The
principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise stated.



Basis
of preparation



The
consolidated financial statements have been prepared on the historical cost basis and in accordance with IFRS as issued by the
IASB. The principal accounting policies are set out below.



Basis
of consolidation



The
consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its
subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity
so as to obtain benefits from its activities.



Where
necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with
those used by other members of the Group.



All
intra-group transactions, balances, income and expenses are eliminated on consolidation.



Foreign currencies



Functional and
presentation currency



Items included
in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the
"functional currency").



The Group conducts
its business predominately in the PRC and hence its functional currency is the Renminbi (RMB).



Translation from
RMB to USD found place at the following rates:



|                  | Period
    end rates     | Average
    rates      
|----------------- | ------------------------ | -----------------------
|                  |                          |                        
|December 31, 2012 | USD 1.00= RMB
    6.2855 | USD 1.00=RMB
    6.3111
|                  |                          |                        
|December 31, 2013 | USD 1.00= RMB
    6.0969 | USD 1.00=RMB
    6.1896



The results and
financial positions in functional currency are translated into the presentation currency of its intended ultimate legal parent
as follows:



(1)      Assets
and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;



(2)      Income
and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation
of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at
the dates of the transactions);



(3)      Share
equity, share premium and dividends are translated at historical exchange rates; and



(4)      All
resulting exchange differences are recognized in foreign currency translation reserve, a separate component of equity.



F-29







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 4. | SIGNIFICANT ACCOUNTING POLICIES - continued
| | -- | -------------------------------------------



Segment
reporting



Operating
segments, and the amounts of each segment item reported in the financial statements, are identified from the financial information
provided regularly to the Group’s most senior executive management for the purposes of allocating resources to, and assessing
the performance of, the Group’s various lines of business and geographical locations.



Individually
material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics
and are similar in respect of the nature of products and services, the nature of production processes, the type or class of customers,
the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments
which are not individually material may be aggregated if they share a majority of these criteria. The Group’s three segments
are wholesale, retail and subcontracting.



Revenue
recognition



Revenue
is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods sold in
the normal course of business, net of discounts and sales related taxes.



The
Group’s revenue originating (i) from corporate owned stores, (ii) distributors and (iii) the services performed as an original
design manufacturer. Revenue from the all above categoriesis recognized
when all the following conditions are satisfied:



| | l | the
                                         Group has transferred to the buyer the significant risks and rewards of ownership of
                                         the goods;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | l | the
                                         Group retains neither continuing managerial involvement to the degree usually associated
                                         with ownership nor effective control over the goods sold;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | l | the
                                         amount of revenue can be measured reliably;
| | - | ----------------------------------------------------------------------------------------



| | l | it
                                         is probable that the economic benefits associated with the transaction will flow to the
                                         Group; and the costs incurred or to be incurred in respect of the transaction can be
                                         measured reliably.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Specifically,
revenue from sale of goods is recognized when the goods are delivered and title has passed.



Interest
income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest
rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the
financial asset to that asset's net carrying amount on initial recognition.





Value
added tax (VAT)



Output
VAT is 17% of product sales and taxable services revenue, according to tax laws. The remaining balance of output VAT, after subtracting
the deductible input VAT of the period, is VAT payable.





Borrowing costs



Borrowing
costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily
take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets until such
time as the assets are substantially ready for their intended use or sale.



All
other borrowing costs are recognized in profit or loss in the period in which they are incurred.





F-30







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 4. | SIGNIFICANT ACCOUNTING POLICIES - continued
| | -- | -------------------------------------------



Retirement
benefit costs



Pursuant
to the relevant regulations of the PRC government, the Group participates in a local municipal government retirement benefits
scheme (the "Scheme"), whereby the subsidiaries located in the PRC are required to contribute a certain percentage of
the basic salaries of its employees to the Scheme to fund their retirement benefits. The local municipal government undertakes
to assume the retirement benefits obligations of all existing and future retired employees of the subsidiaries located in the
PRC. The only obligation of the Group with respect to the Scheme is to pay the on-going required contributions under the Scheme
mentioned above. Contributions under the Scheme are charged to the profit or loss as incurred. There are no provisions under the
Scheme whereby forfeited contributions may be used to reduce future contributions. These plans are considered defined contribution
plans. The Group has no legal or constructive obligations to pay further contributions after its payment of the fixed contributions
into the national pension schemes. Contributions to national pension schemes are recognized as an expense in the period in which
the related service is performed.



Taxation



Income
tax expense represents the sum of the tax currently payable and deferred tax.



The
tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated
statements of comprehensive income because of items of income or expense that are taxable or deductible in other years and items
that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted
or substantively enacted by the end of the reporting period.



Deferred
tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial
statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized
for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to
the extent that it is probable that taxable profits will be available against which those deductible temporary differences can
be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from
the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither
the taxable profit nor the accounting profit.



Deferred
tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except where the
Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse
in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments
are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the
benefits of the temporary differences and they are expected to reverse in the foreseeable future.



The
carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.



Deferred
tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled
or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting
period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner
in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.



F-31







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 4. | SIGNIFICANT ACCOUNTING POLICIES
                                         - continued
| | -- | ------------------------------------------------------------------------------------



Taxation-continued



Current
and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive
income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or
directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination,
the tax effect is included in the accounting for the business combination.





Store
pre-opening cost



Store
pre-opening cost was the start-up activity costs incurred prior to opening a new store, mainly including leasing, leasehold improvements,
payroll and supplies. The accounting policies for leasing and leasehold improvements were as below. Other store pre-opening costs
were directly charged to expenses when occurred.



Leasing



Leases
are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership
to the lessee. All other leases are classified as operating leases.



Leasehold
improvements



Leasehold
improvements, principally comprising costs of office buildings and shops renovation, are held for administrative and selling purposes.
Leasehold improvements are initially measured at cost and amortized systematically over its useful life.





Property,
plant and equipment



Property,
plant and equipment ("PPE") including buildings held for use in the production or supply of goods or services, or for
administrative purposes other than construction in progress are stated at cost less subsequent accumulated depreciation and accumulated
impairment losses.



Depreciation
is provided to write off the cost of items of property, plant and equipment other than construction in progress over their estimated
useful lives and after taking into account of their estimated residual value, using the straight-line method.



Construction
in progress includes property, plant and equipment in the course of construction for production or for its own use purposes. Construction
in progress is carried at cost less any recognized impairment loss. Construction in progress is classified to the appropriate
category of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same
basis as other property assets, commences when the assets are ready for their intended use.



An
item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount of the item) is included in profit or loss in the period in which the item is
derecognized.



Leasing



Leases
are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership
to the lessee. All other leases are classified as operating leases.



The
Group as lessor



Rental
income from operating leases is recognized in profit or loss on a straight-line basis over the term of the relevant lease.



F-32







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 4. | SIGNIFICANT ACCOUNTING POLICIES
                                         - continued
| | -- | ------------------------------------------------------------------------------------



Leasehold
land



When
a lease includes both land and building elements, the Group assesses the classification of each element as a finance or an operating
lease separately based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each
element have been transferred to the Group. Specifically, the minimum lease payments (including any lump-sum upfront payments)
are allocated between the land and the building elements in proportion to the relative fair values of the leasehold interests
in the land element and building element of the lease at the inception of the lease.



To
the extent the allocation of the lease payments can be made reliably, interest in leasehold land that is accounted for as an operating
lease is presented as "prepaid lease payments" in the consolidated statement of financial position and is amortized
over the lease term on a straight-line basis.



Inventories



Inventories
are stated at the lower of cost and net realizable value. Costs of inventories are determined using the weighted average method.
Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary
to make the sale.





Financial instruments



Financial assets and financial
liabilities are recognized on the consolidated statements of financial position when a group entity becomes a party to the contractual
provisions of the instrument.



Financial assets and financial
liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue
of financial assets and financial liabilities are added to or deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition.



Financial assets



The Group's financial assets
are classified as receivables.



Effective interest method



The effective interest method
is a method of calculating the amortized cost of a financial asset and of allocating interest income over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid
or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through
the expected life of the financial asset, or, where appropriate, a shorter period to the net carrying amount on initial recognition.



Interest income is recognized on an effective interest
basis for debt instruments.



Receivables



Receivables are non-derivative
financial assets with fixed or determinable payments that are not quoted in an active market. Receivables (including trade and
other receivables, related parties receivables, and cash and cash equivalents) are measured at amortized cost using the effective
interest method, less any impairment (see accounting policy on impairment loss on receivables below).



F-33







4.   SIGNIFICANT
ACCOUNTING POLICIES - continued



Financial instruments-continued



Financial assets-continued



Impairments of receivables



Receivables are assessed for
indicators of impairment at the end of the reporting period. Receivables are impaired where there is objective evidence that,
as a result of one or more events that occurred after the initial recognition of the receivables, the estimated future cash flows
of the receivables have been affected.



Objective evidence of impairment
could include:



lsignificant
financial difficulty of the issuer or counterparty;



ldefault
or delinquency in interest or principal payments;



lit
becoming probable that the borrower will enter bankruptcy or financial reorganization.



For certain categories of
financial asset, such as trade and other receivables, assets that are assessed not to be impaired individually are subsequently
assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the
Group's past experience of collecting payments, and increase in the number of delayed payments in the portfolio past the average
credit period, observable changes in national or local economic conditions that correlate with default on receivables.



An impairment loss is recognized in profit or loss
when there is objective evidence that the asset is impaired, and is measured as the difference between the asset’s carrying
amount and the present value of the estimated future cash flows discounted at the original effective interest rate.



The carrying amount of the
receivables is reduced by the impairment loss directly for all financial assets with exception of trade and other receivables,
where the carrying amount is reduced through the use of an allowance account. Changes in carrying amount of the allowance account
are recognized in profit or loss. When a trade and other receivable are considered uncollectible, it is written off against the
allowance account. Subsequent recoveries of amounts previously written off are credited to profit or loss.



If, in a subsequent period,
the amount of impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment
losses was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying
amount of the asset at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment
not been recognized.



Cash and cash equivalents



Cash and cash equivalents
comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid
investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes
in value, having been within three months of maturity at acquisition.





F-34







4.     
SIGNIFICANT ACCOUNTING POLICIES - continued



Financial instruments-continued



Financial liabilities and equity



Financial liabilities and
equity instruments issued by a group entity are classified according to the substance of the contractual arrangements entered
into and the definitions of a financial liability and an equity instrument.



An equity instrument is any
contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.



Effective interest method



The effective interest method
is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid
or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through
the expected life of the financial liability, or, where appropriate, a shorter period to the net carrying amount on initial recognition.



Interest expense is recognized on an effective
interest basis.



Financial liabilities



Financial liabilities including
trade and other payables, related parties payables and short-term loans are subsequently measured at amortized cost, using the
effective interest method.



Equity instruments



Equity instruments issued
by the group entities are recorded at the proceeds received, net of direct issue costs.



Derecognition



Financial assets are derecognized
when the rights to receive cash flows from the assets expire or, the financial assets are transferred and the Group has transferred
substantially all the risks and rewards of ownership of the financial assets. On derecognition of a financial asset, the difference
between the asset's carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.



Financial liabilities are
derecognized when the obligation specified in the relevant contract is discharged, cancelled or expires. The difference between
the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or
loss.





Subsidies prepaid to distributors



Subsidies were paid to
major distributors for compensating their rental expenses. Such subsidies would vest to distributors when they met the sales targets
predetermined by the Company. Subsidies prepaid to distributors were recognized when payments were made and amortized over the
agreement term on a straight-line basis in selling expenses.





F-35







4.     SIGNIFICANT
ACCOUNTING POLICIES - continued





Capital
and Reserves



Share
capital represents the nominal value of shares that have been issued by the Group. Share capital is determined using the nominal
value of shares that have been issued.



Retained
profits include all current and prior period results as determined in the combined statement of comprehensive income.



Foreign
currency translation reserve arising on the translation are included in the currency translation reserve.



In
accordance with the relevant laws and regulations of PRC, the subsidiaries of the Group established in PRC are required to transfer
10% of its annual statutory net profit (after offsetting any prior years’ losses) to the statutory reserve. When the balance
of such reserve reaches 50% of the subsidiary’s share capital, any further transfer of its annual statutory net profit is
optional. Such reserve may be used to offset accumulated losses or to increase the registered capital of the subsidiary subject
to the approval of the relevant authorities. However, except for offsetting prior years’ losses, such statutory reserve
must be maintained at a minimum of 25% of the share capital after such usage. The statutory reserves are not available for dividend
distribution to the shareholders.



All
transactions with owners of the Group are recorded separately within equity.



The
preparation of financial statements in conformity with IFRS requires management to exercise judgment in the process of applying
the Group’s accounting policies and requires the use of accounting estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and reported
amount of revenue and expenses during the reporting period. The following estimates that have a significant risk of causing a
material adjustment to the carrying amount of assets and liabilities within the next financial year are disclosed below:



F-36







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 5. | SIGNIFICANT MANAGEMENT JUDGMENT
                                         IN APPLYING ACCOUNTING POLICIES
| | -- | --------------------------------------------------------------------------------------------------------



Allowance
for Bad and Doubtful debts



Allowances
for bad and doubtful debts are based on an assessment of the recoverability of trade and other receivables. Allowances are applied
to trade and other receivables where events or changes in circumstances indicate that the balances may not be collectible. The
identification of bad and doubtful debts requires the use of judgment and estimates, where the expected outcome is different from
the original estimate, such difference will impact carrying value of trade and other receivables and doubtful debt expenses in
the period in which such estimate has been charged.



Income
Tax



The
Group has exposure to income taxes in numerous jurisdictions. Significant judgment is involved in determining the Group’s
provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain
during the ordinary course of business. The Group recognizes liabilities for expected tax issues based on estimates of whether
additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognized,
such differences will impact the income tax and differed tax provisions in the period in which such determination is made. The
carrying amount of the Group’s income tax payable as at December 31, 2012 and 2013 amounted to USD 3,869,502 and USD 3,974,838
respectively.



| | 6. | KEY SOURCES
                                         OF ESTIMATION UNCERTAINTY
| | -- | ------------------------------------------------------------------------------



In
the application of the Group's accounting policies, which are described in Note 4, management is required to make estimates and
assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates
and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results
may differ from these estimates.



The
estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the
period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods
if the revision affects both current and future periods.



The
following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting
period, that have a significant risk of causing a material adjustment to the carrying amounts of assets within the next financial
year.



Depreciation
of building, machinery and equipment



As
described in Note 4, the Group reviews the estimated useful lives and residual values of property, plant and equipment at the
end of each reporting period. The cost of building, machinery and equipment is depreciated on a straight-line basis over the assets'
estimated useful lives. Management estimates the useful lives of these buildings, machinery and equipment to be within 5 to 20
years. These are the common life expectancies applied in the same industry. Changes in the expected level of usage and technological
developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges
could be revised.



F-37







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 7. | SEGMENT REPORTING
| | -- | -----------------



Management
currently identifies the Group’s three sales models as operating segments, which are wholesale, retail and subcontracting.
The segment presentation is in accordance with management’s expectation of future business developments. These operating
segments are monitored and strategic decisions are made on the basis of segmental gross margins.





|By business                 |  | Wholesale                            |            |  | Retail                               |  |            | Subcontracting                       |  |  | Consolidated                         | 
|--------------------------- |  | ------------------------------------ | ---------- |  | ------------------------------------ |  | ---------- | ------------------------------------ |  |  | ------------------------------------ | 
|                            |  | Year ended
    December
    31, 2013 |            |  | Year ended
    December
    31, 2012 |  |            | Year ended
    December
    31, 2013 |  |  | Year ended
    December
    31, 2012 | 
|Sales to external customers |  |                                      | 78,111,563 |  |                                      |  | 37,272,635 |                                      |  |  | 19,093,669                           | 
|Segment revenue             |  |                                      | 78,111,563 |  |                                      |  | 37,272,635 |                                      |  |  | 19,093,669                           | 
|Segment gross margins       |  |                                      | 28,162,776 |  |                                      |  | 13,495,905 |                                      |  |  | 13,277,404                           | 
|Reconciling items           |  |                                      |            |  |                                      |  |            |                                      |  |  |                                      | 
|Profit before tax           |  |                                      |            |  |                                      |  |            |                                      |  |  |                                      | 
|Income tax expense          |  |                                      |            |  |                                      |  |            |                                      |  |  |                                      | 
|Profit for the year         |  |                                      |            |  |                                      |  |            |                                      |  |  |                                      | 







The Group does not allocate the assets because
they are shared by the three segments and can not be split.



Geographical information



The Group’s operations are located in the
PRC and all of the Group’s revenue is derived from sales to customers in the PRC. Hence, no analysis by geographical area
of operations is provided.



F-38







Hongri International
Holdings Limited

Notes to consolidated
financial statements





7. SEGMENT REPORTING
- continued



Information about major customers



Major distributors that make
up 10% or more of wholesale revenue are as below:





|                   |  | Year ended December 31, |           
|------------------ |  | ----------------------- | ----------
|                   |  | 2013                    |           
|Distributor A      |  |                         | 15,967,077
|Distributor B      |  |                         | 14,869,975
|Distributor C      |  |                         | 11,438,483
|Other distributors |  |                         | 35,836,028
|                   |  |                         | 78,111,563







| | 8. | REVENUE
| | -- | -------



|               |  | Year ended December 31, |           
|-------------- |  | ----------------------- | ----------
|               |  | 2013                    |           
|               |  |                         |           
|Apparel        |  |                         |           
|-Wholesale     |  |                         | 78,111,563
|-Retail        |  |                         | 19,093,669
|Subtotal       |  |                         | 97,205,232
|Subcontracting |  |                         | 2,354,582 
|               |  |                         | 99,559,814





| | 9. | COST OF SALES
| | -- | -------------



Cost
of sales comprises of purchasing materials, labor costs for personnel employed in production, depreciation of non-current assets
used for production purpose, outsourced manufacturing cost, taxes and surcharges and water and electricity. The following table
shows a breakdown of cost of sales for the period under review for each category:



|                                                              |  | Year ended December 31, |           
|------------------------------------------------------------- |  | ----------------------- | ----------
|                                                              |  | 2013                    |           
|Changes in inventories of finished goods and work in progress |  |                         | 1,168,215 
|Materials consumed in production                              |  |                         | 63,541    
|Purchases of finished goods                                   |  |                         | 53,846,922
|Labor                                                         |  |                         | 934,457   
|Depreciation                                                  |  |                         | 252,759   
|Rental                                                        |  |                         | 145,082   
|Outsourced manufacturing cost                                 |  |                         | 26,679    
|Taxes and surcharges *                                        |  |                         | 754,593   
|Water and electricity                                         |  |                         | 79,850    
|Inventory provision                                           |  |                         | 1,994     
|Others                                                        |  |                         | 17,039    
|Foreign currency translation difference                       |  |                         | 72,708    
|                                                              |  |                         | 57,363,839



*
Tax and surcharges are mainly Urban Maintenance and Construction Tax (7% of Valued Added Tax payment amount), Extra Charges of
Education Fund (3% of Valued Added Tax payment amount) and Local Surcharge for Education Fund (2% of Valued Added Tax payment
amount).



| | 10. | OTHER INCOME
| | --- | ------------



|                                 |  | Year ended December 31, |        
|-------------------------------- |  | ----------------------- | -------
|                                 |  | 2013                    |        
|                                 |  |                         |        
|Sales of raw material            |  |                         | 9,875  
|Government grant                 |  |                         | 215,782
|Interest income on bank deposits |  |                         | 134,267
|                                 |  |                         | 359,924



F-39







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 11. | OTHER GAINS AND LOSSES
| | --- | ----------------------



|                                                   |  | Year ended December 31, |        
|-------------------------------------------------- |  | ----------------------- | -------
|                                                   |  | 2013                    |        
|                                                   |  |                         |        
|Gain on disposals of property, plant and equipment |  |                         | 10,132 
|Foreign exchange gain                              |  |                         | 79,968 
|Impairment losses                                  |  |                         | (1,994)
|Others                                             |  |                         | 8,700  
|                                                   |  |                         | 96,806 



| | 12. | DISTRIBUTION AND SELLING EXPENSES
| | --- | ---------------------------------



|                        |  | Year ended December 31, |          
|----------------------- |  | ----------------------- | ---------
|                        |  | 2013                    |          
|                        |  |                         |          
|Rental                  |  |                         | 1,665,836
|Depreciation            |  |                         | 1,178,209
|Labor                   |  |                         | 603,013  
|Subsidy to distributors |  |                         | 1,397,789
|Promotion               |  |                         | 1,092,238
|Advertisement           |  |                         | -        
|Others                  |  |                         | 301,910  
|                        |  |                         | 6,238,995



| | 13. | ADMINISTRATIVE EXPENSES
| | --- | -----------------------



|                                      |  | Year ended December 31, |          
|------------------------------------- |  | ----------------------- | ---------
|                                      |  | 2013                    |          
|                                      |  |                         |          
|Labor                                 |  |                         | 742,797  
|Audit fee                             |  |                         | 182,620  
|Depreciation and amortization charges |  |                         | 460,429  
|Bank charges                          |  |                         | 69,146   
|Rental                                |  |                         | 81,336   
|Travelling and entertainment          |  |                         | 78,366   
|Others                                |  |                         | 213,216  
|                                      |  |                         | 1,872,910



| | 14. | FINANCE COSTS
| | --- | -------------



|                                                                          |  | Year ended December 31, |        
|------------------------------------------------------------------------- |  | ----------------------- | -------
|                                                                          |  | 2013                    |        
|                                                                          |  |                         |        
|Interest expenses on bank borrowings wholly repayable within
    one year |  |                         | 116,421



Bank
borrowings interests are charged on interest rates of 6.60% and 7.80%, per annum during the years ended December 31, 2013 and
2012 respectively.



F-40







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 14. | FINANCE COSTS-continued
| | --- | -----------------------



December
31, 2013

|           |  | Amount |           |  |        |           |               |           |  |          |      |   | 
|---------- |  | ------ | --------- |  | ------ | --------- | ------------- | --------- |  | -------- | ---- | - | 
|Bank loans |  | USD    |           |  | Period |           | Interest rate |           |  | Interest |     
|#1         |  |        | 1,968,213 |  |        | 2013-2-26 |               | 2014-2-25 |  |          | 6.60 | % | 



December
31, 2012

|           |  | Amount |         |  |        |            |               |           |  |          |      |   | 
|---------- |  | ------ | ------- |  | ------ | ---------- | ------------- | --------- |  | -------- | ---- | - | 
|Bank loans |  | USD    |         |  | Period |            | Interest rate |           |  | Interest |     
|#2         |  |        | 795,482 |  |        | 2012-10-15 |               | 2013-2-18 |  |          | 7.80 | % | 



The detailed information
of the short - term loans is set out in Note 32.



| | 15. | INCOME TAX EXPENSE
| | --- | ------------------

|                          |  | Year ended December 31, |          
|------------------------- |  | ----------------------- | ---------
|                          |  | 2013                    |          
|                          |  |                         |          
|Current tax:              |  |                         |          
|PRC enterprise income tax |  |                         | 8,629,022
|                          |  |                         | 8,629,022



Hongri Fujian,
Anhui Kai Xin and Brand Management subject to the applicable enterprise income tax rate of 25%. As of December 31, 2012 and 2013,
the Company had no unrecognized tax benefits.



France Cock and
Vast Billion were incorporated in Hong Kong and subject to Hong Kong profits tax at a tax rate of 16.5%. No provision for Hong
Kong profits tax has been made as France Cock and Vast Billion has no taxable income during the reporting period.



The Company and
Roller Rome were incorporated in the BVI and under the current laws of the BVI, are not subject to income taxes.



The tax charge
for the year can be reconciled to the profit per the consolidated statements of comprehensive income as follows:



|                                                                                                                                                    |  | Year ended December 31, |           
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ----------
|                                                                                                                                                    |  | 2013                    |           
|                                                                                                                                                    |  |                         |           
|Profit before tax                                                                                                                                   |  |                         | 34,424,379
|Tax calculated at domestic tax rates applicable to
    profits in PRC (2012 and 2013: 25%)                                                          |  |                         | 8,606,095 
|Tax effect of expenses not deductible for tax purpose                                                                                               |  |                         | 6,133     
|Tax effect of tax loss of Hongri International, Roller
    Rome, Vast Billion and France Cock for which no deferred Income tax asset was recognized |  |                         | 16,303    
|Tax effect of provision for diminution
    in value of inventories                                                                                  |  |                         | 491       
|Tax charge for the year                                                                                                                             |  |                         | 8,629,022 



F-41







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 16. | PROFIT FOR THE YEAR
| | --- | -------------------



Profit
for the year has been arrived at after charging:



|                                                                |  | Year ended December 31, |           
|--------------------------------------------------------------- |  | ----------------------- | ----------
|                                                                |  | 2013                    |           
|Cost of inventories recognized as expenses                      |  |                         | 56,609,246
|Taxes and surcharges                                            |  |                         | 754,593   
|                                                                |  |                         | 57,363,839
|Depreciation of property, plant and equipment                   |  |                         | 1,875,812 
|Amortization of prepaid lease payments                          |  |                         | 15,585    
|Amortization of subsidies prepaid to distributors               |  |                         | 1,397,789 
|Amortization of prepayments and premiums under operating leases |  |                         | 1,892,254 
|Provision (Reversal) of inventory obsolescence                  |  |                         | 1,944     
|                                                                |  |                         | 5,183,384 



| | 17. | EMPLOYEES' EMOLUMENTS
| | --- | ---------------------



|                                                                      |  | Year ended December 31, |          
|--------------------------------------------------------------------- |  | ----------------------- | ---------
|                                                                      |  | 2013                    |          
|                                                                      |  |                         |          
|Salaries and other short-term benefits                                |  |                         | 2,187,866
|Defined contribution benefit schemes                                  |  |                         | 92,401   
|Total employee benefits expense
    (including directors’ emoluments) |  |                         | 2,280,267



The employees of
the Group’s PRC subsidiaries are members of state-managed retirement benefit schemes operated by the local government. The
subsidiaries are required to contribute a specified percentage of its payroll costs to the retirement benefit schemes to fund
the benefits. The only obligation of the Group with respect to the retirement benefit schemes is to make the specified contributions.



| | 18. | DIRECTORS' EMOLUMENTS
| | --- | ---------------------



The emoluments
paid or payable to the directors of the Company were as follows:



|                      |  | Year ended December 31, |        
|--------------------- |  | ----------------------- | -------
|                      |  | 2013                    |        
|                      |  |                         |        
|Directors' emoluments |  |                         |        
|- Salaries            |  |                         | 105,015
|Yan Keyan             |  |                         | 105,015
|Chen Bizhen           |  |                         | 126,018
|Stanley Wong          |  |                         | 336,048
|- Social Welfare      |  |                         | 758    
|Yan Keyan             |  |                         | 758    
|Chen Bizhen           |  |                         | 1,516  



F-42







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 19. | EARNINGS PER SHARE
| | --- | ------------------



|                               |  | Year ended December 31, |      
|------------------------------ |  | ----------------------- | -----
|                               |  | 2013                    |      
|                               |  |                         |      
|Basic earnings per share       |  |                         |      
|                               |  |                         |      
|From continuing operations     |  |                         | 1,290
|Total basic earnings per share |  |                         | 1,290



The earnings and
weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:



|                                                                                                          |  | Year ended December 31, |           
|--------------------------------------------------------------------------------------------------------- |  | ----------------------- | ----------
|                                                                                                          |  | 2013                    |           
|                                                                                                          |  |                         |           
|Profit for the year attributable to owners
    of the Company for the purpose of basic earnings per share |  |                         | 25,795,357



|                                                                                           |  | Year ended December 31, |       
|------------------------------------------------------------------------------------------ |  | ----------------------- | ------
|                                                                                           |  | 2013                    |       
|                                                                                           |  |                         |       
|Weighted average number of ordinary shares
    for the purpose of basic earnings per share |  |                         | 20,000



No diluted earnings
per share have been presented because no dilutive potential ordinary shares existed during the Periods.



F-43







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 20. | PROPERTY, PLANT AND EQUIPMENT
| | --- | -----------------------------



|                                  |  | Plant |           |   | Machinery |  |           | Officeequipment |  |  | Motorvehicles |   |  | Furnitureandfixtures |         |   | Leaseholdimprovements-factories andoffices |  |         | Leaseholdimprovements-shops |  |  | Distributorshops'furniture andfixtures |   |  | Constructionin progress |            |   | Total | 
|--------------------------------- |  | ----- | --------- | - | --------- |  | --------- | --------------- |  |  | ------------- | - |  | -------------------- | ------- | - | ------------------------------------------ |  | ------- | --------------------------- |  |  | -------------------------------------- | - |  | ----------------------- | ---------- | - | ----- | 
|                                  |  |       |           |   |           |  |           |                 |  |  |               |   |  |                      |         |   |                                            |  |         |                             |  |  |                                        |   |  |                         |            |   |       | 
|COST                              |  |       |           |   |           |  |           |                 |  |  |               |   |  |                      |         |   |                                            |  |         |                             |  |  |                                        |   |  |                         |            |   |       | 
|At January 1, 2012                |  |       | -         |   |           |  | 699,504   |                 |  |  | 134,828       |   |  |                      | 133,957 |   |                                            |  | 51,048  |                             |  |  | 267,774                                |   |  |                         | 1,712,378  |   |       | 
|Additions                         |  |       | 8,659,241 |   |           |  | 351,800   |                 |  |  | 42,123        |   |  |                      | -       |   |                                            |  | 7,647   |                             |  |  |                                        |   |  |                         | 657,774    |   |       | 
|Disposals                         |  |       | -         |   |           |  | -         |                 |  |  | -             |   |  |                      | -       |   |                                            |  | -       |                             |  |  | -                                      |   |  |                         | -          |   |       | 
|Translation adjustment            |  |       | 35,313    |   |           |  | 3,149     |                 |  |  | 502           |   |  |                      | 328     |   |                                            |  | 156     |                             |  |  | 656                                    |   |  |                         | 6,878      |   |       | 
|At December 31, 2012              |  |       | 8,694,554 |   |           |  | 1,054,453 |                 |  |  | 177,453       |   |  |                      | 134,285 |   |                                            |  | 58,851  |                             |  |  | 268,430                                |   |  |                         | 2,377,030  |   |       | 
|Additions                         |  |       | -         |   |           |  | 785       |                 |  |  | 39,149        |   |  |                      | 1,205   |   |                                            |  | 9,825   |                             |  |  | -                                      |   |  |                         | 210,648    |   |       | 
|Disposals                         |  |       | -         |   |           |  | (33,881   | )               |  |  | (55,749       | ) |  |                      | -       |   |                                            |  | (21,440 | )                           |  |  | -                                      |   |  |                         | -          |   |       | 
|Translation adjustment            |  |       | 268,956   |   |           |  | 32,618    |                 |  |  | 5,490         |   |  |                      | 4,153   |   |                                            |  | 1,820   |                             |  |  | 8,303                                  |   |  |                         | 73,530     |   |       | 
|At December 31, 2013              |  |       | 8,963,510 |   |           |  | 1,053,975 |                 |  |  | 166,343       |   |  |                      | 139,643 |   |                                            |  | 49,056  |                             |  |  | 276,733                                |   |  |                         | 2,661,208  |   |       | 
|                                  |  |       |           |   |           |  |           |                 |  |  |               |   |  |                      |         |   |                                            |  |         |                             |  |  |                                        |   |  |                         |            |   |       | 
|DEPRECIATION                      |  |       |           |   |           |  |           |                 |  |  |               |   |  |                      |         |   |                                            |  |         |                             |  |  |                                        |   |  |                         |            |   |       | 
|At January 1, 2012                |  |       | -         |   |           |  | (144,086  | )               |  |  | (61,203       | ) |  |                      | (49,824 | ) |                                            |  | (21,713 | )                           |  |  | (174,803                               | ) |  |                         | (1,164,083 | ) |       | 
|Provided for the year             |  |       | (64,944   | ) |           |  | (140,622  | )               |  |  | (21,585       | ) |  |                      | (16,096 | ) |                                            |  | (6,156  | )                           |  |  | (48,121                                | ) |  |                         | (697,716   | ) |       | 
|Eliminated on disposals of assets |  |       | -         |   |           |  | -         |                 |  |  | -             |   |  |                      | -       |   |                                            |  | -       |                             |  |  | -                                      |   |  |                         | -          |   |       | 
|Translation adjustment            |  |       | (265      | ) |           |  | (927      | )               |  |  | (238          | ) |  |                      | (188    | ) |                                            |  | (78     | )                           |  |  | (625                                   | ) |  |                         | (5,739     | ) |       | 
|At December 31, 2012              |  |       | (65,209   | ) |           |  | (285,635  | )               |  |  | (83,026       | ) |  |                      | (66,108 | ) |                                            |  | (27,947 | )                           |  |  | (223,549                               | ) |  |                         | (1,867,538 | ) |       | 
|Provided for the year             |  |       | (400,005  | ) |           |  | (26,913   | )               |  |  | (24,639       | ) |  |                      | (16,776 | ) |                                            |  | (7,816  | )                           |  |  | (11,145                                | ) |  |                         | (536,062   | ) |       | 
|Eliminated on disposals of assets |  |       | -         |   |           |  | -         |                 |  |  | 50,174        |   |  |                      | -       |   |                                            |  | 19,296  |                             |  |  | -                                      |   |  |                         | -          |   |       | 
|Translation adjustment            |  |       | (5,370    | ) |           |  | (8,836    | )               |  |  | (2,568        | ) |  |                      | (2,045  | ) |                                            |  | (864    | )                           |  |  | (6,915                                 | ) |  |                         | (57,728    | ) |       | 
|At December 31, 2013              |  |       | (470,584  | ) |           |  | (321,384  | )               |  |  | (60,059       | ) |  |                      | (84,929 | ) |                                            |  | (17,331 | )                           |  |  | (241,609                               | ) |  |                         | (2,461,328 | ) |       | 
|                                  |  |       |           |   |           |  |           |                 |  |  |               |   |  |                      |         |   |                                            |  |         |                             |  |  |                                        |   |  |                         |            |   |       | 
|CARRYING AMOUNT                   |  |       |           |   |           |  |           |                 |  |  |               |   |  |                      |         |   |                                            |  |         |                             |  |  |                                        |   |  |                         |            |   |       | 
|At December 31, 2012              |  |       | 8,629,345 |   |           |  | 768,818   |                 |  |  | 94,427        |   |  |                      | 68,177  |   |                                            |  | 30,904  |                             |  |  | 44,881                                 |   |  |                         | 509,492    |   |       | 
|At December 31, 2013              |  |       | 8,492,926 |   |           |  | 732,591   |                 |  |  | 106,284       |   |  |                      | 54,714  |   |                                            |  | 31,725  |                             |  |  | 35,124                                 |   |  |                         | 199,880    |   |       | 



F-44







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 20. | PROPERTY, PLANT AND EQUIPMENT-continued
| | --- | ---------------------------------------



Depreciation is
provided on straight-line basis for all property, plant and equipment over their estimated useful lives of the assets as follows:



|                                             |  | Useful life              |  | Residual value |    
|-------------------------------------------- |  | ------------------------ |  | -------------- | ---
|                                             |  |                          |  |                |    
|Plant                                        |  | 20 years                 |  |                | 10 
|Machinery                                    |  | 5 years                  |  |                | 10 
|Office equipment                             |  | 5 years                  |  |                | 10 
|Motor vehicles                               |  | 5 years                  |  |                | 10 
|Furniture and fixtures                       |  | 5 years                  |  |                | 10 
|Leasehold improvements-factories and offices |  | Shorter of estimated     |  |                | 10 
|                                             |  | useful life of 5 years   |  |                |    
|                                             |  | or lease term            |  |                |    
|                                             |  |                          |  |                |    
|Leasehold improvements-shops                 |  | Shorter of estimated     |  |                | Nil
|                                             |  | useful life of 1.5 years |  |                |    
|                                             |  | or lease term            |  |                |    
|                                             |  |                          |  |                |    
|Distributor shops' furniture and fixtures    |  | 1.5 years                |  |                | Nil



All
the plant mentioned above were owned by Anhui Kaxin.



Buildings on leasehold
land comprise:



|  |  | Location                                                       |  | Description |  | Gross
    area (m2) |      
|- |  | -------------------------------------------------------------- |  | ----------- |  | ------------------- | -----
|  |  |                                                                |  |             |  |                     |      
|* |  | Jinxi Town, Longshan Road, Taihu City, Anhui Province, the PRC |  | Dormitory   |  |                     | 8,573



*
Items pledged to secure bank borrowings



The
Group pledged buildings having a carrying amount of USD 8,492,926 as at December 31, 2013 to secure general banking facilities
granted to the Group (December 31, 2012: 8,629,345).



The gross carrying
amount of the fully depreciated property, plant and equipment that is still in use is USD 9,440 as at December 31, 2013 (December
31, 2012:USD 31,179).



| | 21. | PREPAYMENTS AND PREMIUMS UNDER
                                         OPERATING LEASES
| | --- | ----------------------------------------------------------------------------------------



|                         |  | Amount |           
|------------------------ |  | ------ | ----------
|                         |  |        |           
|Cost                     |  |        |           
|At January 1, 2012       |  |        | 6,333,650 
|additions for the year   |  |        | 3,634,643 
|charge for the year      |  |        | (4,129,335
|translation adjustment   |  |        | 13,499    
|At December 31, 2012     |  |        | 5,852,457 
|additions for the year   |  |        | 725,943   
|charge for the year      |  |        | (1,892,254
|withdraw during the year |  |        | (1,246,270
|translation adjustment   |  |        | 181,040   
|At December 31, 2013     |  |        | 3,620,916 



F-45







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 21. | PREPAYMENTS AND PREMIUMS UNDER
                                         OPERATING LEASES-continued
| | --- | --------------------------------------------------------------------------------------------------



Analyzed for reporting
purposes as:





|                  |  | As at December 31, |          
|----------------- |  | ------------------ | ---------
|                  |  | 2013               |          
|                  |  |                    |          
|Current asset     |  |                    | 534,124  
|Non-current asset |  |                    | 3,086,792
|                  |  |                    | 3,620,916



| | 22. | PREPAYMENT FOR CONSTRUCTION
                                         OF NEW PLANT
| | --- | ---------------------------------------------------------------------------------



On
November 20, 2010, Hongri Fujian entered into an agreement with a third party, Anqing Zhongfang Construction and Installation
Co., Ltd., for the construction of the new plant in Anhui at a consideration of USD 17,826,251. In 2012, Kaixin Anhui has made
another prepayment of USD 6,363,853 for the second phase project. In 2013, Kaixin Anhui has made another prepayment of USD 9,747,897
for the second phase project and USD 16,401,778 was recognized in Construction in progress.



| | 23. | PREPAYMENT FOR ACQUISITION
                                         OF LAND USE RIGHT
| | --- | -------------------------------------------------------------------------------------



On September 2,
2010, Hongri Fujian entered into an agreement with a third party, Taihu Weiqi Sports Apparel Co., Ltd., to acquire a land use
right in relation to the development of factories of Anhui Kaixin, at a total consideration of USD6,340,456.



| | 24. | PREPAID LEASE PAYMENTS
| | --- | ----------------------



|                       |  | Amount |        
|---------------------- |  | ------ | -------
|                       |  |        |        
|Cost                   |  |        |        
|At January 1, 2012     |  |        | 31,741 
|additions for the year |  |        | 760,205
|translation adjustment |  |        | 3,179  
|At December 31, 2012   |  |        | 795,125
|additions for the year |  |        | -      
|translation adjustment |  |        | 24,596 
|At December 31, 2013   |  |        | 819,721
|                       |  |        |        
|AMORTISATION           |  |        |        
|At January 1, 2012     |  |        | (16,664
|charge for the year    |  |        | (15,768
|translation adjustment |  |        | (106   
|At December 31, 2012   |  |        | (32,538
|charge for the year    |  |        | (15,585
|translation adjustment |  |        | (4,933 
|At December 31, 2013   |  |        | (53,056
|                       |  |        |        
|CARRYING AMOUNTS       |  |        |        
|At December 31, 2012   |  |        | 762,587
|At December 31, 2013   |  |        | 766,665



F-46







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 24. | PREPAID LEASE PAYMENTS-continued
| | --- | --------------------------------



Analyzed for reporting
purposes as:



|                  |  | As at December 31, |        
|----------------- |  | ------------------ | -------
|                  |  | 2013               |        
|                  |  |                    |        
|Current asset     |  |                    | 19,512 
|Non-current asset |  |                    | 747,153
|                  |  |                    | 766,665



The amounts represent
the prepayment of rentals for land use right (industrial use) situated in the PRC. The leasehold lands have the term of 50 years.



All
the leasehold lands mentioned above were owned by Anhui Kaixin.



The Group has pledged
leasehold land having a carrying amount of approximately USD 195,037 at December 31, 2013 to secure general banking facilities
granted to the Group (2012: USD 185,392).



The leasehold land
comprises:



|  |  | Location                                                   |  | Expiry date of tenure |  | Land
    area (m2) |      
|- |  | ---------------------------------------------------------- |  | --------------------- |  | ------------------ | -----
|* |  | Longshan Road, Economic development District, Taihu County |  | 2062-05-23            |  |                    | 2,440



*
Items pledged to secure bank borrowings



| | 25. | INVENTORIES
| | --- | -----------





|                                   |  | As at December 31, |        
|---------------------------------- |  | ------------------ | -------
|                                   |  | 2013               |        
|                                   |  |                    |        
|Work in progress                   |  |                    | 42,658 
|Finished goods                     |  |                    | 624,419
|Provision for obsolete inventories |  |                    | (1,994 
|                                   |  |                    | 665,083



| | 26. | TRADE AND OTHER RECEIVABLES
| | --- | ---------------------------



|                          |  | As at December 31, |           
|------------------------- |  | ------------------ | ----------
|                          |  | 2013               |           
|                          |  |                    |           
|Trade receivables         |  |                    | 30,401,177
|Other receivables         |  |                    | 74,934    
|Subtotal financial assets |  |                    | 30,476,111
|Prepayments               |  |                    | -         
|                          |  |                    | 30,476,111



F-47







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 26. | TRADE AND OTHER RECEIVABLES-continued
| | --- | -------------------------------------



The
fair value of trade and other receivables have not been disclosed as, due to their short duration, management considers the carrying
amounts recognized in the consolidated statements of financial position to be reasonable approximation of their fair values.



Before
accepting any new customer, the Group assesses the potential customer's credit quality and defined credit limits by customer.
Limits attributed to customers are reviewed once a year. The aging analysis of trade receivables is as follows:





|                                |  | As at December 31, |           
|------------------------------- |  | ------------------ | ----------
|                                |  | 2013               |           
|                                |  |                    |           
|Current                         |  |                    | 20,436,960
|Past due for less than 4 months |  |                    | 9,964,217 
|                                |  |                    | 30,401,177



The
Group allows an average credit period of 90 days to its trade customers. There are no trade receivables that are past due and
impaired.





Among the amounts of
trade receivables, USD 4,417,265 and USD 2,061,567 Output VAT was included as of December 31, 2013 and 2012, respectively.





| | 27. | SUBSIDIES PREPAID TO DISTRIBUTORS
| | --- | ---------------------------------



|                       |  | Amount |           
|---------------------- |  | ------ | ----------
|                       |  |        |           
|Cost                   |  |        |           
|At January 1, 2012     |  |        | 757,437   
|additions for the year |  |        | 824,955   
|charge for the year    |  |        | (824,955  
|translation adjustment |  |        | 1,856     
|At December 31, 2012   |  |        | 759,293   
|additions for the year |  |        | 1,253,461 
|charge for the year    |  |        | (1,397,789
|translation adjustment |  |        | 21,293    
|At December 31, 2013   |  |        | 636,258   



Subsidies
were paid to major distributors for compensating their rental expenses. Such subsidies would vest to distributors when they met
the sales targets predetermined by the Company. Subsidies prepaid to distributors were recognized when payments were made and
amortized over the agreement term on a straight-line basis in selling expenses. The amortization for 2012 and 2013 were USD 824,955
and USD 1,397,789 respectively.



F-48







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 28. | RELATED PARTIES RECEIVABLES
| | --- | ---------------------------



(1) Nature of relationship
with related parties:



|Name      |  | Relationship
    with the Group
|--------- |  | -------------------------------
|          |  |                                
|Yan Keyan |  | Actual controller              



(2) Significant
balances between the Group and the above related parties:



|          |  |                    |  | As at December 31, |  
|--------- |  | ------------------ |  | ------------------ | -
|Name      |  | Nature             |  | 2013               |  
|          |  |                    |  | Unit:USD           |  
|          |  |                    |  |                    |  
|Yan Keyan |  | Borrowing of funds |  |                    | -
|          |  |                    |  |                    | -



Related
parties receivables were unsecured, non-interest bearing and repayment on demand.



| | 29. | CASH AND CASH EQUIVALENTS
| | --- | -------------------------



|              |  | As at December 31, |           
|------------- |  | ------------------ | ----------
|              |  | 2013               |           
|              |  |                    |           
|Cash on hand  |  |                    | 16,519    
|Bank deposits |  |                    | 39,802,280
|              |  |                    | 39,818,799



|                      |  | As at December 31, |           
|--------------------- |  | ------------------ | ----------
|                      |  | 2013               |           
|                      |  |                    |           
|Renminbi              |  |                    | 39,798,525
|Hong Kong Dollars     |  |                    | 19,457    
|United States Dollars |  |                    | 817       
|                      |  |                    | 39,818,799



Cash
and cash equivalents comprise cash held by the Group and short-term deposits with an original maturity of three months or less.
Bank deposits as at December 31, 2013 carry interest at market rates which ranged from 0.35% to 0.50% (2012: 0.35%-0.50%) per
annum



F-49







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 30. | TRADE AND OTHER PAYABLES
| | --- | ------------------------







|                               |  | As at December 31, |          
|------------------------------ |  | ------------------ | ---------
|                               |  | 2013               |          
|                               |  |                    |          
|Trade payables                 |  |                    | 166,049  
|Employee benefits payable      |  |                    | 1,178,682
|Other payables                 |  |                    | 876,738  
|Subtotal financial liabilities |  |                    | 2,221,469
|                               |  |                    |          
|Other taxes payable            |  |                    | 2,041,066
|                               |  |                    | 4,262,535



The
fair value of trade and other payables have not been disclosed as, due to their short duration, management considers the carrying
amounts recognized in the consolidated statements of financial position to be reasonable approximation of their fair values.



Trade
payables comprise amounts outstanding for trade purchase. The average credit period is 30 days from the time when the services
are rendered by or goods received from suppliers. The aging analysis of trade payables is as follows:





|                                |  | As at December 31, |        
|------------------------------- |  | ------------------ | -------
|                                |  | 2013               |        
|                                |  |                    |        
|Current                         |  |                    | 166,049
|Past due for less than 4 months |  |                    | -      
|                                |  |                    | 166,049



The
Company was granted a credit term of 30 days. The balances past due were mainly for the Company's high bargaining power.



| | 31. | RELATED PARTIES PAYABLES
| | --- | ------------------------



(1) Nature of relationship
with related parties:



|Name              |  | Relationship
    with the Group
|----------------- |  | -------------------------------
|                  |  |                                
|Yan Keyan         |  | Actual controller              
|                  |  |                                
|Chen Bizhen       |  | Wife of Yan Keyan              
|                  |  |                                
|KBS International |  | Parent company of the Company  



(2)
Significant balances between the Group and the above related parties:



|                  |  |                    |  | As at December 31, |          
|----------------- |  | ------------------ |  | ------------------ | ---------
|Name              |  | Nature             |  | 2013               |          
|                  |  |                    |  |                    |          
|Yan Keyan         |  | Borrowing of funds |  |                    | 209,116  
|                  |  |                    |  |                    |          
|Chen Bizhen       |  | Borrowing of funds |  |                    | 214,028  
|                  |  |                    |  |                    |          
|KBS International |  | Borrowing of funds |  |                    | 5,365,898
|                  |  |                    |  |                    | 5,789,042



Related parties
payables were unsecured, non-interest bearing and repayment on demand.



The highest amount
the Group borrowed from Mr. Keyan Yan was USD 529,962 and USD 477,912 for the years ended December 31, 2013 and 2012 respectively.



F-50







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 32. | SHORT-TERM LOANS
| | --- | ----------------





|                                        |  | As at December 31, |          
|--------------------------------------- |  | ------------------ | ---------
|                                        |  | 2013               |          
|                                        |  |                    |          
|Secured bank borrowings                 |  |                    | 1,968,213
|Carrying amount repayable within 1 year |  |                    | 1,968,213



The borrowings
are fixed-rate and denominated in RMB.



December 31, 2013

|Bankloans |  | AmountUSD |           |  | Period |           |  |           | Interestrate |  |      | Mortgage |  | Personalguarantee               
|--------- |  | --------- | --------- |  | ------ | --------- |  | --------- | ------------ |  | ---- | -------- |  | --------------------------------
|#1        |  |           | 1,968,213 |  |        | 2013-2-26 |  | 2014-2-25 |              |  | 6.60 | %        |  | Land
    use right and buildings
|          |  |           | 1,968,213 |  |        |           |  |           |              |  |      |          |  |                                 



December
31, 2012

|Bankloans |  | AmountUSD |         |  | Period |            |  |           | Interestrate |  |      | Mortgage |  | Personalguarantee               
|--------- |  | --------- | ------- |  | ------ | ---------- |  | --------- | ------------ |  | ---- | -------- |  | --------------------------------
|#2        |  |           | 795,482 |  |        | 2012-10-15 |  | 2013-2-18 |              |  | 7.80 | %        |  | Land
    use right and buildings
|          |  |           | 795,482 |  |        |            |  |           |              |  |      |          |  |                                 



Assets
with the following carrying amounts have been pledged to secure bank borrowings:





|               |  | As at December 31, |          
|-------------- |  | ------------------ | ---------
|               |  | 2013               |          
|               |  |                    |          
|Land use right |  |                    | 758,464  
|Plant          |  |                    | 8,492,926
|               |  |                    | 9,251,390



A
personal guarantee was provided by director of the Company, Yan Keyan and Chen Bizhen for USD 1,968,213 among the balances at
December 31, 2013 (December 31, 2012:USD 795,482).



| | 33. | SHARE CAPITAL AND SHARE PREMIUM
| | --- | -------------------------------



Share capital shown
in the consolidated statements of financial position is as follows:



The details of
the Company's share capital are as follows:



|                                                                       |  | Numbers of |        |  | Share capital |  |        | Share
    premium | 
|---------------------------------------------------------------------- |  | ---------- | ------ |  | ------------- |  | ------ | ----------------- | 
|                                                                       |  | shares     |        |  | USD           |  |        | USD               | 
|                                                                       |  |            |        |  |               |  |        |                   | 
|Issue of shares at December 31, 2010(a)                                |  |            | 10,000 |  |               |  | 10,000 |                   | 
|                                                                       |  |            |        |  |               |  |        |                   | 
|Issue of shares at January 27, 2011(b)                                 |  |            | 10,000 |  |               |  | 10,000 |                   | 
|                                                                       |  |            |        |  |               |  |        |                   | 
|Cost of issue of shares                                                |  |            | 20,000 |  |               |  | 20,000 |                   | 
|                                                                       |  |            |        |  |               |  |        |                   | 
|Authorized and issued and fully paid                                   |  |            |        |  |               |  |        |                   | 
|                                                                       |  |            |        |  |               |  |        |                   | 
|Ordinary shares of $1USD at December
    31,2012 and December 31, 2013 |  |            | 20,000 |  |               |  | 20,000 |                   | 



F-51







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 33. | PAID-IN CAPITAL & CAPITAL
                                         RESERVE-continued
| | --- | ------------------------------------------------------------------------------------



The
share capital shown on the consolidated statement of financial position as at December 31, 2012 and 2013 represents the share
capital of the Company issued and fully paid on the date of incorporation.



| | (a) | As of December, 31, 2010,
                                         the Company issued 10,000 common shares were issued at a cash consideration of
                                         USD 1 per share.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | As of January, 27, 2011,the Company issued additional 10,000 common shares at a cash consideration of
                                         USD 77 per share.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 34. | RESERVES
| | --- | --------



Statutory
surplus reserve



As
stipulated by the relevant laws and regulations applicable to China’s foreign investment enterprises, the Company’s
PRC subsidiaries are required to maintain a statutory surplus reserve which is non-distributable. Appropriations to such reserve
are made out of net profit after tax of the statutory financial statements of the PRC subsidiaries at the amounts determined by
their respective boards of directors annually up to 50% of authorized capital, but must not be less than 10% of the net profit
after tax.



| |  | The statutory
                                         surplus reserve can be used for making up losses of the group entities in Mainland China,
                                         if any. The statutory surplus reserve may also be used to increase capital or to meet
                                         unexpected or future losses. The statutory surplus reserve is non-distributable other
                                         than upon liquidation.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
statutory surplus reserve of the Group amounts to USD 5,063,906 at December 31, 2013 (2012: USD 2,438,536). The statutory surplus
reserve of the Group is related to Hongri Fujian and Anhui Kaixin.



Retained
profits



The
retained profits comprise the cumulative net gains and losses recognized in the Company's income statement.



Foreign
currency translation reserve (other comprehensive income)



Foreign
currency translation reserve represents the foreign currency translation difference arising from the translation of the financial
statements of companies within the Group from their functional currency to the Group's presentation currency.



F-52







Hongri International
Holdings Limited

Notes to consolidated
financial statements



| | 35. | COMMITMENTS
                                         AND CONTINGENCIES
| | --- | ----------------------------------------------------------------------



| | (1) | The Company had the
                                         following capital commitments in respect of the construction of plant and equipment which
                                         were contracted but not provided for in the financial statements:
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                          |  | As at December 31, |          
|------------------------- |  | ------------------ | ---------
|                          |  | 2013               |          
|                          |  |                    |          
|Contracted and authorized |  |                    | 1,631,331



| | (2) | As at December 31, 2013,
                                         the Company had lease commitment as follows
| | --- | -------------------------------------------------------------------------------------------------------------





|                          |  | As at December 31, |       
|------------------------- |  | ------------------ | ------
|                          |  | 2013               |       
|                          |  |                    |       
|Contracted and authorized |  |                    | 76,364





| | (3) | As at 31 December, 2013,
                                         the Company had no contingencies that needed to be disclosed.
| | --- | -------------------------------------------------------------------------------------------------------------------------------





| | 36. | SUBSEQUENT
                                         EVENTS
| | --- | ----------------------------------------------------------



On
March 24, 2014, its holding company, KBS International Holdings Inc, the Company together with the principal stockholders
have entered into a Shares Exchange Agreement with Aquasition Corporation, a company incorporated in the Republic of the Marshall
Islands and currently listed in the Nasdaq with the intention to effect an alternative listing in the Nasdaq. The expected date of completion
of the Share Exchange would be in early July 2014.



* * * * *



F-53







UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS



Aquasition is providing the following unaudited
pro forma condensed combined financial information to aid you in your analysis of the financial aspects of the Business Combination.



The following unaudited pro forma condensed
combined balance sheet combines the audited consolidated historical statement of financial position of Hongri as of December 31,
2013 with the audited historical balance sheet of Aquasition as of December 31, 2013, giving effect to the Business Combination
as if it had been consummated as of that date.



The following unaudited pro forma condensed
combined income statement combines the audited historical statement of comprehensive income of Hongri for the year ended December
31, 2013 with the audited historical statement of operations of Aquasition for the year ended December 31, 2013, giving effect
to the Business Combination as if it had occurred on January 1, 2013.



The historical financial information has
been adjusted to give effect to the final events that are related and/or directly attributable to the Business Combination, are
factually supportable and are expected to have a continuing impact on the combined results. The adjustments presented on the unaudited
pro forma condensed combined financial statements have been identified and presented to provide relevant information necessary
for an accurate understanding of the combined company upon consummation of the Business Combination.



The historical financial statements of
Hongri have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board and presented in US Dollars. The historical financial statements of Aquasition have been
prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and
presented in US Dollars and for these pro formas have been converted into IFRS. No material adjustments were made to Aquasition’s
financial statements prepared under US GAAP when converting them to IFRS. The unaudited pro forma condensed combined financial
statements included herein are prepared under IFRS and presented in US Dollars. Following the consummation of the Business Combination,
the combined entity intends to prepare its consolidated financial statements under IFRS and present such consolidated financial
statements in US Dollars.



The historical financial information
of Hongri was derived from the audited financial statements of Hongri for the years ended December 31, 2013 and 2012 included
elsewhere in this Shell Company Report. The historical financial information of Aquasition was derived from the audited
financial statements of Aquasition for the year ended December 31, 2013, for the period from January 26, 2012 (inception)
through December 31, 2012 and for the period from January 26, 2012 (inception) through December 31, 2013 included elsewhere
in this Shell Company Report. This information should be read together with Hongri’s and Aquasition’s audited
financial statements and related notes, “Management’s Discussion and Analysis of Financial Condition and
Results of Operations of the Target Companies ,”Management’s Discussion and Analysis of Financial
Condition and Results of Operations of Aquasition ” and other financial information included elsewhere in this
Shell Company Report.



The unaudited pro forma condensed combined
financial information is for illustrative purposes only. The financial results may have been different had the companies always
been combined. You should not rely on the unaudited pro forma condensed combined financial information as being indicative of the
historical results that would have been achieved had the companies always been combined or the future results that the combined
company will experience.



In the Business Combination, Aquasition
acquired 100% of the issued and outstanding equity interest in Hongri from KBS in exchange for the transaction consideration consisting
of 22,957,455 shares of Aquasition’s common stock. Upon issuance of its shares of common stock to KBS, KBS liquidated immediately
thereafter, distributing all of its assets to its stockholders in proportion to their ownership. The number of shares comprising
the transaction consideration was calculated as follows: (a) (i) EBITDA multiplied by 5, less (ii) the difference of Long Term
Debt minus cash held by Hongri; divided by (b) $10.30.



F-54







As a result of the Business Combination,
after 4,981,736 public shares were converted to cash at the conversion price of approximately $10.30 per share (which is a full
pro rata share of the trust account as of August 1, 2014), KBS owns approximately 90.3% of Aquasition’s common stock outstanding
immediately after the Business Combination, and the other Aquasition stockholders own approximately 9.7% of Aquasition’s
outstanding common stock.



The Business Combination will be accounted
for as a reverse acquisition in accordance with IFRS. Under this method of accounting, Aquasition will be treated as the “acquired”
company for financial reporting purposes. This determination was primarily based on Hongri comprising the ongoing operations of
the combined entity, Hongri senior management comprising the senior management of the combined company, and KBS having a majority
of the voting power of the combined entity. In accordance with guidance applicable to these circumstances, the Business Combination
will be considered to be a capital transaction in substance. Accordingly, for accounting purposes, the Business Combination will
be treated as the equivalent of Hongri issuing stock for the net assets of Aquasition, accompanied by a recapitalization. The net
assets of Aquasition will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior
to the Business Combination will be those of Hongri.



Included in the shares outstanding and
weighted average shares outstanding as presented in the pro forma condensed combined financial statements are 22,957,455 shares
of Aquasition common stock issued to KBS in exchange for their shares in Hongri.



F-55







AQUASITION CORP.

PRO FORMA CONDENSED COMBINED BALANCE
SHEET

(Unaudited)

As of December 31, 2013



|                                                      |  | (A)    |             |  | (B)        |   |            |                       |  |   |                              |      
|----------------------------------------------------- |  | ------ | ----------- |  | ---------- | - | ---------- | --------------------- |  | - | ---------------------------- | -----
|                                                      |  | Hongri |             |  | Aquasition |   |            | Pro Forma Adjustments |  |   | Pro Forma Condensed Combined |      
|Assets                                                |  |        |             |  |            |   |            |                       |  |   |                              |      
|Current assets:                                       |  |        |             |  |            |   |            |                       |  |   |                              |      
|Cash and cash equivalents                             |  | $      | 39,818,799  |  |            | $ | 27,918     |                       |  | $ | 57,178,034                   | (1)  
|                                                      |  |        |             |  |            |   |            |                       |  |   | (312,500                     | )(3) 
|                                                      |  |        |             |  |            |   |            |                       |  |   | (478,003                     | )(7) 
|                                                      |  |        |             |  |            |   |            |                       |  |   | (51,314,888                  | )(8) 
|                                                      |  |        |             |  |            |   |            |                       |  |   | (1,219,273                   | )(11)
|Inventories                                           |  |        | 665,083     |  |            |   | -          |                       |  |   | -                            |      
|Trade and other receivables                           |  |        | 30,476,111  |  |            |   | -          |                       |  |   | -                            |      
|Interest on cash held in trust                        |  |        | -           |  |            |   | 7,972      |                       |  |   | (7,972                       | )(1) 
|Other current assets                                  |  |        | 1,189,894   |  |            |   | 14,732     |                       |  |   | -                            |      
|Total Current Assets                                  |  |        | 72,149,887  |  |            |   | 50,622     |                       |  |   | 3,845,398                    |      
|Long term assets:                                     |  |        |             |  |            |   |            |                       |  |   |                              |      
|Investments held in trust                             |  |        | -           |  |            |   | 57,168,785 |                       |  |   | (57,168,785                  | )(1) 
|Property, plant and equipment                         |  |        | 27,039,977  |  |            |   | -          |                       |  |   | -                            |      
|Other assets                                          |  |        | 10,266,868  |  |            |   | -          |                       |  |   | -                            |      
|Total Long Term Assets                                |  |        | 37,306,845  |  |            |   | 57,168,785 |                       |  |   | (57,168,785                  | )    
|Total Assets                                          |  | $      | 109,456,732 |  |            | $ | 57,219,407 |                       |  | $ | (53,323,387                  | )    
|                                                      |  |        |             |  |            |   |            |                       |  |   |                              |      
|Liabilities                                           |  |        |             |  |            |   |            |                       |  |   |                              |      
|Current liabilities:                                  |  |        |             |  |            |   |            |                       |  |   |                              |      
|Accounts payable and accrued expenses                 |  | $      | 4,262,535   |  |            | $ | 131,763    |                       |  | $ | 929                          | (4)  
|                                                      |  |        |             |  |            |   |            |                       |  |   | 52,500                       | (5)  
|                                                      |  |        |             |  |            |   |            |                       |  |   | 66,421                       | (6)  
|                                                      |  |        |             |  |            |   |            |                       |  |   | (58,022                      | )(7) 
|Short-term loans                                      |  |        | 1,968,213   |  |            |   | -          |                       |  |   | -                            |      
|Other current liabilities                             |  |        | 9,763,880   |  |            |   | 69,904     |                       |  |   | 350,077                      | (6)  
|                                                      |  |        |             |  |            |   |            |                       |  |   | (419,981                     | )(7) 
|Total Current Liabilities                             |  |        | 15,994,628  |  |            |   | 201,667    |                       |  |   | (8,076                       | )    
|Long term liabilities:                                |  |        |             |  |            |   |            |                       |  |   |                              |      
|Warrant liability                                     |  |        | -           |  |            |   | 3,432,440  |                       |  |   | -                            |      
|Total Liabilities                                     |  |        | 15,994,628  |  |            |   | 3,634,107  |                       |  |   | (8,076                       | )    
|                                                      |  |        |             |  |            |   |            |                       |  |   |                              |      
|Commitments and Contingencies                         |  |        |             |  |            |   |            |                       |  |   |                              |      
|Common stock subject to possible redemption or tender |  |        | -           |  |            |   | 51,448,500 |                       |  |   | (51,448,500                  | )(8) 
|                                                      |  |        |             |  |            |   |            |                       |  |   |                              |      
|Stockholders’ Equity                                  |  |        |             |  |            |   |            |                       |  |   |                              |      
|Share capital                                         |  |        | 20,000      |  |            |   | -          |                       |  |   | (20,000                      | )(9) 
|Share premium                                         |  |        | 760,000     |  |            |   | -          |                       |  |   | (760,000                     | )(9) 
|Common stock                                          |  |        | -           |  |            |   | 231        |                       |  |   | (4                           | )(2) 
|                                                      |  |        |             |  |            |   |            |                       |  |   | 18                           | (3)  
|                                                      |  |        |             |  |            |   |            |                       |  |   | 1                            | (8)  
|                                                      |  |        |             |  |            |   |            |                       |  |   | 2,296                        | (9)  
|Additional paid-in capital                            |  |        | -           |  |            |   | 5,621,277  |                       |  |   | 1,277                        | (1)  
|                                                      |  |        |             |  |            |   |            |                       |  |   | 4                            | (2)  
|                                                      |  |        |             |  |            |   |            |                       |  |   | (312,518                     | )(3) 
|                                                      |  |        |             |  |            |   |            |                       |  |   | (929)                        | (4)  
|                                                      |  |        |             |  |            |   |            |                       |  |   | (52,500                      | )(5) 
|                                                      |  |        |             |  |            |   |            |                       |  |   | (416,498                     | )(6) 
|                                                      |  |        |             |  |            |   |            |                       |  |   | 133,611                      | (8)  
|                                                      |  |        |             |  |            |   |            |                       |  |   | 777,704                      | (9)  
|                                                      |  |        |             |  |            |   |            |                       |  |   | (3,484,708                   | )(10)
|                                                      |  |        |             |  |            |   |            |                       |  |   | (1,219,273                   | )(11)
|Legal reserves                                        |  |        | 5,063,906   |  |            |   | -          |                       |  |   | -                            |      
|Cumulative translation adjustments                    |  |        | 4,635,209   |  |            |   | -          |                       |  |   | -                            |      
|Retained earnings (accumulated deficit)               |  |        | 82,982,989  |  |            |   | (3,484,708 | )                     |  |   | 3,484,708                    | (10) 
|Total Stockholders’ Equity                            |  |        | 93,462,104  |  |            |   | 2,136,800  |                       |  |   | (1,866,811                   | )    
|Total Liabilities and Stockholders’ Equity            |  | $      | 109,456,732 |  |            | $ | 57,219,407 |                       |  | $ | (53,323,387                  | )    



F-56







Pro Forma Adjustments to the Unaudited
December 31, 2013 Audited Condensed Combined Balance Sheet



| | (A) | Derived from the audited balance sheet of Hongri as of December 31, 2013.
| | --- | -------------------------------------------------------------------------

| | (B) | Derived from the audited balance sheet of Aquasition Corp. as of December 31, 2013.
| | --- | -----------------------------------------------------------------------------------



| | (1) | To record interest earned on the investments held in trust and to subsequently liquidate investments held in trust by Aquasition.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------

| | (2) | To record cancellation of 42,000 founder shares in order to reissue such shares to an advisor (see Note 3).
| | --- | -----------------------------------------------------------------------------------------------------------

| | (3) | To record payment of costs related to the Business Combination. Aquasition engaged SNV Global Ltd. (“SNV”) pursuant
to which SNV agreed to provide introductions to potential target companies to Aquasition, including KBS, among other services.
Aquasition paid SNV a finder’s fee equal to 1.5% of the pre-closing equity of Hongri in newly issued shares of the combined
company, amounting to 136,110 shares of Aquasition’s common stock, valued at $1,367,906, or $10.05 per share (based on the
closing price of Aquasition’s common stock on August 1, 2014). Aquasition also engaged SunTrust Robinson Humphery, Inc. (“STRH”)
pursuant to which Aquasition paid STRH a cash fee equal to $312,500 upon completion of the Business Combination. Additionally,
Aquasition engaged Early Bird Capital, Inc. (“EBC”), pursuant to which EBC provided Aquasition certain financial advisory
services in connection with the Business Combination. Aquasition paid EBC an equity fee in the amount of 42,000 shares, valued
at $422,100, or $10.05 per share (based on the closing price of Aquasition’s common stock on August 1, 2014).
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | To record $929 of deferred underwriters’ fee payable from Aquasition’s IPO.
| | --- | ---------------------------------------------------------------------------

| | (5) | To record related party amounts due to Seacrest Shipping Co. Ltd.
| | --- | -----------------------------------------------------------------

| | (6) | To record advances from related parties.
| | --- | ----------------------------------------

| | (7) | To record payment of advances from related party.
| | --- | -------------------------------------------------

| | (8) | To reflect (a) the cancellation of 4,981,736 shares of common stock for stockholders who elected cash conversion for cash payment
of $51,314,888 and (b) the reclassification of 13,264 shares of common stock subject to redemption to permanent equity for those
stockholders who did not exercise their conversion rights.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (9) | To reflect the recapitalization of Hongri through the issuance of 22,957,455 shares of Aquasition’s common stock to KBS
| | --- | -----------------------------------------------------------------------------------------------------------------------

| | (10) | To eliminate the historical accumulated deficit of Aquasition of $3,484,708, the accounting acquiree.
| | ---- | -----------------------------------------------------------------------------------------------------

| | (11) | To reflect the payment of legal, financial advisory, accounting, printing and other professional fees and expenses incurred
in connection with the Business Combination.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-57







AQUASITION CORP.

PRO FORMA CONDENSED COMBINED INCOME STATEMENT

(Unaudited)

Year Ended December 31, 2013



|                                             |  | (A)    |            |   | (B)        |   |           |                       |  |   |                              |    
|-------------------------------------------- |  | ------ | ---------- | - | ---------- | - | --------- | --------------------- |  | - | ---------------------------- | ---
|                                             |  | Hongri |            |   | Aquasition |   |           | Pro Forma Adjustments |  |   | Pro Forma Condensed Combined |    
|                                             |  |        |            |   |            |   |           |                       |  |   |                              |    
|Revenue                                      |  | $      | 99,559,814 |   |            | $ | -         |                       |  | $ | -                            |    
|Cost of sales                                |  |        | 57,363,839 |   |            |   | -         |                       |  |   | -                            |    
|Gross profit                                 |  |        | 42,195,975 |   |            |   | -         |                       |  |   | -                            |    
|                                             |  |        |            |   |            |   |           |                       |  |   |                              |    
|Operating expenses:                          |  |        |            |   |            |   |           |                       |  |   |                              |    
|Distribution and selling expenses            |  |        | 6,238,995  |   |            |   | -         |                       |  |   | -                            |    
|General and administrative expenses          |  |        | 1,872,910  |   |            |   | 338,521   |                       |  |   | -                            |    
|Total operating expenses                     |  |        | 8,111,905  |   |            |   | 338,521   |                       |  |   | -                            |    
|                                             |  |        |            |   |            |   |           |                       |  |   |                              |    
|Other income:                                |  |        |            |   |            |   |           |                       |  |   |                              |    
|Change in fair value of warrants             |  |        | -          |   |            |   | (45,442   | )                     |  |   | -                            |    
|Interest income                              |  |        | -          |   |            |   | 7,972     |                       |  |   | -                            |    
|Finance costs                                |  |        | (116,421   | ) |            |   | -         |                       |  |   | -                            |    
|Other income                                 |  |        | 456,730    |   |            |   | -         |                       |  |   | -                            |    
|                                             |  |        |            |   |            |   |           |                       |  |   |                              |    
|Income (loss) before income taxes            |  |        | 34,424,379 |   |            |   | (375,991  | )                     |  |   | -                            |    
|Provision for income taxes                   |  |        | 8,629,022  |   |            |   | -         |                       |  |   | -                            |    
|Net income (loss)                            |  | $      | 25,795,357 |   |            | $ | (375,991  | )                     |  | $ | -                            |    
|                                             |  |        |            |   |            |   |           |                       |  |   |                              |    
|Weighted average shares outstanding, basic   |  |        |            |   |            |   | 2,310,500 |                       |  |   | 23,106,829                   | (1)
|Basic net income (loss) per share            |  |        |            |   |            | $ | (0.16     | )                     |  |   |                              |    
|                                             |  |        |            |   |            |   |           |                       |  |   |                              |    
|Weighted average shares outstanding, diluted |  |        |            |   |            |   | 2,310,500 |                       |  |   | 23,106,829                   | (1)
|Diluted net income (loss) per share          |  |        |            |   |            | $ | (0.16     | )                     |  |   |                              |    



F-58







Pro Forma Adjustments to the Unaudited
Condensed Combined Income Statement



| | (A) | Derived from the audited statement of comprehensive income of Hongri for the year ended December 31, 2013.
| | --- | ----------------------------------------------------------------------------------------------------------

| | (B) | Derived from the audited statement of operations of Aquasition Corp. for the year ended December 31, 2013.
| | --- | ----------------------------------------------------------------------------------------------------------



| | (1) | As the Business Combination is being reflected as if it had occurred at the beginning of the period presented, the calculation
of weighted average shares outstanding for basic and diluted net income (loss) per share assumes that the shares issued and redeemed
relating to the Business Combination have been outstanding for the entire period presented. The Aquasition shares used in
the weighted average shares calculation is computed as the sum of the  shares outstanding, plus the shares issued to advisors,
less the shares redeemed. Weighted average common shares outstanding – basic and diluted is calculated as follows:
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Aquasition public shares electing cash conversion                     |  |  | (4,981,736 | )
|--------------------------------------------------------------------- |  |  | ---------- | -
|Aquasition shares issued to advisors                                  |  |  | 178,110    |  
|Aquasition  shares outstanding                                        |  |  | 7,263,500  |  
|Aquasition shares issued in merger                                    |  |  | 22,957,455 |  
|Shares outstanding                                                    |  |  | 25,417,329 |  
|Percent of shares owned by KBS                                        |  |  | 90.3       | %
|Percent of shares owned by other Aquasition stockholders and advisors |  |  | 9.7        | %
|                                                                      |  |  |            |  
|Weighted average shares calculation, basic and diluted                |  |  |            |  
|KBS                                                                   |  |  | 22,957,455 |  
|Aquasition and advisors shares                                        |  |  | 2,459,874  |  
|Weighted average shares, basic and diluted                            |  |  | 25,417,329 |  



The computation of diluted income per share excludes the effect
of Unit Purchase Options to purchase 250,000 units (consisting of one warrant and one share of common stock) and warrants to purchase
5,918,000 shares of common stock because their exercise price is greater than the average market price in the period.



F-59







EXHIBIT INDEX



|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                              
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1         |  | Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.3 to the Amendment No. 4 to the registrant’s Registration Statement on Form F-1 filed on October 24, 2012 (Commission File No. 333-180571)).                                                                      
|            |  |                                                                                                                                                                                                                                                                                                          
|1.2         |  | By-laws (incorporated by reference to Exhibit 3.2 to the Amendment No. 1 to the registrant’s Registration Statement on Form F-1 filed on June 5, 2012 (Commission File No. 333-180571)).                                                                                                                 
|            |  |                                                                                                                                                                                                                                                                                                          
|2.1         |  | Specimen Unit Certificate (incorporated by reference to Exhibit 4.1 to the Amendment No. 3 to the registrant’s Registration Statement on Form F-1 filed on October 15, 2012 (Commission File No. 333-180571)).                                                                                           
|            |  |                                                                                                                                                                                                                                                                                                          
|2.2         |  | Specimen of Common Stock Certificate (incorporated by reference to Exhibit 4.2 to the Amendment No. 1 to the registrant’s Registration Statement on Form F-1 filed on June 5, 2012 (Commission File No. 333-180571)).                                                                                    
|            |  |                                                                                                                                                                                                                                                                                                          
|2.3         |  | Specimen Public Redeemable Warrant Certificate (incorporated by reference to Exhibit 4.3 to the Amendment No. 1 to the registrant’s Registration Statement on Form F-1 filed on June 5, 2012 (Commission File No. 333-180571)).                                                                          
|            |  |                                                                                                                                                                                                                                                                                                          
|2.4         |  | Specimen Placement Unit Certificate (incorporated by reference to Exhibit 4.4 to the Amendment No. 3 to the registrant’s Registration Statement on Form F-1 filed on October 15, 2012 (Commission File No. 333-180571)).                                                                                 
|            |  |                                                                                                                                                                                                                                                                                                          
|2.5         |  | Specimen Placement Warrant Certificate (incorporated by reference to Exhibit 4.5 to the Amendment No. 1 to the registrant’s Registration Statement on Form F-1 filed on June 5, 2012 (Commission File No. 333-180571)).                                                                                  
|            |  |                                                                                                                                                                                                                                                                                                          
|2.6         |  | Form of Warrant Agreement (incorporated by reference to Exhibit 4.6 to the Amendment No. 4 to the registrant’s Registration Statement on Form F-1 filed on October 24, 2012 (Commission File No. 333-180571)).                                                                                           
|            |  |                                                                                                                                                                                                                                                                                                          
|2.7         |  | Form of Unit Purchase Option (incorporated by reference to Exhibit 4.7 to the Amendment No. 3 to the registrant’s Registration Statement on Form F-1 filed on October 15, 2012 (Commission File No. 333-180571)).                                                                                        
|            |  |                                                                                                                                                                                                                                                                                                          
|4.1         |  | Form of Underwriting Agreement (incorporated by reference to Exhibit 1.1 to the Amendment No. 4 to the registrant’s Registration Statement on Form F-1 filed on October 24, 2012 (Commission File No. 333-180571)).                                                                                      
|            |  |                                                                                                                                                                                                                                                                                                          
|4.2         |  | Form of Letter Agreement by and among the registrant, Lazard Capital Markets LLC and the founders (incorporated by reference to Exhibit 10.1 to the Amendment No. 4 to the registrant’s Registration Statement on Form F-1 filed on October 24, 2012 (Commission File No. 333-180571)). (1)              
|            |  |                                                                                                                                                                                                                                                                                                          
|4.3         |  | Form of Investment Management Trust Agreement between American Stock Transfer & Trust Company and the registrant (incorporated by reference to Exhibit 10.2 to the Amendment No. 4 to the registrant’s Registration Statement on Form F-1 filed on October 24, 2012 (Commission File No. 333-180571)).   
|            |  |                                                                                                                                                                                                                                                                                                          
|4.4         |  | Form of Securities Escrow Agreement between the registrant, American Stock Transfer & Trust Company and the Founders (incorporated by reference to Exhibit 10.2 to the Amendment No. 2 to the registrant’s Registration Statement on Form F-1 filed on August 31, 2012 (Commission File No. 333-180571)).
|            |  |                                                                                                                                                                                                                                                                                                          
|4.5         |  | Form of Services Agreement between the registrant and Seacrest Shipping Co. Ltd. (incorporated by reference to Exhibit 10.4 to the Amendment No. 1 to the registrant’s Registration Statement on Form F-1 filed on June 5, 2012 (Commission File No. 333-180571)).                                       
|            |  |                                                                                                                                                                                                                                                                                                          
|4.6         |  | Form of Registration Rights Agreement among the Registrant and the founders (incorporated by reference to Exhibit 10.5 to the Amendment No. 1 to the registrant’s Registration Statement on Form F-1 filed on June 5, 2012 (Commission File No. 333-180571)).                                            
|            |  |                                                                                                                                                                                                                                                                                                          
|4.7         |  | Form of Placement Unit Purchase Agreement between the registrant and the founders (incorporated by reference to Exhibit 10.6 to the Amendment No. 4 to the Registrant’s Registration Statement on Form F-1 filed on October 24, 2012 (Commission File No. 333-180571)).                                  













|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.8         |  | Promissory Note, dated as of February 27, 2012, issued to Aqua Investments Corp. (incorporated by reference to Exhibit 10.7 to the Amendment No. 1 to the registrant’s Registration Statement on Form F-1 filed on June 5, 2012 (Commission File No. 333-180571)).                                                                                         
|            |  |                                                                                                                                                                                                                                                                                                                                                            
|4.9         |  | Share Exchange Agreement and Plan of Liquidation, dated March 24, 2014, by and among Aquasition Corp., KBS International Holdings, Inc., Hongri International Holdings Limited, Cheung So Wa and Chan Sun Keung (incorporated by reference to Exhibit 10.1 to the Registration Report on Form 6-K filed by the registrant on April 4, 2014)                
|            |  |                                                                                                                                                                                                                                                                                                                                                            
|4.10        |  | Frist Amendment to Share Exchange Agreement and Plan of Liquidation, dated June 21, 2014 by and among Aquasition Corp., KBS International Holdings, Inc., Hongri International Holdings Limited, Cheung So Wa and Chan Sun Keung (incorporated by reference to Exhibit (D)(3) to Amendment No.4 to the Schedule TO filed by the registrant on July 9, 2014)
|            |  |                                                                                                                                                                                                                                                                                                                                                            
|4.11*       |  | Voting Agreement , dated August 1, 2014, by and among Aquasition Corp., Aquasition Investments Corp., Cheung So Wa and Chan Sun Keung                                                                                                                                                                                                                      
|            |  |                                                                                                                                                                                                                                                                                                                                                            
|4.12*       |  | Form of Resale Lock-Up Agreement, dated August 1, 2014, by and among Aquasition Corp., Aquasition Investments Corp., Cheung So Wa, Chan Sun Keung and other named parties.                                                                                                                                                                                 
|            |  |                                                                                                                                                                                                                                                                                                                                                            
|4.13*       |  | Employee Agreement with Keyan Yan, dated August 1, 2014                                                                                                                                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                                                                                                            
|4.14*       |  | Employee Agreement with Stanley Wong, dated August 1, 2014                                                                                                                                                                                                                                                                                                 
|            |  |                                                                                                                                                                                                                                                                                                                                                            
|8.1*        |  | List of the registrant’s subsidiaries                                                                                                                                                                                                                                                                                                                      

______________________



*Filed herewith.