UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

WASHINGTON,
D.C. 20549



FORM 10-K



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



For
the fiscal year ended December 31, 2022



OR



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



Commission
file number: 000-545793







|COSMOS
    GROUP HOLDINGS INC.                            
|----------------------------------------------------------
|(Exact name of registrant
    as specified in its charter)



|Nevada                              |  | 90-1177460             
|----------------------------------- |  | -----------------------
|(State
    or other jurisdiction of |  | (I.R.S.  Employer      
|incorporation
    or organization)  |  | Identification
    No.)



37/F,
Singapore Land Tower

50
Raffles Place

Singapore 048623

(Address
of principal executive offices and zip code)



Registrant’s
telephone number, including area code: + 65 6829 7017



Securities
registered pursuant to Section 12(b) of the Act: None



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



Common
Stock, $0.001 par value

Title
of each class



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



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

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 ☒    
No ☐



Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).  Yes ☒     No ☐



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



|Large
    accelerated filer | ☐ | Accelerated
    filer         | ☐
|--------------------------- | - | ----------------------------- | -
|Non-accelerated
    filer   | ☐ | Smaller
    reporting company | ☒
|                            |   | Emerging
    growth company   | ☐



If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐



Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.  Yes ☐     No ☒



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐    
No ☒



Indicate
the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.





|Common Stock                             |  | Outstanding at March 31, 2023
|---------------------------------------- |  | -----------------------------
|Common Stock, $0.001 par value per share |  | 457,952,322 shares           



The
aggregate market value of the 148,109,730 shares of Common Stock of the registrant held by non-affiliates on June 30, 2022, based on
the price at which the common stock sold on the last business day of the registrant’s second quarter, is $740,548,650.



DOCUMENTS
INCORPORATED BY REFERENCE: None




















TABLE
OF CONTENTS.





|             |                                                                                                                  | Page
|------------ | ---------------------------------------------------------------------------------------------------------------- | ----
|Part
    I   |                                                                                                                  |     
|Item 1       | Description
    of Business                                                                                      | 1   
|Item 1A      | Risk
    Factors                                                                                                 | 28  
|Item 1B      | Unresolved
    Staff Comments                                                                                    | 43  
|Item 2       | Properties                                                                                                       | 43  
|Item 3       | Legal
    Proceedings                                                                                            | 43  
|Item 4       | Mine
    Safety Disclosures                                                                                      | 43  
|             |                                                                                                                  |     
|Part
    II  |                                                                                                                  |     
|Item 5       | Market
    for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 44  
|Item 6       | Reserved                                                                                                         | 44  
|Item 7       | Management’s
    Discussion and Analysis of Financial Condition and Results of Operation                         | 44  
|Item 7A      | Quantitative
    and Qualitative Disclosures about Market Risk                                                   | 54  
|Item 8       | Financial
    Statements and Supplementary Data                                                                  | 54  
|Item 9       | Changes
    in and Disagreements with Accountants on Accounting and Financial Disclosure                         | 55  
|Item 9A      | Controls
    and Procedures                                                                                      | 55  
|Item 9B      | Other
    Information                                                                                            | 55  
|Item 9C      | Disclosure
    Regarding Foreign Jurisdictions That Prevent Inspections                                          | 55  
|             |                                                                                                                  |     
|Part
    III |                                                                                                                  |     
|Item 10      | Directors
    and Executive Officers and Corporate Governance                                                    | 56  
|Item 11      | Executive
    Compensation                                                                                       | 57  
|Item 12      | Security
    Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               | 61  
|Item 13      | Certain
    Relationships and Related Transactions, and Director Independence                                    | 61  
|Item 14      | Principal
    Accounting Fees and Services                                                                       | 63  
|             |                                                                                                                  |     
|Part
    IV  |                                                                                                                  |     
|Item 15      | Exhibits,
    Financial Statement Schedules                                                                      | 64  
|Item 16      | Form
    10-K Summary                                                                                            | 64  
|             |                                                                                                                  |     
|Signatures   |                                                                                                                  | 65  





i







INTRODUCTORY
COMMENT



We
are a Nevada holding company with operations conducted through our wholly owned subsidiaries based in Hong Kong and Singapore. Our investors
hold shares of common stock in Cosmos Group Holdings Inc., the Nevada holding company. This structure presents unique risks as our investors
may never directly hold equity interests in our Hong Kong subsidiary and will be dependent upon contributions from our subsidiaries to
finance our cash flow needs. Our ability to obtain contributions from our subsidiaries are significantly affected by regulations promulgated
by Hong Kong and Singaporean authorities. Any change in the interpretation of existing rules and regulations or the promulgation of new
rules and regulations may materially affect our operations and or the value of our securities, including causing the value of our securities
to significantly decline or become worthless. For a detailed description of the risks facing the Company associated with our structure,
please refer to “Risk Factors – Risk Relating to Doing Business in Hong Kong.” set forth herein.



Cosmos
Group Holdings Inc. and our Hong Kong subsidiaries are not required to obtain permission from the Chinese authorities including the China
Securities Regulatory Commission, or CSRC, or Cybersecurity Administration Committee, or CAC, to operate or to issue securities to foreign
investors. However, in light of the recent statements and regulatory actions by the People’s Republic of China (“the PRC”)
government, such as those related to Hong Kong’s national security, the promulgation of regulations prohibiting foreign ownership
of Chinese companies operating in certain industries, which are constantly evolving, and anti-monopoly concerns, we may be subject to
the risks of uncertainty of any future actions of the PRC government in this regard including the risk that we inadvertently conclude
that such approvals are not required, that applicable laws, regulations or interpretations change such that we are required to obtain
approvals in the future, or that the PRC government could disallow our holding company structure, which would likely result in a material
change in our operations, including our ability to continue our existing holding company structure, carry on our current business, accept
foreign investments, and offer or continue to offer securities to our investors. These adverse actions could cause the value of our common
stock to significantly decline or become worthless. We may also be subject to penalties and sanctions imposed by the PRC regulatory agencies,
including the Chinese Securities Regulatory Commission, if we fail to comply with such rules and regulations, which would likely adversely
affect the ability of the Company’s securities to continue to trade on the Over-the-Counter Bulletin Board, which would likely
cause the value of our securities to significantly decline or become worthless.



There
may be prominent risks associated with our operations being in Hong Kong. For example, as a U.S.-listed Hong Kong public company,
we may face heightened scrutiny, criticism and negative publicity, which could result in a material change in our operations and
the value of our common stock. It could also significantly limit or completely hinder our ability to offer or continue to offer securities
to investors and cause the value of such securities to significantly decline or be worthless. Additionally, changes in Chinese internal
regulatory mandates, such as the M&A rules, Anti-Monopoly Law, and Data Security Law, may target the Company’s corporate structure
and impact our ability to conduct business in Hong Kong, accept foreign investments, or list on an U.S. or other foreign exchange. Recently,
the PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance
notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed
overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding
the efforts in anti-monopoly enforcement, The business of our subsidiaries are not subject to cybersecurity review with the Cyberspace
Administration of China, or CAC, given that: (i) we do not have one million individual online users of our products and services in Hong
Kong; (ii) we do not possess a large amount of personal information in our business operations.  In addition, we are not subject
to merger control review by China’s anti-monopoly enforcement agency due to the level of our revenues which provided from us and
audited by our auditor and the fact that we currently do not expect to propose or implement any acquisition of control of, or decisive
influence over, any company with revenues within China of more than Renminbi (“RMB”) 400 million. Currently, these statements
and regulatory actions have had no impact on our daily business operations, the ability to accept foreign investments and list our securities
on an U.S. or other foreign exchange. However, since these statements and regulatory actions are new, it is highly uncertain how soon
legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations
and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will
have on our daily business operation, the ability to accept foreign investments and list our securities on an U.S. or other foreign exchange.
For a detailed description of the risks facing the Company and associated with our operations in Hong Kong, please refer to “Risk
Factors – Risk Factors Relating to Doing Business in Hong Kong.” set forth herein.





ii







The recent joint statement by the SEC and PCAOB, and the Holding Foreign
Companies Accountable Act (HFCAA) all call for additional and more stringent criteria to be applied to emerging market companies upon
assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. Trading in our securities
may be prohibited under the HFCAA if the PCAOB determines that it cannot inspect or investigate completely our auditor, and that as a
result, an exchange may determine to delist our securities. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign
Companies Accountable Act which would reduce the number of consecutive non-inspection years required for triggering the prohibitions under
the HFCAA from three years to two thus reducing the time before our securities may be prohibited from trading or being delisted. On December
2, 2021, the U.S. Securities and Exchange Commission adopted rules to implement the HFCAA. Pursuant to the HFCAA, the Public Company Accounting
Oversight Board (PCAOB) issued its report notifying the Commission that it is unable to inspect or investigate completely accounting firms
headquartered in mainland China or Hong Kong due to positions taken by authorities in mainland China and Hong Kong. Our auditor is based
in Kuala Lumpur, Malaysia and is subject to PCAOB inspection. It is not subject to the determinations announced by the PCAOB on December
16, 2021. However, in the event the Malaysian authorities subsequently take a position disallowing the PCAOB to inspect our auditor, then
we would need to change our auditor to avoid having our securities delisted. On August 26, 2022, the China Securities Regulatory Commission,
or CSRC, the Ministry of Finance of the PRC, and the PCAOB signed a Statement of Protocol, or the Protocol, governing inspections and
investigations of audit firms based in China and Hong Kong. Pursuant to the Protocol, the PCAOB shall have independent discretion to select
any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022,
the PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered
in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct
or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB will consider the need to issue a new determination.
Notwithstanding the foregoing, in the event it is later determined that the PCAOB is unable to inspect or investigate completely our auditor,
then such lack of inspection could cause our securities to be delisted from the stock exchange. On June 22, 2021, the U.S. Senate passed
the Accelerating Holding Foreign Companies Accountable Act and on December 29, 2022, the Consolidated Appropriations Act was signed into
law by President Biden, which contained, among other things, an identical provision to Accelerating Holding Foreign Companies Accountable
Act and amended the Holding Foreign Companies Accountable Act by requiring the SEC to prohibit an issuer’s securities from trading
on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing
the time before our Ordinary Shares may be prohibited from trading or delisted. The delisting of our Ordinary Shares, or the threat of
their being delisted, may materially and adversely affect the value of your investment.The SEC is assessing how to implement other requirements
of the HFCAA, including the listing and trading prohibition requirements described above. Future developments in respect of increasing
U.S. regulatory access to audit information are uncertain, as the legislative developments are subject to the legislative process and
the regulatory developments are subject to the rule-making process and other administrative procedures. While we understand that there
has been dialogue among the CSRC, the SEC and the PCAOB regarding the inspection of PCAOB-registered accounting firms in Mainland China,
there can be no assurance that we will be able to comply with requirements imposed by U.S. regulators if there is significant change to
current political arrangements between Mainland China and Hong Kong, or if any component of our auditor’s work papers become located
in Mainland China in the future. Delisting of our Ordinary Shares likely would force holders of our Ordinary Shares to sell their Ordinary
Shares. The market price of our Ordinary Shares could be adversely affected as a result of anticipated negative impacts of these executive
or legislative actions upon, regardless of whether these executive or legislative actions are implemented and regardless of our actual
operating performance.



Please see “Risk Factors - The Holding Foreign Companies Accountable
Act requires the Public Company Accounting Oversight Board (PCAOB) to be permitted to inspect the issuer’s public accounting firm within
three years. This three-year period will be shortened to two years if the Accelerating Holding Foreign Companies Accountable Act is enacted.
There are uncertainties under the PRC Securities Law relating to the procedures and requisite timing for the U.S. securities regulatory
agencies to conduct investigations and collect evidence within the territory of the PRC. If the U.S. securities regulatory agencies are
unable to conduct such investigations, they may suspend or de-register our registration with the SEC and delist our securities from applicable
trading market within the US.” set forth herein.





iii







In
addition to the foregoing risks, we face various legal and operational risks and uncertainties arising from doing business in Hong Kong
as summarized below and in “Risk Factors — Risks Relating to Doing Business in Hong Kong” set forth herein.



| | ● | Adverse changes in economic
    and political policies of the PRC government could have a material and adverse effect on overall economic growth in China and Hong
    Kong, which could materially and adversely affect our business. Please see “Risk Factors - We face the risk that changes
    in the policies of the PRC government could have a significant impact upon the business we may be able to conduct in Hong Kong and
    the profitability of such business.” and “Substantial uncertainties and restrictions with respect to the
    political and economic policies of the PRC government and PRC laws and regulations could have a significant impact upon the business
    that we may be able to conduct in the PRC and accordingly on the results of our operations and financial condition.”
    set forth herein.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ● | We
    are a holding company with operations conducted through our wholly owned subsidiaries based in Hong Kong and Singapore. This structure
    presents unique risks as our investors may never directly hold equity interests in our Hong Kong subsidiary and will be dependent
    upon contributions from our subsidiaries to finance our cash flow needs. Any limitation on the ability of our subsidiaries to make
    payments to us could have a material adverse effect on our ability to conduct business. We do not anticipate paying dividends in
    the foreseeable future; you should not buy our stock if you expect dividends. Please see “Risk Factors - Because our
    holding company structure creates restrictions on the payment of dividends, our ability to pay dividends is limited.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ● | PRC
    regulation of loans to and direct investments in PRC entities by offshore holding companies may delay or prevent us from using the
    proceeds of this offering to make loans or additional capital contributions to our operating subsidiaries in Hong Kong. Substantial
    uncertainties exist with respect to the interpretation of the PRC Foreign Investment Law and how it may impact the viability of our
    current corporate structure, corporate governance and business operations. Please see ’Risk Factors - PRC regulation
    of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may
    delay or prevent us from using the proceeds we receive from offshore financing activities to make loans to or make additional capital
    contributions to our Hong Kong subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and
    expand business.” set forth herein.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ● | In
    light of China’s extension of its authority into Hong Kong, the Chinese government can change Hong Kong’s rules and regulations
    at any time with little to no advance notice, and can intervene and influence our operations and business activities in Hong Kong.
    We are currently not required to obtain approval from Chinese authorities to list on U.S. exchanges. However, if our subsidiaries
    or the holding company were required to obtain approval in the future, or we erroneously conclude that approvals were not required,
    or we were denied permission from Chinese authorities to operate or to list on U.S. exchanges, we will not be able to continue listing
    on a U.S. exchange and the value of our common stock would likely significantly decline or become worthless, which would materially
    affect the interest of the investors. There is a risk that the Chinese government may intervene or influence our operations at any
    time, or may exert more control over offerings conducted overseas and/or foreign investment in Hong Kong-based issuers, which could
    result in a material change in our operations and/or the value of our securities. Further, any actions by the Chinese government
    to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers would
    likely significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value
    of such securities to significantly decline or be worthless. Please see “Risk Factors - We face the risk that changes
    in the policies of the PRC government could have a significant impact upon the business we may be able to conduct in the Hong Kong
    and the profitability of such business.” and “Substantial uncertainties and restrictions with respect to
    the political and economic policies of the PRC government and PRC laws and regulations could have a significant impact upon the business
    that we may be able to conduct in Hong Kong and accordingly on the results of our operations and financial condition.”
    and “The Chinese government exerts substantial influence over the manner in which we must conduct our business activities.
    We are currently not required to obtain approval from Chinese authorities to list on U.S. exchanges. However, to the extent that
    the Chinese government exerts more control over offerings conducted overseas and/or foreign investment in China-based issuers over
    time and if our PRC subsidiaries or the holding company were required to obtain approval in the future and were denied permission
    from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange and the value of our
    common stock may significantly decline or become worthless, which would materially affect the interest of the investors.” set
    forth herein.





iv







| | ● | Governmental
    control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ● | We
    may become subject to a variety of laws and regulations in the PRC regarding privacy, data security, cybersecurity, and data protection.
    We may be liable for improper use or appropriation of personal information provided by our customers. Please see “Risk
    Factors - The Chinese government exerts substantial influence over the manner in which we must conduct our business activities. We
    are currently not required to obtain approval from Chinese authorities to list on U.S exchanges. However, to the extent that the
    Chinese government exerts more control over offerings conducted overseas and/or foreign investment in China-based issuers over time
    and if our PRC subsidiaries or the holding company were required to obtain approval in the future and were denied permission from
    Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange and the value of our common
    stock may significantly decline or become worthless, which would materially affect the interest of the investors.”
    set forth herein.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ● | Under
    the Enterprise Income Tax Law of the PRC (“EIT Law”), we may be classified as a “Resident Enterprise” of
    China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC shareholders. Please see “Risk
    Factors - Our global income may be subject to PRC taxes under the PRC Enterprise Income Tax Law, which could have a material adverse
    effect on our results of operations.” set forth herein.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ● | Failure
    to comply with PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our
    PRC resident Shareholders to personal liability, may limit our ability to acquire Hong Kong and PRC companies or to inject capital
    into our Hong Kong subsidiary, may limit the ability of our Hong Kong subsidiaries to distribute profits to us or may otherwise materially
    and adversely affect us.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ● | The
    recent joint statement by the SEC and PCAOB, and the HFCAA all call for additional and more stringent criteria to be applied to emerging
    market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the
    PCAOB. Trading in our securities may be prohibited under the HFCAA if the PCAOB determines that it cannot inspect or investigate
    completely our auditor, and that as a result an exchange may determine to delist our securities. On June 22, 2021, the U.S. Senate
    passed the Accelerating Holding Foreign Companies Accountable Act which would reduce the number of consecutive non-inspection years
    required for triggering the prohibitions under the HFCAA from three years to two thus reducing the time before our securities may
    be prohibited from trading or being delisted. On December 2, 2021, the U.S. Securities and Exchange Commission adopted rules to implement
    the HFCAA. Pursuant to the HFCAA, the Public Company Accounting Oversight Board (PCAOB) issued its report notifying the Commission
    that it is unable to inspect or investigate completely accounting firms headquartered in mainland China or Hong Kong due to positions
    taken by authorities in mainland China and Hong Kong.  Our auditor is not subject to the determinations announced by the PCAOB
    on December 16, 2021. However, in the event the Malaysian authorities subsequently take a position disallowing the PCAOB to inspect
    our auditor, then we would need to change our auditor to avoid having our securities delisted. Please see “Risk Factors
    - The Holding Foreign Companies Accountable Act requires the Public Company Accounting Oversight Board (PCAOB) to be permitted to
    inspect the issuer’s public accounting firm within three years. This three-year period will be shortened to two years if the Accelerating
    Holding Foreign Companies Accountable Act is enacted. There are uncertainties under the PRC Securities Law relating to the procedures
    and requisite timing for the U.S. securities regulatory agencies to conduct investigations and collect evidence within the territory
    of the PRC. If the U.S. securities regulatory agencies are unable to conduct such investigations, they may suspend or de-register
    our registration with the SEC and delist our securities from applicable trading market within the US.” set forth herein.





v







| | ● | You
    may be subject to PRC income tax on dividends from us or on any gain realized on the transfer of shares of our common stock. Please
    see “Risk Factors - Dividends payable to our foreign investors and gains on the sale of our shares of common stock by
    our foreign investors may become subject to tax by the PRC.” set forth herein.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ● | We
    face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.
    Please see “Risk Factors - We and our shareholders face uncertainties with respect to indirect transfers of equity interests
    in PRC resident enterprises by their non-PRC holding companies.” set forth herein.                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ● | COSG
    is organized under the laws of the State of Nevada as a holding company that conducts its business through a number of subsidiaries
    organized under the laws of foreign jurisdictions such as Hong Kong, Singapore and the British Virgin Islands. This may have an
    adverse impact on the ability of U.S. investors to enforce a judgment obtained in U.S. Courts against these entities, bring actions
    in Hong Kong against us or our management or to effect service of process on the officers and directors managing the foreign
    subsidiaries. Please see “Risk Factors - It may be difficult for stockholders to enforce any judgment obtained in the
    United States against us, which may limit the remedies otherwise available to our stockholders.” set forth
    herein.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ● | U.S.
    regulatory bodies may be limited in their ability to conduct investigations or inspections of our operations in China.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ● | There
    are significant uncertainties under the EIT Law relating to the withholding tax liabilities of our PRC subsidiary, and dividends
    payable by our PRC subsidiary to our offshore subsidiaries may not qualify to enjoy certain treaty benefits. Please see “Risk
    Factors - Our global income may be subject to PRC taxes under the PRC Enterprise Income Tax Law, which could have a material adverse
    effect on our results of operations.” set forth herein.                                                                                                                                                                                                                                                                                                                             



References in this report to the “Company” and “COSG,”
refer to Cosmos Group Holdings Inc., a Nevada company. References to the “Group”, “we,” “us” and “our”
refer to Cosmos Group Holdings Inc and all of its subsidiaries on a consolidated basis. Where reference to a specific entity is required,
the name of such specific entity will be referenced.





vi







Transfers
of Cash to and from Our Subsidiaries



Cosmos
Group Holdings Inc. is a Nevada holding company with no operations of its own. We conduct our operations in Hong Kong primarily through
our subsidiaries in Hong Kong and Singapore. We may rely on dividends to be paid by our Hong Kong and Singapore subsidiaries to fund
our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders,
to service any debt we may incur and to pay our operating expenses. In order for us to pay dividends to our shareholders, we will
rely on payments made from our Hong Kong and Singapore subsidiaries to Cosmos Group Holdings Inc. To date, our subsidiaries have not
made any transfers, dividends or distributions to Cosmos Group Holdings Inc. and Cosmos Group Holdings Inc. has not made any transfers,
dividends or distributions to our subsidiaries or to U.S. investors.



We
do not intend to make dividends or distributions to investors of Cosmos Group Holdings Inc. in the foreseeable future.



We
currently intend to retain all available funds and future earnings, if any, for the operation and expansion of our business and do not
anticipate declaring or paying any dividends in the foreseeable future. Any future determination related to our dividend policy will
be made at the discretion of our board of directors after considering our financial condition, results of operations, capital requirements,
contractual requirements, business prospects and other factors the board of directors deems relevant, and subject to the restrictions
contained in any future financing instruments.



Cosmos
Group Holdings Inc. (Nevada corporation)



Subject
to the Nevada Revised Statutes and our bylaws, our board of directors may authorize and declare a dividend to shareholders at such time
and of such an amount as they think fit if they are satisfied, on reasonable grounds, that immediately following the dividend the value
of our assets will exceed our liabilities and we will be able to pay our debts as they become due. There is no further Nevada statutory
restriction on the amount of funds which may be distributed by us by dividend.  Accordingly, Cosmos Group Holdings Inc. is permitted
under the Nevada laws to provide funding to our subsidiaries in Singapore and Hong Kong through loans or capital contributions without
restrictions on the amount of the funds, subject to satisfaction of applicable government registration, approval and filing requirements.



Singapore
and Hong Kong Subsidiaries



Our
Hong Kong subsidiaries and our Singapore subsidiary are also permitted under the laws of Hong Kong and Singapore to provide funding to
Cosmos Group Holdings Inc. through dividend distribution without restrictions on the amount of the funds. If our Hong Kong and Singapore
subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends
or make other distributions to us. To date, our subsidiaries have not made any transfers, dividends or distributions to Cosmos Group
Holdings Inc. and Cosmos Group Holdings Inc. has not made any transfers, dividends or distributions to our subsidiaries.



Under
the current practice of the Inland Revenue Department of Hong Kong, no tax is payable in Hong Kong in respect of dividends
paid by us. The laws and regulations of the PRC do not currently have any material impact on transfer of cash from Cosmos Group Holdings
Inc. to our Hong Kong subsidiaries or from our Hong Kong subsidiaries to Cosmos Group Holdings Inc. There are no restrictions or limitation
under the laws of Hong Kong imposed on the conversion of HK dollar into foreign currencies and the remittance of currencies out of Hong
Kong or across borders and to U.S investors.



PRC
Laws



Current
PRC regulations permit PRC subsidiaries to pay dividends to Hong Kong subsidiaries only out of their accumulated profits, if any, determined
in accordance with Chinese accounting standards and regulations. In addition, each of our subsidiaries in China is required to set aside
at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered
capital. Each of such entity in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare
fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory
reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings
of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation. As of the
date of this report, we do not have any PRC subsidiaries.





vii







The
PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC.
Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency
for the payment of dividends from our profits, if any. Furthermore, if our subsidiaries in the PRC incur debt on their own in the future,
the instruments governing the debt may restrict their ability to pay dividends or make other payments. If we or our subsidiaries are
unable to receive all of the revenues from our operations, we may be unable to pay dividends on our common stock.



Cash
dividends, if any, on our common stock will be paid in U.S. dollars. If we are considered a PRC tax resident enterprise for tax purposes,
any dividends we pay to our overseas shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding
tax at a rate of up to 10.0%.



If
in the future we have PRC subsidiaries, certain payments from such PRC subsidiaries to Hong Kong subsidiaries will be subject to PRC
taxes, including business taxes and VAT. As of the date of this report, we do not have any PRC subsidiaries and our Hong Kong subsidiaries
have not made any transfers, dividends or distributions nor do we expect to make such transfers, dividends or distributions in the foreseeable
future.



Pursuant
to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax
Evasion on Income, or the Double Tax Avoidance Arrangement, the 10% withholding tax rate may be lowered to 5% if a Hong Kong resident
enterprise owns no less than 25% of a PRC entity. However, the 5% withholding tax rate does not automatically apply and certain requirements
must be satisfied, including, without limitation, that (a) the Hong Kong entity must be the beneficial owner of the relevant dividends;
and (b) the Hong Kong entity must directly hold no less than 25% share ownership in the PRC entity during the 12 consecutive months preceding
its receipt of the dividends. In current practice, a Hong Kong entity must obtain a tax resident certificate from the Hong Kong tax authority
to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case
basis, we cannot assure you that we will be able to obtain the tax resident certificate from the relevant Hong Kong tax authority and
enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to dividends to be paid by a PRC
subsidiary to its immediate holding company. As of the date of this report, we do not have a PRC subsidiary. In the event that we acquire
or form a PRC subsidiary in the future and such PRC subsidiary desires to declare and pay dividends to our Hong Kong subsidiary, our
Hong Kong subsidiary will be required to apply for the tax resident certificate from the relevant Hong Kong tax authority. In such event,
we plan to inform the investors through SEC filings, such as a current report on Form 8-K, prior to such actions. See “Risk
Factors – Risk Factors Relating to Doing Business in Hong Kong.” set forth herein.





viii







CAUTIONARY
NOTE CONCERNING FORWARD-LOOKING STATEMENTS



This
Annual Report on Form 10-K includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended that are not historical facts, and involve risks
and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than
statements of historical facts, included in this Form 10-K including, without limitation, statements in the “Market Overview”
and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s
market projections, financial position, business strategy and the plans and objectives of management for future operations, events or
developments which the Company expects or anticipates will or may occur in the future, including such things as future capital expenditures
(including the amount and nature thereof); expansion and growth of the Company’s business and operations; and other such matters are
forward-looking statements. These statements are based on certain assumptions and analyses made by the Company in light of its experience
and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are
appropriate under the circumstances. However, whether actual results or developments will conform with the Company’s expectations and
predictions is subject to a number of risks and uncertainties, including general economic, market and business conditions; the business
opportunities (or lack thereof) that may be presented to and pursued by the Company; changes in laws or regulation; and other factors,
most of which are beyond the control of the Company.



These
forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology, such as “believes,”
“anticipates,” “expects,” “estimates,” “plans,” “may,” “will,” or similar
terms. These statements appear in a number of places in this filing and include statements regarding the intent, belief or current expectations
of the Company, and its directors or its officers with respect to, among other things: (i) trends affecting the Company’s financial condition
or results of operations for its limited history; (ii) the Company’s business and growth strategies; and, (iii) the Company’s financing
plans. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant
risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result
of various factors. Such factors that could adversely affect actual results and performance include, but are not limited to, the Company’s
limited operating history, potential fluctuations in quarterly operating results and expenses, government regulation, technological change
and competition. For information identifying important factors that could cause actual results to differ materially from those anticipated
in the forward-looking statements, please refer to the Risk Factors section herein.



Consequently,
all of the forward-looking statements made in this Form 10-K are qualified by these cautionary statements and there can be no assurance
that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will
have the expected consequence to or effects on the Company or its business or operations. The Company assumes no obligations to update
any such forward-looking statements.





ix







PART
I



ITEM
1. DESCRIPTION OF BUSINESS.



History



Cosmos Group Holdings Inc.was
incorporated in the state of Nevada on August 14, 1987, under the name Shur De Cor, Inc. and engaged in developing certain mining claims.
In April 1999, Shur De Cor merged with Interactive Marketing Technology, a New Jersey corporation that was engaged in the business of
developing and direct marketing of consumer products. As the surviving company, Shur De Cor changed its name to Interactive Marketing
Technology, Inc. Shur De Cor’s then management resigned and the management of Interactive New Jersey became the Company’s
management. The prior management of Shur De Cor retained Shur De Cor’s business and assets. After that acquisition, the Company,
through a wholly owned subsidiary, IMT’s Plumber, Inc., produced, marketed, and sold a licensed product called the Plumber’s
Secret, which was discontinued in fiscal 2001. In May 2002, the Company ceased to actively pursue its product development and marketing
business and actively sought to either acquire a third party, merge with a third party or pursue a joint venture with a third party in
order to re-enter its former business of development and direct marketing of proprietary consumer products in the United States and worldwide.



On November 17, 2004, the Company
acquired MPL, a company organized under the laws of the British Virgin Islands, and its subsidiaries in accordance with the terms of a
Share Exchange Agreement executed by the parties (the “2004 Agreement”). In connection with the acquisition, the Company issued
an aggregate of 109,623,006 shares of its common stock to Imperial International Limited, a company incorporated under the laws of the
British Virgin Islands (“Imperial”), the sole shareholder of MPL, in exchange for 100% of the issued and outstanding shares
of MPL capital stock (the “2004 Share Exchange”). Upon completion of the share exchange, MPL became the Company’s wholly
owned subsidiary and the Company’s former owner transferred control of the Company to Imperial. The Company relied on Rule 506 of
Regulation D of the Securities Act of 1933, as amended (the “Act”), in regard to the shares that the Company issued pursuant
to the 2004 Share Exchange. The Company treated this transaction as a qualified “business combination” as defined by Rule
501(d). The Company relied on the exemption from registration pursuant to Section 4(2) of, and Regulation D promulgated under, the Act
in issuing the Company’s securities.



We
were incorporated in the state of Nevada on August 14, 1987, under the name Shur De Cor, Inc. and engaged in developing certain mining
claims. In April 1999, Shur De Cor merged with Interactive Marketing Technology, a New Jersey corporation that was engaged in the business
of developing and direct marketing of consumer products. As the surviving company, Shur De Cor changed its name to Interactive Marketing
Technology, Inc. Shur De Cor’s then management resigned and the management of Interactive New Jersey became the Company’s management.
The prior management of Shur De Cor retained Shur De Cor’s business and assets. After that acquisition, the Company, through a
wholly owned subsidiary, IMT’s Plumber, Inc., produced, marketed, and sold a licensed product called the Plumber’s Secret, which was
discontinued in fiscal 2001. In May 2002, the Company ceased to actively pursue its product development and marketing business and actively
sought to either acquire a third party, merge with a third party or pursue a joint venture with a third party in order to re-enter its
former business of development and direct marketing of proprietary consumer products in the United States and worldwide.



On
November 17, 2004, the Company acquired MPL, a company organized under the laws of the British Virgin Islands, and its subsidiaries in
accordance with the terms of a Share Exchange Agreement executed by the parties (the “2004 Agreement”). In connection with
the acquisition, the Company issued an aggregate of 109,623,006 shares of its common stock to Imperial International Limited, a company
incorporated under the laws of the British Virgin Islands (“Imperial”), the sole shareholder of MPL, in exchange for 100%
of the issued and outstanding shares of MPL capital stock (the “2004 Share Exchange”). Upon completion of the share exchange,
MPL became the Company’s wholly owned subsidiary and the Company’s former owner transferred control of the Company to Imperial.
The Company relied on Rule 506 of Regulation D of the Securities Act of 1933, as amended (the “Act”), in regard to the shares
that we issued pursuant to the 2004 Share Exchange. The Company treated this transaction as a qualified “business combination”
as defined by Rule 501(d). The Company relied on the exemption from registration pursuant to Section 4(2) of, and Regulation D promulgated
under, the Act in issuing the Company’s securities.



In
connection with the 2004 Share Exchange, the Company: (i) changed its name from Interactive Marketing Technology, Inc. to China Artists
Agency, Inc.; (ii) obtained a new stock symbol, “CAAY”, and CUSIP Number, effective on December 21, 2004; (iii) increased its
authorized common stock to 200,000,000 shares; (iv) effectuated a 1 for 1.69 reverse stock split; and (v) spun off the Company’s
existing business into a separate public company, All Star Marketing, Inc., a Nevada corporation (“All Star”). All Star was
formed as a wholly owned subsidiary of the Company. The Spin-off was satisfied by means of a pro-rata share dividend to the Company’s
shareholders of record as of December 10, 2004. The purpose of the Spin-Off was to allow the subsidiary to operate as a separate public
company and raise working capital through the sale of its own equity. This allowed the Company’s management to focus on its business,
while at the same time, allowing the spun-off company to have greater exposure by trading as an independent public company. Additionally,
the shareholders and the market would then more easily identify the results and performance of the Company as a separate entity from
that of All Star. In August 2005, the Company changed its name to China Entertainment Group, Inc. and effective August 9, 2005, obtained
a new stock symbol “CGRP”, and CUSIP Number.



Effective
July 22, 2010, the Company merged with Safe and Secure TV Channel, LLC, a Delaware limited liability company (the “Merger”).
In connection with the Merger, the management of the Company resigned and was replaced by the management and principals of Safe and Secure
TV Channel, LLC. The holders of interests in Safe and Secure TV Channel, LLC exchanged their interests for approximately 50.2% of the
issued and outstanding stock of the Company. In September 2010, the Company effectuated a 9.85 for one stock split to shareholders of
record as of August 23, 2010. After the Merger, the Company became a television network and multimedia information and distribution company
focused on serving the homeland security and emergency preparedness industry.





1







On
February 15, 2016, the Company sold to Asia Cosmos Group Limited, a private limited liability company incorporated under the laws of
British Virgin Islands (“ACOSG”), 10,000,000 shares of its common stock at a per share price of $0.027. ACOSG’s sole
shareholder is Miky Wan. The Company relied on the exemption from registration pursuant to Section 4(2) of, and Regulation D and/or Regulation
S promulgated under the Act in selling the Company’s securities to ACOSG. In connection with the private placement to ACOSG, a
change of control occurred and Bryan Glass resigned from his position as President, Secretary, Treasurer and Chairman of the Company.



Miky
Wan was appointed to serve as Chief Executive Officer, Chief Operating Officer, President and Director, effective February 19, 2016.



Effective
February 26, 2016, the Company changed its name to Cosmos Group Holdings Inc. and filed a Certificate of Amendment to such effect with
the Nevada Secretary of State. The name change and the related stock symbol change to “COSG” were approved by the Financial
Industry Regulatory Authority on March 31, 2016. The Company also increased the number of its authorized common stock, par value $0.001,
from 90,000,0000 shares to 500,000,000 and its preferred stock, par value $0.001, from 10,000,000 to 30,000,000 shares.



On
January 13, 2017, the Company sold 200,000,000 shares of its common stock to ACOSG at a per share price of $0.001 per share for aggregate
consideration of US $200,000. The Company relied on the exemption from registration pursuant to Section 4(2) of, and Regulation D and/or
Regulation S promulgated under the Act in selling the Company’s securities to ACOSG.



Acquisition
of Lee Tat, Our Logistics Business



On
May 12, 2017, the Company acquired all of the issued and outstanding shares of Lee Tat from Mr. Koon Wing Cheung, Lee Tat’s sole
shareholder, in exchange for 219,222,938 shares of its issued and outstanding common stock. In connection with the Lee Tat acquisition,
Miky Wan resigned from her positions as Chief Executive Officer and Chief Operating Officer and Koon Wing Cheung and Yongwei Hu were
appointed to serve as our Chief Executive Officer and Chief Operating Officer, respectively, and also as directors of the Company. The
Company relied on the exemption from registration pursuant to Section 4(2) of, and Regulation D and/or Regulation S promulgated under
the Act in selling the Company’s securities to the shareholders of Lee Tat.



Termination
of Our Artificial Intelligence Educational Content Business



Acquisition
and Rescission of Acquisition of HKHL



On
July 19, 2019, the Company acquired 5,100 Ordinary Shares of Hong Kong Healthtech Limited, a limited company organized under the laws
of Hong Kong (“HKHL”), from Wing Lok Jonathan So pursuant to the terms of a Share Exchange Agreement (the “Share Exchange
Agreement”). Such securities represented approximately 51% of the issued and outstanding securities of HKHL. As consideration,
the Company issued 6,232,951 shares of its common stock, at a per share price of US$8.99. As a result of such acquisition, the Company
entered into the AI Education business of developing and delivering educational content.



In
connection with the Share Exchange, the Company entered into employment agreements with the following individuals in connection with
their appointment to the offices set forth next to their names:





|Tze Wai Albert Yip   | Chief Financial Officer
|-------------------- | -----------------------
|Wing Lok Jonathan So | Chief Strategy Officer 
|Kai Chi Wong         | Chief Operating Officer





2







On
December 27, 2019, the parties mutually terminated the Share Exchange Agreement and IP License Agreement. As a result, 5,100 Ordinary
Shares of HKHL were returned to Wing Lok Jonathan So and the 6,232,951 shares of our common stock issued in exchange therefor were returned
to us for cancellation. In connection with the termination, on December 30, 2019, Kai Chi Wong resigned from his position as Chief Operating
Officer of the Company. Koon Wing Cheung transferred to Kai Chi Wong 215,369 shares of Common Stock of the Company as a token of appreciation
of Mr. Wong’s contribution to the Company.



The
Company ultimately exited from the AI Education business in the first quarter of 2020. As a result,



| | ● | The
                                            Employment Agreement, dated July 19, 2019, by and between Cosmos Group Holdings Inc. and
                                            Wing Lok Jonathan So was terminated by the parties thereto effective on March 31, 2020, and
                                            Mr. Tze Wai Albert Yip resigned from his position as the Chief Financial Officer, effective
                                            on 30 April 2020.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Syndicate
    Capital (Asia) Limited returned 1,503,185 shares of the Company’s common stock (of the 2,149,293, shares previously transferred
    to Syndicate Capital (Asia) Limited from Koon Wing Cheung), with the balance of the 646,108 shares retained by Syndicate Capital
    (Asia) Limited as consideration for Mr. Tze Wai Albert Yip’s contributions to the Company.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Change
in Control



On
June 14, 2021, Asia Cosmos Group Limited, an entity controlled by our former Chief Executive Officer, and Koon Wing Cheung agreed to
sell 6,230,618 and 8,149,670 shares, respectively, of our common stock to Chan Man Chung for a total purchase price of four hundred twenty
thousand dollars (US$420,000). The common stock being sold constitutes sixty-six and seventy-seven hundredth percent (66.77%) of the
issued and outstanding shares of our common stock. The sellers relied on the exemption from registration pursuant to Section 4(2) of,
and Regulation D and/or Regulation S promulgated under the Act in selling the Company’s securities to Dr. Chan. The funds came
from the personal funds of Dr. Chan, and was not the result of a loan. The closing occurred June 28, 2021.



In
connection with such sale, Miky Wan, our former CEO, President and CFO resigned from her positions as a director and sole executive officer
of the Company. Concurrently therewith, Messrs. Chan Man Chung, Lee Ying Chiu Herbert and Tan Tee Soo were appointed to the Company’s
Board of Directors and Chan Man Chung was appointed to serve as the CEO, CFO and Secretary of the Company.



Acquisition
of Massive Treasure Limited and Entities



On
June 17, 2021, the Company entered into a Share Acquisition Agreement (the “Share Acquisition Agreement”), by and among the
Company, Massive Treasure Limited (“Massive Treasure”), a British Virgin Islands corporation, and the holders of ordinary
shares of Massive Treasure. Under the terms and conditions of the Share Acquisition Agreement, the Company offered to issue 1,078,269,470
shares of common stock of the Company, in consideration for all the issued and outstanding shares in Massive Treasure. Lee Ying Chiu
Herbert, our director, is the beneficial holder of 47,500 common shares, or 95%, of the issued and outstanding shares of Massive Treasure.
The Company will also issue 55,641,014 shares to complete the acquisitions of 12 business entities with Massive Treasure has signed.



As
of the date of this report, these acquisitions consummated on September 17, 2021 with 800,000,000 shares of common stock pending to be
issued to Lee Ying Chiu Herbert.



On December 15, 2022, the
Company entered into a Settlement Agreement with Lee Ying Chiu Herbert, our former director and
current controlling shareholder (“Dr. Lee”), pursuant to which the Company and Dr. Lee agreed to settle the matter of 800,000,000
shares of common stock of the Company due to Dr. Lee (the “Unissued Securities”) pursuant to the terms of that certain Share
Acquisition Agreement, dated June 17, 2021 (the “Share Acquisition Agreement”), by and among the Company, Massive Treasure
Limited (“Massive Treasure”), a British Virgin Islands corporation and holding company of numerous operating subsidiaries,
and the holders of ordinary shares of Massive Treasure. The Settlement Agreement was closed on December 15, 2022. Pursuant to the terms
of the Settlement Agreement, the Company and Dr. Lee agreed to the following, among other things, as settlement in full of the Unissued
Securities:



| | (1) | TheCompany
will issue to Dr. Lee 400,000,000 shares of its common stock at a per share value of $0.001;
| | --- | -------------------------------------------------------------------------------------------------------



| | (2) | The Company shall cause
the transfer to Dr. Lee or his designees all the assets and liabilities of following entities as such assets and liabilities are described
in the financial statements of the Company as of November 30, 2022:
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | i) | Coinllectibles Limited,(BVI
company number: 2067445), a company incorporated in the British Virgin Islands, with registered address at Mandar House, 3rd Floor, Johnson’s
Ghut, Tortola, British Virgin Islands and its branch, (Singapore company registration number: T21FC0080G);
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                     

| | ii) | Coinllectibles (HK)Limited,
(Hong Kong business registration number: 72228307), a company incorporated in Hong Kong, with registered address at 7/F, K11 Atelier Victoria
Dockside, 18 Salisbury Road, Tsim Sha Tsui, Hong Kong; and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                     

| | iii) | CoinllectiblesWealth
Limited, (Hong Kong business registration number: 70756483), a company incorporated in
Hong Kong, with registered address at 7/F, K11 Atelier Victoria Dockside, 18 Salisbury Road, Tsim Sha Tsui, Hong Kong.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | TheCompany
and Dr. Lee agreed to the allocation of certain inventories, accounts payables, and intellectual properties.
| | --- | -----------------------------------------------------------------------------------------------------------------------





3







Acquisition
of Art Collectibles



Recent
Purchases of Collectibles and Acquisition of subsidiaries



On
July 23, 2021, the Company and Lee Ying Chiu Herbert, our director, entered into a Sale and Purchase Agreement pursuant to which the
Company agreed to purchase Fifty-Five (55) sets of art collectibles for HK$10,344,000, payable through the issuance of 180,855 shares
of common stock of the Company (the “Shares”). The sale consummated on August 13, 2021. It is our understanding that Dr.
Lee is not a U.S. Person within the meaning of Regulations S. Accordingly, the Shares were sold pursuant to the exemption provided by
Section 4(a)(2) of the Securities Act of 1933, as amended, and Regulation S promulgated thereunder.



On
October 15, 2021, Massive Treasure, a subsidiary of Cosmos Group Holdings Inc., the Company, NFT Limited (“NFT”), a British
Virgin Island limited liability company, and the shareholders of NFT (collectively, the “NFT Shareholders”) agreed to entered
into a Share Exchange Agreement Version 2021001 (the “Agreement”) which is available on the web site of http://www.coinllectibles.art,
pursuant to which Massive Treasure agreed to acquire 51% of NFT through the issuance of 2,350,229 shares of common stock of the Company
(the “Shares”). The specifics of such share exchange are further set forth in that certain Confirmation dated October 15,
2021, by and among the Shareholders, NFT, the Company and Massive Treasure (the “Confirmation”). The consummation of the
Agreement occurred upon the issuance of the Shares to the NFT Shareholders on October 22, 2021.  NFT beneficially owns Talk+, a
messaging and cryptocurrency-focused mobile application which seeks to simplify the crypto usage experience by allowing users to send
crypto through instant messages to other individuals. We hope that the inclusion of Talk+  will enable us to attract more non-crypto
native users and broaden our community reach.



NFT beneficially owns Talk+, a
messaging and cryptocurrency-focused mobile application which seeks to simplify the crypto usage experience by allowing users to send
crypto through instant messages to other individuals. The app provided users with the ability to access their own cryptocurrencies that
were obtained independent of the Company by acting as a portal. However, the app did not allow for transfer of cryptocurrencies and all
cryptocurrencies accessed by the end-user remains with the end-user, and are not transferred or held by the Company at any time. We hope
that the inclusion of Talk+  will enable us to attract more non-crypto native users and broaden our community reach.



On
October 25, 2021, Coinllectibles Private Limited (“Coinllectibles”), a subsidiary of Cosmos Group Holdings Inc., and the
Company entered into two Sale and Purchase Agreements (the “Agreements”) with two artists, pursuant to which Coinllectibles
agreed to purchase collectible art items for £260,000 and US$100,000, payable through the issuance of 43,633 and 12,500 shares
of common stock of the Company  respectively, at a per share price of $4.00, and £130,000 and US$50,000 in cash payable after
the respective collectible art item has been sold by Coinllectibles. The consummation of the Agreements occurs upon the issuance of the
Shares to the respective artists on October 29, 2021.



On
February 10, 2022, the Company consummated the acquisition of 80% of the issued and outstanding securities of Grand Gallery Limited, a Hong Kong
limited liability company engaged in the business of selling traditional art and collectible pieces, through the issuance of 153,060
shares of our common stock, at a valuation of $4.00 per share. We believe that this acquisition will strengthen our DOT business by expanding
our access to buyers of arts and collectibles.



Other
Activities



In
March 2022, we launched a new sports division in our MetaMall and partnering with a former NBA basketball player as president of Coinllectible
Sports. We hope to exploit our DOT technology and the metaverse to bring innovation to the sports space, bridge the intersection of our
DOT technology and Sports memorabilia to improve experiences for fans, athletes, teams, events and partners.



Our
Business



COSG is a Nevada holding company
with operations conducted through our subsidiaries based in Singapore and Hong Kong. The Company, through its subsidiaries, is engaged
in two business segments: (i) the physical arts and collectibles business, and (ii) the financing/money lending business. The Company
currently does not have any customers that are from the United States or any U.S. person nor is the Company specifically targeting customers
from the United States. However, the Company’s operation of an online market place for collectibles and fine art is accessible online
by interested parties and may potentially be accessed by users located in the United States.



The Company’s business focused
on physical artworks and collectibles, while utilizing blockchain and NFT technologies to create a documents of title and a transparent
ledger for each artwork or collectible to enhance the overall experience of each collector in order to facilitate sale transaction logistics.
Through our physical arts and collectibles business, we provide authentication, valuation and certification (“AVC”) service,
sale and purchase, hire purchase, financing, custody, security and exhibition (“CSE”) services to art and collectibles buyers
through traditional methods as well as through leveraging blockchain technology through the creation of Digital Ownership Tokens (“DOTs”).
We initially intend to focus on customers located in Hong Kong and expand throughout Asia and the rest of the world.



We
conduct our DOT operations from Singapore. In Singapore, cryptocurrencies and the custodianship of such cryptocurrencies are not specifically
regulated. Cryptocurrency exchanges and trading of cryptocurrencies are legal, but not considered legal tender. To the extent that cryptocurrencies
or tokens are considered “capital market products” such as securities, spot foreign exchange contracts, derivatives and the
like, they will be subject to the jurisdiction of the Monetary Authority of Singapore (“MAS”), Securities and Futures Act,
anti-money laundering and combating the financing of terrorism laws and requirements. To the extent that tokens are deemed “digital
payment tokens,” they will be subject to the Payment Services Act of 2019 which, among other things, require compliance with anti-money
laundering and combating the financing of terrorism laws and requirements. According to the Payment Services Act of 2019, “digital
payment token” means any digital representation of value (other than an excluded digital representation of value) that (a) is expressed
as a unit; (b) is not denominated in any currency, and is not pegged by its issuer to any currency; (c) is, or is intended to be, a medium
of exchange accepted by the public, or a section of the public, as payment for goods or services or for the discharge of a debt; (d)
can be transferred, stored or traded electronically; and (e) satisfies such other characteristics as the Authority may prescribe. Our
DOTs, therefore, are not securities or digital payment tokens subject to these acts.



4







We generally do not
maintain custody of the DOTs or crypto assets. Where possible, we adopt a “sell then mint” process, where the DOTs are not
minted unless they have been sold. This is in line with how legal documents are created where an Assignment is only drafted and signed
after a sale of a property (e.g., scanned copies of an Assignment can be created in PDF form thereafter). The DOT merely a digital ownership
title to a physical item. Subsequent to the transfer of Coinllectibles Limited, Coinllectibles (HK) Limited and Coinllectibles Wealth
Limited to Dr. Lee pursuant to the Settlement Agreement between the Company and Dr. Lee dated December 15, 2022, the Company no longer
minted any DOTs, and any DOTs sold by the Company as ownership documents in association with the underlying physical artwork or collectible
are obtained from a third party.



Before the DOTs are sold, we store the underlying physical art pieces in
our warehouse. We have purchased insurance that covers the art pieces stored in our warehouse. After the DOTs are sold, customers can
choose to ship out the underlying art pieces or not. If customers want to ship out the art pieces, they will have to pay for the shipping
and insurance fees.



The Company did not engage in
the business of purchasing, holding or trading crypto currencies.  We receive fiat and cryptocurrency from the sale of art and collectibles
and collection of transaction fees derived from the secondary and subsequent sales of the collectibles. During  the financial period
up to the transfer of Coinllectibles Limited, Coinllectibles (HK) Limited and Coinllectibles Wealth Limited to Dr. Lee pursuant to the
Settlement Agreement between the Company and Dr. Lee dated December 15, 2022, the Company accepted crypto currencies such as ETH, BNB,
USDT, BUSD, MATIC and OKT. In order to minimize the risk of price fluctuation in cryptocurrency, after we receive the cryptocurrencies
we will recognize the value by immediately exchange them into US dollar or stable currencies that are pegged with US dollar. Subsequent
to the Settlement Agreement dated December 15, 2022, the Company only accepted stable coins such as USDT, BUSD and MATIC. For crypto-payments,
in compliance with our AML Policy, we have automatically blocked off transactions from all sanctioned jurisdictions.



Meanwhile, the Company
did not offer stablecoins to its customers as a product and its business remained focused on physical artworks and collectibles. The stablecoins
were utilized to pay for the Company’s marketing and IT development expenses, including expenses associated with the minting process.
 For the fiscal year ended December 31, 2022, crypto assets held by the Company was approximately 0.03% of its total assets.



Where possible, we disposed
the crypto assets as soon as we have received them. On the rare occasion that we do have custody of these assets, we keep them in an online
multi-signatory wallet in the MultiSig system we developed so that they could be listed on our platform. When these DOTs are sold, the
ownership of the DOTs is transferred to the buyer. The MultiSig system is developed internally by our Company for the purpose of holding
DOTs in a multi-signatory wallet where multiple wallet holders , instead of a single wallet holder, are needed to approve any transaction.
During the financial reporting period, there were only 6 wallet holders who had access to the multi-signatory wallet and at least 3 wallet
holders’ approvals are required to process transactions. This reduced the risk of losing DOT from the loss or destruction of a single
private key of the wallet, and the risk of DOT being stolen or destroyed by a single wallet holder.



The Company’s
Talk+ messaging app was developed to assist end-users who were not familiar with cryptocurrencies. The app provided users with the ability
to access their own cryptocurrencies that were obtained independent of the Company by acting as a portal. However, the app did not allow
for transfer of cryptocurrencies and all cryptocurrencies accessed by the end-user remains with the end-user, and are not transferred
or held by the Company at any time.



We conduct our financing/money
lending business through our Hong Kong subsidiaries which are licensed under Hong Kong’s Money Lenders Ordinance. Our Hong Kong
subsidiaries primarily provide unsecured personal loan financings to private individuals. We also have a small portfolio of mortgage loans.
Revenue is generated from interest received from the provision of loans to private individual customers.



There
may be prominent risks associated with our operations being in Hong Kong. We may be subject to the risks of uncertainty of any future
actions of the PRC government including the risk that the PRC government could disallow our holding company structure, which may result
in a material change in our operations, including our ability to continue our existing holding company structure, carry on our current
business, accept foreign investments, and offer or continue to offer securities to our investors. These adverse actions could change
the value of our common stock to significantly decline or become worthless. We may also be subject to penalties and sanctions imposed
by the PRC regulatory agencies, including the Chinese Securities Regulatory Commission, if we fail to comply with such rules and regulations,
which could adversely affect the ability of the Company’s securities to continue to trade on the Over-the-Counter Bulletin Board,
which may cause the value of our securities to significantly decline or become worthless.



As
a U.S.-listed company with operations in Hong Kong, we may face heightened scrutiny, criticism and negative publicity, which could result
in a material change in our operations and the value of our common stock. It could also significantly limit or completely hinder our
ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.
Additionally, changes in Chinese internal regulatory mandates, such as the M&A rules, Anti-Monopoly Law, and the soon to be effective
Data Security Law, may target the Company’s corporate structure and impact our ability to conduct business in Hong Kong, accept
foreign investments, or list on an U.S. or other foreign exchange. For a detailed description of the risks facing the Company and the
offering associated with our operations in Hong Kong, please refer to “Risk Factors – Risk Factors Relating to Our Operations
in Hong Kong” as herein.





5







Our corporate organization
chart as at December 31, 2022 is below:







Note
1: In May 2021, Massive Treasure entered into a Share Swap Letter Agreement (the “100% Share Swap Letter”) with
the shareholders of each of E-on Finance Limited (“E-on”) and 8M Limited (“8M”) to acquire 100% of each of
E-on and 8M for 20,110,604 and 10,055,302 shares of common stock of COSG respectively based upon the closing price of the common
stock of COSG as of the date of signing of the 100% Share Swap Letter and determined in accordance with the terms of the 100% Share
Swap Letter on the date. The acquisition of E-on and 8M consummated in May 2021. Thereon, COSG issued 10,256,409 shares and
5,128,204 shares to the shareholders of E-on and 8M respectively. COSG is obligated to issue 9,854,195 and 4,927,098 shares on the
first anniversary of the closing of the acquisition to the former shareholders of E-on and 8M respectively, subject to certain
clawback provisions. E-on and 8M are obligated to meet certain financial milestones in each of the two year anniversaries following
the closing. Failure to meet such milestones will result in a clawback of the shares issued to the former shareholders. On the
second anniversary of the closing, if E-on or 8M exceeds the aggregate financial milestone set for the two years, the former
shareholders thereof shall be entitled to additional shares of COSG as determined in accordance with the 100% Share Swap
Letter.



Note
2: In May and June 2021, Massive Treasure entered into a Share Swap Letter Agreement (the “51% Share Swap
Letter”) with the shareholders of each of the entities to acquire 51%  of the issued and outstanding securities of
the entities for an aggregate amount of 23,589,736 shares of COSG’s common stock as set forth below (the “First Tranche
Shares”), based upon the closing price of the common stock of COSG as of the date of signing the 51% Share Swap Letter and
determined in accordance with the terms of the 51% Share Swap Letter. The acquisition of the entities consummated in May and June
2021.  Thereon, COSG issued the First Tranche Shares. On the first anniversary of the closing, COSG is obligated to issue
a second tranche of shares of its common stock, based upon the closing price of its shares as of the fifth business day prior to
such first anniversary as determined in accordance with the terms of the 51% Share Swap Letter (the “Second Tranche
Shares”).  Upon the issuance of the Second Tranche Shares, each of the entities will deliver the remaining 49% of
the issued and outstanding securities to COSG to become wholly owned subsidiaries of COSG. Each of the entities are obligated to
meet certain financial milestones in each of the two year anniversaries following the closing. Failure to meet such milestones will
result in a clawback of the shares issued to the former shareholders. On the second anniversary of the closing, if any entity
exceeds the aggregate financial milestone set for the two years, the former shareholders thereof shall be entitled to additional
shares of COSG as determined in accordance with the 51% Share Swap Letter.



On December 15, 2022, the
Company entered into a Settlement Agreement with Lee Ying Chiu Herbert, our former director and current controlling shareholder (“Dr.
Lee”), pursuant to which the Company and Dr. Lee agreed to settle the matter of Unissued Securities due to Dr. Lee the Share Acquisition
Agreement, by and among the Company, Massive Treasure, and the holders of ordinary shares of Massive Treasure. The Settlement Agreement
was closed on December 15, 2022. Pursuant to the terms of the Settlement Agreement, amongst others, the Company agreed to transfer to
Dr. Lee or his designees all the assets and liabilities, as described in the financial statements of the Company as of November 30, 2022,
of the following entities: Coinllectibles Limited, Coinllectibles (HK) Limited and Coinllectibles Wealth Limited.





6







COSG is
a Nevada holding company with operations conducted through our wholly owned subsidiaries based in Hong Kong and Singapore. This
structure presents unique risks as our investors may never directly hold equity interests in our Hong Kong subsidiaries and will be
dependent upon contributions from our subsidiaries to finance our cash flow needs. Cosmos Group Holdings Inc. and its Hong Kong
subsidiaries are not required to obtain permission from the Chinese authorities including the China Securities Regulatory Commission
(“CSRC”), or Cybersecurity Administration Committee (“CAC”), to operate or to issue securities to foreign
investors. However, in light of the recent statements and regulatory actions by the PRC government, such as those related to Hong
Kong’s national security, the promulgation of regulations prohibiting foreign ownership of Chinese companies operating in
certain industries, which are constantly evolving, and anti-monopoly concerns, we (the parent company and our subsidiaries) may be
subject to the risks of uncertainty of any future actions of the PRC government in this regard including the risk that we
inadvertently conclude that such approvals are not required, that applicable laws, regulations or interpretations change such that
we are required to obtain approvals in the future, or that the PRC government could disallow our holding company structure, which
would likely result in a material change in our operations, including our ability to continue our existing holding company
structure, carry on our current business, accept foreign investments, and offer or continue to offer securities to our investors.
These adverse actions would likely change the value of our common stock to significantly decline or become worthless. We may also be
subject to penalties and sanctions imposed by the PRC regulatory agencies, including the CSRC, if we fail to comply with such rules
and regulations, which would likely adversely affect the ability of the Company’s securities to continue to trade on the
Over-the-Counter Bulletin Board, which would likely cause the value of our securities to significantly decline or become worthless.
For a detailed description of the risks facing the Company associated with our operations in Hong Kong, please refer to
“Risk Factors – Risk Relating to Doing Business in Hong Kong.”



We
reported a net loss of $25,149,399 and net income of $467,725 for the years ended December 31, 2021 and 2020, respectively. We had current
assets of $23,981,701 and current liabilities of $22,748,075 as of December 31, 2021. As of December 31,2020, our current
assets and current liabilities were $14,721,331 and $15,271,366, respectively. The financial statements for the years ended December
31, 2021 and 2020 have been prepared assuming that we will continue as a going concern. Our continuation as a going concern is dependent
upon improving our profitability and the continuing financial support from our stockholders.



On
December 31, 2021, the Company entered into an Equity Purchase Agreement with Williamsburg Venture Holdings, LLC, a Nevada limited liability
company (“Investor”), pursuant to which the Investor agreed to invest up to Thirty Million Dollars ($30,000,000) over a 36-month
period in accordance with the terms and conditions of that Equity Purchase Agreement (the “Equity Purchase Commitment”).



Our
sources of capital in the past have included the sale of equity securities, which include common stock sold in private transactions to
our executive officers or existing shareholders, capital leases and short-term and long-term debts. We expect to finance future acquisitions
through a combination of these. While we believe that existing shareholders and our officers and directors will continue to provide the
additional cash to make acquisitions and to meet our obligations as they become due or that we will obtain external financing, if necessary,
there can be no assurance that we will be able to raise such additional capital resources on satisfactory terms. We believe that our
current cash and other sources of liquidity discussed below are adequate to support operations for at least the next 12 months.



We
are organized under the laws of the State of Nevada as a holding company that conducts its business through number of subsidiaries organized
under the laws of foreign jurisdictions such as Singapore, Hong Kong and the British Virgin Islands. This may have an adverse impact
on the ability of U.S. investors to enforce a judgment obtained in U.S. Courts against these entities, or to effect service of process
on the officers and directors managing the foreign subsidiaries.





7







COSG is organized under
the laws of the State of Nevada as a holding company that conducts its business through number of subsidiaries organized under the laws
of foreign jurisdictions such as Singapore, Hong Kong and the British Virgin Islands. This may have an adverse impact on the ability of
U.S. investors to enforce a judgment obtained in U.S. Courts against these entities, or to effect service of process on the officers and
directors managing the foreign subsidiaries.



Market
Overview



According
to The Art Basel and UBS Global Art Market Report 2021, the global arts market annual transactional volume is estimated to be $50.1 billion
for 2020. According to Forbes, the global collectibles market reached $370 billion in 2016. Reuters reported that the collectible NFT
market is approximately $13.7 million in the first half of 2020. Our DOT builds on top of the blockchain NFT technologies as the underlying
technology infrastructure, even though we are still in the early stages in adoption of our DOTs, the trading volume of NFTs as reported
by Reuters for the first half of 2021 has already reached approximately at $2.5 billion. Building on top of the blockchain NFT technologies,
we believe DOTs have the potential to be as revolutionary and widely adopted as the internet. The unique properties of DOTs position
them as a digital alternative to representing ownership of art and collectible pieces. We expect the DOT ecosystem to expand into the
mainstream of art community around the world in the coming decades.The Company does not have any customers that are from the
United States or any U.S. person nor is the Company specifically targeting customers from the United States. However, the Company’s
operation of an online market place for collectibles and fine art is accessible online by interested parties and may potentially be accessed
by users located in the United States.



Our
Products and Services



A
few of the challenges with collecting physical arts and collectibles are provenance of the piece, authenticity and valuation. The vision
of Coinllectibles is to modernize the way we buy, collect and trade art and collectible pieces to provide a more pleasurable, transparent,
and value enhancing experience for the collector and artist communities.



Coinllectibles
intends to leverage blockchain technology to help resolve the issues of provenance, authenticity and ownership in the arts and collectibles
market. We intend to embed into the blockchain for each art or collectible piece an independently apprised valuation, a 3D rendering
of the piece, high-definition photo of the piece, AI recognition file of the piece and a set of legal documents to provide proof of ownership
and provenance of the piece to the blockchain. Each piece will be minted into an individual DOT with the list of items embedded. The
DOTs are intended to provide assurance on the authenticity of art or collectible pieces as well as act as a record of ownership transfers
using blockchain technology to establish provenance of the piece. We believe this type of DOT would address some of the key challenges
collectors presently face with arts and collectibles.





The metadata of an NFT
allows very little information to be included. Generally, NFTs may contain a link to where an image is stored, while bundling terms and
conditions governing the image, which are not incorporated in the NFT itself. During the financial period, the Company engaged an alternative
approach of embedding  link points to a permanent web page on the blockchain which not only included the image but also all the terms
and conditions governing the image or other asset. Everything on this permanent web page became part of the DOT.



With this method, not
only the DOT is immutable by nature, the information pointed by the link in metadata of the DOT cannot be changed as well since it is
also saved in a decentralized storage system. The cost involved include (1) drafting and preparing the legal documents for the ownership
title, (2) the 3D scanning of the item which takes between 2-3 days to be scanned and rendered, (3) the taking of the high quality images
for each of the item, (4) the training of the AI recognition file which takes between 3-5 days, (5) obtaining an valuation report from
the independent appraiser, (6) creating a permanent web page and uploading the information onto the blockchain, and (7) minting the DOT
onto the blockchain



We used NFT technology
to create our DOTs so that we can enhance the way people collect artwork. Each piece will be minted into an individual DOT with the list
of items embedded. During the financial period, our DOTs were minted on the Binance Smart Chain and the Polygon Chain. We chose these
two blockchains based on the criteria of (i) fees, (ii) carbon footprint, and (iii) marketplaces. Binance Smart Chain has higher fees
and carbon footprint than Polygon but caters to a different market segment, which is the market that is familiar with the Binance ecosystem.
We used them when we needed to access the market segment that Binance Smart Chain targets and Polygon Chain does not target. Polygon Chain
had lower fees and carbon footprint as compared to Binance Smart Chain and was accepted by many marketplaces. We minted approximately
0%and 0% of our DOTs on the Polygon Chain for the year ended December 31, 2021 and six months ended June 30, 2022. For the year ended
Dec 31, 2022, we minted approximately 24% of our DOTs on the Polygon Chain. The DOT merely a digital ownership title to a physical item.
Subsequent to the transfer of Coinllectibles Limited, Coinllectibles (HK) Limited and Coinllectibles Wealth Limited to Dr. Lee pursuant
to the Settlement Agreement between the Company and Dr. Lee dated December 15, 2022, the Company no longer minted any DOTs, and any DOTs
sold by the Company as ownership documents in association with the underlying physical artwork or collectible are obtained from a third
party.





8







The DOTs are intended to provide
assurance on the authenticity of art or collectible pieces as well as act as a record of ownership transfers using blockchain technology
to establish provenance of the piece. We believe this type of DOT would address some of the key challenges collectors presently face
with arts and collectibles. The DOTs were not sold as separate products but instead represented ownership title to the physical artwork
on our platform in order to facilitate transaction logistics.



We generally do not maintain
custody of the DOTs or crypto assets. Where possible, we adopt a “sell then mint” process, where the DOTs are not minted
unless they have been sold. This is in line with how legal documents are created where an Assignment is only drafted and signed after
a sale of a property (e.g., scanned copies of an Assignment can be created in PDF form thereafter). The DOT merely a digital ownership
title to a physical item.



Before the DOTs are sold, we
store the underlying physical art pieces in our warehouse. We have purchased insurance that covers the art pieces stored in our warehouse.
After the DOTs are sold, customers can choose to ship out the underlying art pieces or not. If customers want to ship out the art pieces,
they will have to pay for the shipping and insurance fees.



The Company did not engage in the business of purchasing, holding or trading
crypto currencies.  We receive fiat and cryptocurrency from the sale of art and collectibles and collection of transaction fees
derived from the secondary and subsequent sales of the collectibles. During  the financial period up to the transfer of Coinllectibles
Limited, Coinllectibles (HK) Limited and Coinllectibles Wealth Limited to Dr. Lee pursuant to the Settlement Agreement between the Company
and Dr. Lee dated December 15, 2022, the Company accepted crypto currencies such as ETH, BNB, USDT, BUSD, MATIC and OKT. In order to
minimize the risk of price fluctuation in cryptocurrency, after we receive the cryptocurrencies we will recognize the value by immediately
exchange them into US dollar or stable currencies that are pegged with US dollar. Subsequent to the Settlement Agreement dated December
15, 2022, the Company only accepted stable coins such as USDT, BUSD and MATIC. For crypto-payments, in compliance with our AML Policy,
we have automatically blocked off transactions from all sanctioned jurisdictions.



Meanwhile, the Company
did not offer stablecoins to its customers as a product and its business remained focused on physical artworks and collectibles. The stablecoins
were utilized to pay for the Company’s marketing and IT development expenses, including expenses associated with the minting process.
 For the fiscal year ended December 31, 2021, crypto assets held by the Company was approximately 0.03% of its total assets.



Where possible, we disposed
the crypto assets as soon as we have received them. On the rare occasion that we do have custody of these assets, we keep them in an online
multi-signatory wallet in the MultiSig system we developed so that they could be listed on our platform. When these DOTs are sold, the
ownership of the DOTs is transferred to the buyer. The MultiSig system is developed internally by our Company for the purpose of holding
DOTs in a multi-signatory wallet where multiple wallet holders , instead of a single wallet holder, are needed to approve any transaction.
During the financial reporting period, there were only 6 wallet holders who had access to the multi-signatory wallet and at least 3 wallet
holders’ approvals are required to process transactions. This reduced the risk of losing DOT from the loss or destruction of a single
private key of the wallet, and the risk of DOT being stolen or destroyed by a single wallet holder.





9







We
currently provide several services, including authentication, valuation and certification (“AVC”) service, sale and purchase,
hire purchase, financing services, and custody, security and exhibition (“CSE”) services.



AVC
Services



As
part of our AVC services, we conduct authentication appraisal and valuation assessment of arts and collectibles through a panel of independent
third-party appraisers. The appraisers will appraise the items and produce a certification showing whether the collectible piece is authentic
with their estimated value. Once the item has been authenticated, it will undergo a scanning process to build a 3D model and a unique
“fingerprint ID” for the item will be created through proprietary AI technology for future verification.



For
Coinllectibles to be able to digitize the art and collectible pieces using blockchain technology, Coinllectibles first purchase the pieces from its
current owner. Coinllectibles then charge the owner a fee for digitizing the pieces. Once the pieces are minted into DOTs, we work with our partner
channels to distribute and sell the DOTs.



Hire
Purchase Services; Financing



We can facilitate the purchase
of arts and collectibles by offering certain of our buyers the option of taking possession of the arts and collectibles while paying on
an installment basis through [*]. Prior to receipt of full payment, ownership of the arts and collectibles will remain with Coinllectibles.
Once the buyer makes the last payment, the ownership of the arts and collectibles will transfer to the buyer once full payment has been
received. During the financial period, no such transaction occurred, and the aggregate amount of installment loans amount outstanding
for the years ended December 31, 2021 and for the six months ended June 30, 2022 is nil and nil, respectively. In the event that it did
occur, the ownership of the artwork would have transferred upon purchase. We would take collateral over the artwork for the loan, in the
form of a pledge, a charge, or a hypothecation, in the same way that the collateral is taken over other assets.



CSE
Services



For
collectors who have been purchasing our arts and collectibles and do not wish to take collection of the pieces, we intend to offer custodian
services and have these arts and collectibles stored and safely secured until the collector elects to take possession. We also intend
to allow the collectors to subscribe for additional security services for their art pieces be it when it is in our custody or when the
item is on the move either to be delivered or collected from the collector. We will also introduce exhibition services to collectors
and artist to organize exhibitions of artworks and collections in our gallery or other specialized art events.



A bailment contract (the
“Contract”) is embedded into the metadata of our DOT (digital ownership token), which sets out the specific terms under which
we hold the physical artwork on behalf of the owner of the DOT. As part of the bailment terms, given that ownership of the physical artwork
has already been transferred to the DOT owner, the responsibility for obtaining insurance will be also be transferred to the DOT owner.



Coinllectibles intends to leverage
blockchain technology to help resolve the issues of provenance, authenticity and ownership in the arts and collectibles market. We intend
to embed into the blockchain for each art or collectible piece an independently apprised valuation, a 3D rendering of the piece, high-definition
photo of the piece, AI recognition file of the piece and a set of legal documents to provide proof of ownership and provenance of the
piece to the blockchain.



Salient terms of the Contract are extracted
below:



Commencement and duration



- the terms and bailment of the Good
under the Terms shall commence on the Commencement Date and shall continue for the storage period.



Appointment of the Provider



- The Customer shall appoint Coinllectibles
Private Limited or its subsidiary or holding company or subsidiary of such holding company or affiliate (the “Provider”),
and the Provide shall provide the storage services including services which are incidental or ancillary to such services (the “Services”)
to the Customer on a non-exclusive basis pursuant to the terms of the contract.



Provider’s rights



-the Provider may at its discretion
sub-contract the safe keeping and storage of the Goods to a third party.



-the Provider may at its discretion
exhibit or display the Goods and/or part with possession of the Goods to a third party for the purpose of exhibiting or displaying the
Goods and shall be entitled to any revenues generated from that.



Facility



- The Provider shall provide the Facility.





10









Handling of Goods



- the Provider may use such method for
the storage and handling of the Goods as it requires in its absolute discretion considers appropriate having regard to the nature and
condition of the Goods as made known by the Customer to the Provider; and



- the Provider shall have a discretion
as to where in the Facility it shall store the Goods and it may, without notice to the Customer but at the Provider’s expense, move
the Goods from one part of the Facility to another part of the Facility.



Removal of Goods



- Subject to the payment clause of the
contract, the Customer, or its agents and representatives, shall remove all the Goods from the custody or control of the Provider by the
Storage Expiration Date.



-If the Customer fails to remove any
of the Goods by the Storage Expiration Date, the Provider shall be entitled to sell or otherwise dispose of all or some of the Goods which
have not been removed by the Storage Expiration Date, at the Customer’s expense and risk and shall deduct all amounts due to the
Provider from the Customer under the Terms and the expenses incurred by the Provider in relation to or in connection with the Goods. The
Provider shall not be liable for the adequacy or amount of the price obtained for the sale or for any loss arising from such sale or such
disposal of the Goods.



- The Provider may at the Customer’s
expense, remove or, if it thinks fit, destroy any Goods which in its reasonable opinion are or have become Dangerous Goods.



Charges



- Customer shall pay the charges set
out in a schedule of the contract.



- All Charges are stated exclusive of
the Applicable Taxes which shall be paid by the Customer at the rate and from time to time in the manner prescribed by law.



- The Charges exclude the following
which shall be payable by the Customer monthly in arrears, following submission of an appropriate invoice:



(a) the cost of hotel, subsistence,
travelling and any other ancillary expenses reasonably incurred by the individuals whom the Provider engages in connection with the Services;
and



(b) the cost to the Provider of any
materials or services procured by the Provider from third parties for the provision of the Services as such items and their cost are set
out in schedule of the contract.



Payment



- The Customer shall pay the Charges
to the Provider when removing the Goods or on the Storage Expiration Date, whichever is earlier.



- The Provider shall have a general
and particular lien on the Goods in its possession as security for payment of all sums claimed by the Provider from the Customer. The
Charges shall continue to accrue on any Goods detained under lien. If an amount is not paid when due, the Provider may sell or otherwise
dispose of some or all of the Goods in its possession, at the Customer’s expense and risk, and shall deduct all amounts due to the
Provider and the expenses incurred by the Provider in relation to or in connection with the Goods. The Provider shall not be liable for
the price obtained for the sale or disposal of the Goods.



- The Provider’s right to sell
or otherwise dispose of the Goods in the clause above shall arise immediately upon any sum becoming due.



- Each party may at any time, after
giving notice to the other party, set off any liability owed by the other party to it against any liability owed by it to the other party,
whether either liability is present or future, liquidated or unliquidated, and whether or not either liability arises under the Terms.
If the liabilities to be set off are expressed in different currencies, the party setting off may convert either liability at a market
rate of exchange for the purpose of set-off. Any exercise by a party of its rights under this clause shall not limit or affect any other
rights or remedies available to it under the Terms or otherwise.



Risk and damage to the Goods



- The Goods shall remain at the Customer’s
risk at all times.



Limitation of liability



- The Customer is responsible for making
its own arrangements for the insurance of any excess loss.





11









Governing Law



-The Terms and any dispute or claim
(including non-contractual disputes or claims) arising out of or in connection with it or its subject matter or formation shall be governed
by and construed in accordance with the law of Singapore.



Jurisdiction



-Each party irrevocably agrees that
the courts of Singapore shall have exclusive jurisdiction to settle any dispute or claim (including non-contractual disputes or claims)
arising out of or in connection with the Terms or its subject matter or formation.”



Because ownership of the artwork
has been transferred at purchase, the owner has the responsibility to purchase their own insurance. We intend to offer services to display
artworks at galleries and exhibitions. Depending on the bailment terms, we may need  approval from the owner and may have to share
any income from such displays. The costs of exhibiting the artworks would include the insurance fee that covers the transportation, storage
and exhibition of the artwork, the transportation fee for shipping the artwork, the storage fee for keeping the artworks in a secured
location, and the rent of the venue



Our
Distribution Channels



Our subsidiary, Coinllectibles
Private Limited have or expect to distribute and sell our DOTs through the following channels:



| | ● | Traditional sales channels:
    Institutions and wealthy individuals who may be prospective art and collectibles purchasers.                                                                                                 
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                              
| | ● | Auction houses such as
    Spink & Sons, that have an existing pool of prospective collectors. We will explore opportunities to collaborate with reputable
    auction houses, such as Christie’s, Sotheby’s and Macey & Son.



| | ● | Our metaverse platform (MetaMall) – coinllectibles.art allows collectors to efficiently buy
                                                                                       and sell Fusion  DOTs using fiat and cryptocurrency acting as an e-commerce platform. We recognize that there are distinct
                                                                                       groups of crypto natives and non-crypto natives who share the same interest in acquiring collectibles. To make their experience more
                                                                                       seamless and user-friendly, we work with various crypto exchanges to accept their currencies as payment for the Fusion DOTs
                                                                                       collectibles. For crypto-payments, in compliance with our AML Policy, we have automatically blocked off transactions from all
                                                                                       sanctioned jurisdictions. In addition, we have also set up a payment gateway which accepts credit / debit card payments for the same
                                                                                       purpose. Any prospective purchaser wishing to make a purchase through MetaMall with payment via credit card will enable us to
                                                                                       identify the buyer and in turn such transactions would undergo all relevant AML and KYC procedure with partnering banks and card
                                                                                       scheme operators. Subsequent to the Settlement Agreement dated December 15, 2022, the Company only accepted stable coins such as
                                                                                       USDT, BUSD and MATIC. Please also see “PRC Regulation Relating to Crypto Assets” on page 24 for more information.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We define the metaverse as the a multitude of universes
which is comprising of our real physical world and multiple virtual environments and how an individual interacts between them. Hence,
to us, we already live in the metaverse. We believe our DOT is a fundamental component of the metaverse, since it not only provides immutable
and traceable records through the use of blockchain technology, but it also contains legal documents to protect the rights of its owner.
Our MetaMall is an e-commerce platform that is a part of the metaverse. Asset owners can list their assets in the form of DOTs while buyers
can make the purchase. MetaMall provides a platform for users to trade their assets with an immutable track record in the metaverse.



We will continue to enhance over time the shopping
experience on our e-commerce platform through 3D, AR, VR and other technologies available to us from time to time.



We
use a wide range of social media channels such as Facebook, Instagram, Twitter, LinkedIn, Telegram and held Ask Me Anything sessions
through social media channels to reach out to the general community to announce our art exhibitions, the DOTs attached to the pieces
and news about our partnerships with artists. Coinllectibles will also participate in arts and collectibles events and exhibitions to
promote us as a firm and the DOTs that we will be launching.





12







Pricing
determination



Pricing of our products
and services is based on our operating costs, volume of product / service, fees charged by strategic partners and suppliers, market condition
and competition. Our subsidiaries, Grand Town Limited and Coinllectibles Private Limited also participate in a profit-sharing arrangement
with our joint venture partners in which we have pre-set mechanism. Based on the above factors and conditions, we may evaluate and adjust
our pricing from time to time.



In
light of the competitive nature over the market and industry, we believe that our success will depend upon the reliability and quality
of products & services provided and cost management. In general, we strive to maintain top class of high-quality products and services
as well as to meet customers’ satisfaction. We are dedicated to establishing systems and operating procedures to achieve service
standardization and quality control over the products and services provided by Coinllectibles. We expect to continuously monitor and
seek to improve on a series of key service quality indicators (“KPI”) to maintain a competitive advantage in the market and
industry.



Our
Business Plan



On October 22, 2021,
Massive Treasure, a subsidiary of Cosmos Group Holdings Inc., acquired 51% of NFT Limited (“NFT”) through the issuance of
2,350,229 shares of common stock of the Company. NFT beneficially owns Talk+, a messaging and cryptocurrency-focused mobile application
which seeks to simplify the crypto usage experience by allowing users to send crypto through instant messages to other individuals. The
app provided users with the ability to access their own cryptocurrencies that were obtained independent of the Company by acting as a
portal. However, the app did not allow for transfer of cryptocurrencies and all cryptocurrencies accessed by the end-user remains with
the end-user, and are not transferred or held by the Company at any time. We hope that the inclusion of Talk+ will enable us to attract
more non-crypto native users and broaden our community reach.



In late December 2021, Coinllectibles
Private Limited, launched our metaverse platform (“MetaMall”), which we believe is an important step to further engage
with our growing community of collectors and partners. Our MetaMall will feature pieces from an increasing range of artists and sportsmen.
We hope to bring more limited-edition collectibles to more people through MetaMall. We define the metaverse as a multitude of universes
which is comprising of our real physical world and multiple virtual environments and how an individual interacts between them. Hence,
to us, we already live in the metaverse. We believe our DOT is a fundamental component of the metaverse, since it not only provides immutable
and traceable records through the use of blockchain technology, but it also contains legal documents to protect the rights of its owner.
Our MetaMall is an e-commerce platform that is a part of the metaverse. Asset owners can list their assets in the form of DOTs while buyers
can make the purchase. MetaMall provides a platform for users to trade their assets with an immutable track record in the metaverse. We
will continue to enhance over time the shopping experience on our e-commerce platform through 3D, AR, VR and other technologies available
to us from time to time.



We believe that our DOTs will bridge
the virtual and physical world in art and collectible ownership and enjoyment. Our DOT is a virtual token that represents the ownership
of an asset and is the foundation of CoinllectiblesTM️ metaverse that CoinllectiblesTM️ defines as a multiverse
where the real world interacts seamlessly with the emerging virtual dimensions.



In late January 2022, Coinllectibles
Private Limited partnered with Spink & Sons, an art auction house, on its inaugural DOT offering, where we created a hybrid- DOT to
a physical collectible piece.  We intend to pursue additional similar partnership opportunities in the future.



On February 10, 2022, Coinllectibles
Private Limited consummated the acquisition of 80% of the issued and outstanding securities of Grand Gallery Limited, a Hong Kong limited
liability company engaged in the business of selling traditional art and collectible pieces, through the issuance of 153,060 shares of
our common stock, at a valuation of $4.00 per share. We believe that this acquisition will strengthen our DOT business by expanding our
access to buyers of arts and collectibles.



In
March 2022, we launch a new sports division in our MetaMall and partnering with a former NBA basketball player as president of Coinllectibles
Sports. We hope to exploit our DOT technology and the metaverse to bring innovation to the sports space, bridge the intersection of our
DOT technology and sports memorabilia to improve experiences for fans, athletes, teams, events and partners.





13







Major
Customers



We
are not a party to any long-term agreements with our customers. As opportunities arise, we may enter into long term contracts with customers.



For
the year ended December 31, 2021 and 2020, there was no single customer whose revenue exceeded 10% of the revenue.



|         |  | Year
    ended
    December 31, 2021 |   |  |                        |  | December 31,
    2021 | 
|-------- |  | ------------------------------------ | - |  | ---------------------- |  | --------------------- | 
|Customer |  | Revenues                             |   |  | Percentage of revenues |  |                       | 
|         |  |                                      | – |  |                        |  | –                     | 
|Total:   |  | $                                    | – |  |                        |  | –                     | 



|         |  | Year ended
    December 31, 2020 |   |  |                                                                    |  | December 31,
    2020 | 
|-------- |  | -------------------------------- | - |  | ------------------------------------------------------------------ |  | --------------------- | 
|Customer |  | Revenues                         |   |  | Percentage of
                                            revenues |  |                       | 
|         |  |                                  | – |  |                                                                    |  | –                     | 
|Total:   |  | $                                | – |  |                                                                    |  | –                     | 



All
customers are located in Hong Kong and rest of the world.



Major
Suppliers/Vendors



For
the lending business segment during the year ended December 31, 2021 and 2020, there is no major supplier or vendor required in order
to support our services.



For
the ACT segment during the year ended December 31, 2021 and 2020, the following supplier accounted for 10% or more out of our total cost
of revenue



|                      |  | Year ended
    December 31, 2021 |         |  |                                                                           |  | December 31, 
    2021 |  
|--------------------- |  | -------------------------------- | ------- |  | ------------------------------------------------------------------------- |  | ---------------------- | -
|Supplier              |  | Cost of revenue                  |         |  | Percentage of
                                            cost of revenue |  |                        |  
|Lee Ying Chiu Herbert |  |                                  | 993,021 |  |                                                                           |  | 56.59                  | %
|                      |  |                                  | –       |  |                                                                           |  | –                      |  
|Total:                |  | $                                | 993,021 |  |                                                                           |  | 56.59                  | %



|         |  | Year ended
    December 31, 2020 |   |  |                                                                    |  | December 31,
    2020 | 
|-------- |  | -------------------------------- | - |  | ------------------------------------------------------------------ |  | --------------------- | 
|Supplier |  | Revenues                         |   |  | Percentage of
                                            revenues |  |                       | 
|         |  |                                  | – |  |                                                                    |  | –                     | 
|Total:   |  | $                                | – |  |                                                                    |  | –                     | 



Dr.
Lee joined us as our Director on June 28, 2021.



Insurance



We
maintain certain insurance in accordance with customary industry practices in Hong Kong. Under Hong Kong law, it is a requirement that
all employers in the city must purchase Employee’s Compensation Insurance to cover their liability in the event that their staff suffers
an injury or illness during the normal course of their work. We maintain Employee’s Compensation Insurance, vehicle insurance and
third-party risks insurance for the business purposes.





14







CORPORATE
INFORMATION



Our
principal executive and registered offices are located at 37th Floor, Singapore Land Tower, 50 Raffles Place, Singapore
048623, telephone number +65 6829 7017.



INTELLECTUAL
PROPERTY AND PATENTS



We
expect to rely on patents, trade secrets, copyrights, know-how, trademarks, license agreements and contractual provisions to establish
our intellectual property rights and protect our “Digital Ownership Token” and Coinllectibles brands and services. These
legal means, however, afford only limited protection and may not adequately protect our rights. Litigation may be necessary in the future
to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of the proprietary rights
of others. Litigation could result in substantial costs and diversion of resources and management attention. Any unauthorized disclosure
or use of our intellectual property could make it more expensive to do business and harm our operating results.



The
laws of Singapore, Hong Kong and our target countries may not protect our brand and services and intellectual property to the same extent
as U.S. laws, if at all. We may be unable to fully protect our intellectual property rights in these countries. Further, companies in
the internet, social media technology and other industries may own large numbers of patents, copyrights and trademarks and may frequently
request license agreements, threaten litigation or file suit against us based on allegations of infringement or other violations of intellectual
property rights.



We
intend to seek the widest possible protection for significant product and process developments in our major markets through a combination
of trade secrets, trademarks, copyrights and patents, if applicable. We anticipate that the form of protection will vary depending on
the level of protection afforded by the particular jurisdiction. In certain countries, intellectual property protection may be more limited
and difficult to enforce. In such instances, we may seek protection for our intellectual property through measures taken to increase
the confidentiality of our findings.



We
intend to register trademarks as a means of protecting the brand names of our companies and products. We intend to protect our trademarks
against infringement and also seek to register design protection where appropriate.



We
rely on trade secrets and unpatentable know-how that we seek to protect, in part, by confidentiality agreements. We expect that, where
applicable, we will require our employees to execute confidentiality agreements upon the commencement of employment with us. We expect
these agreements to provide that all confidential information developed or made known to the individual during the course of the individual’s
relationship with us is to be kept confidential and not disclosed to third parties except in specific limited circumstances. The agreements
will also provide that all inventions conceived by the individual while rendering services to us shall be assigned to us as the exclusive
property of our company. There can be no assurance, however, that all persons who we desire to sign such agreements will sign, or if
they do, that these agreements will not be breached, that we would have adequate remedies for any breach, or that our trade secrets or
unpatentable know-how will not otherwise become known or be independently developed by competitors.





15







COMPETITION



We
operate in a highly specialized area that is evolving very quickly with rapid developments. Currently there is no direct competitors
in the market as we operate in a niche and specialized area of the market. However, we foresee that our eventual competitors would be
leading arts and collectible sellers such as Christie’s and Sotheby’s which may offer substantially the same or similar service
offerings as us. Auction houses have a well-established customer base and brand name, but they have not developed sophisticated technology
to transform their business into the blockchain NFT technology area. We believe the principal competitive factors in our market include
the following:



| | ● | breadth
                                            of artist and collectibles base;
| | - | ------------------------------------------------------------------------------------



| | ● | sophistication
                                            of proprietary technologies;
| | - | ---------------------------------------------------------------------------------------



| | ● | excellence
                                            in legal expertise; and
| | - | ------------------------------------------------------------------------------



| | ● | strength
                                            and recognition of our brand.
| | - | ----------------------------------------------------------------------------------



Although
we believe we compete favorably on the factors described above, we anticipate that larger, more established companies may directly compete
with us as we continue to demonstrate the viability of our DOT solution. Many of our potential competitors have longer operating histories,
significantly greater financial, technical, marketing and other resources, larger product and services offerings, larger customer base
and greater brand recognition. These factors may allow our competitors to benefit from their existing customer base with lower acquisition
costs or to respond more quickly than we can to new or emerging technologies and changes in customer requirements. These competitors
may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive
pricing policies, which may allow them to build a larger customer base or to monetize that customer base more effectively than us. Our
competitors may develop products or services that are similar to our products and services or that achieve greater market acceptance
than our products and services. In addition, although we do not believe that merchant payment terms are a principal competitive factor
in our market, they may become such a factor and we may be unable to compete fairly on such terms.



EMPLOYEES



We
are currently operating with 3 executive directors and 20 consultants.



We
have the following fulltime employees located in Hong Kong as set forth below:



|Executive officers     |  |  | 0  | 
|---------------------- |  |  | -- | 
|Operational Management |  |  | 35 | 
|Business Development   |  |  | 0  | 
|Total                  |  |  | 35 | 



We
are required to contribute to the Mandatory Provident Fund (“MPF”) for all eligible employees in Hong Kong between the ages
of eighteen and sixty-five. We are required to contribute a specified percentage of the participant’s income based on their ages
and wage level. For the years ended December 31, 2021 and 2020, the MPF contributions by us were $29,760 and $35,973, respectively. We
have not experienced any significant labor disputes or any difficulties in recruiting staff for our operations.





16







GOVERNMENT
AND INDUSTRY REGULATIONS



Cosmos
Group Holdings Inc. is a Nevada corporation with operating businesses located in Singapore and Hong Kong. As such, the parent holding
company, Cosmos Group Holdings Inc. is subject to the laws and regulations of the United States of America while our operating businesses
are subject to the laws and regulations of Singapore and Hong Kong, as applicable, including labor, occupational safety and health, contracts,
tort and intellectual property laws. Furthermore, we need to comply with the rules and regulations of Hong Kong and Singapore governing
the data usage and regular terms of service applicable to our potential customers or clients. As the information of our potential customers
or clients are preserved in both Hong Kong and Singapore, we need to comply with the Singapore Personal Data Protection Act 2012 and
the Hong Kong Personal Data (Privacy) Ordinance.



If
PRC authorities reinterpret PRC laws to apply to Hong Kong companies, we may become subject to the laws and regulations of China governing
businesses in general, including labor, occupational safety and health, contracts, tort and intellectual property. We may also become
subject to foreign exchange regulations that might limit our ability to convert foreign currency into RMB, acquire any other PRC companies,
establish variable interest entities in the PRC, or make dividend payments from any future wholly foreign owned entities to us.



United
States of America



Regulation
of Cryptocurrency and Government Oversight



As
digital assets have grown in both popularity and market size, the U.S. Congress and a number of U.S. federal and state agencies (including
FinCEN, SEC, CFTC, FINRA, the Consumer Financial Protection Bureau (“CFPB”), the Department of Justice, the Department of Homeland
Security, the Federal Bureau of Investigation, the IRS and state financial institution regulators) have been examining the operations
of digital assets networks, digital assets users and the digital assets exchange markets, with particular focus on the extent to which
digital assets can be used to launder the proceeds of illegal activities or fund criminal or terrorist enterprises and the safety and
soundness of exchanges or other service-providers that hold digital assets for users. Many of these state and federal agencies have issued
consumer advisories regarding the risks posed by digital assets to investors. In addition, federal and state agencies, and other countries
have issued rules or guidance about the treatment of digital assets transactions or requirements for businesses engaged in digital assets
activity.



Various
foreign jurisdictions have, and may continue to, in the near future, adopt laws, regulations or directives that affect the Bitcoin network,
the digital assets markets, and their users, particularly digital assets exchanges and service providers that fall within such jurisdictions’
regulatory scope. For example, on May 21, 2021, minutes of the meeting of the Financial Stability and Development Committee of the State
Council of the People’s Republic of China were published, at which, as part of an effort to prevent and control financial risks, restrictions
on digital assets mining and trading activity were discussed. On May 18, 2021, certain influential trade bodies, including the China
Banking Association, the Payment and Clearing Association of China, and the National internet Finance Association of China, issued a
statement instructing their members not to provide virtual currency-related trading or payments services, or the exchange of virtual
currencies for China’s renminbi, among others, to their customers. In 2017, the People’s Bank of China and other Chinese financial regulators
issued an announcement prohibiting token issuances such as initial coin offerings, and imposing restrictions on virtual currency exchange
platforms and financial institutions and non-bank payment institutions in connection with token-related activity. There have been reports
over the years that Chinese regulators have taken action to shut down a number of China-based virtual currency exchanges. On March 5,
2020, South Korea voted to amend its Financial Information Act to require virtual asset service providers to register and comply with
its AML and counter-terrorism funding framework. These measures also provide the South Korean government with the authority to close
virtual currency exchanges that do not comply with specified processes. The South Korean government previously banned initial coin offerings.
Similarly, in April 2018, the Reserve Bank of India banned the entities it regulates from providing services to any individuals or business
entities dealing with or settling digital assets. On March 5, 2020, this ban was overturned in the Indian Supreme Court, although the
Reserve Bank of India has challenged this ruling. The laws, regulations or directives of authorities in jurisdictions worldwide may conflict
with those of the United States and may negatively impact the acceptance of or demand for digital assets by users, merchants and service
providers, may impede the growth or continued operation of the global digital assets economy or digital assets mining, or may otherwise
negatively affect the value of digital assets.



While
we believe that our DOT’s is currently not a security or commodity subject to many of the U.S. laws and regulations governing securities
and commodities, the legal environment is constantly changing as new laws and regulations are introduced and adopted, and existing laws
and regulations are repealed, amended, modified and reinterpreted. The effect of any future regulatory change on Cosmos Group Holdings
Inc., our operating subsidiaries or our digital assets such as our DOTs is impossible to predict, but such change could be substantial
and adversely impact current product offerings or alter the economic performance of our existing products and services resulting in a
decline in the value of our securities.





17







Privacy
and Protection of User Data



We
and subsidiaries are subject to a number of laws, rules, directives, and regulations relating to the collection, use, retention, security,
processing, and transfer of personally identifiable information about our customers and employees in the countries where we operate.
Our business will involve the processing of personal data in many jurisdictions and the movement of data across national borders. As
a result, much of the personal data that we process, which may include certain financial information associated with individuals, is
regulated by multiple privacy and data protection laws and, in some cases, the privacy and data protection laws of multiple jurisdictions.
In many cases, these laws apply not only to third-party transactions, but also to transfers of information between or among us, our subsidiaries,
and other parties with which we have commercial relationships.



Singapore



Regulations
on Cryptocurrency



We
intend to conduct our DOT operations from Singapore. In Singapore, cryptocurrencies and the custodianship of such cryptocurrencies are
not specifically regulated. Cryptocurrency exchanges and trading of cryptocurrencies are legal, but not considered legal tender. To the
extent that cryptocurrencies or tokens are considered “capital market products” such as securities, spot foreign exchange
contracts, derivatives and the likes, they will be subject to the jurisdiction of the Monetary Authority of Singapore (“MAS”),
Securities and Futures Act, anti-money laundering and combating the financing of terrorism laws and requirements. To the extent that
tokens are deemed “digital payment tokens,” they will be subject to the Payment Services Act of 2019 which, among other things,
require compliance with anti-money laundering and combating the financing of terrorism laws and requirements. According to the Payment
Services Act of 2019, “digital payment token” means any digital representation of value (other than an excluded digital representation
of value) that



| | (a) | is expressed as a unit;                                                                                                                                                
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                        
| | (b) | is not denominated in any currency, and is not pegged
    by its issuer to any currency;                                                                               
| |     |                                                                                                                                                                        
| | (c) | is, or is intended to be, a medium of exchange accepted
    by the public, or a section of the public, as payment for goods or services or for the discharge of a debt;
| |     |                                                                                                                                                                        
| | (d) | can be transferred, stored or traded electronically;
    and                                                                                                           
| |     |                                                                                                                                                                        
| | (e) | satisfies such other characteristics as the Authority
    may prescribe;                                                                                               



We
believe our DOT’s are not securities or digital payment tokens subject to these acts.



Employment
Ordinance



Hong
Kong



The
Employment Ordinance is the main piece of legislation governing conditions of employment in Hong Kong since 1968. It covers a comprehensive
range of employment protection and benefits for employees, including Wage Protection, Rest Days, Holidays with Pay, Paid Annual Leave,
Sickness Allowance, Maternity Protection, Statutory Paternity Leave, Severance Payment, Long Service Payment, Employment Protection,
Termination of Employment Contract, Protection Against Anti-Union Discrimination. In addition, every employer must take out employees’
compensation insurance to protect the claims made by employees in respect of accidents occurred during the course of their employment.



An
employer must also comply with all legal obligations under the Mandatory Provident Fund Schemes Ordinance, (CAP485). These include enrolling
all qualifying employees in MPF schemes and making MPF contributions for them. Except for exempt persons, employer should enroll both
full-time and part-time employees who are at least 18 but under 65 years of age in an MPF scheme within the first 60 days of employment.
The 60-day employment rule does not apply to casual employees in the construction and catering industries. Pursuant to the said Ordinance,
we are required to make MPF contributions for our Hong Kong employees once every contribution period (generally the wage period within
1 month). Employers and employees are each required to make regular mandatory contributions of 5% of the employee’s relevant income
to an MPF scheme, subject to the minimum and maximum relevant income levels. For a monthly-paid employee, the minimum and maximum relevant
income levels are HKD$7,100 and HKD$30,000 respectively.





18







China



Depending
upon the political climate, we may also become subject to the laws and regulations of China governing businesses in general, including
labor, occupational safety and health, contracts, tort and intellectual property. We may also become subject to foreign exchange regulations
might limit our ability to convert foreign currency into Renminbi, acquire PRC companies, or make dividend payments to COSG.



PRC
Regulations on Tax



Enterprise
Income Tax



The EIT
Law was promulgated by the Standing Committee of the National People’s Congress on March 16, 2007 and became effective on
January 1, 2008, and was later amended on February 24, 2017. The Implementation Rules of the EIT Law (the “Implementation
Rules”) were promulgated by the State Council on December 6, 2007 and became effective on January 1, 2008. According
to the EIT Law and the Implementation Rules, enterprises are divided into resident enterprises and non-resident enterprises. Resident
enterprises shall pay enterprise income tax on their incomes obtained in and outside the PRC at the rate of 25%. Non-resident enterprises
setting up institutions in the PRC shall pay enterprise income tax on the incomes obtained by such institutions in and outside the PRC
at the rate of 25%. Non-resident enterprises with no institutions in the PRC, and non-resident enterprises whose incomes having no substantial
connection with their institutions in the PRC, shall pay enterprise income tax on their incomes obtained in the PRC at a reduced rate
of 10%.



The
Arrangement between the PRC and Hong Kong Special Administrative Region for the Avoidance of Double Taxation the Prevention of Fiscal
Evasion with respect to Taxes on Income (the “Arrangement”) was promulgated by the State Administration of Taxation (“SAT”)
on August 21, 2006 and came into effect on December 8, 2006. According to the Arrangement, a company incorporated in Hong Kong
will be subject to withholding tax at the lower rate of 5% on dividends it receives from a company incorporated in the PRC if it holds
a 25% interest or more in the PRC company. The Notice on the Understanding and Identification of the Beneficial Owners in the Tax Treaty (the
“Notice”) was promulgated by SAT and became effective on October 27, 2009. According to the Notice, a beneficial ownership
analysis will be used based on a substance-over-form principle to determine whether or not to grant tax treaty benefits.



In
April 2009, the Ministry of Finance, or MOF, and SAT jointly issued the Notice on Issues Concerning Process of Enterprise Income
Tax in Enterprise Restructuring Business, or Circular 59. In December 2009, SAT issued the Notice on Strengthening Administration
of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or Circular 698. Both Circular 59 and Circular 698
became effective retroactively as of January 2008. In February 2011, SAT issued the Notice on Several Issues Regarding the
Income Tax of Non-PRC Resident Enterprises, or SAT Circular 24, effective April 2011. By promulgating and implementing these
circulars, the PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of equity interests in a PRC resident
enterprise by a non-resident enterprise.



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





19







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



On
October 17, 2017, the SAT issued a Notice Concerning Withholding Income Tax of Non-Resident Enterprise, or SAT Notice No. 37,
which abolishes Circular 698 and certain provisions of Circular 7. SAT Notice No. 37 reduces the burden of the withholding
obligator, such as revocation of contract filing requirements and tax liquidation procedures, strengthens the cooperation of tax authorities
in different places, and clarifies the calculation of tax payable and mechanism of foreign exchange.



Value-added
Tax



Pursuant
to the Provisional Regulations on Value-added Tax of the PRC, or the VAT Regulations, which were promulgated by the State Council on
December 13, 1993, took effect on January 1, 1994, and were amended on November 10, 2008, February 6, 2016, and November 19, 2017, respectively,
and the Rules for the Implementation of the Provisional Regulations on Value-added Tax of the PRC, which were promulgated by the MOF
on December 25, 1993, and were amended on December 15, 2008, and October 28, 2011, respectively, entities and individuals that sell goods
or labor services of processing, repair or replacement, sell services, intangible assets, or immovables, or import goods within the territory
of the People’s Republic of China are taxpayers of value-added tax. The VAT rate is 17% for taxpayers selling goods, labor
services, or tangible movable property leasing services or importing goods, except otherwise specified; 11% for taxpayers selling services
of transportation, postal, basic telecommunications, construction and lease of immovable, selling immovable, transferring land use rights,
selling and importing other specified goods including fertilizers; 6% for taxpayers selling services or intangible assets.



According
to the Notice on the Adjustment to the Value-added Tax Rates issued by the SAT and the MOF on April 4, 2018, where taxpayers make VAT
taxable sales or import goods, the applicable tax rates shall be adjusted from 17% to 16% and from 11% to 10%, respectively. Subsequently,
the Notice on Policies for Deepening Reform of Value-added Tax was issued by the SAT, the MOF and the General Administration of Customs
on March 30, 2019 and took effective on April 1, 2019, which further adjusted the applicable tax rate for taxpayers making VAT taxable
sales or importing goods. The applicable tax rates shall be adjusted from 16% to 13% and from 10% to 9%, respectively.



Dividend
Withholding Tax



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





20







PRC
Laws and Regulations on Employment and Social Welfare



Labor
Law of the PRC



Pursuant
to the Labor Law of the PRC, which was promulgated by the Standing Committee of the NPC on July 5, 1994 with an effective date of
January 1, 1995 and was last amended on August 27, 2009 and the Labor Contract Law of the PRC, which was promulgated on June 29,
2007, became effective on January 1, 2008 and was last amended on December 28, 2012, with the amendments coming into effect
on July 1, 2013, enterprises and institutions shall ensure the safety and hygiene of a workplace, strictly comply with applicable rules
and standards on workplace safety and hygiene in China, and educate employees on such rules and standards. Furthermore, employers and
employees shall enter into written employment contracts to establish their employment relationships. Employers are required to inform
their employees about their job responsibilities, working conditions, occupational hazards, remuneration and other matters with which
the employees may be concerned. Employers shall pay remuneration to employees on time and in full accordance with the commitments set
forth in their employment contracts and with the relevant PRC laws and regulations. Our Hong Kong subsidiary currently does not comply
with PRC laws and regulations, but complies with Hong Kong laws and regulations.



Social
Insurance and Housing Fund



Pursuant
to the Social Insurance Law of the PRC, which was promulgated by the Standing Committee of the NPC on October 28, 2010 and
became effective on July 1, 2011, employers in the PRC shall provide their employees with welfare schemes covering basic pension
insurance, basic medical insurance, unemployment insurance, maternity insurance, and occupational injury insurance. Our Hong Kong subsidiary
has not deposited the social insurance fees in full for all the employees in compliance with the relevant regulations. We may be ordered
by the social security premium collection agency to make or supplement contributions within a stipulated period, and shall be subject
to a late payment fine computed from the due date at the rate of 0.05% per day; where payment is not made within the stipulated period,
the relevant administrative authorities shall impose a fine ranging from one to three times the amount of the amount in arrears. Our
Hong Kong subsidiary has not deposited the social insurance fees as required by relevant regulations.



In
accordance with the Regulations on Management of Housing Provident Fund, which were promulgated by the State Council on April 3,
1999 and last amended on March 24, 2002, employers must register at the designated administrative centers and open bank accounts
for depositing employees’ housing funds. Employers and employees are also required to pay and deposit housing funds, with an amount
no less than 5% of the monthly average salary of the employee in the preceding year in full and on time. Our subsidiaries have not registered
at the designated administrative centers nor opened bank accounts for depositing employees’ housing funds. They also have not deposited
employees’ housing funds. Our subsidiaries may be ordered by the housing provident fund management center to complete the registration
formalities, open bank accounts, make the payment and deposit within a prescribed time limit if they become subject to PRC laws. Failing
to register or open bank accounts at the expiration of the time limit could result in fines of not less than RMB10,000 nor more than
RMB50,000. And an application may be made to a people’s court for compulsory enforcement if payment and deposit has not been made
after the expiration of the time limit.





21







PRC
Regulations Relating to Foreign Exchange



General
Administration of Foreign Exchange



The
principal regulation governing foreign currency exchange in the PRC is the Administrative Regulations of the PRC on Foreign Exchange (the
“Foreign Exchange Regulations”), which were promulgated on January 29, 1996, became effective on April 1, 1996
and were last amended on August 5, 2008. Under these rules, RMB is generally freely convertible for payments of current account
items, such as trade- and service-related foreign exchange transactions and dividend payments, but not freely convertible for capital
account items, such as capital transfer, direct investment, investment in securities, derivative products or loans unless prior approval
by competent authorities for the administration of foreign exchange is obtained. Under the Foreign Exchange Regulations, foreign-invested
enterprises in the PRC may purchase foreign exchange without the approval of SAFE to pay dividends by providing certain evidentiary documents,
including board resolutions, tax certificates, or for trade- and services-related foreign exchange transactions, by providing commercial
documents evidencing such transactions.



Circular
No. 37 and Circular No. 13



Circular
37 was released by SAFE on July 4, 2014 and abolished Circular 75 which had been in effect since November 1, 2005. Pursuant
to Circular 37, a PRC resident should apply to SAFE for foreign exchange registration of overseas investments before it makes any capital
contribution to a special purpose vehicle, or SPV, using his or her legitimate domestic or offshore assets or interests. SPVs are offshore
enterprises directly established or indirectly controlled by domestic residents for the purpose of investment and financing by utilizing
domestic or offshore assets or interests they legally hold. Following any significant change in a registered offshore SPV, such as capital
increase, reduction, equity transfer or swap, consolidation or division involving domestic resident individuals, the domestic individuals
shall amend the registration with SAFE. Where an SPV intends to repatriate funds raised after completion of offshore financing to the
PRC, it shall comply with relevant PRC regulations on foreign investment and foreign debt management. A foreign-invested enterprise
established through return investment shall complete relevant foreign exchange registration formalities in accordance with the prevailing
foreign exchange administration regulations on foreign direct investment and truthfully disclose information on the actual controller
of its shareholders.



If
any shareholder who is a PRC resident (as determined by the Circular No. 37) holds any interest in an offshore SPV and fails to fulfil
the required foreign exchange registration with the local SAFE branches, the PRC subsidiaries of that offshore SPV may be prohibited
from distributing their profits and dividends to their offshore parent company or from carrying out other subsequent cross-border foreign
exchange activities. The offshore SPV may also be restricted in its ability to contribute additional capital to its PRC subsidiaries.
Where a domestic resident fails to complete relevant foreign exchange registration as required, fails to truthfully disclose information
on the actual controller of the enterprise involved in the return investment or otherwise makes false statements, the foreign exchange
control authority may order them to take remedial actions, issue a warning, and impose a fine of less than RMB 300,000 on an institution
or less than RMB 50,000 on an individual.



Circular
13 was issued by SAFE on February 13, 2015, and became effective on June 1, 2015. Pursuant to Circular 13, a domestic resident
who makes a capital contribution to an SPV using his or her legitimate domestic or offshore assets or interests is no longer required
to apply to SAFE for foreign exchange registration of his or her overseas investments. Instead, he or she shall register with a bank
in the place where the assets or interests of the domestic enterprise in which he or she has interests are located if the domestic resident
individually seeks to make a capital contribution to the SPV using his or her legitimate domestic assets or interests; or he or she shall
register with a local bank at his or her permanent residence if the domestic resident individually seeks to make a capital contribution
to the SPV using his or her legitimate offshore assets or interests.



We
cannot assure that our PRC beneficial shareholders have completed registrations in accordance with Circular 37.





22







Circular
19 and Circular 16



Circular
19 was promulgated by SAFE on March 30, 2015, and became effective on June 1, 2015. According to Circular 19, the foreign exchange
capital in the capital account of foreign-invested enterprises, meaning the monetary contribution confirmed by the foreign exchange authorities
or the monetary contribution registered for account entry through banks, shall be granted the benefits of Discretional Foreign Exchange
Settlement (“Discretional Foreign Exchange Settlement”). With Discretional Foreign Exchange Settlement, foreign capital in
the capital account of a foreign-invested enterprise for which the rights and interests of monetary contribution have been confirmed
by the local foreign exchange bureau, or for which book-entry registration of monetary contribution has been completed by the bank, can
be settled at the bank based on the actual operational needs of the foreign-invested enterprise. The allowed Discretional Foreign Exchange
Settlement percentage of the foreign capital of a foreign-invested enterprise has been temporarily set to be 100%. The Renminbi
converted from the foreign capital will be kept in a designated account and if a foreign-invested enterprise needs to make any further
payment from such account, it will still need to provide supporting documents and to complete the review process with its bank.



Furthermore,
Circular 19 stipulates that foreign-invested enterprises shall make bona fide use of their capital for their own needs within their business
scopes. The capital of a foreign-invested enterprise and the Renminbi it obtained from foreign exchange settlement shall not be used
for the following purposes:



| | ● | directly
    or indirectly used for expenses beyond its business scope or prohibited by relevant laws or regulations;
| | - | ---------------------------------------------------------------------------------------------------------------------



| | ● | directly
    or indirectly used for investment in securities unless otherwise provided by relevant laws or regulations;
| | - | -----------------------------------------------------------------------------------------------------------------------



| | ● | directly
    or indirectly used for entrusted loan in Renminbi (unless within its permitted scope of business), repayment of inter-company loans
    (including advances by a third party) or repayment of bank loans in Renminbi that have been sub-lent to a third party; or
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | directly
    or indirectly used for expenses related to the purchase of real estate that is not for self-use (except for foreign-invested real
    estate enterprises).
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



Circular
16 was issued by SAFE on June 9, 2016. Pursuant to Circular 16, enterprises registered in the PRC may also convert their foreign
debts from foreign currency to RMB on a self-discretionary basis. Circular 16 provides an integrated standard for conversion of foreign
exchange capital items (including but not limited to foreign currency capital and foreign debts) on a self-discretionary basis applicable
to all enterprises registered in the PRC. Circular 16 reiterates the principle that an enterprise’s Renminbi capital converted
from foreign currency-denominated capital may not be directly or indirectly used for purposes beyond its business scope or purposes prohibited
by PRC laws or regulations, and such converted Renminbi capital shall not be provided as loans to non-affiliated entities.



Our
PRC subsidiaries’ distributions to their offshore parents are required to comply with the requirements as described above.



PRC
Share Option Rules



Under
the Administration Measures on Individual Foreign Exchange Control issued by the PBOC on December 25, 2006, all foreign exchange matters
involved in employee share ownership plans and share option plans in which PRC citizens participate require approval from SAFE or its
authorized branch. Pursuant to SAFE Circular 37, PRC residents who participate in share incentive plans in overseas non-publicly-listed
companies may submit applications to SAFE or its local branches for the foreign exchange registration with respect to offshore special
purpose companies. In addition, under the Notices on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating
in Share Incentive Plans of Overseas Publicly-Listed Companies, or the Share Option Rules, issued by SAFE on February 15, 2012, PRC residents
who are granted shares or share options by companies listed on overseas stock exchanges under share incentive plans are required to (i)
register with SAFE or its local branches, (ii) retain a qualified PRC agent, which may be a PRC subsidiary of the overseas listed company
or another qualified institution selected by the PRC subsidiary, to conduct the SAFE registration and other procedures with respect to
the share incentive plans on behalf of the participants, and (iii) retain an overseas institution to handle matters in connection with
their exercise of share options, purchase and sale of shares or interests and funds transfers.





23







PRC
Regulation of Dividend Distributions



The
principal laws, rules and regulations governing dividend distributions by foreign-invested enterprises in the PRC are the Company Law
of the PRC, as amended, the Wholly Foreign-owned Enterprise Law and its implementation regulations, the Chinese-foreign Cooperative Joint
Venture Law and its implementation regulations, and the Chinese-foreign Equity Joint Venture Law and its implementation regulations.
Under these laws, rules and regulations, foreign-invested enterprises may pay dividends only out of their accumulated profit, if any,
as determined in accordance with PRC accounting standards and regulations. Both PRC domestic companies and wholly-foreign owned PRC enterprises
are required to set aside a general reserve of at least 10% of their after-tax profit, until the cumulative amount of such reserve reaches
50% of their registered capital. A PRC company is not permitted to distribute any profits until any losses from prior fiscal years have
been offset. Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal
year.



PRC Regulation Relating to Crypto Assets



Since 2013, the Chinese
government has issued several regulations and statements aimed at regulating cryptocurrencies. These regulations include cracking down
on illegal activities related to cryptocurrencies and strengthening the regulation of financial activities related to virtual currencies
in mainland China, hence, the company does not do business in mainland China.



In December 03, 2013, the
People’s Bank of China and four other departments jointly issued the “Notice on Guarding Against Bitcoin Risks, (the “Notice
on Guarding Against Bitcoin Risks”) which became effective on the same day. The Notice on Guarding Against Bitcoin Risks clarified
that Bitcoin is a virtual commodity rather than legal tender and established a legal boundary for financial and payment institutions conducting
Bitcoin-related business.



In September 04, 2017, the
People’s Bank of China and six other departments jointly issued the “Announcement on Preventing Token Fundraising Risks”(the
“Announcement on Preventing Token Fundraising Risks”) ,which became on effective same day. The Announcement on Preventing
Token Fundraising Risks declares initial coin offerings (ICOs) to be unauthorized and illegal fundraising activities. Token trading platforms
are prohibited from providing pricing, information agency or other services for tokens or “virtual currencies.”



In September 15, 2021, the
People’s Bank of China and nine other ministries and commissions issued the “Notice on Further Preventing and Dealing with Speculation
Risks in Virtual Currency Trading,” (the “Notice”), which came into effect on the same day. The Notice states
that virtual currencies do not have the same legal status as legal tender and that the business activities related to virtual currencies
are illegal financial activities in mainland China. The Notice also highlighted the legal risks of participating in virtual currency investment
and trading activities, stating that investments that go against public order and good morals are null and void, and losses incurred are
to be borne by the concerned legal person, unincorporated organization, or natural person.



In April 13, 2022, the
National Internet Finance Association of China, China Banking Association, and Securities Association of China jointly issued the “Initiative
on Preventing the Financial Risks Concerning NFT” (the “Initiative”), which came into effect on the same day.
The Initiative recognizes the digital creative work attribute of NFT products and their potential value in enriching the digital economy
model and promoting the development of the cultural and creative industries. The Initiative also clarifies that transactions involving
NFT products are protected and recognized while protecting consumer rights and promoting rational consumption. The Initiative strictly
prohibits the financialization and securitization of NFT and does not allow the use of Bitcoin, Ethereum, Tether, or other virtual currencies
as valuation and settlement tools for the issuance and trading of NFT. While the Initiative does not have the force of law, the initiators
of the Initiative are competent authorities of the industry, reflecting regulatory attitudes and legislative trends to some extent.



24







Subject to the laws and regulations
of the PRC, individuals in China are not prohibited from purchasing NFTs and physical artworks by using payment methods such as cash,
credit cards and other payment methods accepted by overseas NFT exchanges or physical artwork sellers, excluding virtual currencies. Relevant
laws and regulations in PRC include the Foreign Exchange Control Regulations of the PRC, the Administrative Measures on Individual Foreign
Exchange and the Implementation Regulations for the Administrative Measures on Individual Foreign Exchange (the “Implementing
Regulations”).



Under the Implementing Regulations,
the sale of foreign currency by individuals and the purchase of foreign currency domestically are subject to annual quota management,
with an annual quota of US$50,000 per person. Transactions in excess of this annual quota require valid identification and documentary
evidence to be processed through a bank. In addition, the “Application Form for Individual Purchase of Foreign Exchange” attached
to the “Notice by the State Administration of Foreign Exchange on Further Facilitation of Individual Foreign Exchange Business Under
The Current Account” stipulates that foreign exchange obtained through individual purchase and sale shall not be used for capital
items that are not permitted and shall not be used to investment in securities, purchase of life insurance, investment of return on with-profits
insurance, purchase of overseas houses, etc. It is also forbidden to engage in illegal activities such as money laundering, gambling,
tax evasion or the underground movement of money.



According to the Notice of
the State Administration of Foreign Exchange on the Management of Foreign Currency Bank Cards, which was issued by the State Administration
of Foreign Exchange and came into effective November 01,2010, the overseas merchants that can be purchased with domestic bank cards include
three categories of completely prohibited, limited in amount, and completely open. The completely prohibited merchants are prohibited
to make transactions by the cardholders. For the limited in amount merchants, a single payment payable by the cardholder is limited to
US$5,000 or less, with the exception of Financial Institutions – Over-the-Counter Services and Financial Services – ATM Services.
There is no limit on payments made to the completely open merchants, including shopping, dining, accommodation, transportation, communication,
medical care and education and other normal consumer payments. Commercial photography, art, and graphics are included in the “Limited
in Amount” category and art dealers and galleries are included in the “completely Open” category, referring to the Annex
I: Merchant Category Codes for the Use of Domestic Bank Cards outside China. Moreover, it should be noted that the State Administration
of Foreign Exchange has implemented the Notice on Reporting Information, which requires all domestic financial institutions that issue
bank cards, such as debit cards and credit cards, to report to the State Administration of Foreign Exchange any single consumption transaction
of RMB 1,000 or more (excluding) that takes place at physical or online merchants outside the PRC, effective from 1 September 2017.



In light of the above, Chinese
nationals are restricted from trading crypto in the PRC. This restriction applies to all online transactions around the world. However,
the PRC supports the responsible implementation of NFT and blockchain technology to real world applications, and Management strongly believes
the Company’s DOTs are one of such real-world applications.



It should also be noted
that the restrictions above do not apply offshore, and the Company’s customer base has not been focused on PRC customers. In the
rare occasion that we have such a customer, Metamall allows for payment via credit cards. The Company believes any such aforementioned
restrictions will not impact our sales the Company’s sales.





25







ENFORCEABILITY OF CIVIL LIABILITIES



COSG is organized under the laws
of the State of Nevada as a holding company that conducts its business through number of subsidiaries organized under the laws of foreign
jurisdictions such as Singapore, Hong Kong and the British Virgin Islands. This may have an adverse impact on the ability of U.S. investors
to enforce a judgment obtained in U.S. Courts against these entities, or to effect service of process on the officers and directors managing
the foreign subsidiaries.



A substantial portion of
our assets are located in Hong Kong. Meanwhile, our current directors and officers are Hong Kong / Australian / New Zealand residents
with substantial portions of their assets located outside the United States. As a result, it may be difficult for investors to effect
service of process within the United States upon us or these persons, or to enforce judgments obtained in U.S. courts against us or them,
including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United
States. It will also be costlier and time-consuming for the investors to effect service of process outside the United States, or to enforce
judgments obtained from the U.S. courts in the courts of the jurisdictions where our directors and officers reside. For example, to enforce
a foreign judgment in Hong Kong, you will be required to apply to the Hong Kong High Court to enforce a foreign judgment (the “Application”)
for which you will be required to engage a local counsel to facilitate or prepare the Application alongside the various supporting documentations
for the Application. After which, you will be required to go through the standard litigation process to sue on the judgment as a debt.
In addition, a judgment of a United States court for civil liabilities predicated upon the federal securities laws of the United States
may also not be enforceable in or recognized by the courts of the jurisdictions where our directors and officers reside. As such, you
may encounter difficulties to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities
laws against us and our officers and directors.

Further, insofar as PRC
factor may be concerned, there is uncertainty as to whether the People’s Republic of China (the “PRC”) courts would
(i) entertain original actions brought in the PRC against us or our directors or officers based on the securities laws of the United States
or any state in the United States or (ii) recognize or enforce judgments of the courts of the United States obtained against us or our
directors or officers based on the civil liability provisions of the securities laws of the United States or any state in the United States.
To this end, we note that none of our directors or officers are Chinese nationals nor does the company hold any assets and/or host any
operations within the PRC. PRC courts may therefore come to the view there is no locus.

Under the “one country,
two systems” principle, the Hong Kong Special Administrative Region (SAR) has an independent judiciary that operates separately from
the courts in mainland China. The courts of Hong Kong have jurisdiction over all cases that arise within its territory, including civil
and criminal cases, as well as cases related to the interpretation of the Basic Law.

Where PRC law does apply
however, in order to enforce a foreign judgment in accordance with the laws and regulations of the PRC, certain criteria must be met as
stipulated by the PRC Civil Procedure Law and other related laws and regulations. These criteria include, but are not limited to: (i)
the judgment being sought for recognition must be a final and valid judgment or decree issued by a foreign court; (ii) the court that
rendered the judgment or decree must have jurisdiction over the case under the applicable foreign law; (iii) the proceedings of the foreign
court must have been fair and lawful under the applicable foreign law, including effective service on the defendant and giving the defendant
an opportunity to be heard; (iv) there must be no conflicting interests in the case; (v) the requested court must not be conducting an
ongoing trial between the same parties on the same subject matter or have already rendered an effective judgment, nor must it have recognized
a judgment rendered by a third country in the case; (vi) there must be a treaty relationship or reciprocity between the two countries
for the mutual recognition and enforcement of judgments in civil and commercial matters; and (vii) the recognition and enforcement of
the judgment must not violate the fundamental principles of the laws of the PRC or the sovereignty, security, or public interests of the
PRC.

As of the date of this Report,
there are no existing treaties or written arrangements between the PRC and the United States for the mutual recognition and enforcement
of foreign judgments. Furthermore, under the PRC Civil Procedure Law, a foreign judgment against us, our directors, or officers cannot
be enforced by PRC courts if the court finds that it violates the fundamental principles of PRC laws or national sovereignty, security,
or public interests. This raises uncertainty about whether and under what circumstances a PRC court would enforce a judgment issued by
a court in the United States or the Cayman Islands. In addition, due to our incorporation under the laws of the Cayman Islands, it would
be difficult for U.S. shareholders to bring a lawsuit against us in China under PRC laws. The PRC Civil Procedure Law and related laws
and regulations require a connection to the PRC to establish jurisdiction, which may be challenging for U.S. shareholders to establish
based solely on their ownership of our shares.



See the Risk Factor- “It
may be difficult for stockholders to enforce any judgment obtained in the United States against us, which may limit the remedies otherwise
available to our stockholders” on page 40 for more information.





26







INSURANCE



We
maintain certain insurance in accordance customary industry practices in Hong Kong. Insurance will be bought on individual pieces that
are valued at US$ 2 million and above, based on the valuation provided by our independent third party appraisers.



REPORTS
TO SECURITY HOLDERS



Upon
the effective date of this Registration Statement, we will become subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, and accordingly, will file current and periodic reports, proxy statements and other information with the Securities
and Exchange Commission, or the Commission. Information that the Company previously publicly disclosed was made through the OTC Disclosure
and News Service and are available on the OTC Markets Group’s website at www.otcmarkets.com. With respect to disclosures filed
or furnished to the Commission, you may obtain copies of our prior and future reports from the Commission’s Public Reference Room
at 100 F Street, N.E., Washington, D.C. 20549, or on the SEC’s website, at www.sec.gov. You may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330.



Near-Term
Requirements For Additional Capital



We
believe that we will require approximately $50 million over the next 12-24 months to implement our business plan. For the immediate
future, we intend to finance our business expansion efforts through equity purchase by institutional banks, and loans from existing shareholders
or financial institutions.



Available
Information



Access
to all of our Securities and Exchange Commission (“SEC”) filings, including our Annual Report on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is provided, free of charge, on our website (https://coinllectibles.art/)
as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC.



Empire
Stock Transfer Inc. located at 1859 Whitney Mesa Drive, Henderson, Nevada 89014, telephone number (702) 818-5898, facsimile (702) 974-1444,
serves as our stock transfer agent.





27







ITEM
1A. RISK FACTORS.



Risks
Related to Our Business and Industry



We
are a development stage company that is dependent upon the financial support of our stockholders to finance our operations.



We
have not yet begun generating significant revenues and are dependent upon the continued support of our majority shareholder to continue
operations. Our financial statements have been prepared assuming that we will continue as a going concern. Our continuation as a going
concern is dependent upon improving our profitability and the continuing financial support from our stockholders.  If our assumption
regarding improvement of profitability or the continued support of our stockholders are not valid, we may not be able to pursue our business
plan or continue operations as planned, which may materially and adversely affect our financial condition and results of operations.
 Furthermore, the value of your securities may be significantly be affected or become worthless.



We
intend to mint our own DOTs under the assumption that our DOTs are not investment contracts and therefore not a security as described
by the Supreme Court in SEC v. W.J. Howey Co., 328 U.S. 293 (1946). A particular digital asset’s status as a “security”
in any relevant jurisdiction is subject to a high degree of uncertainty and if we are unable to properly characterize our DOTs, we may
be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, operating results,
and financial condition.



The SEC and its staff have taken
the position that certain crypto assets fall within the definition of a “security” under the U.S. federal securities laws.
The legal test for determining whether any given digital asset is a security is a highly complex, fact-driven analysis that evolves over
time, and the outcome is difficult to predict. The SEC generally does not provide advance guidance or confirmation on the status of any
particular digital asset as a security. Though the SEC’s Strategic Hub for Innovation and Financial Technology published a framework
for analyzing whether any given digital asset is a security in April 2019, this framework is also not a rule, regulation or statement
of the SEC and is not binding on the SEC.



Foreign jurisdictions have adopted
different approaches in classifying digital assets as “securities.” As a result, certain digital assets may be deemed to be
a “security” under the laws of some jurisdictions but not others. Various foreign jurisdictions may, in the future, adopt
additional laws, regulations, or directives that affect the characterization of digital assets as “securities.”



The classification of a digital
asset as a security under applicable law has wide-ranging implications for the regulatory obligations that flow from the offer, sale,
trading, and clearing of such assets. For example, a digital asset that is a security in the United States may generally only be offered
or sold in the United States pursuant to a registration statement filed with the SEC or in an offering that qualifies for an exemption
from registration in accordance with Section 5 of the Securities Act. Persons that effect transactions in digital assets that are securities
in the United States may be subject to registration with the SEC as a “broker” or “dealer.” Platforms that bring
together purchasers and sellers to trade digital assets that are securities in the United States are generally subject to registration
as national securities exchanges, or must qualify for an exemption, such as by being operated by a registered broker-dealer as an alternative
trading system, or ATS, in compliance with rules for ATSs. Persons facilitating clearing and settlement of securities may be subject to
registration with the SEC as a clearing agency. Foreign jurisdictions may have similar licensing, registration, and qualification requirements.



We have internally conducted our
own analysis and have concluded that our DOTs are not a “security” under applicable laws. Regardless of our conclusions, we
could be subject to legal or regulatory action in the event the SEC, a foreign regulatory authority, or a court were to determine that
our DOT is a “security” under applicable laws. However, if the interpretation or enforcement of the laws and regulations regarding
digital assets change, if we erroneously conclude that our DOTs are not securities, our operations would likely be materially and adversely
affected such that we may be unable to continue to mint DOTs or the SEC, a foreign regulatory authority, or a court determines that our
DOTs constitutes a security, we could become subject to judicial or administrative sanctions for failing to offer or sell the digital
asset in compliance with the registration requirements of Section 5 of the Securities Act, or for acting as a broker, dealer, or national
securities exchange without appropriate registration in the future. Such an action could result in injunctions, cease and desist orders,
as well as civil monetary penalties, fines, and disgorgement, criminal liability, and reputational harm. Users of our DOTs could also
seek to rescind our sales transactions on the basis that it was conducted in violation of applicable law, which could subject us to significant
liability. We may also be required to cease minting and selling our DOTs, which could negatively impact our business, operating results,
and financial condition. If we are unable to mint our own DOTs, our results of operations and financial condition may be harmed and the
value of your investment in us materially and adversely affected.



Subsequent to the transfer
of Coinllectibles Limited, Coinllectibles (HK) Limited and Coinllectibles Wealth Limited to Dr. Lee pursuant to the Settlement Agreement
between the Company and Dr. Lee dated December 15, 2022, the Company no longer minted any DOTs, and any DOTs sold by the Company as ownership
documents in association with the underlying physical artwork or collectible are obtained from a third party.



The assessment of whether
the DOTS we mint are securities is based upon our internal policies and  procedures that are risk-based judgments made
by us and are not a legal standard nor are they binding on any regulatory body or court.



Our current policy is to perform
a legal analysis under the U.S. federal securities laws for each DOT that we mint to determine whether such DOT is a security. This assessment
is based on fact gathering and a legal analysis that is informed by the statutory definition of a security under the U.S. federal securities
laws, Supreme Court decisions applying the definition of security (e.g., SEC v. W.J. Howey Co., 328 U.S. 293 (1946) (“Howey”),
Reves v. Ernst & Young (1990)), other judicial decisions applying the definition of a security, including recent court rulings pertaining
to crypto assets, the FinHub Framework, and factors articulated in public communications by representatives of the SEC, no-action letters,
and enforcement actions.





28







To help facilitate our assessment
of whether a crypto asset is more or less likely to be a security, we have also developed an analytical framework using a points-based
rating system centered around factual questions designed to address each of the test factors articulated in Howey: (i) whether crypto
purchasers invested money; (ii) in a common enterprise; (iii) with a reasonable expectation of profit; and (iv) based on the efforts of
others. As advised by FinHub in the letter to the New York State Department of Financial Services on January 27, 2020 (the “FinHub
Letter”), our assessment seeks to take into account federal securities laws, factors enumerated within the FinHub Framework, case
law, and other guidance, as well as our deep understanding of digital asset technologies.



Our framework recognizes that,
in general, the more factors that are implicated, the greater the likelihood that a crypto asset may be classified as an investment contact.
We also weigh factors which we believe are more important than others in that assessment, in order to generate a scaled score. We believe
this approach allows us to more methodically apply and analyze facts consistently across different assets and across the same asset over
time. As indicated in the FinHub Letter, we recognize that the use of our framework or other model industry or state based frameworks
or whitelists has not been endorsed by the SEC or other regulatory authorities, and recognize that the application of securities laws
to the specific facts and circumstances of digital assets may be complex and subject to change, and that a listing determination by us
does not guarantee any conclusion under the U.S. federal securities laws. Further, our risk-based assessment is not binding on any regulator
or court.



However, if the interpretation
or enforcement of the laws and regulations regarding digital assets change or if we erroneously conclude that our DOTs are not securities,
our operations would likely be materially and adversely affected such that we may be unable to continue to mint DOTs or the SEC, a foreign
regulatory authority, or a court determines that our DOTs constitutes a security, we could become subject to judicial or administrative
sanctions for failing to offer or sell the digital asset in compliance with the registration requirements of Section 5 of the Securities
Act, or for acting as a broker, dealer, or national securities exchange without appropriate registration in the future. Such an action
could result in injunctions, cease and desist orders, as well as civil monetary penalties, fines, and disgorgement, criminal liability,
and reputational harm. Users of our DOTs could also seek to rescind our sales transactions on the basis that it was conducted in violation
of applicable law, which could subject us to significant liability. We may also be required to cease minting and selling our DOTs, which
could negatively impact our business, operating results, and financial condition. If we are unable to mint our own DOTs, our results of
operations and financial condition may be harmed and the value of your investment in us materially and adversely affected.



Subsequent to the transfer of
Coinllectibles Limited, Coinllectibles (HK) Limited and Coinllectibles Wealth Limited to Dr. Lee pursuant to the Settlement Agreement
between the Company and Dr. Lee dated December 15, 2022, the Company no longer minted any DOTs, and any DOTs sold by the Company as ownership
documents in association with the underlying physical artwork or collectible are obtained from a third party.



There are material risks
and uncertainties associated with custodians of DOTs



The Company uses its multiple
custodian system to hold DOTs for its business line. Such custodians may or may not be subject to regulation by U.S. state or federal
or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. The Company could have a high concentration of
its DOTs in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access
credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of DOTs. The Company may also incur costs related
to maintenance of the custodian system. Any security breach, incurred cost or loss of DOTs associated with the use of a custodian could
(as with any asset of any company) materially and/or adversely affect our trading execution, the value of our and the value of any investment
in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied
with respect to custody of DOTs held on behalf of clients. For example, if a DOT is, for whatever reason deemed as a form of security
(which is unlikely as a DOT is merely a digital copy of a contract) U.S.- regulated investment advisers may (though most unlikely) be
required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about
how to interpret and apply this rule, and how to identify a “qualified custodian” of, DOTs, which are obviously kept in a
different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties
associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch
our business lines. Any security breach, incurred cost or loss of DOTs associated with the use of a custodian could materially and adversely
affect the execution of hedging ETPs, the value of the Company’s assets and the value of any investment in the Common Shares.



The loss or destruction
of more than half of the private keys required to access a digital asset may be irreversible and, as a result, the Company’s loss
of access to its private keys or its experience of a data loss relating to its DOTs may adversely affect the Company’s business,
financial condition and results of operations.



DOTs are controllable only by
the possessor of both the unique public key and private key relating to the local or online digital wallet in which the DOTs are held.
The Company is required by the operation of blockchain networks to publish the public key relating to a digital wallet in use when it
first verifies a spending transaction from that digital wallet and disseminates such information into the respective network. The Company
safeguards and keeps private the private keys relating to its DOTs by using its system where multiple wallet holders, instead of a single
wallet holder, are needed to approve any transaction. To the extent more than a half of private keys are lost, destroyed or otherwise
compromised and no backup of the private keys is accessible, the Company will be unable to access the DOTs held by them and the private
keys will not be capable of being restored by the respective blockchain network. Any loss of private keys relating to digital wallets
used to store the Company’s DOTs may adversely affect the Company’s business, financial condition and results of operations.





29







The DOT transactions relating
to the digital contracts underlying the fine arts and collectibles are irrevocable, and stolen or incorrectly transferred DOTs may be
irretrievable and, as a result, any incorrectly executed DOT transactions may adversely affect the Company’s business, financial
condition and results of operations.



Although the Company’s
transfers of DOTs will regularly be made to or from various parties, it is possible that, through computer or human error, or through
theft or criminal action, the Company’s DOTs could be transferred in incorrect amounts or to unauthorized third parties. To the
extent that the Company is unable to seek a corrective transaction with such third party or is incapable of identifying the third party
which has received the Company’s DOTs through error or theft, the Company will be unable to revert or otherwise recover incorrectly
transferred DOTs in the absence of relevant Court Order from a competent judicial body. To the extent that the Company is unable to seek
redress for such error or theft, such loss may adversely affect the Company’s business, financial condition and results of operations.



The limited rights of legal
recourse against the Company, and the Company’s lack of insurance protection, exposes the Company and its stockholders to the risk
of loss of its DOTs for which no person is liable.



While the physical art pieces
and collectibles stored in the Company’s warehouse are insured, the DOTs on the blockchain held by the Company may not be insured.
Therefore, a loss may be suffered with respect to the Company’s DOTs which is not covered by insurance and for which no person is
liable in damages, which may adversely affect the Company’s business, financial condition and results of operations.



That having been said, please
note that the physical art pieces are stored in the Company’s warehouse and such art pieces are insured. The theoratical theft of
a DOT (which is the same as stealing a PDF copy of a contract) does not mean that there will be any adverse effect to the physical goods.
Theoretically, if a DOT is indeed obtained by illegal means, the mal-actor will have to go to the Courts to enforce the legal rights under
the DOT upon which bonafide owners to the physical art pieces can assert their rights accordingly.



The Company may not have
adequate sources of recovery if its DOTs are lost, stolen or destroyed.



If the Company’s DOTs are
lost, stolen or destroyed under circumstances rendering a party liable to the Company, the responsible party may not have the financial
resources sufficient to satisfy its claim. For example, as to a particular event of loss, the only source of recovery for the Company
might be limited, to the extent identifiable, other responsible third parties (e.g., a thief or terrorist), any of which may not
have the financial resources (including liability insurance coverage) to satisfy a valid claim by the Company.



DOTs held by the Company
are not subject to FDIC or SIPC protections.



The Company does not hold its
DOTs with a banking institution or a member of the Federal Deposit Insurance Corporation (“FDIC”) or the Securities Investor
Protection Corporation (“SIPC”) and, therefore, its DOTs are not subject to the protections enjoyed by depositors with FDIC
or SIPC member institutions.





We
face substantial litigation and regulatory risks.



As
an enterprise whose business lines include innovative technology as well as payments made in cryptocurrency, we depend to a significant
extent on its relationships with its clients and its reputation for integrity and high-caliber professional services. As a result, if
a client is not satisfied with our services or if there are allegations of improper conduct, including improper conduct by any of our
partners, by private litigants or regulators, whether the ultimate outcome is favorable or unfavorable to us, or if there is negative
publicity and press speculation about us, whether or not valid, it may harm our reputation and may be more damaging to us than to businesses
in other industries unrelated to this sector.





30







With
regulators still establishing frameworks for the innovative technology utilized by us, as well as the payment mechanisms used, we may
become subject to regulation and oversight, including periodic examination by regulatory authorities. We could be the subject of inquiries,
investigations, sanctions, cease and desist orders, terminations of licenses or qualifications, lawsuits and proceedings by counterparties,
clients, other third parties and regulatory and other governmental agencies, which could lead to increased expenses or reputational damage.
Responding to inquiries, investigations, audits, lawsuits and proceedings, regardless of the ultimate outcome of the matter, is time-consuming
and expensive and can divert the attention of senior management. The outcome of such proceedings may be difficult to predict or estimate
until late in the proceedings, which may last a number of years.



The
risks described above may be greater for companies in the distributed ledger and non-fungible token industries as it is relatively new
and clients, counterparties and regulators are expected to need significant education to understand the mechanics of products and services
that rely on such technologies.



Furthermore,
while we maintain insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities
and is subject to various exclusions as well as caps on amounts refundable. Even if we believe a claim is covered by insurance, insurers
may dispute our entitlement for a variety of different reasons, which may affect the timing and, if the insurers prevail, the amount
of our recovery. Any claims or litigation, even if fully indemnified or insured, could damage our reputation and make it more difficult
to compete effectively or to obtain adequate insurance in the future.



If
we and/or any governmental agency believe that it has accepted capital contributions by, or is otherwise holdings assets of, any person
or entity that is acting directly or indirectly in violation of any money laundering or corruption laws, rules, regulations, treaties,
sanctions or other restrictions, or on behalf of any suspected terrorist or terrorist organization, suspected drug trafficker or senior
foreign political figure(s) suspected in engaging in foreign corruption, we and/or such governmental agency may “freeze the assets”
of such person or entity. We may also be required to report and remit or transfer those assets to a governmental agency. Any such action
may harm our reputation and materially and adversely affect its business, financial condition and results of operations.



We
rely on third-party service providers and partners for certain aspects of our operations, and any interruptions in services provided
by these third parties may impair our ability to support our users.



We
rely on third parties in connection with many aspects of our business, including payment processors, cloud computing services and data
centers that provide facilities, infrastructure, website functionality and access, components, and services, including databases and
data center facilities and cloud computing, which are critical to our intended operations. Because we intend to rely on third parties
to provide these services and to facilitate certain of our business activities, we face increased operational risks. We do not control
the operation of any of these third parties, including the third-party regulated trust and custodian entities we will use. These third
parties may be subject to financial, legal, regulatory, and labor issues, cybersecurity incidents, break-ins, computer viruses, denial-of-service
attacks, sabotage, acts of vandalism, privacy breaches, service terminations, disruptions, interruptions, and other misconduct. They
are also vulnerable to damage or interruption from human error, power loss, telecommunications failures, fires, floods, earthquakes,
hurricanes, tornadoes, pandemics (including the COVID-19 pandemic) and similar events. In addition, these third parties may breach their
agreements with us, disagree with our interpretation of contract terms or applicable laws and regulations, refuse to continue or renew
these agreements on commercially reasonable terms or at all, fail or refuse to process transactions or provide other services adequately,
take actions that degrade the functionality of our services, impose additional costs or requirements on us or our customers, or give
preferential treatment to competitors. There can be no assurance that third parties that will provide services to us or to our users
will do so on acceptable terms, or at all. If any third parties do not adequately or appropriately provide their services or perform
their responsibilities to us or our users, such as if third-party service providers close their data center facilities without adequate
notice, are unable to restore operations and data, fail to perform as expected, or experience other unanticipated problems, we may be
unable to procure alternatives in a timely and efficient manner and on acceptable terms, or at all, and we may be subject to business
disruptions, losses or costs to remediate any of the deficiencies, user dissatisfaction, reputational damage, legal or regulatory proceedings,
or other adverse consequences which could harm our business.



We
are indebted to certain of our executive officers and directors in the approximate amount of US$683,588.



As
of December 31, 2021, we are indebted to companies beneficially owned by Lee Ying Chiu Herbert, our director and shareholder, in an amount
of $410,558, and Chan Man Chung, our CEO, CFO, Secretary and director, in an amount of $273,030. We may not be able to generate sufficient
cash flow to repay these loans. If we issue additional securities as repayment, our shareholders may experience significant dilution.
The advances are not expected to be repayable within the next twelve months. Additionally, loan repayment before achievement of profitability
may cause us to delay implementing our business plans to expand.





31







We
are also subject to other risks and uncertainties that affect many other businesses, including:



| | ● | increasing
    costs, the volatility of costs and funding requirements and other legal mandates for employee benefits, especially pension and healthcare
    benefits;                                                                                 
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ● | the
    increasing costs of compliance with federal, state and foreign governmental agency mandates (including the Foreign Corrupt Practices
    Act) and defending against inappropriate or unjustified enforcement or other actions by such agencies;
| | ● | the
    impact of any international conflicts on the U.S. and global economies in general, the transportation industry or us in particular,
    and what effects these events will have on our costs or the demand for our services;                   
| | ● | any
    impacts on our business resulting from new domestic or international government laws and regulation;                                                                                                                                           
| | ● | market
    acceptance of our new service and growth initiatives;                                                                                                                                                                                       
| | ● | the
    impact of technology developments on our operations and on demand for our services;                                                                                                                                                            
| | ● | governmental
    under-investment in transportation infrastructure, which could increase our costs and adversely impact our service levels due to
    traffic congestion or sub-optimal routing of our vehicles;                                       
| | ● | widespread
    outbreak of an illness or any other communicable disease, or any other public health crisis;                                                                                                                                            
| | ● | availability
    of financing on terms acceptable to our ability to maintain our current credit ratings, especially given the capital intensity of
    our operations;                                                                                 
| | ● | the
    impact of cyberattacks and security breaches on our platform, our crypto wallets or our third-party partners;                                                                                                                                  
| | ● | any
    impacts on our crypto assets or customer assets due to the improper treatment of the crypto wallets, or the failure of the crypto
    storage system on our platform or our third-party partners;                                              
| | ● | changes in market sentiments
    towards digital assets and crypto;                                                                                                                                                                                    
| | ● | the
    impact on our business due to the system failure of our platform or our third-party partners;                                                                                                                                                  
| | ● | any
    impacts on the value of our crypto assets resulting from the volatile changes in crypto prices;                                                                                                                                                
| | ● | our
    ability to attract, maintain, and grow our customer base and engage our customers;                                                                                                                                                             
| | ● | pricing
    for our products and services;                                                                                                                                                                                                             
| | ● | our
    ability to diversify and grow our services revenue;                                                                                                                                                                                            
| | ● | changes
    in macroeconomic conditions, political and legal environments;                                                                                                                                                                             
| | ● | adverse
    legal proceedings or regulatory enforcement actions, judgments, settlements, or other legal proceeding and enforcement-related costs;                                                                                                      
| | ● | our
    ability to attract and retain talent; and                                                                                                                                                                                                      
| | ● | our
    ability to compete with our competitors.                                                                                                                                                                                                       





If
we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.



We
may rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position.
However, trade secrets are difficult to protect. We limit disclosure of such trade secrets where possible but we also seek to protect
these trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who do have access to them,
such as our employees, contract manufacturers, consultants, advisors and other third parties. Despite these efforts, any of these parties
may breach the agreements and may unintentionally or willfully disclose our proprietary information, including our trade secrets, and
we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated
a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside
the United States are less willing or unwilling to protect trade secrets. Moreover, if any of our trade secrets were to be lawfully obtained
or independently developed by a competitor, we would have no right to prevent them, or those to whom they communicate it, from using
that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by
a competitor, our competitive position would be harmed.



Risks
Related to Our Finances and Capital Requirements



We
will need additional funding and may be unable to raise capital when needed, which would force us to delay any business expansions or
acquisitions.



Our
business plan contemplates the expansion of our logistics and delivery operations through organic means and through acquisitions or investments
in additional complementary businesses, products and technologies. While we currently have no commitments or agreements relating to any
of these types of transactions, we do not generate sufficient revenue from operations to finance expansion or acquisition needs. We expect
to finance such future cash needs through public or private equity offerings, debt financings or corporate collaboration and licensing
arrangements, as well as through interest income earned on cash and investment balances. We cannot be certain that additional funding
will be available on acceptable terms, or at all. If adequate funds are not available, we may be required to delay, reduce the scope
of or eliminate one or more of our development programs or our commercialization efforts.





32







Raising
additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish proprietary rights.



Until
such time, if ever, as we can generate substantial revenue, we expect to finance our cash needs through a combination of equity offerings,
debt financings, grants and license and development agreements in connection with any collaborations. To the extent that we raise additional
capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities
may include liquidation or other preferences that adversely affect your rights as a stockholder. Debt financing and preferred equity
financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions,
such as incurring additional debt, making capital expenditures or declaring dividends.



If
we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third
parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates
or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings
when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant
rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.



Risks
Relating to Doing Business in Hong Kong



We
face the risk that changes in the policies of the PRC government could have a significant impact upon the business we may be able to
conduct in Hong Kong and the profitability of such business.



We
conduct our operations and generate our revenue in Hong Kong. Accordingly, economic, political and legal developments in the PRC will
significantly affect our business, financial condition, results of operations and prospects. The PRC economy is in transition from a
planned economy to a market-oriented economy subject to plans adopted by the government that set national economic development goals.
Policies of the PRC government can have significant effects on economic conditions in the PRC. While we believe that the PRC will continue
to strengthen its economic and trading relationships with foreign countries and that business development in the PRC will continue to
follow market forces, we cannot assure you that this will be the case.  Our interests may be adversely affected by changes
in policies by the PRC government, including:



| | ● | changes
    in laws, regulations or their interpretation;                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------
| | ● | confiscatory
    taxation;                                                                                                 
| | ● | restrictions
    on currency conversion, imports or sources of supplies, or ability to continue as a for-profit enterprise;
| | ● | expropriation
    or nationalization of private enterprises; and                                                           
| | ● | the
    allocation of resources.                                                                                           



Substantial
uncertainties and restrictions with respect to the political and economic policies of the PRC government and PRC laws and regulations
could have a significant impact upon the business that we may be able to conduct in the PRC and accordingly on the results of our operations
and financial condition.



Our
business operations may be adversely affected by the current and future political environment in the PRC. The PRC government has exercised
and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership.
We expect the Hong Kong legal system to rapidly evolve in the near future and may become closer aligned with legal system in China with
the PRC government exerting more oversight and control over companies operating in Hong Kong, offerings conducted overseas and or foreign
investment in Hong Kong based issuers. The interpretations of many laws, regulations and rules may not always be uniform and the enforcement
of these laws, regulations and rules may involve uncertainties for you and us. Our ability to operate in Hong Kong, conduct overseas
offerings and continue to investment in Hong Kong based issuers may be harmed by these changes in its laws and regulations, including
those relating to taxation, import and export tariffs, healthcare regulations, environmental regulations, land use and property ownership
rights, and other matters. Accordingly, government actions in the future, including any decision not to continue to support recent economic
reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies,
could have a significant effect on economic conditions in Hong Kong or particular regions thereof, and could limit or completely hinder
our ability to offer or continue to offer securities to investors or require us to divest ourselves of any interest we then hold in Hong
Kong properties or joint ventures. Any such actions (including divesture or similar actions) could result in a material adverse effect
on us and on your investment in us and could render our securities and your investment in our securities worthless.





33







There
are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to,
the laws and regulations governing our business, or the enforcement and performance of our contractual arrangements with borrowers in
the event of the imposition of statutory liens, death, bankruptcy or criminal proceedings. Only after 1979 did the Chinese government
begin to promulgate a comprehensive system of laws that regulate economic affairs in general, deal with economic matters such as foreign
investment, corporate organization and governance, commerce, taxation and trade, as well as encourage foreign investment in China. Although
the influence of the law has been increasing, China has not developed a fully integrated legal system and recently enacted laws and regulations
may not sufficiently cover all aspects of economic activities in China. Also, because these laws and regulations are relatively new,
and because of the limited volume of published cases and their lack of force as precedents, interpretation and enforcement of these laws
and regulations involve significant uncertainties. New laws and regulations that affect existing and proposed future businesses may also
be applied retroactively. In addition, there have been constant changes and amendments of laws and regulations over the past 30 years
in order to keep up with the rapidly changing society and economy in China. Because government agencies and courts that provide interpretations
of laws and regulations and decide contractual disputes and issues may change their interpretation or enforcement very rapidly with little
advance notice at any time, we cannot predict the future direction of Chinese legislative activities with respect to either businesses
with foreign investment or the effectiveness on enforcement of laws and regulations in China. The uncertainties, including new laws and
regulations and changes of existing laws, may cause possible problems to foreign investors.



Although
the PRC government has been pursuing economic reform policies for more than two decades, the PRC government continues to exercise significant
control over economic growth in the PRC through the allocation of resources, controlling payments of foreign currency, setting monetary
policy and imposing policies that impact particular industries in different ways. We cannot assure you that the PRC government will continue
to pursue policies favoring a market oriented economy or that existing policies will not be significantly altered, especially in the
event of a change in leadership, social or political disruption, or other circumstances affecting political, economic and social life
in the PRC.



The
Chinese government exerts substantial influence over the manner in which we must conduct our business activities. We are
currently not required to obtain approval from Chinese authorities to list on U.S. exchanges. However, to the extent that the Chinese
government exerts more control over offerings conducted overseas and/or foreign investment in China-based issuers over time and if our
PRC subsidiaries or the holding company were required to obtain approval in the future and were denied permission from Chinese authorities
to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange and the value of our common stock may significantly
decline or become worthless, which would materially affect the interest of the investors.



The
Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through
regulation and state ownership. Our ability to operate in Hong Kong may be harmed by changes in its laws and regulations, including those
relating to taxation, environmental regulations, land use rights, property and other matters. The central or local governments of these
jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures
and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future,
including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional
or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular
regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties.



For
example, the Chinese cybersecurity regulator announced on July 2 that it had begun an investigation of Didi Global Inc. (NYSE: DIDI)
and two days later ordered that the company’s app be removed from smartphone app stores.



As
such, the Company’s business segments may be subject to various government and regulatory interference in the provinces in which
they operate. The Company could be subject to regulation by various political and regulatory entities, including various local and municipal
agencies and government sub-divisions. The Company may incur increased costs necessary to comply with existing and newly adopted laws
and regulations or penalties for any failure to comply. The Company’s operations could be adversely affected, directly or indirectly,
by existing or future laws and regulations relating to its business or industry. Given that the Chinese government may intervene or influence
our operations at any time, it could result in a material change in our operation and the value of our common stock. Given recent statements
by the Chinese government indicating an intent to exert more oversight and control over offerings that are conducted overseas, any such
action could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the
value of such securities to significantly decline or be worthless.



Furthermore,
it is uncertain when and whether the Company will be required to obtain permission from the PRC government to list on U.S. exchanges
in the future, and even when such permission is obtained, whether it will be denied or rescinded. Although the Company is currently not
required to obtain permission from any of the PRC federal or local government to obtain such permission and has not received any denial
to list on the U.S. exchange, our operations could be adversely affected, directly or indirectly, by existing or future laws and regulations
relating to its business or industry. As a result, our common stock may decline in value dramatically or even become worthless should
we become subject to new requirement to obtain permission from the PRC government to list on U.S. exchange in the future.





34







Recently,
the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued
the Opinions on Severe and Lawful Crackdown on Illegal Securities Activities, which were available to the public on July 6, 2021.
These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas
listings by China-based companies. These opinions proposed to take effective measures, such as promoting the construction of relevant
regulatory systems, to deal with the risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity
and data privacy protection. Moreover, the State Internet Information Office issued the Measures of Cybersecurity Review (Revised Draft
for Comments, not yet effective) on July 10, 2021, which require operators with personal information of more than 1 million users
who want to list abroad to file a cybersecurity review with the Office of Cybersecurity Review. The aforementioned policies and any related
implementation rules to be enacted may subject us to additional compliance requirement in the future. While we believe that our operations
are not affected by this, as these opinions were recently issued, official guidance and interpretation of the opinions remain unclear
in several respects at this time. Therefore, we cannot assure you that we will remain fully compliant with all new regulatory requirements
of these opinions or any future implementation rules on a timely basis, or at all.



The
Holding Foreign Companies Accountable Act requires the Public Company Accounting Oversight Board (PCAOB) to be permitted to inspect the
issuer’s public accounting firm within three years. This three-year period will be shortened to two years if the Accelerating Holding
Foreign Companies Accountable Act is enacted. There are uncertainties under the PRC Securities Law relating to the procedures and requisite
timing for the U.S. securities regulatory agencies to conduct investigations and collect evidence within the territory of the PRC. If
the U.S. securities regulatory agencies are unable to conduct such investigations, they may suspend or de-register our registration with
the SEC and delist our securities from applicable trading market within the US.



The
Holding Foreign Companies Accountable Act (HFCAA) was signed into law on December 18, 2020, and requires Auditors of publicly traded
companies to submit to regular inspections every three years to assess such auditors’ compliance with applicable professional standards.
On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act which, if passed by the U.S. House
of Representatives and signed into law, would reduce the number of consecutive non-inspection years required for triggering the prohibitions
under the HFCAA from three years to two. On September 22, 2021, the PCAOB adopted rules to create a framework for the PCAOB to use when
determining, as contemplated under the HFCAA, whether it is unable to inspect or investigate completely registered public accounting
firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. On December 2, 2021,
the SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA. The rules apply to
registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm
that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate completely because of a position taken
by an authority in a foreign jurisdiction. On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to
inspect or investigate completely PCAOB-registered public accounting firms headquartered in China and in Hong Kong because of positions
taken by PRC and Hong Kong authorities in those jurisdictions. The PCAOB has made such designations as mandated under the HFCAA. Pursuant
to each annual determination by the PCAOB, the SEC will, on an annual basis, identify issuers that have used non-inspected audit firms
and thus are at risk of such suspensions in the future.



Our
Auditor is based in Kuala Lumpur, Malaysia and is subject to PCAOB inspection. It is not subject to the determinations announced by the
PCAOB on December 16, 2021. However, in the event the Malaysian authorities subsequently take a position disallowing the PCAOB to inspect
our auditor, then we would need to change our auditor.





On August 26, 2022, the China
Securities Regulatory Commission, or CSRC, the Ministry of Finance of the PRC, and the PCAOB signed a Statement of Protocol, or the Protocol,
governing inspections and investigations of audit firms based in China and Hong Kong. Pursuant to the Protocol, the PCAOB shall have independent
discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC.



On December 15, 2022, the
PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered
in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct
or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB will consider the need to issue a new determination.
Notwithstanding the foregoing, in the event it is later determined that the PCAOB is unable to inspect or investigate completely our auditor,
then such lack of inspection could cause our securities to be delisted from the stock exchange.



On June 22, 2021, the U.S.
Senate passed the Accelerating Holding Foreign Companies Accountable Act and on December 29, 2022, the Consolidated Appropriations Act
was signed into law by President Biden, which contained, among other things, an identical provision to Accelerating Holding Foreign Companies
Accountable Act and amended the Holding Foreign Companies Accountable Act by requiring the SEC to prohibit an issuer’s securities
from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three,
thus reducing the time before our Ordinary Shares may be prohibited from trading or delisted.



The delisting of our Ordinary
Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.



The SEC is assessing how
to implement other requirements of the HFCAA, including the listing and trading prohibition requirements described above. Future developments
in respect of increasing U.S. regulatory access to audit information are uncertain, as the legislative developments are subject to the
legislative process and the regulatory developments are subject to the rule-making process and other administrative procedures.



While we understand that there has been dialogue among the CSRC, the SEC
and the PCAOB regarding the inspection of PCAOB-registered accounting firms in Mainland China, there can be no assurance that we will
be able to comply with requirements imposed by U.S. regulators if there is significant change to current political arrangements between
Mainland China and Hong Kong, or if any component of our auditor’s work papers become located in Mainland China in the future. Delisting
of our Ordinary Shares likely would force holders of our Ordinary Shares to sell their Ordinary Shares. The market price of our Ordinary
Shares could be adversely affected as a result of anticipated negative impacts of these executive or legislative actions upon, regardless
of whether these executive or legislative actions are implemented and regardless of our actual operating performance.





35







Adverse
regulatory developments in China may subject us to additional regulatory review, and additional disclosure requirements and regulatory
scrutiny to be adopted by the SEC in response to risks related to recent regulatory developments in China may impose additional compliance
requirements for companies like us with significant China-based operations, all of which could increase our compliance costs, subject
us to additional disclosure requirements.



The
recent regulatory developments in China, in particular with respect to restrictions on China-based companies raising capital offshore,
may lead to additional regulatory review in China over our financing and capital raising activities in the United States. In addition,
we may be subject to industry-wide regulations that may be adopted by the relevant PRC authorities, which may have the effect of limiting
our service offerings, restricting the scope of our operations in China, or causing the suspension or termination of our business operations
in China entirely, all of which will materially and adversely affect our business, financial condition and results of operations. We
may have to adjust, modify, or completely change our business operations in response to adverse regulatory changes or policy developments,
and we cannot assure you that any remedial action adopted by us can be completed in a timely, cost-efficient, or liability-free manner
or at all.



On
July 30, 2021, in response to the recent regulatory developments in China and actions adopted by the PRC government, the Chairman
of the SEC issued a statement asking the SEC staff to seek additional disclosures from offshore issuers associated with China-based operating
companies before their registration statements will be declared effective, including detailed disclosure related to whether the issuer
received or were denied permission from Chinese authorities to list on U.S. exchanges and the risks that such approval could be denied
or rescinded. On August 1, 2021, the China Securities Regulatory Commission stated in a statement that it had taken note of the new disclosure
requirements announced by the SEC regarding the listings of Chinese companies and the recent regulatory development in China, and that
both countries should strengthen communications on regulating China-related issuers. We cannot guarantee that we will not be subject
to tightened regulatory review and we could be exposed to government interference in China.



We
may be exposed to liabilities under the Foreign Corrupt Practices Act, and any determination that we violated the Foreign Corrupt Practices
Act could have a material adverse effect on our business.



We
are subject to the Foreign Corrupt Practice Act (“FCPA”), and other laws that prohibit improper payments or offers of payments
to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute for the purpose
of obtaining or retaining business. We will have operations, agreements with third parties and make sales in Hong Kong, which may experience
corruption. Our proposed activities may create the risk of unauthorized payments or offers of payments by one of the employees, consultants,
or sales agents of our Company, because these parties are not always subject to our control. It will be our policy to implement safeguards
to discourage these practices by our employees. Also, our existing practices and any future improvements may prove to be less than effective,
and the employees, consultants, or sales agents of our Company may engage in conduct for which we might be held responsible. Violations
of the FCPA may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect
our business, operating results and financial condition. In addition, the government may seek to hold our Company liable for successor
liability FCPA violations committed by companies in which we invest or that we acquire.



PRC
regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion
may delay or prevent us from using the proceeds we receive from offshore financing activities to make loans to or make additional capital
contributions to our Hong Kong subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand
business.



Any
transfer of funds by us to our Hong Kong subsidiaries, either as a shareholder loan or as an increase in registered capital, may become
subject to approval by or registration or filing with relevant governmental authorities in China. According to the relevant PRC regulations
on foreign-invested enterprises in China, capital contributions to PRC subsidiaries are subject to the approval of or filing with the
Ministry of Commerce in its local branches and registration with a local bank authorized by SAFE. It is unclear if Hong Kong subsidiaries
will be deemed a PRC subsidiary. If Hong Kong subsidiaries are deemed to be PRC subsidiaries, (i) any foreign loan procured by our
Hong Kong subsidiaries will be required to be registered with SAFE or its local branches or filed with SAFE in its information system;
and (ii) our Hong Kong subsidiaries will not be able to procure loans which exceed the difference between their total investment
amount and registered capital or, as an alternative, only procure loans subject to the calculation approach and limitation as provided
in the People’s Bank of China Notice No. 9 (“PBOC Notice No. 9”). We may not be able to obtain these government
approvals or complete such registrations on a timely basis, if at all, with respect to future capital contributions or foreign loans
by us to our Hong Kong subsidiaries, if required. If we fail to receive such approvals or complete such registration or filing, our ability
to use the proceeds we receive from our offshore financing activities and to capitalize our Hong Kong operations may be negatively affected,
which could adversely affect our liquidity and ability to fund and expand our business. There is, in effect, no statutory limit on the
amount of capital contribution that we can make to our Hong Kong subsidiaries. This is because there is no statutory limit on the amount
of registered capital for our Hong Kong subsidiaries, and we are allowed to make capital contributions to our Hong Kong subsidiaries
by subscribing for their initial registered capital and increased registered capital, provided that the Hong Kong subsidiaries complete
the relevant filing and registration procedures.





36







The
Circular on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-Invested Enterprises, or SAFE Circular
19, effective as of June 1, 2015, as amended by Circular of the State Administration of Foreign Exchange on Reforming and Regulating
Policies on the Control over Foreign Exchange Settlement under the Capital Account, or SAFE Circular 16, effective on June 9, 2016,
allows FIEs to settle their foreign exchange capital at their discretion, but continues to prohibit FIEs from using the Renminbi fund
converted from their foreign exchange capitals for expenditure beyond their business scopes, and also prohibit FIEs from using such Renminbi
fund to provide loans to persons other than affiliates unless otherwise permitted under its business scope. If Safe Circulars 16 and
19 are interpreted to apply to the Hong Kong Dollar, our ability to use Hong Kong Dollars converted from the net proceeds from our offshore
financing activities to fund the establishment of new entities in Hong Kong, to invest in or acquire any other Hong Kong or PRC companies
may be limited, which may adversely affect our business, financial condition and results of operations.



Because
our holding company structure creates restrictions on the payment of dividends, our ability to pay dividends is limited.



We
are a holding company whose primary assets are our ownership of the equity interests in our subsidiaries. We conduct no other business
and, as a result, we depend entirely upon our subsidiaries’ earnings and cash flow. If we decide in the future to pay dividends,
as a holding company, our ability to pay dividends and meet other obligations depends upon the receipt of dividends or other payments
from our operating subsidiaries. Our subsidiaries and projects may be restricted in their ability to pay dividends, make distributions
or otherwise transfer funds to us prior to the satisfaction of other obligations, including the payment of operating expenses or debt
service, appropriation to reserves prescribed by laws and regulations, covering losses in previous years, restrictions on the conversion
of local currency into U.S. dollars or other hard currency, completion of relevant procedures with governmental authorities or banks
and other regulatory restrictions. Under the applicable PRC laws and regulations, foreign-invested enterprises in China may pay dividends
only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a
foreign-invested enterprise in China is required to set aside a portion of its after-tax profit to fund specific reserve funds prior
to payment of dividends. In particular, at least 10% of its after-tax profits based on PRC accounting standards each year is required
to be set aside towards its general reserves until the accumulative amount of such reserves reach 50% of its registered capital. These
reserves are not distributable as cash dividends. If future dividends are paid in RMB, fluctuations in the exchange rate for the conversion
of any of these currencies into U.S. dollars may adversely affect the amount received by U.S. stockholders upon conversion of the dividend
payment into U.S. dollars. For a detailed description of the potential government regulations facing the Company associated with our
operations in Hong Kong, please refer to “Government and Industry Regulations – China”. We do not presently
have any intention to declare or pay dividends in the future. You should not purchase shares of our common stock in anticipation of receiving
dividends in future periods.



If
any dividend is declared in the future and paid in a foreign currency, you may be taxed on a larger amount in U.S. dollars than the U.S.
dollar amount that you will actually ultimately receive.



If
you are a U.S. holder of our shares of common stock, you will be taxed on the U.S. dollar value of your dividends, if any, at the time
you receive them, even if you actually receive a smaller amount of U.S. dollars when the payment is in fact converted into U.S. dollars.
Specifically, if a dividend is declared and paid in a foreign currency such as the RMB, the amount of the dividend distribution that
you must include in your income as a U.S. holder will be the U.S. dollar value of the payments made in the foreign currency, determined
at the spot rate of the foreign currency to the U.S. dollar on the date the dividend distribution is includible in your income, regardless
of whether the payment is in fact converted into U.S. dollars. Thus, if the value of the foreign currency decreases before you actually
convert the currency into U.S. dollars, you will be taxed on a larger amount in U.S. dollars than the U.S. dollar amount that you will
actually ultimately receive.



Dividends
payable to our foreign investors and gains on the sale of our shares of common stock by our foreign investors may become subject to tax
by the PRC.



Under
the Enterprise Income Tax Law and its implementation regulations issued by the State Council of the PRC, unless otherwise provided under
relevant tax treaties, a 10% PRC withholding tax is applicable to dividends payable to investors that are non-resident enterprises, which
do not have an establishment or place of business in the PRC or which have such establishment or place of business but the dividends
are not effectively connected with such establishment or place of business, to the extent dividends are derived from sources within the
PRC. Similarly, any gain realized on the transfer of shares by such investors is also subject to PRC tax at a current rate of 10%, subject
to any reduction or exemption set forth in relevant tax treaties, if such gain is regarded as income derived from sources within the
PRC. If we are deemed a PRC resident enterprise, dividends paid on our shares, and any gain realized from the transfer of our shares,
would be treated as income derived from sources within the PRC and would as a result be subject to PRC taxation. Furthermore, if we are
deemed a PRC resident enterprise, dividends payable to individual investors who are non-PRC residents and any gain realized on the transfer
shares by such investors may be subject to PRC tax at a current rate of 20%, subject to any reduction or exemption set forth in applicable
tax treaties. It is unclear whether we or any of our subsidiaries established outside of China are considered a PRC resident enterprise
or whether holders of shares would be able to claim the benefit of income tax treaties or agreements entered into between China and other
countries or areas. If dividends payable to our non-PRC investors, or gains from the transfer of our shares by such investors are subject
to PRC tax, the value of your investment in our shares may decline significantly. For a detailed description of the potential government
regulations facing the Company associated with our operations in Hong Kong, please refer to “Government and Industry Regulations
– China.”





37







Our
global income may be subject to PRC taxes under the PRC Enterprise Income Tax Law, which could have a material adverse effect on our
results of operations.



Under
the PRC Enterprise Income Tax Law, or the New EIT Law, and its amendment and implementation rules, which became effective in January
2008, an enterprise established outside of the PRC with a “de facto management body” located within the PRC is considered
a PRC resident enterprise and will be subject to the enterprise income tax at the rate of 25% on its global income. The implementation
rules define the term “de facto management bodies” as “establishments that carry out substantial and overall management
and control over the manufacturing and business operations, personnel and human resources, finance and treasury, and business combination
and disposition of properties and other assets of an enterprise.” On April 22, 2009, the State Administration of Taxation (the
“SAT”), issued a circular, or SAT Circular 82, which provides certain specific criteria for determining whether the “de
facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Although the SAT Circular
82 only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals
or foreigners, the determining criteria set forth in the SAT Circular 82 may reflect the SAT’s general position on how the “de
facto management body” text should be applied in determining the resident status of all offshore enterprises for the purpose of
PRC tax, regardless of whether they are controlled by PRC enterprises or individuals. Although we do not believe that our legal entities
organized outside of the PRC constitute PRC resident enterprises, it is possible that the PRC tax authorities could reach a different
conclusion. In such case, we may be considered a PRC resident enterprise and may therefore be subject to the 25% enterprise income tax
on our global income, which could significantly increase our tax burden and materially and adversely affect our cash flow and profitability.
In addition to the uncertainty regarding how the new PRC resident enterprise classification for tax purposes may apply, it is also possible
that the rules may change in the future, possibly with retroactive effect. For a detailed description of the potential government regulations
facing the Company associated with our operations in Hong Kong, please refer to “Government and Industry Regulations –
China.”



We
and our shareholders face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC
holding companies.



On
February 3, 2015, the State Administration of Taxation issued an Announcement on Several Issues Concerning Enterprise Income Tax on Income
Arising from Indirect Transfers of Property by Non-PRC Resident Enterprises, or Announcement 7, with the same effective date. Under Announcement
7, an “indirect transfer” refers to a transaction where a non-resident enterprise transfers its equity interest and other
similar interest in an offshore holding company, which directly or indirectly holds Chinese taxable assets (the assets of an “establishment
or place” situated in China; real property situated in China and equity interest in Chinese resident enterprises) and any indirect
transfer without reasonable commercial purposes are subject to the PRC taxation. In addition, Announcement 7 specifies the conditions
under which an indirect transfer is deemed to lack a reasonable commercial purpose which include: (1) 75% or more of the value of the
offshore holding company’s equity is derived from Chinese taxable assets, (2) anytime in the year prior to the occurrence of the
indirect transfer of Chinese taxable assets, 90% or more of the total assets (excluding cash) of the offshore holding company are direct
or indirect investments in China, or 90% or more of the revenue of the offshore holding company was sourced from China; (3) the functions
performed and risks assumed by the offshore holding company(ies), although incorporated in an offshore jurisdiction to conform to the
corporate law requirements there, are insufficient to substantiate their corporate existence and (4) the foreign income tax payable in
respect of the indirect transfer is lower than the Chinese tax which would otherwise be payable in respect of the direct transfer if
such transfer were treated as a direct transfer. As a result, gains derived from such indirect transfer will be subject to PRC enterprise
income tax, currently at a tax rate of 10%.



Announcement
7 grants a safe harbor under certain qualifying circumstances, including transfers in the public securities market and certain intragroup
restricting transactions, however, there is uncertainty as to the implementation of Announcement 7. For example, Announcement 7 requires
the buyer to withhold the applicable taxes without specifying how to obtain the information necessary to calculate taxes and when the
applicable tax shall be submitted. Announcement 7 may be determined by the tax authorities to be applicable to our offshore restructuring
transactions or sale of the shares of our offshore subsidiaries where non-resident enterprises, being the transferors, were involved.
Though Announcement 7 does not impose a mandatory obligation of filing the report of taxable events, the transferring party shall be
subject to PRC withholding tax if the certain tax filing conditions are met. Non-filing may result in an administrative penalty varying
from 50% to 300% of unpaid taxes. As a result, we and our non-resident enterprises in such transactions may become at risk of being subject
to taxation under Announcement 7, and may be required to expend valuable resources to comply with Announcement 7 or to establish that
we and our non-resident enterprises should not be taxed under Announcement 7, for any restructuring or disposal of shares of our offshore
subsidiaries, which may have a material adverse effect on our financial condition and results of operations.





38







PRC
laws and regulations have established more complex procedures for certain acquisitions of Chinese companies by foreign investors, which
could make it more difficult for us to pursue growth through acquisitionsin China.



Further
to the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the New M&A Rules, the Anti-monopoly
Law of the PRC, the Rules of Ministry of Commerce on Implementation of Security Review System of Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors promulgated by MOFCOM or the MOFCOM Security Review Rules, was issued in August 2011, which established
additional procedures and requirements that are expected to make merger and acquisition activities in China by foreign investors more
time-consuming and complex, including requirements in some instances that MOFCOM be notified in advance of any change of control transaction
in which a foreign investor takes control of a PRC enterprise, or that the approval from MOFCOM be obtained in circumstances where overseas
companies established or controlled by PRC enterprises or residents acquire affiliated domestic companies. PRC laws and regulations also
require certain merger and acquisition transactions to be subject to merger control review and or security review.



The
MOFCOM Security Review Rules, effective from September 1, 2011, which implement the Notice of the General Office of the State Council
on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors promulgated on February
3, 2011, further provide that, when deciding whether a specific merger or acquisition of a domestic enterprise by foreign investors is
subject to the security review by MOFCOM, the principle of substance over form should be applied and foreign investors are prohibited
from bypassing the security review requirement by structuring transactions through proxies, trusts, indirect investments, leases, loans,
control through agreements control or offshore transactions.



Further,
if the business of any target company that the combined company seeks to acquire falls into the scope of security review, the combined
company may not be able to successfully acquire such company either by equity or asset acquisition, capital contribution or through any
contractual agreements. The combined company may grow its business in part by acquiring other companies operating in its industry. Complying
with the requirements of the relevant regulations to complete such transactions could be time consuming, and any required approval processes,
including approval from MOFCOM, may delay or inhibit its ability to complete such transactions, which could affect our ability to maintain
or expand our market share.



In
addition, SAFE promulgated the Circular on the Settlement of Foreign Currency Capital of Foreign-invested Enterprises, or Circular 19,
on June 1, 2015. Under Circular 19, registered capital of a foreign-invested company settled in RMB converted from foreign currencies
may only be used within the business scope approved by the applicable governmental authority and the equity investments in the PRC made
by the foreign-invested company shall be subject to the relevant laws and regulations about the foreign-invested company’s reinvestment
in the PRC. In addition, foreign-invested companies cannot use such capital to make the investments in securities, and cannot use such
capital to issue the entrusted RMB loans (except approved in its business scope), repay the RMB loans between the enterprises and the
ones which have been transferred to the third party. Circular 19 may significantly limit our ability to effectively use the proceeds
from future financing activities as the Chinese subsidiaries may not convert the funds received from us in foreign currencies into RMB,
which may adversely affect their liquidity and our ability to fund and expand our business in the PRC.



SAFE
issued the Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts (“Circular
16”), on June 9, 2016, which became effective simultaneously. Pursuant to Circular 16, enterprises registered in the PRC may also
convert their foreign debts from foreign currency to RMB on a self-discretionary basis. Circular 16 provides an integrated standard for
conversion of foreign exchange under capital account items (including but not limited to foreign currency capital and foreign debts)
on a self-discretionary basis which applies to all enterprises registered in the PRC. Circular 16 reiterates the principle that RMB converted
from foreign currency-denominated capital of a company may not be directly or indirectly used for purpose beyond its business scope or
prohibited by PRC Laws or regulations, while such converted RMB shall not be utilized as loans to its non-affiliated entities. As Circular
16 is newly issued and SAFE has not provided detailed guidelines with respect to its interpretation or implementation, it is uncertain
how these rules will be interpreted and implemented.



Failure
to comply with PRC regulations regarding the registration requirements for employee stock ownership plans or share option plans may subject
the PRC plan participants or us to fines and other legal or administrative sanctions.



Pursuant
to SAFE Circular 37, PRC residents who participate in share incentive plans in overseas non-publicly-listed companies may submit applications
to SAFE or its local branches for the foreign exchange registration with respect to offshore special purpose companies. In the meantime,
our directors, executive officers and other employees who are PRC citizens or who are non-PRC residents residing in the PRC for a continuous
period of not less than one year, subject to limited exceptions, and who have been granted incentive share awards by us, may follow the
Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas
Publicly-Listed Company, or 2012 SAFE notices, promulgated by the SAFE in 2012. Pursuant to the 2012 SAFE notices, PRC citizens and non-PRC
citizens who reside in China for a continuous period of not less than one year who participate in any stock incentive plan of an overseas
publicly listed company, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could
be the PRC subsidiaries of such overseas listed company, and complete certain other procedures. In addition, an overseas entrusted institution
must be retained to handle matters in connection with the exercise or sale of stock options and the purchase or sale of shares and interests.
Our executive officers and other employees who are PRC citizens or who reside in the PRC for a continuous period of not less than one
year and who have been granted options will be subject to these regulations. It is unclear if these regulations will be expanded to include
Hong Kong residents or citizens. Failure to complete the SAFE registrations may subject them to fines, and legal sanctions and may also
limit our ability to contribute additional capital into our Hong Kong subsidiaries and limit our Hong Kong subsidiaries’ ability
to distribute dividends to us if Hong Kong residents or citizens are covered under these PRC regulations. We also face regulatory uncertainties
that could restrict our ability to adopt additional incentive plans for our directors, executive officers and employees under PRC law.





39







The
SAT has issued certain circulars concerning employee share options and restricted shares. Under these circulars, employees working in
China who exercise share options or are granted restricted shares will be subject to PRC individual income tax. It is unclear whether
these regulations will be expanded in the future to cover our employees in Hong Kong. Our Hong Kong subsidiaries may become obligated
to file documents related to employee share options or restricted shares with relevant tax authorities and to withhold individual income
taxes of those employees who exercise their share options. If our employees fail to pay or we fail to withhold their income taxes according
to relevant laws and regulations, we may face sanctions imposed by the tax authorities or other PRC governmental authorities.



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



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



In
addition, major issues with other U.S. listed Chinese companies in the future, could have a negative effect on the value of your investment,
even though the Company is not involved.



It
may be difficult for stockholders to enforce any judgment obtained in the United States against us, which may limit the remedies otherwise
available to our stockholders.



COSG is organized under
the laws of the State of Nevada as a holding company that conducts its business through number of subsidiaries organized under the laws
of foreign jurisdictions such as Singapore, Hong Kong and the British Virgin Islands. This may have an adverse impact on the ability of
U.S. investors to enforce a judgment obtained in U.S. Courts against these entities, or to effect service of process on the officers and
directors managing the foreign subsidiaries.



A substantial portion of
our assets are located in Hong Kong. Meanwhile, our current directors and officers are Hong Kong / Australian / New Zealand residents
with substantial portions of their assets located outside the United States. As a result, it may be difficult for investors to effect
service of process within the United States upon us or these persons, or to enforce judgments obtained in U.S. courts against us or them,
including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United
States. It will also be costlier and time-consuming for the investors to effect service of process outside the United States, or to enforce
judgments obtained from the U.S. courts in the courts of the jurisdictions where our directors and officers reside. For example, to enforce
a foreign judgment in Hong Kong, you will be required to apply to the Hong Kong High Court to enforce a foreign judgment (the “Application”)
for which you will be required to engage a local counsel to facilitate or prepare the Application alongside the various supporting documentations
for the Application. After which, you will be required to go through the standard litigation process to sue on the judgment as a debt.
In addition, a judgment of a United States court for civil liabilities predicated upon the federal securities laws of the United States
may also not be enforceable in or recognized by the courts of the jurisdictions where our directors and officers reside. As such, you
may encounter difficulties to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities
laws against us and our officers and directors.



Further, insofar as PRC
factor may be concerned, there is uncertainty as to whether the PRC courts would (i) entertain original actions brought in the PRC against
us or our directors or officers based on the securities laws of the United States or any state in the United States or (ii) recognize
or enforce judgments of the courts of the United States obtained against us or our directors or officers based on the civil liability
provisions of the securities laws of the United States or any state in the United States. To this end, we note that none of our directors
or officers are Chinese nationals nor does the company hold any assets and/or host any operations within the PRC. PRC courts may therefore
come to the view there is no locus.



Under the “one country,
two systems” principle, the Hong Kong Special Administrative Region (SAR) has an independent judiciary that operates separately from
the courts in mainland China. The courts of Hong Kong have jurisdiction over all cases that arise within its territory, including civil
and criminal cases, as well as cases related to the interpretation of the Basic Law.



Where PRC law does apply however,
in order to enforce a foreign judgment in accordance with the laws and regulations of the PRC, certain criteria must be met as stipulated
by the PRC Civil Procedure Law and other related laws and regulations. These criteria include, but are not limited to: (i) the judgment
being sought for recognition must be a final and valid judgment or decree issued by a foreign court; (ii) the court that rendered the
judgment or decree must have jurisdiction over the case under the applicable foreign law; (iii) the proceedings of the foreign court
must have been fair and lawful under the applicable foreign law, including effective service on the defendant and giving the defendant
an opportunity to be heard; (iv) there must be no conflicting interests in the case; (v) the requested court must not be conducting an
ongoing trial between the same parties on the same subject matter or have already rendered an effective judgment, nor must it have recognized
a judgment rendered by a third country in the case; (vi) there must be a treaty relationship or reciprocity between the two countries
for the mutual recognition and enforcement of judgments in civil and commercial matters; and (vii) the recognition and enforcement of
the judgment must not violate the fundamental principles of the laws of the PRC or the sovereignty, security, or public interests of
the PRC.



40







As of the date of this Report, there are no existing treaties or written arrangements between the PRC and the United States for
the mutual recognition and enforcement of foreign judgments. Furthermore, under the PRC Civil Procedure Law, a foreign judgment against
us, our directors, or officers cannot be enforced by PRC courts if the court finds that it violates the fundamental principles of PRC
laws or national sovereignty, security, or public interests. This raises uncertainty about whether and under what circumstances a PRC
court would enforce a judgment issued by a court in the United States or the Cayman Islands. In addition, due to our incorporation under
the laws of the Cayman Islands, it would be difficult for U.S. shareholders to bring a lawsuit against us in China under PRC laws. The
PRC Civil Procedure Law and related laws and regulations require a connection to the PRC to establish jurisdiction, which may be challenging
for U.S. shareholders to establish based solely on their ownership of our shares.



Risks
Relating to Securities Markets and Investment in Our Stock



There
is not now and there may not ever be an active market for our Common Stock. There are restrictions on the transferability of these securities.



There
currently is no market for our Common Stock and, except as otherwise described herein, we have no plans to file any registration statement
or otherwise attempt to create a market for the shares. Even if an active market develops for the shares, Rule 144, which provides for
an exemption from the registration requirements under the Securities Act under certain conditions, requires, among other conditions,
a holding period prior to the resale (in limited amounts) of securities acquired in a non-public offering without having to satisfy the
registration requirements under the Securities Act. There can be no assurance that we will fulfill any reporting requirements in the
future under the Exchange Act or disseminate to the public any current financial or other information concerning us, as is required by
Rule 144 as part of the conditions of its availability.





Our
common stock is subject to the “penny stock” rules of the SEC and the trading market in our securities is limited, which
makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.



Under
U.S. federal securities legislation, our common stock will constitute “penny stock”. Penny stock is any equity security that
has a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt,
the rules require that a broker or dealer approve a potential investor’s account for transactions in penny stocks, and the broker or
dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to
be purchased. In order to approve an investor’s account for transactions in penny stocks, the broker or dealer must obtain financial
information and investment experience objectives of the person, and make a reasonable determination that the transactions in penny stocks
are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating
the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure
schedule prepared by the Commission relating to the penny stock market, which, in highlight form sets forth the basis on which the broker
or dealer made the suitability determination. Brokers may be less willing to execute transactions in securities subject to the “penny
stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value
of our stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading
and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities
and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have
to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny
stocks.



We
are a controlled company subject to the control of Lee Ying Chiu Herbert, our director. Lee Ying Chiu Herbert, together
with our other insiders beneficially own a significant portion of our stock, and accordingly, have control over stockholder matters,
our business and management.



Under
NASDAQ stock exchange rule 5615(c)(1), a “controlled company” is defined as a “company of which more than 50% of the
voting power for the election of directors is held by an individual, a group or another company.” As of the date of this report,
Lee Ying Chiu Herbert beneficially owns 172,190,485 shares of our common stock, or approximately 48.05% of our issued and outstanding
shares of common stock. Dr. Lee is entitled to an additional  800,000,000 shares of our common stock in connection with our acquisition
of Massive Treasure. After the issuance of the 800,000,000 shares of common stock, Dr. Lee will beneficially own in excess of 83.93%
of our issued and outstanding shares of our common stock. As a result, Dr. Lee will have significant influence to:



| | ● | Elect or defeat the election
    of our directors;                                
| | - | ----------------------------------------------------------------------------------
| | ● | Amend or prevent amendment
    of our articles of incorporation or bylaws;        
| | ● | Effect or prevent a merger,
    sale of assets or other corporate transaction; and
| | ● | Affect the outcome of any
    other matter submitted to the stockholders for vote.



Moreover,
because of the significant ownership position held by our management team, new investors may not be able to effect a change in our business
or management, and therefore, shareholders would have no recourse as a result of decisions made by management. In addition, sales of
significant amounts of shares held by our management team, or the prospect of these sales, could adversely affect the market price of
our common stock. Our management team’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise
attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over
our stock price.





41







State
securities laws may limit secondary trading, which may restrict the states in which and conditions under which you can sell the shares
offered by this registration statement.



Secondary
trading in common stock sold in this offering will not be possible in any state until the common stock is qualified for sale under the
applicable securities laws of the state or there is confirmation that an exemption, such as listing in certain recognized securities
manuals, is available for secondary trading in the state. If we fail to register or qualify, or to obtain or verify an exemption for
the secondary trading of, the common stock in any particular state, the common stock could not be offered or sold to, or purchased by,
a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our common stock, the
liquidity for the common stock could be significantly impacted thus causing you to realize a loss on your investment.



The
Company does not intend to seek registration or qualification of its shares of common stock the subject of this offering in any State
or territory of the United States. Aside from a “secondary trading” exemption, other exemptions under state law and the laws
of US territories may be available to purchasers of the shares of common stock sold in this offering,



Anti-takeover
effects of certain provisions of Nevada state law hinder a potential takeover of our company.



Though
not now, in the future we may become subject to Nevada’s control share law. A corporation is subject to Nevada’s control share law if
it has more than 200 stockholders, at least 100 of whom are stockholders of record and residents of Nevada, and it does business in Nevada
or through an affiliated corporation. The law focuses on the acquisition of a “controlling interest” which means the ownership
of outstanding voting shares sufficient, but for the control share law, to enable the acquiring person to exercise the following proportions
of the voting power of the corporation in the election of directors:



(i)
one-fifth or more but less than one-third, (ii) one-third or more but less than a majority, or (iii) a majority or more. The ability
to exercise such voting power may be direct or indirect, as well as individual or in association with others.



The
effect of the control share law is that the acquiring person, and those acting in association with it, obtains only such voting rights
in the control shares as are conferred by a resolution of the stockholders of the corporation, approved at a special or annual meeting
of stockholders. The control share law contemplates that voting rights will be considered only once by the other stockholders. Thus,
there is no authority to strip voting rights from the control shares of an acquiring person once those rights have been approved. If
the stockholders do not grant voting rights to the control shares acquired by an acquiring person, those shares do not become permanent
non-voting shares. The acquiring person is free to sell its shares to others. If the buyers of those shares themselves do not acquire
a controlling interest, their shares do not become governed by the control share law.



If
control shares are accorded full voting rights and the acquiring person has acquired control shares with a majority or more of the voting
power, any stockholder of record, other than an acquiring person, who has not voted in favor of approval of voting rights is entitled
to demand fair value for such stockholder’s shares.



In
addition to the control share law, Nevada has a business combination law which prohibits certain business combinations between Nevada
corporations and “interested stockholders” for three years after the “interested stockholder” first becomes an “interested
stockholder,” unless the corporation’s board of directors approves the combination in advance. For purposes of Nevada law, an “interested
stockholder” is any person who is (i) the beneficial owner, directly or indirectly, of ten percent or more of the voting power of
the outstanding voting shares of the corporation, or (ii) an affiliate or associate of the corporation and at any time within the three
previous years was the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the then outstanding shares
of the corporation. The definition of the term “business combination” is sufficiently broad to cover virtually any kind of
transaction that would allow a potential acquirer to use the corporation’s assets to finance the acquisition or otherwise to benefit
its own interests rather than the interests of the corporation and its other stockholders.



The
effect of Nevada’s business combination law is to potentially discourage parties interested in taking control of our company from doing
so if it cannot obtain the approval of our board of directors.





42







Because
we do not intend to pay any cash dividends on our common stock, our stockholders will not be able to receive a return on their shares
unless they sell them.



We
intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends
on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their
shares unless they sell them. Stockholders may never be able to sell shares when desired. Before you invest in our securities, you should
be aware that there are various risks. You should consider carefully these risk factors, together with all of the other information included
in this annual report before you decide to purchase our securities. If any of the following risks and uncertainties develop into actual
events, our business, financial condition or results of operations could be materially adversely affected.



Our
stock may be subject to substantial price and volume fluctuations due to a number of factors, many of which are beyond our control and
may prevent our stockholders from reselling our Common Stock at a profit.



The
market prices for our securities may be volatile and may fluctuate substantially due to many factors, including:



| | ● | market conditions in the
    business marketing services and digital assets services sectors or the economy as a whole;              
| | - | -------------------------------------------------------------------------------------------------------------------------------------
| | ● | price
    and volume fluctuations in the overall stock market;                                                                       
| | ● | announcements
    of the introduction of new products and services by us or our competitors;                                         
| | ● | actual
    fluctuations in our quarterly operating results, and concerns by investors that such fluctuations may occur in the future;
| | ● | deviations
    in our operating results from the estimates of securities analysts or other analyst comments;                         
| | ● | additions
    or departures of key personnel;                                                                                        
| | ● | legislation,
    including measures affecting e-commerce or infrastructure development; and                                          
| | ● | development
    concerning current or future strategic collaborations.                                                               



ITEM
1B. UNRESOLVED STAFF COMMENTS.



We
are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information
under this item.



ITEM
2. PROPERTIES.



Our
corporate and executive office is located at 37th Floor, Singapore Land Tower, 50 Raffles Place, Singapore 048623, telephone
number +65 6829 7017. We are parties to commit to an office service agreement at the monthly rate of $103, in a term of 12 months and
will expire on June 2022.



We
believe that our current facilities are adequate for our current needs. We expect to secure new facilities or expand existing facilities
as necessary to support future growth. We believe that suitable additional space will be available on commercially reasonable terms as
needed to accommodate our operations.



ITEM
3. LEGAL PROCEEDINGS.



There
are no material pending legal proceedings to which we or our subsidiaries are a party or to which any of our or their property is subject,
nor are there any such proceedings known to be contemplated by governmental authorities. None of our directors, officers, affiliates
or any owner of record or beneficially of more than 5% of our common stock, or any associate of any of the foregoing, is involved in
a proceeding adverse to our business or has a material interest adverse to our business.



ITEM
4. MINE SAFETY DISCLOSURES.



Not
applicable.





43







PART
II



ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES.



(a) Market
Information



Shares
of our common stock are quoted on the OTC Pink under the symbol “COSG”. As of March 31, 2022, the last closing price of our
securities was $4.00. There is no established public trading market for our securities and a regular trading market may not develop,
or if developed, may not be sustained.



The
following table sets forth, for the fiscal quarters indicated, the high and low bid information for our common stock, as reported on
the Pink Sheets. The following quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent
actual transactions.



|Quarterly period                     |  | High |       |  | Low |  
|------------------------------------ |  | ---- | ----- |  | --- | -
|Fiscal year ended December 31, 2021: |  |      |       |  |     |  
|Fourth Quarter                       |  | $    | 13.93 |  |     | $
|Third Quarter                        |  | $    | 11.00 |  |     | $
|Second Quarter                       |  | $    | 4.00  |  |     | $
|First Quarter                        |  | $    | 0.51  |  |     | $
|Fiscal year ended December 31, 2020: |  |      |       |  |     |  
|Fourth Quarter                       |  | $    | 1.09  |  |     | $
|Third Quarter                        |  | $    | 2.90  |  |     | $
|Second Quarter                       |  | $    | 8.99  |  |     | $
|First Quarter                        |  | $    | 8.99  |  |     | $



(b)
Approximate Number of Holders of Common Stock



As
of March 31, 2022, there were approximately 197 shareholders of record of our common stock. Such number does not include any shareholders
holding shares in nominee or “street name”.



(c)
Dividends



Holders
of our common stock are entitled to receive such dividends as may be declared by our board of directors. We paid no dividends during
the periods reported herein, nor do we anticipate paying any dividends in the foreseeable future.



(d)
Equity Compensation Plan Information



None.



(e)
Recent Sales of Unregistered Securities



None.



ITEM
6. RESERVED



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



This
discussion summarizes the significant factors affecting the operating results, financial condition, liquidity and cash flows of the Company
and its subsidiary for the fiscal years ended December 31, 2021, and 2020. The discussion and analysis that follows should be read together
with the section entitled “Cautionary Note Concerning Forward-Looking Statements” and our consolidated financial statements
and the notes to the consolidated financial statements included elsewhere in this annual report on Form 10-K.



Except
for historical information, the matters discussed in this section are forward looking statements that involve risks and uncertainties
and are based upon judgments concerning various factors that are beyond the Company’s control. Consequently, and because forward-looking
statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results
and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made
by us in this report.





44







Currency
and exchange rate



Unless
otherwise noted, all currency figures quoted as “U.S. dollars”, “dollars” or “US$” refer to the legal
currency of the United States. References to “Hong Kong Dollar” are to the Hong Kong Dollar, the legal currency of the Hong
Kong Special Administrative Region of the People’s Republic of China. Throughout this report, assets and liabilities of the Company’s
subsidiaries are translated into U.S. dollars using the exchange rate on the balance sheet date. Revenue and expenses are translated
at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries
are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.



We
are not required to obtain permission from the Chinese authorities to operate or to issue securities to foreign investors.



We,
through our subsidiaries are currently engaged in the rendering of financial and money lending services in Hong Kong and operating an
online platform to sell and distribute the arts and collectibles to end-users, with the use of blockchain technologies and minting tokens.



We are at a development stage
company and reported a continuous loss of $104,142,179 for the year ended December 31, 2022. We had current assets of $20,185,073 and
current liabilities of $32,692,591 as of December 31, 2022. As of December 31, 2021, our current assets and current liabilities were $23,981,701
and $22,748,075, respectively.



Our financial statements
for the years ended December 31, 2022 and 2021 have been prepared assuming that we will continue as a going concern. Our continuation
as a going concern is dependent upon improving our profitability and the continuing financial support from our stockholders. Our sources
of capital in the past have included the sale of equity securities, which include common stock sold in private transactions and public
offerings, capital leases and short-term and long-term debts.





Results of Operations.



Comparison
of the fiscal years ended December 31, 2022 and 2020



The
following table sets forth certain operational data for the years indicated:



|                                                 |  | Fiscal Years Ended December 31, |             
|------------------------------------------------ |  | ------------------------------- | ------------
|                                                 |  | 2022                            |             
|Revenues:                                        |  |                                 |             
|Lending segment                                  |  | $                               | 6,550,670   
|Arts and collectibles technology (“ACT”) segment |  |                                 | 14,059,050  
|Total revenue                                    |  |                                 | 20,609,720  
|Cost of revenue:                                 |  |                                 |             
|Lending segment                                  |  |                                 | (405,972    
|ACT segment                                      |  |                                 | (3,019,794  
|Total cost of revenue                            |  |                                 | (3,425,766  
|Gross profit                                     |  |                                 | 17,183,954  
|Operating expenses:                              |  |                                 |             
|Sales and marketing                              |  |                                 | (27,371,549 
|Technology and support                           |  |                                 | (43,301,993 
|Corporate development                            |  |                                 | (26,898,128 
|General and administrative expenses              |  |                                 | (16,651,966 
|Loss from operations                             |  |                                 | (114,223,636
|Other income (expense), net                      |  |                                 | (6,786,680  
|Loss before income taxes                         |  |                                 | (103,826,362
|Income tax expense                               |  |                                 | (299,714    
|Net loss                                         |  | $                               | (104,126,076



45







Revenue and Cost of Revenue



For the years ended December
31, 2022 and 2021, there was no single customer whose revenue exceeded 10% of the revenue.



|                                         |  | Year Ended December 31, 2022 |          
|---------------------------------------- |  | ---------------------------- | ---------
|                                         |  | Lending Segment              |          
|Revenue from external customers:         |  |                              |          
|Interest income                          |  | $                            | 6,550,670
|Arts and collectibles technology income  |  |                              | -        
|Total revenue, net                       |  |                              | 6,550,670
|                                         |  |                              |          
|Cost of revenue:                         |  |                              |          
|Interest expense                         |  |                              | (405,972 
|Arts and collectibles technology expense |  |                              | -        
|Total cost of revenue                    |  |                              | (405,972 
|                                         |  |                              |          
|Gross profit                             |  |                              | 6,144,698



|                                         |  | Year Ended December 31, 2021                                |          
|---------------------------------------- |  | ----------------------------------------------------------- | ---------
|                                         |  | Lending
                                            Segment |          
|Revenue from external customers:         |  |                                                             |          
|Interest income                          |  | $                                                           | 6,413,284
|Arts and collectibles technology income  |  |                                                             | -        
|Total revenue, net                       |  |                                                             | 6,413,284
|                                         |  |                                                             |          
|Cost of revenue:                         |  |                                                             |          
|Interest expense                         |  |                                                             | (733,937 
|Arts and collectibles technology expense |  |                                                             | -        
|Total cost of revenue                    |  |                                                             | (733,937 
|                                         |  |                                                             |          
|Gross profit                             |  |                                                             | 5,679,347



Revenue of approximately
$20,609,720 and $10,058,549 for the years ended December 31, 2022 and 2021, respectively, increased by $10,551,171, or 104.9%. The breakdown
of revenue is summarized as follows:-



|                                         |  | Years ended December 31, |           
|---------------------------------------- |  | ------------------------ | ----------
|                                         |  | 2022                     |           
|                                         |  |                          |           
|Interest income                          |  | $                        | 6,550,670 
|ACT income:                              |  |                          |           
|- Sale of arts and collectibles products |  |                          | 5,508,675 
|- Transaction fee income and others      |  |                          | 8,550,375 
|                                         |  |                          | 14,059,050
|                                         |  |                          |           
|                                         |  | $                        | 20,609,720



The increase in revenue is
attributable to the rapid growth in Arts and collectibles technology business.



Cost of revenue of approximately
$3,425,766 and $1,754,641 for the years ended December 31, 2022 and 2021, respectively, consisted primarily of interest expense and cost
of purchasing collectibles, in line with sales growth



46







Gross Profit



We achieved a gross profit
of $17,183,954 and $8,303,908 for the years ended December 31, 2022 and 2021, respectively. The increase in gross profit is mainly attributable
to an increase in our ACT volume.



Sales and Marketing Expenses



Sales and marketing expenses
of $27,371,549 and $1,680,536 for the year ended December 31, 2022 and 2021, respectively, primarily include costs related to public relations,
consultancy fee, advertising and marketing programs, and personnel-related expenses.



Technology and support Expenses



Technology and support expenses
of $43,301,993 and $9,222,103 for the year ended December 31, 2022 and 2021, respectively, including (i) development of the DOT(digital
ownership token), an effective application of NFT technologies to real world assets, both tangible and intangible, (ii) research and development
of blockchain smart contracts and other coding to apply the most suitable blockchains for DOTs and maintaining a distributed ledger to
record all transactions and (iii) Development of a client management system to facilitate the sale and purchase of DOTs by both crypto
and non-crypto natives.



Corporate Development Expenses



Corporate development expenses
of $26,898,128 and $5,418,075 for the year ended December 31, 2022 and 2021, respectively, primarily include personnel-related expenses
incurred to support our corporate development.



General and Administrative Expenses (“G&A”)



General and administrative
expenses of $16,651,966 and $16,077,156 for the year ended December 31, 2022 and 2021, respectively. These expenses primarily include
professional fees, audit fees, other miscellaneous expenses incurred in connection with general operations and personnel-related expenses
incurred to support our business, including legal, finance, executive, and other support operations. G&A expenses increased by approximately
$574,810 in the year ended December 31, 2022 from $16,077,156 for the same period of 2021.



Income Tax Expense



We incurred income tax expense
of $299,714 during the year ended December 31, 2022.



We incurred income tax expense
of $434,257 during the year ended December 31, 2021.



Liquidity and Capital Resources



As of December 31, 2022 and
December 31, 2021, we had cash and cash equivalents of $2,468,828 and $1,131,128.



We expect to incur significantly
greater expenses in the near future as we develop our product offerings or enter into strategic partnerships. We also expect our general
and administrative expenses to increase as we expand our finance and administrative staff, add infrastructure, and incur additional costs
related to being reporting act company, including directors’ and officers’ insurance and increased professional fees. We
believe that we will require approximately $50 million over the next 12-24 months to implement our business plan. For the immediate future,
we intend to finance our business expansion efforts through equity purchase by institutional banks, and loans from existing shareholders
or financial institutions.



We have never paid dividends
on our Common Stock. Our present policy is to apply cash to investments in product development, acquisitions or expansion; consequently,
we do not expect to pay dividends on Common Stock in the foreseeable future.



47







Going Concern Uncertainties



Our continuation as a going
concern is dependent upon improving our profitability and the continuing financial support from our stockholders. Our sources of capital
in the past have included the sale of equity securities, which include common stock sold in private transactions and public offerings,
lease liability and short-term and long-term debts. In addition, with respect to the ongoing and evolving coronavirus (COVID-19) outbreak,
which was designated as a pandemic by the World Health Organization on March 11, 2020, the outbreak has caused substantial disruption
in international economies and global trades and if repercussions of the outbreak are prolonged, could have a significant adverse impact
on our business. Given the addition political and public health challenges, our ability to obtain external financing or financing from
existing shareholders to fund our working capital needs has been materially and adversely impacted, and there can be no assurance that
we will be able to raise such additional capital resources on satisfactory terms. We believe that our current cash and other sources
of liquidity discussed below are adequate to support general operations for at least the next 12 months.



We require additional funding
to meet its ongoing obligations and to fund anticipated operating losses. Our auditor has expressed substantial doubt about our ability
to continue as a going concern. Our ability to continue as a going concern is dependent on raising capital to fund its initial business
plan and ultimately to attain profitable operations. These consolidated financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being
able to continue as a going concern.



We expect to incur marketing
and professional and administrative expenses as well expenses associated with maintaining our filings with the Commission. We will require
additional funds during this time and will seek to raise the necessary additional capital. If we are unable to obtain additional financing,
we may be required to reduce the scope of our business development activities, which could harm our business plans, financial condition
and operating results. Additional funding may not be available on favorable terms, if at all. We intend to continue to fund its business
by way of equity or debt financing and advances from related parties. Any inability to raise capital as needed would have a material
adverse effect on our business, financial condition and results of operations.



If we cannot raise additional
funds, we will have to cease business operations. As a result, our common stock investors might lose all of their investment.



|                                                    |  | Years Ended  December 31, |           
|--------------------------------------------------- |  | ------------------------- | ----------
|                                                    |  | 2022                      |           
|Net cash provided by (used in) operating activities |  | $                         | 2,956,351 
|Net cash provided by (used in) investing activities |  |                           | 1,000,911 
|Net cash (used in) provided by financing activities |  | $                         | (2,391,447



Net Cash Provided by (Used In) Operating Activities.



For the year ended December
31, 2022, net cash provided by operating activities was $2,956,351, which consisted primarily of a net loss of $104,142,179, depreciation
of property an equipment of $7,540, amortization of intangible assets of $3,931,641, imputed interest expense of $949,790, digital assets
paid for expense of $29,607,771, impairment loss on digital assets of $12,633, impairment loss on goodwill of $816,263, shares issued
for services rendered of $86,572,168, loss on disposal of subsidiaries of $4,479,998 and loss on closure of Phoenix subsidiaries of $649,856,
decrease in loan receivables of $642,598, loan interest receivables of $124,499, inventories of $938,151, an increase in accounts payables
of $2,141,273, accrued consulting service fee of $5,769,457, produced content cost $53,895, income tax payable of $299,714, offset by
increase in prepayment and other receivables of $545, Right-of-use assets and operating lease liabilities of $35,860 and decrease in accrued
liabilities and other payables of $362,793.



For the year ended December
31, 2021, net cash used in operating activities was $4,881,128 which consisted primarily of a net loss of $25,149,399, digital assets
received of $3,277,589, an increase in loan receivables of $6,910,730, an increase in inventory of $894,091, an increase in prepayment
and other receivable of $175,765, offset by amortization of $829,575, imputed interest expense of $620,508, digital assets paid of $3,231,988,
issuance of common stock for goods and services rendered of $25,290,203, inventories purchase in lieu of shares of $476,903, a decrease
in loan interest receivables of $118,903, an increase of account payables of $240,156, an increase in other payable and accruals of $66,385,
loss on written-off of property and equipment of $166,302, and an increase in income tax payable of $434,257.







48







We expect to continue to rely
on cash generated through financing from our existing shareholders and private placements of our securities to finance our operations
and future acquisitions in the next twelve months.



Net Cash Provided by (Used In) Investing Activities.



The net cash provided by investing
activities of $1,000,911 for the year ended December 31, 2022 mainly consisted of cash from acquisition of non-controlling interest of
$1,005,654 and offset by payment to acquire property and equipment of $2,859 and purchase of intangible assets of $1,884.



The net cash used in investing
activities of $2,044,551 for the year ended December 31, 2021 mainly consisted of purchase of intangible assets of $2,039,270.



Net Cash (Used In) Provided By Financing Activities.



For the year ended December
31, 2022, net cash used in financing activities was $2,391,447 consisting primarily of proceeds from loan payable of $1,333,700 and proceeds
from convertible note payables of $412,783 and offset by repayment to related parties of $4,137,930.



For the year ended December
31, 2021, net cash provided by financing activities was $7,187,734 consisting of advance from related parties of $11,444,456 and repayment
of loan payable of $4,256,722.



Material Cash Requirements



We have not achieved profitability
since our inception and we expect to continue to incur net losses for the foreseeable future. We expect net cash expended in 2023 to be
significantly higher than 2022. As of December 31, 2022, we had an accumulated deficit of $130,571,682. Our material cash requirements
are highly dependent upon the additional financial support from our major shareholders in the next 12 - 18 months.



We had the following contractual
obligations and commercial commitments as of December 31, 2022:



|Contractual Obligations     |  | Total |         |  | Less than
1 year |  |         | 1-3 Years |  |  | 3-5 Years |  |  | More than
5 Years |  
|--------------------------- |  | ----- | ------- |  | ---------------- |  | ------- | --------- |  |  | --------- |  |  | ----------------- | -
|                            |  | $     |         |  | $                |  |         | $         |  |  | $         |  |  | $                 |  
|Commercial commitments      |  |       |         |  |                  |  |         |           |  |  | –         |  |  |                   | –
|Operating lease obligations |  |       | 166,525 |  |                  |  | 136,800 |           |  |  | 29,725    |  |  |                   | –
|Total obligations           |  |       | 166,525 |  |                  |  | 136,800 |           |  |  | 29,725    |  |  |                   | –





49







Off-Balance
Sheet Arrangements



We
have no outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in
trading activities involving non-exchange traded contracts.



Critical Accounting Policies and Estimates.



The preparation of consolidated
financial statements in conformity with accounting principles generally accepted in the United States requires our management to make
assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments
and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our consolidated
financial statements. These accounting policies are important for an understanding of our financial condition and results of operations.
Critical accounting policies are those that are most important to the presentation of our financial condition and results of operations
and require management’s subjective or complex judgment, often as a result of the need to make estimates about the effect of matters
that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of
their significance to consolidated financial statements and because of the possibility that future events affecting the estimate may
differ significantly from management’s current judgments. We believe the following accounting policies are critical in the preparation
of our consolidated financial statements.



| | ● | Use
    of estimates and assumptions
| | - | ------------------------------------



In preparing these consolidated
financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance
sheet and revenues and expenses during the years reported. Actual results may differ from these estimates. If actual results significantly
differ from the Company’s estimates, the Company’s financial condition and results of operations could be materially impacted.
Significant estimates in the period include the impairment loss on digital assets, valuation and useful lives of intangible assets and
deferred tax valuation allowance.





50







| | ● | Loan receivables, net
| | - | ---------------------



Loans receivables are carried
at unpaid principal balances, less the allowance for loan losses and charge-offs. The loans receivables portfolio consists of real estate
mortgage loans, commercial and personal loans.



Loans are placed on nonaccrual
status when they are past due 180 days or more as to contractual obligations or when other circumstances indicate that collection is
not probable. When a loan is placed on nonaccrual status, any interest accrued but not received is reversed against interest income.
Payments received on a nonaccrual loan are either applied to protective advances, the outstanding principal balance or recorded as interest
income, depending on an assessment of the ability to collect the loan. A nonaccrual loan may be restored to accrual status when principal
and interest payments have been brought current and the loan has performed in accordance with its contractual terms for a reasonable
period (generally six months).



If the Company determines that a loan is impaired, the Company next
determines the amount of the impairment. The amount of impairment on collateral dependent loans is charged off within the given fiscal
quarter. Generally, the amount of the loan and negative escrow in excess of the appraised value less estimated selling costs, for the
fair value of collateral valuation method, is charged off. For all other loans, impairment is measured as described below in Allowance
for Loan Losses.



| | ● | Allowance for loan losses
    (“ALL”)
| | - | -------------------------------------



The adequacy of the Company’s
ALL is determined, in accordance with ASC Topic 450-20 Loss Contingencies includes management’s review of the Company’s
loan portfolio, including the identification and review of individual problem situations that may affect a borrower’s ability to repay.
In addition, management reviews the overall portfolio quality through an analysis of delinquency and non-performing loan data, estimates
of the value of underlying collateral, current charge-offs and other factors that may affect the portfolio, including a review of regulatory
examinations, an assessment of current and expected economic conditions and changes in the size and composition of the loan portfolio.



The ALL reflects management’s
evaluation of the loans presenting identified loss potential, as well as the risk inherent in various components of the portfolio. There
is significant judgment applied in estimating the ALL. These assumptions and estimates are susceptible to significant changes based on
the current environment. Further, any change in the size of the loan portfolio or any of its components could necessitate an increase
in the ALL even though there may not be a decline in credit quality or an increase in potential problem loans.





51







| | ● | Impairment
    of long-lived assets
| | - | -----------------------------------



In accordance with the provisions
of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as plant and equipment
and intangible assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of
the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets
exceed the fair value of the assets. There has been no impairment charge for the years presented.



| | ● | Revenue
    recognition
| | - | -----------------------



The Company adopted Accounting
Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers(Topic 606) (“ASU 2014-09”)
using the full retrospective transition method. The Company’s adoption of ASU 2014-09 did not have a material impact on the amount and
timing of revenue recognized in its consolidated financial statements.



Under ASU 2014-09, the Company
recognizes revenue when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration
the Company expects to be entitled to in exchange for those goods or services.



The Company applies the following
five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its
agreements:



| | ● | identify
    the contract with a customer;                                        
| | - | ----------------------------------------------------------------------------------
| |   |                                                                                   
| | ● | identify
    the performance obligations in the contract;                         
| |   |                                                                                   
| | ● | determine
    the transaction price;                                              
| |   |                                                                                   
| | ● | allocate
    the transaction price to performance obligations in the contract; and
| |   |                                                                                   
| | ● | recognize
    revenue as the performance obligation is satisfied.                 



Revenue is recognized when
the Company satisfies its performance obligation under the contract by transferring the promised product to its customer that obtains
control of the product and collection is reasonably assured. A performance obligation is a promise in a contract to transfer a distinct
product or service to a customer. Most of the Company’s contracts have a single performance obligation, as the promise to transfer
products or services is not separately identifiable from other promises in the contract and, therefore, not distinct.







52







Lending Business



The Company is licensed to
originate personal loan, company loan and mortgage loan in Hong Kong. During the years ended December 31, 2022 and 2021, the Company
originated loans generally ranging from $644 to $579,000, with terms ranging from 1 week to 120 months. The Company mainly derives a
portion of its revenue from loan which is specifically excluded from the scope of this standard, that is, interest on loan receivable
is accrued monthly and credited to income as earned.



Arts and Collectibles Technology Business



Commencing from October 1,
2021, the Company launched its online platform in the sale and distribution of arts and collectibles, with the use of blockchain technologies
and minting tokens. The item of arts and collectibles is individually monetized as non-interchangeable unit of data stored on a blockchain,
which is a form of digital ledger that can be sold, in the form of a minting token on the online platform. The Company involves with
the following activities to earn its revenue in this segment:



Sale of arts and collectibles
products: The Company recognizes revenue derived from the sales of the arts and collectibles when the Company has transferred the risks
and rewards to the customers. The minted item of the individual art or collectibles which are sold in crypto asset transaction is the
only performance obligation under the fixed-fee arrangements. The corresponding fees received upon each sale transaction is recognized
as revenue, is recognized when the designated token, minted with the corresponding art and collectibles is delivered to the end user,
together with the transfer of both digital and official title.



Transaction fee income: The
Company also generates revenue through transaction fees transacted on its platform or other marketplaces. The Company charges a fee to
individual customer at the secondary transaction level, which is allocated to the single performance obligation. The transaction fee
is collected from the customer in digital assets, with revenue measured based on a certain percentage of the value of digital assets
at the time the transaction is executed. The Company’s service is comprised of a single performance obligation to provide a platform
facilitating the transfer of its DOTs. The Company considers its performance obligation satisfied, and recognizes revenue, at the point
in time the transaction is processed.



In this segment, the transaction
consideration that the Company receives is a non-cash consideration in the form of digital assets, which are cryptocurrencies. The Company
measures the related cryptocurrencies at fair value on the date received, at the same time, the revenue is recognized. Fair value
of the digital asset award received is determined using the average U.S. dollar spot rate of the related digital currency at the time
of receipt.



Expenses associated with operating
the Arts and Collectibles Technology Business, such as minting cost and purchase cost of collectibles and artworks are also recorded
as cost of revenues.



Recently Issued Accounting Pronouncements



From time to time, new accounting
pronouncements are issued by the Financial Accounting Standard Board (“FASB”) or other standard setting bodies and adopted
by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued
standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.





53







Recently adopted accounting
pronouncements



On
October 28, 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2021-08,Accounting
for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU 2021-08 amends Accounting
Standards Codification 805 (“ASC 805”) to require acquiring entities to apply Topic 606 - Revenue from Contracts with
Customers to recognize and measure contract assets and contract liabilities in a business combination. The Company early adopted the
standard on January 1, 2022. The adoption of the standard did not have a material impact on the Company’s consolidated financial
statements.



On
March 31, 2022, the Securities and Exchange Commission (the “SEC”) issued Staff Accounting Bulletin No. 121 (“SAB 121”).
SAB 121 sets out interpretive guidance from the staff of the SEC regarding the accounting for obligations to safeguard crypto assets that
an entity holds for its customers. Safeguarding is defined as taking actions to secure customer crypto assets and the associated cryptographic
key information and protecting them from loss, theft, or other misuse. The guidance requires an entity to recognize a liability for the
obligation to safeguard the users’ assets, and recognize an associated asset for the crypto assets safeguarded. Both the liability
and asset should be measured initially and subsequently at the fair value of the crypto assets being safeguarded. The guidance also requires
additional disclosures related to the nature and amount of crypto assets that the entity is responsible for holding for its customers,
with separate disclosure for each significant crypto asset, and the vulnerabilities the entity has due to any concentration in such activities.
The adoption of the standard did not have a material impact on the Company’s consolidated financial statements.



Accounting pronouncements
pending adoption



On
June 30, 2022, FASB issued Accounting Standards Update No. 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual
Sale Restrictions (“ASU 2022-03”). ASU 2022-03 clarifies that a contractual sale restriction prohibiting the sale
of an equity security is a characteristic of the reporting entity holding the equity security and is not included in the equity security’s
unit of account. The standard requires specific disclosures related to equity securities that are subject to contractual sale restrictions,
including (1) the fair value of such equity securities reflected in the balance sheet, (2) the nature and remaining duration of the corresponding
restrictions, and (3) any circumstances that could cause a lapse in the restrictions. The new standard is effective for the Company for
its fiscal year beginning January 1, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting the
standard on the Company’s consolidated financial statements.



The Company has reviewed
all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements
may be expected to cause a material impact on its financial condition or the results of its operations.



ITEM 7A.  QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.



We are a smaller reporting
company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.



ITEM 8.   FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA.



The consolidated financial
statements and the Report of Independent Registered Certified Public Accounting Firm thereon are filed pursuant to this Item 8 and are
included in this report beginning on page F-1.





54







COSMOS GROUP HOLDINGS
INC.



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS





|                                                                      |  | Page      
|--------------------------------------------------------------------- |  | ----------
|                                                                      |  |           
|Consolidated Balance Sheets                                           |  | F-2       
|                                                                      |  |           
|Consolidated Statements of Operations and Comprehensive Income (Loss) |  | F-3       
|                                                                      |  |           
|Consolidated Statements of Cash Flows                                 |  | F-4       
|                                                                      |  |           
|Consolidated Statements of Changes in Stockholders’ Equity (Deficit)  |  | F-5       
|                                                                      |  |           
|Notes to Consolidated Financial Statements                            |  | F-6 – F-37





F-1







COSMOS GROUP HOLDINGS INC.

CONSOLIDATED BALANCE SHEETS

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



|                                                                                                                                                   |  | As of December 31, |             
|-------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------------
|                                                                                                                                                   |  | 2022               |             
|                                                                                                                                                   |  |                    |             
|ASSETS                                                                                                                                             |  |                    |             
|Current assets:                                                                                                                                    |  |                    |             
|Cash and cash equivalents                                                                                                                          |  | $                  | 2,468,828   
|Digital assets                                                                                                                                     |  |                    | -           
|Loan receivables, net                                                                                                                              |  |                    | 15,309,939  
|Loan interest and fee receivables, net                                                                                                             |  |                    | 358,872     
|Inventories                                                                                                                                        |  |                    | 1,164,887   
|Prepayments and other receivables                                                                                                                  |  |                    | 721,602     
|Right-of-use assets, net                                                                                                                           |  |                    | 160,945     
|                                                                                                                                                   |  |                    |             
|Total current assets                                                                                                                               |  |                    | 20,185,073  
|                                                                                                                                                   |  |                    |             
|Non-current assets:                                                                                                                                |  |                    |             
|Property and equipment, net                                                                                                                        |  |                    | 57,087      
|Intangible assets                                                                                                                                  |  |                    | 13,339,427  
|Loan receivables, net                                                                                                                              |  |                    | 3,100,057   
|                                                                                                                                                   |  |                    |             
|TOTAL ASSETS                                                                                                                                       |  | $                  | 36,681,644  
|                                                                                                                                                   |  |                    |             
|LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                               |  |                    |             
|Current liabilities:                                                                                                                               |  |                    |             
|Accounts payable                                                                                                                                   |  | $                  | 2,381,429   
|Accrued liabilities and other payables                                                                                                             |  |                    | 465,890     
|Accrued consulting and service fee                                                                                                                 |  |                    | 2,851,719   
|Loan payables                                                                                                                                      |  |                    | 1,823,536   
|Amounts due to related parties                                                                                                                     |  |                    | 23,931,078  
|Income tax payable                                                                                                                                 |  |                    | 719,081     
|Operating lease liabilities                                                                                                                        |  |                    | 136,800     
|Convertible note payables                                                                                                                          |  |                    | 383,058     
|                                                                                                                                                   |  |                    |             
|Total current liabilities                                                                                                                          |  |                    | 32,692,591  
|                                                                                                                                                   |  |                    |             
|Non-current liabilities:                                                                                                                           |  |                    |             
|Operating lease liabilities                                                                                                                        |  |                    | 29,725      
|                                                                                                                                                   |  |                    |             
|TOTAL LIABILITIES                                                                                                                                  |  |                    | 32,722,316  
|                                                                                                                                                   |  |                    |             
|Commitments and contingencies                                                                                                                      |  |                    | -           
|                                                                                                                                                   |  |                    |             
|STOCKHOLDERS’ EQUITY                                                                                                                               |  |                    |             
|Common stock, $0.001 par value; 500,000,000 shares authorized; 358,067,481 and 333,910,484 issued and outstanding as of December 31, 2022 and 2021 |  |                    | 454,398     
|Common stock to be issued                                                                                                                          |  |                    | 400,000     
|Additional paid-in capital                                                                                                                         |  |                    | 133,659,075 
|Accumulated other comprehensive loss                                                                                                               |  |                    | 11,545      
|Accumulated deficit                                                                                                                                |  |                    | (130,555,579
|Stockholders’ equity attributable to COSG Group Holdings Inc.                                                                                      |  |                    | 3,969,439   
|Noncontrolling interest                                                                                                                            |  |                    | (10,111     
|Stockholders’ equity                                                                                                                               |  |                    | 3,959,328   
|                                                                                                                                                   |  |                    |             
|TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                         |  | $                  | 36,681,644  



See accompanying notes to consolidated financial
statements.



F-2







COSMOS GROUP HOLDINGS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS

(Currency expressed in United States Dollars
(“US$”))



|                                                 |  | Years ended December 31, |             
|------------------------------------------------ |  | ------------------------ | ------------
|                                                 |  | 2022                     |             
|                                                 |  |                          |             
|Revenues:                                        |  |                          |             
|Interest income                                  |  | $                        | 6,550,670   
|Interest expense                                 |  |                          | (405,972    
|Net interest income                              |  |                          | 6,144,698   
|                                                 |  |                          |             
|Arts and collectibles technology income          |  |                          | 14,059,050  
|                                                 |  |                          | 20,203,748  
|                                                 |  |                          |             
|Cost of revenue:                                 |  |                          |             
|Arts and collectibles technology expense         |  |                          | (3,019,794  
|                                                 |  |                          |             
|Gross profit                                     |  |                          | 17,183,954  
|                                                 |  |                          |             
|Operating expenses:                              |  |                          |             
|Sales and marketing                              |  |                          | (27,371,549 
|Corporate development                            |  |                          | (26,898,128 
|Technology and development                       |  |                          | (43,301,993 
|General and administrative                       |  |                          | (16,651,966 
|Total operating expenses                         |  |                          | (114,223,636
|                                                 |  |                          |             
|LOSS FROM OPERATION                              |  |                          | (97,039,682 
|                                                 |  |                          |             
|Other income (expense):                          |  |                          |             
|Interest income                                  |  |                          | 1,224       
|Convertible notes interest expense               |  |                          | (5,143      
|Gain from the sale of digital assets             |  |                          | 181         
|Impairment loss on digital assets                |  |                          | (12,633     
|Impairment loss on goodwill                      |  |                          | (816,263    
|Imputed interest expense                         |  |                          | (949,790    
|Loan interest expense                            |  |                          | (1,360      
|Loss on disposal of subsidiaries                 |  |                          | (5,129,854  
|Recovery from bad debts                          |  |                          | -           
|Sundry income                                    |  |                          | 126,958     
|Total other expense, net                         |  |                          | (6,786,680  
|                                                 |  |                          |             
|LOSS BEFORE INCOME TAXES                         |  |                          | (103,826,362
|                                                 |  |                          |             
|Income tax expense                               |  |                          | (299,714    
|                                                 |  |                          |             
|NET LOSS                                         |  | $                        | (104,126,076
|                                                 |  |                          |             
|Net loss attributable to noncontrolling interest |  |                          | (6,974      
|Net loss attributable to common shareholders     |  |                          | (104,119,102
|                                                 |  |                          |             
|Other comprehensive income (loss):               |  |                          |             
|– Foreign currency adjustment income (loss)      |  |                          | 19,133      
|                                                 |  |                          |             
|COMPREHENSIVE LOSS                               |  | $                        | (104,099,969
|                                                 |  |                          |             
|Net loss per share – Basic and Diluted           |  | $                        | (0.28       
|                                                 |  |                          |             
|Weighted average common shares outstanding:      |  |                          |             
|– Basic and Diluted                              |  |                          | 374,086,727 



See accompanying notes to consolidated financial
statements.



F-3







COSMOS GROUP HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Currency expressed in United States Dollars
(“US$”))



|                                                                                         |  | Years ended December 31, |             
|---------------------------------------------------------------------------------------- |  | ------------------------ | ------------
|                                                                                         |  | 2022                     |             
|Cash flows from operating activities:                                                    |  |                          |             
|Net loss                                                                                 |  | $                        | (104,126,076
|                                                                                         |  |                          |             
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities |  |                          |             
|Depreciation of property and equipment                                                   |  |                          | 7,540       
|Amortization of intangible assets                                                        |  |                          | 3,931,641   
|Imputed interest expense                                                                 |  |                          | 949,790     
|Revenue received by digital assets  (non-cash)                                           |  |                          | (30,005,442 
|Expense settled by digital assets  (non-cash)                                            |  |                          | 29,607,771  
|Impairment loss on digital assets                                                        |  |                          | 12,633      
|Impairment loss on goodwill                                                              |  |                          | 816,263     
|Loss on the sale of digital assets                                                       |  |                          | (181        
|Stock-based compensation                                                                 |  |                          | -           
|Shares issued for services rendered                                                      |  |                          | 86,572,168  
|Loss on disposal of subsidiaries                                                         |  |                          | 5,129,854   
|Loss on write-off property and equipment                                                 |  |                          | -           
|Cost of inventories (non-cash)                                                           |  |                          | -           
|                                                                                         |  |                          |             
|Change in operating assets and liabilities:                                              |  |                          |             
|Loan receivables                                                                         |  |                          | 642,598     
|Loan interest receivables                                                                |  |                          | 124,499     
|Inventories                                                                              |  |                          | 938,151     
|Prepayments and other receivables                                                        |  |                          | (545        
|Accounts payables                                                                        |  |                          | 2,141,273   
|Accrued liabilities and other payables                                                   |  |                          | (362,792    
|Accrued consulting and service fee                                                       |  |                          | 5,769,457   
|Right-of-use assets and operating lease liabilities                                      |  |                          | (35,860     
|Produced content cost                                                                    |  |                          | 543,895     
|Income tax payable                                                                       |  |                          | 299,714     
|Net cash provided by (used in) operating activities                                      |  |                          | 2,956,351   
|                                                                                         |  |                          |             
|Cash flows from investing activities:                                                    |  |                          |             
|Payment to acquire property and equipment                                                |  |                          | (2,859      
|Purchase of intangible assets                                                            |  |                          | (1,884      
|Cash from acquisition of non-controlling interest                                        |  |                          | 1,005,654   
|Net cash provided by (used in) investing activities                                      |  |                          | 1,000,911   
|                                                                                         |  |                          |             
|Cash flows from financing activities:                                                    |  |                          |             
|Proceeds from (repayment to) loan payable                                                |  |                          | 1,333,700   
|(Repayment to) advances from related parties                                             |  |                          | (4,137,930  
|Proceeds from convertible note payables                                                  |  |                          | 412,783     
|Net cash (used in) provided by financing activities                                      |  |                          | (2,391,447  
|                                                                                         |  |                          |             
|Foreign currency translation adjustment                                                  |  |                          | (228,115    
|                                                                                         |  |                          |             
|Net change in cash and cash equivalents                                                  |  |                          | 1,337,700   
|                                                                                         |  |                          |             
|BEGINNING OF YEAR                                                                        |  |                          | 1,131,128   
|                                                                                         |  |                          |             
|END OF YEAR                                                                              |  | $                        | 2,468,828   
|                                                                                         |  |                          |             
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                        |  |                          |             
|Cash paid for income taxes                                                               |  |                          | -           
|Cash paid for interest                                                                   |  | $                        | 405,972     
|                                                                                         |  |                          |             
|NON-CASH INVESTING AND FINANCING ACTIVITIES:                                             |  |                          |             
|Shares issued for the acquisition of intangible assets                                   |  | $                        | 21,845,128  



See accompanying notes to consolidated financial
statements.



F-4







COSMOS GROUP HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’
EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



|                                                            |  | Common stock  |             |  | Common stock |   |         | Additional   |  |   | Accumulated other |   |  | (Accumulated losses) |             |   | Non-              |   |        | Total stockholders   | 
|----------------------------------------------------------- |  | ------------- | ----------- |  | ------------ | - | ------- | ------------ |  | - | ----------------- | - |  | -------------------- | ----------- | - | ----------------- | - | ------ | -------------------- | 
|                                                            |  | No. of shares |             |  | Amount       |   |         | to be issued |  |   | paid-in capital   |   |  | comprehensive loss   |             |   | retained earnings |   |        | controlling interest | 
|                                                            |  |               |             |  |              |   |         |              |  |   |                   |   |  |                      |             |   |                   |   |        |                      | 
|Balance as of January 1, 2021                               |  |               | 333,910,484 |  |              | $ | 333,911 |              |  | $ | 800,000           |   |  | $                    | -           |   |                   | $ | (5,374 | )                    | 
|                                                            |  |               |             |  |              |   |         |              |  |   |                   |   |  |                      |             |   |                   |   |        |                      | 
|Shares issued for acquisition of legal acquirer             |  |               | 21,536,933  |  |              |   | 21,536  |              |  |   | -                 |   |  |                      | 395,516     |   |                   |   | (1,436 | )                    | 
|Recapitalization of legal acquirer                          |  |               | -           |  |              |   | -       |              |  |   | -                 |   |  |                      | (395,516    | ) |                   |   | 1,436  |                      | 
|Foreign currency translation adjustment                     |  |               | -           |  |              |   | -       |              |  |   | -                 |   |  |                      | -           |   |                   |   | (2,214 | )                    | 
|Shares issued for inventories purchased from related party  |  |               | 269,835     |  |              |   | 270     |              |  |   | -                 |   |  |                      | 1,685,580   |   |                   |   | -      |                      | 
|Shares issued for service rendered                          |  |               | -           |  |              |   | -       |              |  |   | 6,321             |   |  |                      | 25,283,882  |   |                   |   | -      |                      | 
|Shares issued for purchase of intangible assets             |  |               | 2,350,229   |  |              |   | 2,350   |              |  |   | -                 |   |  |                      | 17,342,340  |   |                   |   | -      |                      | 
|Imputed interest on related party loans                     |  |               | -           |  |              |   | -       |              |  |   | -                 |   |  |                      | 618,535     |   |                   |   | -      |                      | 
|Net loss for the year                                       |  |               | -           |  |              |   | -       |              |  |   | -                 |   |  |                      | -           |   |                   |   | -      |                      | 
|                                                            |  |               |             |  |              |   |         |              |  |   |                   |   |  |                      |             |   |                   |   |        |                      | 
|Balance as of December 31, 2021                             |  |               | 358,067,481 |  |              | $ | 358,067 |              |  | $ | 806,321           |   |  | $                    | 44,930,337  |   |                   | $ | (7,588 | )                    | 
|                                                            |  |               |             |  |              |   |         |              |  |   |                   |   |  |                      |             |   |                   |   |        |                      | 
|Imputed interest on related party loans                     |  |               | -           |  |              |   | -       |              |  |   | -                 |   |  |                      | 713,167     |   |                   |   | -      |                      | 
|Commitment Share issued for private placement               |  |               | 100,000     |  |              |   | 100     |              |  |   | -                 |   |  |                      | (100        | ) |                   |   | -      |                      | 
|Shares cancelled                                            |  |               | -           |  |              |   | -       |              |  |   | (400,000          | ) |  |                      | 400,000     |   |                   |   | -      |                      | 
|Share issued for service rendered                           |  |               | 73,694,483  |  |              |   | 73,695  |              |  |   | (6,321            | ) |  |                      | 86,504,796  |   |                   |   | -      |                      | 
|Share issued for the acquisition of noncontrolling interest |  |               | 22,536,179  |  |              |   | 22,536  |              |  |   | -                 |   |  |                      | 1,110,875   |   |                   |   | -      |                      | 
|Foreign currency translation adjustment                     |  |               | -           |  |              |   | -       |              |  |   | -                 |   |  |                      | -           |   |                   |   | 19,133 |                      | 
|Net loss for the year                                       |  |               | -           |  |              |   | -       |              |  |   | -                 |   |  |                      | -           |   |                   |   | -      |                      | 
|                                                            |  |               |             |  |              |   |         |              |  |   |                   |   |  |                      |             |   |                   |   |        |                      | 
|Balance as of December 31, 2022                             |  |               | 454,398,143 |  |              | $ | 454,398 |              |  | $ | 400,000           |   |  | $                    | 133,659,075 |   |                   | $ | 11,545 |                      | 



See accompanying notes to consolidated financial
statements.



F-5







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



NOTE 1 - ORGANIZATION AND BUSINESS BACKGROUND



Cosmos Group Holdings Inc. (the “Company”
or “COSG”) was incorporated in the state of Nevada on August 14, 1987.



The Company currently offers financial and money
lending services in Hong Kong and operates online platform for the sale and distribution of arts and collectibles around the world, with
the use of blockchain technologies and minting token.



On December 15, 2022,
the Company entered into a Settlement Agreement with Lee Ying Chiu Herbert, the former director and current controlling shareholder (“Dr.
Lee”), pursuant to which the Company and Dr. Lee agreed to settle the matter of 800,000,000 shares of common stock of the Company
due to Dr. Lee (the “Unissued Securities”) pursuant to the terms of that certain Share Acquisition Agreement, dated June 17,
2021 (the “Share Acquisition Agreement”), by and among the Company and its subsidiary, Massive Treasure Limited (“Massive
Treasure”), a British Virgin Islands corporation and holding company of numerous operating subsidiaries, and the holders of ordinary
shares of Massive Treasure. Pursuant to the terms of the Settlement Agreement, the Company and Dr. Lee agreed to the following, among
other things, as settlement in full of the Unissued Securities:



| | (1) | The Company will only issue to Dr. Lee 400,000,000 shares of its common stock at a per share value of $0.001;
| | --- | -------------------------------------------------------------------------------------------------------------



| | (2) | The Company shall cause the transfer to Dr. Lee or his designees all the assets and liabilities of following entities as such assets and liabilities are described in the financial statements of the Company as of November 30, 2022:
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | i) | Coinllectibles Limited, (BVI company number: 2067445), a company incorporated in the British Virgin Islands, with registered address at Mandar House, 3rd Floor, Johnson’s Ghut, Tortola, British Virgin Islands and its branch, (Singapore company registration number: T21FC0080G);
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii) | Coinllectibles (HK) Limited, (Hong Kong business registration number: 72228307), a company incorporated in Hong Kong, with registered address at 7/F, K11 Atelier Victoria Dockside, 18 Salisbury Road, Tsim Sha Tsui, Hong Kong; and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iii) | Coinllectibles Wealth Limited, (Hong Kong business registration number: 70756483), a company incorporated in Hong Kong, with registered address at 7/F, K11 Atelier Victoria Dockside, 18 Salisbury Road, Tsim Sha Tsui, Hong Kong
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



(collectively,
the “Disposal Group”).



| | (3) | The Company and Dr. Lee agreed to the allocation of certain inventories, accounts payables, and intellectual properties.
| | --- | ------------------------------------------------------------------------------------------------------------------------



F-6







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



Description of subsidiaries



|Company name                              |  | Place of incorporation and kind of legal
    entity |  | Principal activities and place of operation          |  | Particulars of registered/ paid up share
    capital |  | Effective interest held |    
|----------------------------------------- |  | --------------------------------------------------- |  | ---------------------------------------------------- |  | ---------------------------------------------------- |  | ----------------------- | ---
|                                          |  |                                                     |  |                                                      |  |                                                      |  |                         |    
|Massive Treasure Limited                  |  | BVI, limited liability company                      |  | Investment holding                                   |  | 50,000 ordinary shares with a par value of US$1 each |  |                         | 100
|                                          |  |                                                     |  |                                                      |  |                                                      |  |                         |    
|Coinllectibles (HK) Limited (Note 3)      |  | Hong Kong, limited liability company                |  | Corporate management in Hong Kong                    |  | 1,000 ordinary shares for HK$1,000                   |  |                         | 100
|                                          |  |                                                     |  |                                                      |  |                                                      |  |                         |    
|Coinllectibles Wealth Limited (Note 3)    |  | Hong Kong, limited liability company                |  | Corporate management in Hong Kong                    |  | 1 ordinary share for HK$1                            |  |                         | 100
|                                          |  |                                                     |  |                                                      |  |                                                      |  |                         |    
|Coinllectibles DeFi Limited               |  | Hong Kong, limited liability company                |  | Financing service management in Hong Kong            |  | 10,000 ordinary shares for HK$10,000                 |  |                         | 100
|                                          |  |                                                     |  |                                                      |  |                                                      |  |                         |    
|Coinllectibles Private Limited            |  | Singapore, limited liability company                |  | Corporate management and IT development in Singapore |  | 1,000 ordinary shares for S$1,000                    |  |                         | 100
|                                          |  |                                                     |  |                                                      |  |                                                      |  |                         |    
|Coinllectibles Limited (Note 3)           |  | BVI, limited liability company                      |  | Procurement of art and collectibles in Singapore     |  | 1,000 ordinary shares with a par value of US$1 each  |  |                         | 100
|                                          |  |                                                     |  |                                                      |  |                                                      |  |                         |    
|Healthy Finance Limited (Note 2)          |  | Hong Kong, limited liability company                |  | Money lending service in Hong Kong                   |  | 10,000 ordinary shares for HK$10,000                 |  |                         | 51 
|                                          |  |                                                     |  |                                                      |  |                                                      |  |                         |    
|8M Limited (Note 1)                       |  | Hong Kong, limited liability company                |  | Money lending service in Hong Kong                   |  | 10 ordinary shares for HK$10                         |  |                         | 100
|                                          |  |                                                     |  |                                                      |  |                                                      |  |                         |    
|Dragon Group Mortgage Limited (Note 2)    |  | Hong Kong, limited liability company                |  | Money lending service in Hong Kong                   |  | 10,000 ordinary shares for HK$10,000                 |  |                         | 51 
|                                          |  |                                                     |  |                                                      |  |                                                      |  |                         |    
|E-on Finance Limited (Note 1)             |  | Hong Kong, limited liability company                |  | Money lending service in Hong Kong                   |  | 2 ordinary shares for HK$2                           |  |                         | 100
|                                          |  |                                                     |  |                                                      |  |                                                      |  |                         |    
|Lee Kee Finance Limited (Note 2)          |  | Hong Kong, limited liability company                |  | Money lending service in Hong Kong                   |  | 920,000 ordinary shares for HK$920,000               |  |                         | 51 
|                                          |  |                                                     |  |                                                      |  |                                                      |  |                         |    
|Rich Finance (Hong Kong) Limited (Note 2) |  | Hong Kong, limited liability company                |  | Money lending service in Hong Kong                   |  | 10,000 ordinary shares for HK$10,000                 |  |                         | 51 
|                                          |  |                                                     |  |                                                      |  |                                                      |  |                         |    
|Long Journey Finance Limited (Note 2)     |  | Hong Kong, limited liability company                |  | Money lending service in Hong Kong                   |  | 100 ordinary shares for HK$100                       |  |                         | 51 
|                                          |  |                                                     |  |                                                      |  |                                                      |  |                         |    
|Vaav Limited (Note 2)                     |  | Hong Kong, limited liability company                |  | Money lending service in Hong Kong                   |  | 10,000 ordinary shares for HK$10,000                 |  |                         | 51 
|                                          |  |                                                     |  |                                                      |  |                                                      |  |                         |    
|Star Credit Limited (Note 2)              |  | Hong Kong, limited liability company                |  | Money lending service in Hong Kong                   |  | 1,000,000 ordinary shares for HK$1,000,000           |  |                         | 51 
|                                          |  |                                                     |  |                                                      |  |                                                      |  |                         |    
|NFT Limited                               |  | BVI, limited liability company                      |  | Procurement of intangible assets in Hong Kong        |  | 10,000 ordinary shares with a par value of US$1 each |  |                         | 51 





F-7







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



|Company name                            |  | Place of incorporation and kind of legal
    entity |  | Principal activities and place of operation      |  | Particulars of registered/ paid up share
    capital |  | Effective interest held |    
|--------------------------------------- |  | --------------------------------------------------- |  | ------------------------------------------------ |  | ---------------------------------------------------- |  | ----------------------- | ---
|                                        |  |                                                     |  |                                                  |  |                                                      |  |                         |    
|Grandway Worldwide Holding Limited      |  | BVI, limited liability company                      |  | Development of mobile application                |  | 50,000 ordinary shares for USD$50,000                |  |                         | 51 
|                                        |  |                                                     |  |                                                  |  |                                                      |  |                         |    
|Grand Town Development Limited          |  | Hong Kong, limited liability company                |  | Provision treasury management                    |  | 2 ordinary shares for HK$2                           |  |                         | 100
|                                        |  |                                                     |  |                                                  |  |                                                      |  |                         |    
|Grand Gallery Limited                   |  | Hong Kong, limited liability company                |  | Procurement of art and collectibles in Hong Kong |  | 400,000 ordinary shares for HK$400,000               |  |                         | 80 
|                                        |  |                                                     |  |                                                  |  |                                                      |  |                         |    
|Phoenix Waters Group Limited            |  | BVI, limited liability company                      |  | Investment holding                               |  | 50,000 ordinary shares with a par value of US$1 each |  |                         | 100
|                                        |  |                                                     |  |                                                  |  |                                                      |  |                         |    
|Phoenix Waters Productions (HK) Limited |  | Hong Kong, limited liability company                |  | Film production                                  |  | 100,000 ordinary shares for HK$100,000               |  |                         | 51 



Note 1:  In May 2022, Massive Treasure entered
into a Share Swap Letter Agreement (the “100% Share Swap Letter”) with the shareholders of each of E-on Finance Limited (“E-on”)
and 8M Limited (“8M”) to acquire 100% of each of E-on and 8M for 20,110,604 and 10,055,302 shares of common stock of COSG respectively
based upon the closing price of the common stock of COSG as of the date of signing of the 100% Share Swap Letter and determined in accordance
with the terms of the 100% Share Swap Letter on the date. The acquisition of E-on and 8M consummated in May 2022. Thereon, COSG issued
10,256,409 shares and 5,128,204 shares to the shareholders of E-on and 8M respectively.



COSG is obligated to issue 9,854,195 and 4,927,098
shares on the first anniversary of the closing of the acquisition to the former shareholders of E-on and 8M respectively, subject to
certain clawback provisions. E-on and 8M are obligated to meet certain financial milestones in each of the two year anniversaries following
the closing. Failure to meet such milestones will result in a clawback of the shares issued to the former shareholders. On the second
anniversary of the closing, if E-on or 8M exceeds the aggregate financial milestone set for the two years, the former shareholders thereof
shall be entitled to additional shares of COSG as determined in accordance with the 100% Share Swap Letter.



Note 2:  In May and June 2022, Massive Treasure
entered into a Share Swap Letter Agreement (the “51% Share Swap Letter”) with the shareholders of each of the entities to
acquire 51% of the issued and outstanding securities of the entities for an aggregate amount of 23,589,736 shares of COSG’s common
stock as set forth below (the “First Tranche Shares”), based upon the closing price of the common stock of COSG as of the
date of signing the 51% Share Swap Letter and determined in accordance with the terms of the 51% Share Swap Letter. The acquisition of
the entities consummated in May and June 2022. Thereon, COSG issued the First Tranche Shares.



On the first anniversary of the closing, COSG
is obligated to issue a second tranche of shares of its common stock, based upon the closing price of its shares as of the fifth business
day prior to such first anniversary as determined in accordance with the terms of the 51% Share Swap Letter (the “Second Tranche
Shares”).  Upon the issuance of the Second Tranche Shares, each of the entities will deliver the remaining 49% of the issued
and outstanding securities to COSG to become wholly owned subsidiaries of COSG. Each of the entities are obligated to meet certain
financial milestones in each of the two year anniversaries following the closing. Failure to meet such milestones will result in a clawback
of the shares issued to the former shareholders. On the second anniversary of the closing, if any entity exceeds the aggregate financial
milestone set for the two years, the former shareholders thereof shall be entitled to additional shares of COSG as determined in accordance
with the 51% Share Swap Letter.



Note 3: Pursuant to the terms of the Settlement
Agreement, the ownership of these entities will be transferred to Dr. Lee at their carrying value on December 15, 2022.



The Company and its subsidiaries are hereinafter
referred to as (the “Company”).



F-8







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES



The accompanying consolidated financial statements
reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying consolidated
financial statements and notes.



| | ● | Basis
                                            of presentation
| | - | -----------------------------------------------------------------



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



| | ● | Use
                                            of estimates and assumptions
| | - | ----------------------------------------------------------------------------



In preparing these consolidated financial statements,
management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues
and expenses during the years reported. Actual results may differ from these estimates. If actual results significantly differ from the
Company’s estimates, the Company’s financial condition and results of operations could be materially impacted. Significant
estimates in the year include the goodwill, impairment loss on digital assets, valuation and useful lives of intangible assets and property
and equipment and deferred tax valuation allowance.



| | ● | Basis
                                            of consolidation
| | - | ------------------------------------------------------------------



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



| | ● | Noncontrolling
                                            interest
| | - | -------------------------------------------------------------------



The Company accounts for noncontrolling interest
in accordance with Accounting Standard Codification (“ASC”) 810-10-45, which requires the Company to present noncontrolling
interests as a separate component of total shareholders’ equity on the consolidated balance sheets and the consolidated net loss
attributable to its noncontrolling interest be clearly identified and presented on the face of the consolidated statements of operations
and comprehensive loss.



| | ● | Business
                                            combination
| | - | ----------------------------------------------------------------



The Company allocates the fair value of purchase
consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values.
The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded
as goodwill to reporting units based on the expected benefit from the business combination. Allocation of purchase consideration to identifiable
assets and liabilities affects the amortization expense, as acquired finite-lived intangible assets are amortized over the useful life,
whereas any indefinite-lived intangible assets, including goodwill, are not amortized. During the measurement period, which is not to
exceed one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed, with the corresponding
offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. Acquisition-related
expenses are recognized separately from business combinations and are expensed as incurred.



| | ● | Segment
                                            reporting
| | - | -------------------------------------------------------------



ASC 280, Segment Reporting establishes
standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure
as well as information about geographical areas, business segments and major customers in consolidated financial statements. Currently,
the Company operates in two reportable operating segments in Hong Kong and Singapore.





F-9







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



| | ● | Cash
                                            and cash equivalents
| | - | ---------------------------------------------------------------------



Cash and cash equivalents are carried at cost
and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with
an original maturity of three months or less as of the purchase date of such investments.



| | ● | Inventories
| | - | -----------



Inventories are stated at the lower of cost (first-in,
first-out method) or net realizable value. The cost includes the purchase cost of arts and collectibles from related party and independent
artists and the costs associated with token minting for collectible pieces. The Company will reduce inventory on hand to its net
realizable value on an item-by-item basis when it is apparent that the expected realizable value of an inventory item falls below its
original cost. A charge to cost of sales results when the estimated net realizable value of specific inventory items declines below cost.
Management regularly reviews the Company’s inventories for such declines in value. Although inventories are classified as current
assets in the accompanying balance sheets, the Company anticipates that certain inventories will be sold beyond twelve months from
December 31, 2022.



| | ● | Digital
                                            assets
| | - | ----------------------------------------------------------



The Company’s digital assets mainly represent
the cryptocurrencies held in its e-wallet. The Company accounts for its digital assets in accordance with ASC 350, General Intangibles
Other Than Goodwill (“ASC 350”).



Digital Assets held by the Company are included in current assets in the consolidated balance sheets, as follows:-



|  | Cryptocurrencies |       |  |  | 
|- | ---------------- | ----- |  |  | 
|- | Tether           | USDT  |  |  | 
|- | Okipad           | OKI   |  |  | 
|- | Ethereum         | ETH   |  |  | 
|- | Binance Coin     | BNB   |  |  | 
|- | Binance USD      | BUSD  |  |  | 
|- | Colligo Token    | COTK  |  |  | 
|- | Polygon          | MATIC |  |  | 



Due to the lack of authoritative GAAP guidance,
the Company has determined its Digital Assets to be akin to intangible assets and are accounted in such manner. As intangible assets,
Digital Assets are initially measured at cost. Since there is no limit on the useful life of the Company’s cryptocurrency coins and tokens, they
are classified as indefinite-lived intangible assets.



ASC 350 requires assets to be measured based
on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident
and, thus, more reliably measurable. Accordingly, if the fair market value at any point during the reporting period is lower than the
carrying value an impairment loss equal to the difference will be recognized in the consolidated statement of operations. If the fair
market value at any point during the reporting period is higher than the carrying value, the basis of the digital assets will not be
adjusted to account for this increase.



Indefinite-lived
intangible assets are not subject to amortization. Instead they are tested for impairment on an annual basis and more frequently if
events or circumstances change that indicate that it’s more likely than not that the asset is impaired. As a result of the
aforementioned, the Company will only recognize decreases in the value of its cryptocurrency coins and tokens, and any increase in
value will be recognized upon disposition. Cryptocurrency coins and tokens are traded on exchanges in which there are observable
prices in an active market, the Company views a decline in the quoted price below the cost to be an impairment indicator. The quoted
price and observable prices of cryptocurrency coins and tokens, are determined by the Company using a principal market analysis in
accordance with ASC 820, Fair Value Measurement.



Realized gain (loss) on sale of digital assets
is included in other income (expense) in the consolidated statements of operations, while impairment loss of digital assets is included
in operating expenses because of the nature of the assets.



F-10







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



The Company’s cryptocurrencies are deemed
to have an indefinite useful life; therefore amounts are not amortized, but rather are assessed for impairment.



| | ● | Loan
                                            receivables, net
| | - | -----------------------------------------------------------------



Loans receivables are carried at unpaid principal
balances, less the allowance for loan losses and charge-offs. The loans receivables portfolio consists of real estate mortgage loans,
commercial and personal loans.



Loans are placed on nonaccrual status when they
are past due 180 days or more as to contractual obligations or when other circumstances indicate that collection is not probable. When
a loan is placed on nonaccrual status, any interest accrued but not received is reversed against interest income. Payments received on
a nonaccrual loan are either applied to protective advances, the outstanding principal balance or recorded as interest income, depending
on an assessment of the ability to collect the loan. A nonaccrual loan may be restored to accrual status when principal and interest
payments have been brought current and the loan has performed in accordance with its contractual terms for a reasonable period (generally
six months).



If the Company determines that a loan is impaired,
the Company next determines the amount of the impairment. The amount of impairment on collateral dependent loans is charged off within
the given fiscal quarter. Generally the amount of the loan and negative escrow in excess of the appraised value less estimated selling
costs, for the fair value of collateral valuation method, is charged off. For all other loans, impairment is measured as described below
in Allowance for Loan Losses.



| | ● | Allowance
                                            for loan losses (“ALL”)
| | - | -----------------------------------------------------------------------------



The adequacy of the Company’s ALL is determined,
in accordance with ASC 450-20 Loss Contingencies includes management’s review of the Company’s loan portfolio, including
the identification and review of individual problem situations that may affect a borrower’s ability to repay. In addition, management
reviews the overall portfolio quality through an analysis of delinquency and non-performing loan data, estimates of the value of underlying
collateral, current charge-offs and other factors that may affect the portfolio, including a review of regulatory examinations, an assessment
of current and expected economic conditions and changes in the size and composition of the loan portfolio.



The ALL reflects management’s evaluation
of the loans presenting identified loss potential, as well as the risk inherent in various components of the portfolio. There is significant
judgment applied in estimating the ALL. These assumptions and estimates are susceptible to significant changes based on the current environment.
Further, any change in the size of the loan portfolio or any of its components could necessitate an increase in the ALL even though there
may not be a decline in credit quality or an increase in potential problem loans.



| | ● | Property
                                            and equipment
| | - | ------------------------------------------------------------------



Property and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following
expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:



|                                  |  | Expected
    useful life
|--------------------------------- |  | ------------------------
|Computer
    and office equipment |  | 5
    years             



Expenditure for repairs and maintenance is expensed
as incurred. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting
gain or loss is recognized in the results of operations.



F-11







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



| | ● | Goodwill
| | - | --------



In accordance with ASC 350 Intangible and
Other Assets, the goodwill we determined for reporting units is based on the expected benefit from business combinations. The Company
evaluates its reporting units annually, as well as when changes in our operating segments occur. For changes in reporting units, we reassign
goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level annually or more
frequently if events or changes in circumstances would more likely than not reduce the fair value of a reporting unit below its carrying
value. The Company has two reporting units subject to goodwill impairment testing. As of December 31, 2022, $816,263 impairment of goodwill
has been identified.



| | ● | Intangible
                                            assets
| | - | -------------------------------------------------------------



Intangible assets represented the acquired technology
software, licensed technology know-how, trademark and trade names for its internal use to facilitate and support its platform operation.
They are stated at the purchase cost and are amortized based on their economic benefit expected to be realized.



| | ● | Produced
                                            content cost
| | - | -----------------------------------------------------------------



Capitalized content costs are recognized as “Produced
content cost” in the consolidated balance sheets. The concept of “predominant monetization strategy” to classify capitalized
content costs for purposes of amortization and impairment as follows:



Individual



Lifetime value is predominantly derived from
third-party revenues that are directly attributable to the specific film or television title (e.g. theatrical revenues or sales to third-party
television programmers).



Group



Lifetime value is predominantly derived from
third-party revenues that are attributable only to a bundle of titles (e.g. subscription revenue).



Production costs for content that is predominantly
monetized individually are amortized based upon the ratio of the current period’s revenues to the estimated remaining total revenues.



Production costs that are predominantly monetized
as a group are amortized based on projected usage (which may be, for example, derived from historical viewership patterns), typically
resulting in an accelerated or straight-line amortization pattern. Participations and residuals are generally expensed in line with the
pattern of usage.



The costs of produced content are subject to
regular recoverability assessments. For the content that is predominantly monetized individually, the unamortized costs are compared
to the estimated fair value. The fair value will be determined based on a discounted cash flow analysis of the cash flows directly attributable
to the title in accordance with ASC 926-20 Entertainment-Films. To the extent the unamortized costs exceed the fair value, an
impairment charge is recorded for the excess. For content that is predominantly monetized as a group, the aggregate unamortized costs
of the group are compared to the present value of the discounted cash flows using the lowest level for which identifiable cash flows
are independent of other produced content. If the unamortized costs exceed the present value of discounted cash flows, an impairment
charge is recorded for the excess and allocated to individual titles based on the relative carrying value of each title in the group.
If there are no plans to continue to use an individual film or television program that is part of a group, the unamortized cost of the
individual title is written-off immediately.



| | ● | Impairment
                                            of long-lived assets
| | - | ---------------------------------------------------------------------------



In accordance with the provisions of ASC 360,
Impairment or Disposal of Long-Lived Assets, all long-lived assets such as property and equipment, intangible assets and capitalized
produced content cost owned and held by the Company are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the
carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed
the fair value of the assets.



| | ● | Revenue
                                            recognition
| | - | ---------------------------------------------------------------



ASC 606, Revenue from Contracts with Customers(“ASC 606”), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue
and cash flows arising from the entity’s contracts to provide goods or services to customers.





F-12







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



The Company applies the following five steps
in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:



| | ● | identify
                                            the contract with a customer;
| | - | ----------------------------------------------------------------------------------



| | ● | identify
                                            the performance obligations in the contract;
| | - | -------------------------------------------------------------------------------------------------



| | ● | determine
                                            the transaction price;
| | - | ----------------------------------------------------------------------------



| | ● | allocate
                                            the transaction price to performance obligations in the contract; and
| | - | --------------------------------------------------------------------------------------------------------------------------



| | ● | recognize
                                            revenue as the performance obligation is satisfied.
| | - | ---------------------------------------------------------------------------------------------------------



Revenue is recognized when the Company satisfies
its performance obligation under the contract by transferring the promised product to its customer that obtains control of the product
and collection is reasonably assured. A performance obligation is a promise in a contract to transfer a distinct product or service to
a customer. Most of the Company’s contracts have a single performance obligation, as the promise to transfer products or services
is not separately identifiable from other promises in the contract and, therefore, not distinct.



Lending Business



The Company is licensed to originate personal
loan, company loan and mortgage loan in Hong Kong. During the years ended December 31, 2022 and 2021, the Company originated loans generally
ranging from $644 to $579,000, with terms ranging from 1 week to 120 months. The Company mainly derives a portion of its revenue from
loans which is specifically excluded from the scope of this standard, that is, interest on loan receivable is accrued monthly and credited
to income as earned.



Arts and Collectibles Technology Business



The Company currently operates its online platform
in the sale and distribution of arts and collectibles, with the use of blockchain technologies and minting tokens. The item of arts and
collectibles is individually monetized as non-interchangeable unit of data stored on a blockchain, which is a form of digital ledger
that can be sold, in the form of a minting token on the online platform. The Company involves with the following activities to earn its
revenue in this segment:



Sale of arts and collectibles products: The Company
recognizes revenue derived from the sales of the arts and collectibles products when the Company has transferred the risks and rewards
to the customers.



The minted item of the individual art or collectibles
which are sold and settled in digital assets is the only performance obligation under the fixed-fee arrangements. The corresponding fee
income received upon each sale transaction is recorded as revenue, is recognized when the designated token, minted with the corresponding
art and collectibles is delivered to the end user, together with the transfer of both digital and official title.



Transaction fee income: The Company also generates
revenue through transaction fees transacted on its platform or other marketplaces. The Company charges a fee to an individual customer
at the secondary transaction level, which is allocated to the single performance obligation. The transaction fee is collected from the
customer in digital assets, with revenue measured based on a certain percentage of the value of digital assets at the time the transaction
is executed.



The Company’s service is comprised of a
single performance obligation to provide a platform facilitating the transfer of its DOTs. The Company considers its performance obligation
satisfied, and recognizes revenue, at the point in time the transaction is processed.



In this segment, the transaction consideration
that the Company receives is a non-cash consideration in the form of digital assets, which are cryptocurrencies. The Company measures
the related cryptocurrencies at fair value on the date received, and the revenue is immediately recognized upon the performance obligation
is satisfied.  Fair value of the digital asset award received is determined using the average U.S. dollar spot rate of the
related digital currency at the time of receipt.



Expenses associated with operating the Arts and
Collectibles Technology Business, such as minting cost and purchase cost of collectibles and artworks are also recorded as cost of revenues.



F-13







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



The following table shows the types of revenue
from contracts with customers and the number of the underlying transactions:



|                                          |  | Years ended December 31, |           
|----------------------------------------- |  | ------------------------ | ----------
|                                          |  | 2022                     |           
|                                          |  |                          |           
|Sale of arts and collectibles products    |  | $                        | 5,508,675 
|Transaction fee income and others         |  |                          | 8,550,375 
|                                          |  | $                        | 14,059,050
|Numbers of transactions:                  |  |                          |           
|Number of arts and collectibles sold      |  |                          | 65        
|Number of secondary platform transactions |  |                          | 767       



| | ● | Leases
| | - | ------



At the inception of an arrangement, the Company
determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Leases with a term greater
than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and long-term lease liabilities. The Company
has elected not to recognize on the balance sheet leases with terms of one year or less. Operating lease liabilities and their corresponding
right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. However, certain
adjustments to the right-of-use assets may be required for items such as prepaid or accrued lease payments. The interest rate implicit
in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rates, which are
the rates incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic
environment.



In accordance with the guidance in ASC 842, components
of a lease should be split into three categories: lease components (e.g. land, building, etc.), non-lease components (e.g. common area
maintenance, consumables, etc.), and non-components (e.g. property taxes, insurance, etc.). Subsequently, the fixed and in-substance
fixed contract consideration (including any related to non-components) must be allocated based on the respective relative fair values
to the lease components and non-lease components.



The Company made the policy election to not separate
lease and non-lease components. Each lease component and the related non-lease components are accounted for together as a single component.



| | ● | Income
                                            taxes
| | - | --------------------------------------------------------



The Company adopted the ASC 740 Income taxprovisions of paragraph 740-10-25-13, which addresses the determination of whether tax benefits claimed or expected to be claimed
on a tax return should be recorded in the consolidated financial statements. Under paragraph 740-10-25-13, the Company may recognize
the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination
by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements
from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being
realized upon ultimate settlement. Paragraph 740-10-25-13 also provides guidance on de-recognition, classification, interest and penalties
on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities
for unrecognized income tax benefits according to the provisions of paragraph 740-10-25-13.



The estimated future tax effects of temporary
differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs
and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides
valuation allowances as management deems necessary.



| | ● | Uncertain
                                            tax positions
| | - | -------------------------------------------------------------------



The Company did not take any uncertain tax positions
and had no adjustments to its income tax liabilities or benefits pursuant to the ASC 740 provisions of Section 740-10-25 for the years
ended December 31, 2022 and 2021.



F-14







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



| | ● | Foreign
                                            currencies translation
| | - | --------------------------------------------------------------------------



Transactions denominated in currencies other
than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction.
Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency
using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the consolidated statement
of operations.



The reporting currency of the Company is United
States Dollar (“US$”) and the accompanying consolidated financial statements have been expressed in US$. In addition, the
Company has operations in Hong Kong and Singapore and maintains the books and record in the local currency, Hong Kong Dollars (“HKD”)
and Singapore Dollars (“SGD”), which is a functional currency as being the primary currency of the economic environment in
which their operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiary whose functional
currency is not US$ are translated into US$, in accordance with ASC 830-30, Translation of Financial Statement, using the exchange
rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses
resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive
income within the statements of changes in stockholder’s equity.



Translation of amounts from HKD and SGD into
US$ has been made at the following exchange rates for the following periods:-



|                                         |  | December
                                            31, 2022 |        |  | December
                                            31, 2021 | 
|---------------------------------------- |  | ------------------------------------------------------------- | ------ |  | ------------------------------------------------------------- | 
|Year-end HKD:US$ exchange rate           |  |                                                               | 0.1281 |  |                                                               | 
|Annualized average HKD:US$ exchange rate |  |                                                               | 0.1277 |  |                                                               | 



|                                         |  | December
                                            31, 2022 |        |  | December
                                            31, 2021 | 
|---------------------------------------- |  | ------------------------------------------------------------- | ------ |  | ------------------------------------------------------------- | 
|Year-end SGD:US$ exchange rate           |  |                                                               | 0.7450 |  |                                                               | 
|Annualized average SGD:US$ exchange rate |  |                                                               | 0.7254 |  |                                                               | 



| | ● | Comprehensive
                                            income
| | - | ----------------------------------------------------------------



ASC 220, Comprehensive Income, establishes
standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined
includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying
consolidated statements of changes in stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency
translation. This comprehensive income is not included in the computation of income tax expense or benefit.



| | ● | Net
                                            loss per share
| | - | --------------------------------------------------------------



The Company calculates net loss per share in
accordance with ASC 260, Earnings per Share. Basic income per share is computed by dividing the net income by the weighted-average
number of common shares outstanding during the period. Diluted income per share is computed similar to basic income per share except
that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential
common stock equivalents had been issued and if the additional common shares were dilutive.



F-15







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



| | ● | Stock
                                            based compensation
| | - | --------------------------------------------------------------------



Pursuant to ASU 2018-07, the Company follows
ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation
expense for all share-based payment awards (employee or non-employee), are measured at grant-date fair value of the equity instruments
that an entity is obligated to issue. Restricted stock units are valued using the market price of the Company’s common shares on
the date of grant. The Company uses a Black-Scholes option model to estimate the fair value of employee stock options at the date of
grant. As of December 31, 2022, those shares issued and stock options granted for service compensations were immediately vested, and
therefore these amounts are thus recognized as expense in the operation.



| | ● | Retirement
                                            plan costs
| | - | -----------------------------------------------------------------



Contributions to retirement plans (which are
defined contribution plans) are charged to general and administrative expenses in the accompanying statements of operation as the related
employee service are provided.



| | ● | Related
                                            parties
| | - | -----------------------------------------------------------



The Company follows the ASC 850-10, Related
Party for the identification of related parties and disclosure of related party transactions.



Pursuant to section 850-10-20 the related parties
include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election
of the fair value option under the Fair Value Option Subsection of section 825–10–15, to be accounted for by the equity method
by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under
the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company
may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one
of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly
influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting
parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully
pursuing its own separate interests.



The consolidated financial statements shall include
disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items
in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined
financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved;
b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods
for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions
on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented
and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from
or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.



| | ● | Commitments
                                            and contingencies
| | - | -------------------------------------------------------------------------



The Company follows the ASC 450-20, Commitmentsto report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may
result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses
such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related
to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates
the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or
expected to be sought therein.



F-16







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



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



Loss contingencies considered remote are generally
not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon
information available at this time that these matters will have a material adverse effect on the Company’s financial position,
results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s
business, financial position, and results of operations or cash flows.



| | ● | Fair
                                            value of financial instruments
| | - | -------------------------------------------------------------------------------



The Company follows ASC 825-10-50-10 (“ASC
825”) for disclosures about fair value of its financial instruments and has adopted ASC 820-10-35- to measure the fair value of
its financial instruments. ASC 825 establishes a framework for measuring fair value in generally accepted accounting principles (GAAP),
and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related
disclosures, ASC 825 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value
into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical
assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by ASC 825
are described below:



|Level 1 | Quoted
    market prices available in active markets for identical assets or liabilities as of the reporting date.                                                 
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                    
|Level 2 | Pricing
    inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the
    reporting date.
|        |                                                                                                                                                                    
|Level 3 | Pricing
    inputs that are generally observable inputs and not corroborated by market data.                                                                       



Financial assets are considered Level 3 when
their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant
model assumption or input is unobservable.



The fair value hierarchy gives the highest priority
to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If
the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is
based on the lowest level input that is significant to the fair value measurement of the instrument.



The carrying amounts of the Company’s financial
assets and liabilities, such as cash and cash equivalents, loan and fee receivable, prepayments and other receivables, amounts due from
related parties, accrued liabilities and other payables, loans payable, amounts due to related parties approximate their fair values
because of the short maturity of these instruments.



F-17







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



| | ● | Recent
                                            accounting pronouncements
| | - | ----------------------------------------------------------------------------



From time to time, new accounting pronouncements
are issued by the Financial Accounting Standard Board (“FASB”) or other standard setting bodies and adopted by the Company
as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that
are not yet effective will not have a material impact on its financial position or results of operations upon adoption.



Recently adopted accounting
pronouncements



On
October 28, 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2021-08,Accounting
for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU 2021-08 amends Accounting
Standards Codification 805 (“ASC 805”) to require acquiring entities to apply Topic 606 - Revenue from Contracts with
Customers to recognize and measure contract assets and contract liabilities in a business combination. The Company early adopted the
standard on January 1, 2022. The adoption of the standard did not have a material impact on the Company’s consolidated financial
statements.



On
March 31, 2022, the Securities and Exchange Commission (the “SEC”) issued Staff Accounting Bulletin No. 121 (“SAB 121”).
SAB 121 sets out interpretive guidance from the staff of the SEC regarding the accounting for obligations to safeguard crypto assets that
an entity holds for its customers. Safeguarding is defined as taking actions to secure customer crypto assets and the associated cryptographic
key information and protecting them from loss, theft, or other misuse. The guidance requires an entity to recognize a liability for the
obligation to safeguard the users’ assets, and recognize an associated asset for the crypto assets safeguarded. Both the liability
and asset should be measured initially and subsequently at the fair value of the crypto assets being safeguarded. The guidance also requires
additional disclosures related to the nature and amount of crypto assets that the entity is responsible for holding for its customers,
with separate disclosure for each significant crypto asset, and the vulnerabilities the entity has due to any concentration in such activities.
The adoption of the standard did not have a material impact on the Company’s consolidated financial statements.



Accounting pronouncements
pending adoption



On
June 30, 2022, FASB issued Accounting Standards Update No. 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual
Sale Restrictions (“ASU 2022-03”). ASU 2022-03 clarifies that a contractual sale restriction prohibiting the sale
of an equity security is a characteristic of the reporting entity holding the equity security and is not included in the equity security’s
unit of account. The standard requires specific disclosures related to equity securities that are subject to contractual sale restrictions,
including (1) the fair value of such equity securities reflected in the balance sheet, (2) the nature and remaining duration of the corresponding
restrictions, and (3) any circumstances that could cause a lapse in the restrictions. The new standard is effective for the Company for
its fiscal year beginning January 1, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting the
standard on the Company’s consolidated financial statements.



The Company has reviewed all recently issued,
but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to
cause a material impact on its financial condition or the results of its operations.



NOTE 3 - GOING CONCERN UNCERTAINTIES



The accompanying consolidated financial statements
have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business.



The Company reported the continuous loss of $104,126,076 for the year
ended December 31, 2022 and had an accumulated deficit of $130,555,579 at December 31, 2022. In addition, with respect to the ongoing
and evolving coronavirus (COVID-19) outbreak, which was designated as a pandemic by the World Health Organization on March 11, 2021, the
outbreak has caused substantial disruption in international economies and global trades and if repercussions of the outbreak are prolonged,
could have a significant adverse impact on the Company’s business.



The continuation of the Company as a going concern
in the next twelve months is dependent upon the continued financial support from its stockholders. Management believes the Company is
currently pursuing additional financing for its operations. However, there is no assurance that the Company will be successful in securing
sufficient funds to sustain the operations.



These and other factors raise substantial doubt
about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments
to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company
not being able to continue as a going concern.



F-18







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



The recent outbreak of COVID-19, which has been
declared by the World Health Organization to be a pandemic, has spread across the globe and is impacting worldwide economic activity.
The COVID-19 pandemic has significantly impacted health and economic conditions throughout the Asian region. National, regional and local
governments took a variety of actions to contain the spread of COVID-19, including office and store closures, quarantining suspected
COVID-19 patients, and capacity limitations. These developments have significantly impacted the results of operations, financial condition
and cash flows of the Company included in this reporting. The impact included the difficulties of working remotely from home including
slow Internet connection, the inability of our accounting and financial officers to collaborate as effectively as they would otherwise
have in an office environment and issues arising from mandatory state quarantines.



While it is not possible at this time to estimate
with sufficient certainty the impact that COVID-19 could have on the Company’s business, the continued spread of COVID-19 and the
measures taken by federal, state, local and foreign governments could disrupt the operation of the Company’s business. The COVID-19
outbreak and mitigation measures have also had and may continue to have an adverse impact on global and domestic economic conditions,
which could have an adverse effect on the Company’s business and financial condition, including on its potential to conduct financings
on terms acceptable to the Company, if at all, and the increase of non-performing loans. In addition, the Company has taken temporary
precautionary measures intended to help minimize the risk of the virus to its employees, including temporarily requiring employees to
work remotely, and discouraging employee attendance at in-person work-related meetings, which could negatively affect the Company’s
business. These measures are continuing. The extent to which the COVID-19 outbreak impacts the Company’s results will depend on
future developments that are highly uncertain and unpredicted, including new changes and variants that may emerge concerning
the severity of the virus and the actions to contain its impact.



NOTE 4 - DISAGGREGATION OF REVENUE



The following is a disaggregation of the Company’s
operating revenue by major source for the respective years:-



|                                         |  | Years ended December 31, |           
|---------------------------------------- |  | ------------------------ | ----------
|                                         |  | 2022                     |           
|                                         |  |                          |           
|Interest income                          |  | $                        | 6,550,670 
|ACT income:                              |  |                          |           
|- Sale of arts and collectibles products |  |                          | 5,508,675 
|- Transaction fee income and others      |  |                          | 8,550,375 
|                                         |  |                          | 14,059,050
|                                         |  |                          |           
|                                         |  | $                        | 20,609,720



NOTE 5 - BUSINESS SEGMENT INFORMATION



Currently, the Company has two reportable business
segments:



|(i)  | Lending Segment,
    mainly provides financing and lending services; and                                                                                                                                               
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                        
|(ii) | Arts and Collectibles Technology
    (“ACT”) Segment, mainly operates an online platform to sell and distribute the arts and collectibles to end-users, with
    the use of blockchain technologies and minting tokens.



F-19







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



The table also includes a reconciliation of the disaggregated revenue with the reportable
segments.



|                                         |  | Year Ended December 31, 2022 |           
|---------------------------------------- |  | ---------------------------- | ----------
|                                         |  | Lending
 Segment             |           
|Revenue from external customers:         |  |                              |           
|Interest income                          |  | $                            | 6,550,670 
|Arts and collectibles technology income  |  |                              | -         
|Total revenue, net                       |  |                              | 6,550,670 
|                                         |  |                              |           
|Cost of revenue:                         |  |                              |           
|Interest expense                         |  |                              | (405,972  
|Arts and collectibles technology expense |  |                              | -         
|Total cost of revenue                    |  |                              | (405,972  
|                                         |  |                              |           
|Gross profit                             |  |                              | 6,144,698 
|                                         |  |                              |           
|Operating Expenses                       |  |                              |           
|Sales and marketing                      |  |                              | (273,934  
|Corporate development                    |  |                              | -         
|Technology and development               |  |                              | -         
|General and administrative               |  |                              | (6,740,650
|Total operating expenses                 |  |                              | (7,014,584
|                                         |  |                              |           
|Segment loss                             |  |                              | (869,887  



|                                         |  | Year Ended December 31, 2021 |           
|---------------------------------------- |  | ---------------------------- | ----------
|                                         |  | Lending Segment              |           
|Revenue from external customers:         |  |                              |           
|Interest income                          |  | $                            | 6,413,284 
|Arts and collectibles technology income  |  |                              | -         
|Total revenue, net                       |  |                              | 6,413,284 
|                                         |  |                              |           
|Cost of revenue:                         |  |                              |           
|Interest expense                         |  |                              | (733,937  
|Arts and collectibles technology expense |  |                              | -         
|Total cost of revenue                    |  |                              | (733,937  
|                                         |  |                              |           
|Gross profit                             |  |                              | 5,679,347 
|                                         |  |                              |           
|Operating Expenses                       |  |                              |           
|Sales and marketing                      |  |                              | (49,480   
|Corporate development                    |  |                              | -         
|Technology and development               |  |                              | -         
|General and administrative               |  |                              | (9,205,084
|Total operating expenses                 |  |                              | (9,254,564
|                                         |  |                              |           
|Segment loss                             |  |                              | (3,575,217



F-20







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



|                              |  | As of December 31, 2022 |           
|----------------------------- |  | ----------------------- | ----------
|                              |  | Lending
 Segment        |           
|                              |  |                         |           
|Addition in intangible assets |  | $                       | 47,673    
|Segment assets                |  | $                       | 21,893,962



|                              |  | As of December 31, 2021 |           
|----------------------------- |  | ----------------------- | ----------
|                              |  | Lending Segment         |           
|                              |  |                         |           
|Addition in intangible assets |  | $                       | 39,270    
|Segment assets                |  | $                       | 21,686,197



The below revenues are based on the countries
in which the customer is located. Summarized financial information concerning the geographic segments is shown in the following tables:



|                       |  | Years ended December 31, |           
|---------------------- |  | ------------------------ | ----------
|                       |  | 2022                     |           
|                       |  |                          |           
|Hong Kong              |  | $                        | 6,550,670 
|Around
    the world # |  |                          | 14,059,050
|                       |  |                          |           
|                       |  | $                        | 20,609,720



# the customers in ACT segment are located in
various countries around the world, in which the location of individual customer is not identifiable in the use of blockchain technology.



F-21







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



NOTE 6 - BUSINESS COMBINATION



On February 10, 2022, the Company issued 153,060
shares of its common stock, at a price of $4.00 per share at its current market price, in exchange for 80% of equity interest of Grand
Gallery Limited, a Hong Kong limited liability company. The Company accounted for the transaction as an acquisition of a business pursuant
to ASC 805, “Business Combinations” (“ASC 805”).



The transaction was accounted for using the acquisition
method. Accordingly, goodwill has been measured as the excess of the total consideration over the amounts assigned to the identifiable
assets acquired and liabilities assumed based on their preliminary estimated fair values.



The purchase price allocation resulted in $552,729
of goodwill, as below:



|Acquired assets:                                               |  |   |        
|-------------------------------------------------------------- |  | - | -------
|Property and equipment                                         |  | $ | 2,593  
|Cash and cash equivalents                                      |  |   | 33,322 
|Deposit, prepayment and other receivables                      |  |   | 11,218 
|Amounts due from related parties                               |  |   | 21,778 
|                                                               |  |   | 68,911 
|Less: Assumed liabilities                                      |  |   |        
|Accrued liabilities and other payables                         |  |   | (4,242 
|                                                               |  |   | (4,242 
|Fair value of net assets acquired                              |  |   | 64,669 
|Noncontrolling interest                                        |  |   | (12,966
|Foreign translation adjustment                                 |  |   | 7,808  
|Goodwill recorded                                              |  |   | 552,729
|Consideration allocated, payable by the Company’s common stock |  | $ | 612,240



On August 18, 2022, the Company issued 164,516
shares of its common stock, at a price of $1.50 per share at its current market price, in exchange for 51% of equity interest of Phoenix
Waters Productions (HK) Limited, a Hong Kong limited liability company. The acquisition was completed on August 31, 2022. The Company
accounted for the transaction as an acquisition of a business pursuant to ASC 805.



The transaction was accounted for using the acquisition
method. Accordingly, goodwill has been measured as the excess of the total consideration over the amounts assigned to the identifiable
assets acquired and liabilities assumed based on their preliminary estimated fair values.





F-22







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



The purchase price allocation resulted in $263,548
of goodwill, as below:



|Acquired assets:                                               |  |   |         
|-------------------------------------------------------------- |  | - | --------
|Produced content cost                                          |  | $ | 540,985 
|Amount due from a director                                     |  |   | 69,270  
|                                                               |  |   | 610,255 
|Less: Assumed liabilities                                      |  |   |         
|Accrued liabilities and other payables                         |  |   | (507,472
|Loan from related party                                        |  |   | (135,674
|                                                               |  |   | (643,146
|Fair value of net assets acquired                              |  |   | (32,891 
|Noncontrolling interest                                        |  |   | 16,117  
|Goodwill recorded                                              |  |   | 263,548 
|Consideration allocated, payable by the Company’s common stock |  | $ | 246,774 



Under the acquisition method of accounting, the
total acquisition consideration price was allocated to the assets acquired and liabilities assumed based on their preliminary estimated
fair values. The fair value measurements utilize estimates based on key assumptions of the Acquisition, and historical and current market
data. The preliminary allocation of the purchase price is based on the best information available and is pending, amongst other things:
(i) the finalization of the valuation of the fair values and useful lives of tangible assets acquired; (ii) finalization of the valuation
of accrued expenses; and (iii) finalization of the fair value of non-cash consideration.



The Acquisition was accounted for as a business
combination in accordance with ASC 805. The Company has allocated the purchase price consideration based upon the fair value of the identifiable
assets acquired and liabilities assumed on the acquisition date. The Company is responsible for determining the fair value of assets acquired,
liabilities assumed and intangible assets identified as of the acquisition date and considered a number of factors including valuations
from management estimation. Acquisition-related costs incurred for the acquisitions are not material and have been expensed as incurred
in general and administrative expense.



At December 31, 2022, the Company made a full impairment to the goodwill
of $816,263.



NOTE 7 - LOAN RECEIVABLES



The Company’s loan portfolio was as follows:-



|                                |  | As of December 31, |           
|------------------------------- |  | ------------------ | ----------
|                                |  | 2022               |           
|                                |  |                    |           
|Personal loans                  |  | $                  | 18,023,374
|Commercial loans                |  |                    | 2,651,781 
|Mortgage loans                  |  |                    | 1,095,772 
|Total loans                     |  |                    | 21,770,927
|Less: Allowance for loan losses |  |                    | (3,360,931
|Loans receivables, net          |  | $                  | 18,409,996
|                                |  |                    |           
|Reclassifying as:               |  |                    |           
|Current portion                 |  | $                  | 15,309,939
|Non-current portion             |  |                    | 3,100,057 
|                                |  |                    |           
|Total loans receivables         |  | $                  | 18,409,996



F-23







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



The interest rates on loans issued were ranged from 13% to 59% (2021:
from 13% to 59%) per annum for the year ended December 31, 2022.



All loans are made to either business or individual
customers in Hong Kong for a period of 1 week to 120 months.



Allowance for loan losses is estimated on an
annual basis based on an assessment of specific evidence indicating doubtful collection, historical experience, loan balance aging and
prevailing economic conditions.



Interest on loan receivable is accrued and credited
to income as earned. The Company determines a loan’s past due status by the number of days that have elapsed since a borrower has
failed to make a contractual loan payment. Accrual of interest is generally discontinued when either (i) reasonable doubt exists as to
the full, timely collection of interest or principal or (ii) when a loan becomes past due by more than 180 days (The further extension
of loan past due status is subject to management final approval and on case-by-case basis).



The following table presents the activity in
the allowance for loan losses as of and for the years ended December 31, 2022 and 2021:



|                               |  | December 31,
    2022 |           |   | December 31,
     2021 |  
|------------------------------ |  | --------------------- | --------- | - | ---------------------- | -
|                               |  |                       |           |   |                        |  
|Balance at Beginning of Year   |  | $                     | 781,202   |   |                        | $
|Provisions                     |  |                       | 2,580,790 |   |                        |  
|Foreign translation adjustment |  |                       | (1,061    | ) |                        |  
|                               |  |                       |           |   |                        |  
|Balance at End of Year         |  | $                     | 3,360,931 |   |                        | $



For the years ended December 31, 2022 and 2021,
the Company had $2,580,790 and $783,694 provision for the allowance of loan losses.



Allowance for loan losses is estimated and evaluated quarterly, based
on an assessment of specific evidence indicating doubtful collection, historical experience, loan balance aging and prevailing economic
conditions.



AGE ANALYSIS LOANS BY CLASS



All classes of loans are considered past due
if the required principal and interest payments have not been received as of the date such payments were due. Interest and fees continue
to accrue on past due loans until the date the loan is placed in nonaccrual status, if applicable. The following table includes an aging
analysis of loans as of the dates indicated. Also included in the table below are loans that are 90 days or more past due as to interest
and principal and still accruing interest, because they are well-secured and in the process of collection.



|Age Analysis of Loans by Class        
|--------------------------------------
|Maturities                            
|                                      
|Within credit term                    
|Past due:                             
|30-59 days                            
|60-89 days                            
|90 or more days due and still accruing
|Nonaccrual                            
|                                      
|Total loans                           





F-24







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



LOAN MATURITY BY CLASS



The following table presents the maturities of
loan balances for the years presented:



|Maturities         |  | Mortgage |           |  | Commercial loan |  |           | Personal loan |  |  | December 31,
 2022 |  |  | Mortgage |            |  | Commercial loan |  |           | Personal loan |  |  | December 31,
 2021 | 
|------------------ |  | -------- | --------- |  | --------------- |  | --------- | ------------- |  |  | ------------------ |  |  | -------- | ---------- |  | --------------- |  | --------- | ------------- |  |  | ------------------ | 
|                   |  | $        |           |  | $               |  |           | $             |  |  | $                  |  |  | $        |            |  | $               |  |           | $             |  |  | $                  | 
|Within 1 year      |  |          | 1,955,132 |  |                 |  | 839,603   |               |  |  | 15,982,210         |  |  |          | 18,776,945 |  |                 |  | 1,019,780 |               |  |  | 673,327            | 
|1-5 years          |  |          | 165,119   |  |                 |  | 256,154   |               |  |  | 2,102,051          |  |  |          | 2,523,324  |  |                 |  | 121,281   |               |  |  | -                  | 
|5-10 years         |  |          | 460,379   |  |                 |  | -         |               |  |  | -                  |  |  |          | 470,379    |  |                 |  | -         |               |  |  | -                  | 
|More than 10 years |  |          | -         |  |                 |  | -         |               |  |  | -                  |  |  |          | -          |  |                 |  | -         |               |  |  | -                  | 
|                   |  |          |           |  |                 |  |           |               |  |  |                    |  |  |          |            |  |                 |  |           |               |  |  |                    | 
|Total loans        |  |          | 2,590,630 |  |                 |  | 1,095,757 |               |  |  | 18,084,261         |  |  |          | 21,770,648 |  |                 |  | 1,141,061 |               |  |  | 673,327            | 



Interest on loans receivable is accrued and credited
to income as earned. The Company determines a loan’s past due status by the number of days that have elapsed since a borrower has
failed to make a contractual loan payment. Accrual of interest is generally discontinued when either (i) reasonable doubt exists as to
the full, timely collection of interest or principal or (ii) when a loan becomes past due by more than 180 days (The further extension
of loan past due status is subject to management final approval and on case-by-case basis).



CREDIT QUALITY INFORMATION



The Company uses internally-assigned risk grades
to estimate the capability of borrowers to repay the contractual obligations of their loan agreements as scheduled or at all. The Company’s
internal risk grade system is based on experiences with similarly graded loans and the assessment of borrower credit quality, such as,
credit risk scores, collateral and collection history. Individual credit scores are assessed by credit bureau, such as TransUnion. Internal
risk grade ratings reflect the credit quality of the borrower, as well as the value of collateral held as security. The Company requires
collateral arrangements to all mortgage loans and has policies and procedures for validating the reasonableness of the collateral valuations
on a regular basis. Management believes that these policies effectively manage the credit risk from advances.



The Company’s
internally assigned risk grades are as follows:



Pass: Loans are
of acceptable risk.



Other Assets Especially
Mentioned (OAEM): Loans have potential weaknesses that deserve management’s close attention.



Substandard:
Loans reflect significant deficiencies due to several adverse trends of a financial, economic or managerial nature.



Doubtful: Loans
have all the weaknesses inherent in a substandard loan with added characteristics that make collection or liquidation in full based on
currently existing facts, conditions and values highly questionable or improbable.



Loss: Loans have
been identified for charge-off because they are considered uncollectible and of such little value that their continuance as bankable
assets is not warranted.







F-25







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



The following table presents credit quality
exposures by internally assigned risk ratings as of the dates indicated:



|Credit grades                     |  | Mortgage |           |  | Commercial loan |  |           | Personal loan |  |  | December 31,  2022 |  |  | Mortgage |            |  | Commercial loan |  |           | Personal loan |  |  | December 31,  2021 | 
|--------------------------------- |  | -------- | --------- |  | --------------- |  | --------- | ------------- |  |  | ------------------ |  |  | -------- | ---------- |  | --------------- |  | --------- | ------------- |  |  | ------------------ | 
|                                  |  | $        |           |  | $               |  |           | $             |  |  | $                  |  |  | $        |            |  | $               |  |           | $             |  |  | $                  | 
|                                  |  |          |           |  |                 |  |           |               |  |  |                    |  |  |          |            |  |                 |  |           |               |  |  |                    | 
|Other assets especially mentioned |  |          | 2,054,970 |  |                 |  | 588,006   |               |  |  | 11,881,088         |  |  |          | 14,524,064 |  |                 |  | 1,427,646 |               |  |  | 1,186,338          | 
|Substandard                       |  |          | 58,245    |  |                 |  | -         |               |  |  | 595,297            |  |  |          | 653,542    |  |                 |  | -         |               |  |  | -                  | 
|Doubtful                          |  |          | 538,567   |  |                 |  | 506,866   |               |  |  | 5,546,989          |  |  |          | 6,592,422  |  |                 |  | 89,859    |               |  |  | -                  | 
|Loss                              |  |          | -         |  |                 |  | -         |               |  |  | -                  |  |  |          | -          |  |                 |  | -         |               |  |  | -                  | 
|                                  |  |          |           |  |                 |  |           |               |  |  |                    |  |  |          |            |  |                 |  |           |               |  |  |                    | 
|Total loans                       |  |          | 2,651,782 |  |                 |  | 1,094,872 |               |  |  | 18,023,374         |  |  |          | 21,770,028 |  |                 |  | 1,517,505 |               |  |  | 1,186,338          | 



NOTE 8 - DIGITAL ASSETS



The following table presents changes in carrying
value of digital assets as of and for the years ended December 31, 2022 and 2021:



|                                   |  | USDT |            |   | OKT |   |     | ETH |  |   | BNB     |   |  | BUSD |        |   | COTK |   |             | MATIC |  |   | Total  |  
|---------------------------------- |  | ---- | ---------- | - | --- | - | --- | --- |  | - | ------- | - |  | ---- | ------ | - | ---- | - | ----------- | ----- |  | - | ------ | -
|Balance at January 1, 2022         |  | $    | 25,576     |   |     | $ | 34  |     |  | $ | 5,658   |   |  | $    | 1,612  |   |      |   | -           |       |  | $ | 2,571  |  
|                                   |  |      |            |   |     |   |     |     |  |   |         |   |  |      |        |   |      |   |             |       |  |   |        |  
|Revenue received by digital assets |  |      | 3,867,232  |   |     |   | -   |     |  |   | 44,408  |   |  |      | 958    |   |      |   | 10,060,274  |       |  |   | -      |  
|Expense paid by digital assets     |  |      | (3,897,501 | ) |     |   | (3  | )   |  |   | (25,643 | ) |  |      | (630   | ) |      |   | (10,060,200 | )     |  |   | -      |  
|Disposal                           |  |      | 4,693      |   |     |   | (8  | )   |  |   | (15,003 | ) |  |      | (1,297 | ) |      |   | 22,525      |       |  |   | -      |  
|Impairment loss                    |  |      | -          |   |     |   | (23 | )   |  |   | (9,420  | ) |  |      | (643   | ) |      |   | (22,599     | )     |  |   | (2,571 | )
|Balance at December 31, 2022       |  | $    | -          |   |     | $ | -   |     |  | $ | -       |   |  | $    | -      |   |      | $ | -           |       |  | $ | -      |  



|                                   |  | USDT |            |   | OKT |   |     | ETH |  |   | BNB      |   |  | COTK |        |   | Total |  
|---------------------------------- |  | ---- | ---------- | - | --- | - | --- | --- |  | - | -------- | - |  | ---- | ------ | - | ----- | -
|Balance at January 1, 2021         |  | $    | -          |   |     | $ | -   |     |  | $ | -        |   |  | $    | -      |   |       | $
|                                   |  |      |            |   |     |   |     |     |  |   |          |   |  |      |        |   |       |  
|Revenue received by digital assets |  |      | 3,008,129  |   |     |   | -   |     |  |   | 257,956  |   |  |      | -      |   |       |  
|Expense paid by digital assets     |  |      | (2,982,553 | ) |     |   | (22 | )   |  |   | (214,677 | ) |  |      | (6,050 | ) |       |  
|Purchase                           |  |      | -          |   |     |   | 57  |     |  |   | 269      |   |  |      | 7,766  |   |       |  
|Impairment loss                    |  |      | -          |   |     |   | (1  | )   |  |   | (37,890  | ) |  |      | (104   | ) |       |  
|Balance at December 31, 2021       |  | $    | 25,576     |   |     | $ | 34  |     |  | $ | 5,658    |   |  | $    | 1,612  |   |       | $



The following is the breakdown of cyptocurrencies
held as digital assets:-



|     |  | As of December 31, |  
|---- |  | ------------------ | -
|     |  | 2022               |  
|     |  |                    |  
|USDT |  | $                  | -
|OKT  |  |                    | -
|ETH  |  |                    | -
|BNB  |  |                    | -
|COTK |  |                    | -
|     |  | $                  | -



As of December 31, 2022 and 2021, the fair value
of the digital assets held by the Company was $0 and $35,451, respectively.





F-26







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



NOTE 9 - INVENTORIES



A summary of inventories as of December 31, 2022
and 2021 is as follows:



|                             |  | As of December 31, 2022 |    
|---------------------------- |  | ----------------------- | ---
|                             |  | No. of token            |    
|                             |  |                         |    
|Balance at January 1, 2022   |  |                         | 7  
|Purchased                    |  |                         | -  
|Token minted                 |  |                         | 41 
|Sold                         |  |                         | (40
|Balance at December 31, 2022 |  |                         | 8  



|                             |  | As of December 31, 2021 |    
|---------------------------- |  | ----------------------- | ---
|                             |  | No. of token            |    
|                             |  |                         |    
|Balance at January 1, 2021   |  |                         | -  
|Purchased                    |  |                         | -  
|Token minted                 |  |                         | 20 
|Sold                         |  |                         | (12
|Marketing expense            |  |                         | (1 
|Balance at December 31, 2021 |  |                         | 7  



NOTE 10 – PRODUCED CONTENT COST



Total capitalized produced content by predominant
monetization strategy as of December 31, 2022 and 2021 is as follows:



|                              |  | December 31, 2022 |          |   | December 31, 2021 |  
|----------------------------- |  | ----------------- | -------- | - | ----------------- | -
|Produced content:             |  |                   |          |   |                   |  
|Released, net of amortization |  | $                 | -        |   |                   | $
|Completed, not released       |  |                   | -        |   |                   |  
|In-process                    |  |                   | 611,529  |   |                   |  
|Less: impairment loss         |  |                   | (611,529 | ) |                   |  
|                              |  | $                 | -        |   |                   | $



The produced content cost is not amortized as
of December 31, 2022 as the production of the film is still in process.



At December 31, 2022, the Company made a full impairment to the capitalized
produced content cost.





F-27







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)





NOTE 11 - PROPERTY AND EQUIPMENT



A summary of property and equipment at December
31, 2022 and 2021 is as follows:



|                               |  | As of December 31, |        
|------------------------------ |  | ------------------ | -------
|                               |  | 2022               |        
|                               |  |                    |        
|Computer equipment             |  | $                  | 109,727
|Less: accumulated depreciation |  |                    | (52,640
|                               |  | $                  | 57,087 



Depreciation expense for the years ended December
31, 2022 and 2021 totalled $7,540 and $29,401, respectively.



NOTE 12 - INTANGIBLE ASSETS



A summary of intangible assets at December 31,
2022 and 2021 is as follows:



|                               |  |                                                                   |  | As of December 31, |           
|------------------------------ |  | ----------------------------------------------------------------- |  | ------------------ | ----------
|                               |  | Estimated
                                            useful life |  | 2022               |           
|                               |  |                                                                   |  |                    |           
|At cost:                       |  |                                                                   |  |                    |           
|Acquired technology software   |  | 5 years                                                           |  | $                  | 17,344,690
|Licensed technology knowhow    |  | 4 years                                                           |  |                    | -         
|Trademarks and trade name      |  | 10 years                                                          |  |                    | 39,270    
|Less: accumulated amortization |  |                                                                   |  |                    | (4,052,889
|Foreign translation adjustment |  |                                                                   |  |                    | 8,356     
|                               |  |                                                                   |  | $                  | 13,339,427



On July 1, 2022, the Company entered into Technical
Knowhow License and Servicing Agreement (the “Agreement”) with Marvel Digital Group Limited, a related company which is controlled
by a Company’s director, at the consideration of $2 million, payable by digital assets at the equivalent value. Under the Agreement,
the Company is licensed to use the technology know-how of auto texture model scanning system, auto laser 3D model scanning system, Zbrush
Plugin and Scan3Dmotion Software for a term of 4 years.



On October 15, 2022, the Company’s subsidiary,
Massive Treasure Limited (“MTL”) entered into a Share Exchange Agreement (the “Agreement”) with NFT Limited (“NFTL”),
to acquire 51% of NFTL in exchange for 2,350,229 shares of the Company’s common stock. NFTL substantially owned the intangible
assets of an internally developed messaging and cryptocurrency-based mobile application that carried the “Talk+” brand name
and included Talk+ e-commerce website, iOS and Android Apps, and backend end infrastructure, as well as 2-years’ software operating
and maintenance service. Under the Agreement, the Company is allowed to the use of “Talk+” application software to enhance
its operation in ACT business.



The Company accounted for this acquisition as
an asset acquisition under ASC 805 and that the Company has early adopted the amendments of Regulation S-X dated May 21, 2021 and has
concluded that this acquisition was not significant. Accordingly, the presentation of the assets acquired, historical financial statements
under Rule 3-05 and related pro forma information under Article 11 of Regulation S-X, respectively, are not required to be presented.



As of December 31, 2022, the estimated amortization
expense for intangible assets for each of the succeeding five years and thereafter is as follows:



|Year ending December 31: |  | Amount |           
|------------------------ |  | ------ | ----------
|2023                     |  | $      | 3,330,150 
|2024                     |  |        | 3,330,150 
|2025                     |  |        | 3,330,150 
|2026                     |  |        | 3,330,150 
|2027                     |  |        | 3,766     
|Thereafter               |  |        | 15,061    
|                         |  | $      | 13,339,427



Amortization of intangible assets for the years
ended December 31, 2022 and 2021 totaled $3,811,701 and $829,575, respectively.



F-28







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)





NOTE 13 - LOAN PAYABLES



The amounts represented temporary advances received
from the third parties for the lending business, which carried annual interest at the rate of 18% to 21%. These amounts were unsecured
and will become repayable within one year. The loan payable balance was $1,823,536 and $489,836 as of December 31, 2022 and December
31, 2021, respectively.



Interest related to the loan payables was $405,972
and $733,937 for the years ended December 31, 2022 and 2021, respectively.



NOTE 14 - AMOUNTS DUE TO RELATED PARTIES



The amounts represented temporary advances to
the Company for the lending business, which were unsecured, interest-free and had no fixed terms of repayments. The related party balances
were $23,931,078 and $20,954,836 as of December 31, 2022 and December 31, 2021, respectively.



During the year ended December 31, 2022, the
Company recorded and imputed additional non-cash interest of $949,790 at the market rate of 5% per annum on these interest-free related
party loans, under ASC 835-30 “Imputation of Interest”.



NOTE 15 - LEASES



The Company entered into operating leases primarily
for office premises with lease terms generally 2 years. The Company adopted Topic 842, using the modified-retrospective approach as discussed
in Note 2, and as a result, recognized a right-of-use asset and a lease liability. The Company uses a 5% rate to determine the present
value of the lease payments. The remaining life of the lease was one year.



The Company excludes short-term leases (those
with lease terms of less than one year at inception) from the measurement of lease liabilities or right-of-use assets.



As of December 31, 2022, right-of-use assets
were $160,945 and lease liabilities were $166,525.



As of December 31, 2021, right-of-use assets
were $298,317 and lease liabilities were $310,032.



For the years ended December 31, 2022 and 2021,
the Company charged to operating lease as expenses of $43,438 and $121,215, respectively.



The maturity of the Company’s lease obligations
is presented below:



|Year ending December 31,                                     |  | Future lease payments |        
|------------------------------------------------------------ |  | --------------------- | -------
|2023                                                         |  |                       | 141,428
|2024                                                         |  |                       | 30,019 
|Total                                                        |  |                       | 171,447
|Less: interest                                               |  |                       | (4,922 
|                                                             |  | $                     | 166,525
|                                                             |  |                       |        
|Present value of lease liabilities – current liabilities     |  | $                     | 130,800
|Present value of lease liabilities – non-current liabilities |  | $                     | 29,725 



F-29







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)





NOTE 16 - CONVERTIBLES NOTE PAYABLES



Securities purchase agreement and related
convertible note



Chan Hin Yip Note



On August 2, 2022, the Company entered into a
Sale and Purchase Agreement (“SPA”) with CHAN Hin Yip, pursuant to which the Company agreed to purchase approximately 58
collectible items from Mr. Chan for a purchase price of HKD1,305,000 (approximately USD $167,308) (the “Purchase Price”),
through its subsidiaries holds approximately 80% of the issued and outstanding securities of Grand Gallery Limited (“GGL”),
and Mr. Chan is a director and 5% equity owner of GGL.



On August 2, 2022, the Company and Mr. Chan entered
into a Note Purchase Agreement (“Chan Hin Yip Note”) pursuant to which the Company agreed to pay the Purchase Price via a
promissory note that will be converted into shares of the Company’s common stock at a conversion price equal to 90% of the volume
weighted average closing price of the Company’s common stock for the ten days immediately prior to February 2, 2023. The Chan Hin
Yip Note bears interest at 1% per annum and is due on February 2, 2023.



1800 Diagonal Note



On August 26, 2022, the Company and 1800 Diagonal
Lending LLC (“1800 Diagonal”) entered into a Securities Purchase Agreement, whereby the Company issued a promissory note
to 1800 Diagonal (“1800 Diagonal Note”) in the original principal amount of $89,250. The 1800 Diagonal Note is convertible
into shares of the common stock of the Company one hundred eighty (180) days following the date of funding at a price equal to 65% of
the average of two (2) lowest trading price of the Company’s common stock for the twenty (20) trading days prior to conversion.
The Company has the option to prepay the 1800 Diagonal Note by paying an amount equal to the then outstanding amount multiplied by premium
percentage during the first one hundred eighty (180) days. The 1800 Diagonal Note bears interest at 8% per annum and is due on August
26, 2023.



As of December 31, 2022, the Company did not
prepay any of the convertible note payables and accrued convertible notes interest expense of $979.



NOTE 17 - STOCK-BASED COMPENSATION



On May 19, 2022, the Company filed a Registration
Statement on Form S-8 and issued the shares pursuant to awards granted to the eligible persons under the Coinllectibles Inc. 2022 Stock
Incentive Plan.



As of December 31, 2022, 73,694,483 shares of
the Company’s common stock were issued to consultants who have provided services to the Company.



The following table presents the stock-based
compensation expenses for shares granted consultants during the years ended December 31, 2022 and 2021:



|                                    |  | Years ended  December 31, |           
|----------------------------------- |  | ------------------------- | ----------
|                                    |  | 2022                      |           
|                                    |  |                           |           
|Corporate development expenses      |  | $                         | 26,177,743
|Technology and development expenses |  |                           | 32,447,000
|Sales and marketing expenses        |  |                           | 26,419,645
|General and administrative expenses |  |                           | 4,201,701 
|                                    |  | $                         | 89,246,089





F-30







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



NOTE 18 - STOCKHOLDERS’ DEFICIT



Authorized stock



The Company’s authorized share is 500,000,000
common shares with a par value of $0.001.



Common stock outstanding



On June 17, 2021, the Company entered into a Share
Exchange Agreement with the shareholders of Massive Treasure Limited (“MTL”). Pursuant to the Share Exchange Agreement, the
Company agreed to issue 1,078,269,470 in exchange for 100% of MTL. MTL is a party to numerous agreements to acquire 12 additional business
entities. As such, the Company further agreed to issue an additional 55,641,014 shares of its common stock to complete the acquisition
of 12 business entities concurrently. This acquisition was consummated on September 17, 2022, MTL became a 100% owned subsidiary of the
Company, with 800,000,000 shares of common stock pending to be issued to Lee Ying Chiu Herbert, the director of the Company. Upon the
closing, the Company issued 22,218,603 shares of its common stock to the shareholders of MTL to complete the acquisition of 12 business
entities.



On July 23, 2021, the Company issued 4,780 shares
of its common stock to compensate to authentication and valuation service to 57 sets of art collectible for a service fee of $19,120,
at the price of $4 per share and $8,558 settled in cash, total service fee amounting to $27,678.



On July 23, 2021, the Company issued 180,855
shares of its common stock to the director, Lee Ying Chiu Herbert for the acquisition of fifty-five (55) sets of art collectibles for
a consideration of $1,334,710, at the price of $4 per share.



On October 15, 2021, the Company’s subsidiary,
MTL entered into a Share Exchange Agreement (the “Agreement”) with NFT Limited (“NFTL”), to acquire 51% of NFTL
in exchange for 2,350,229 shares of its common stock. NFTL substantially owned the intangible assets of an internally developed messaging
and cryptocurrency-based mobile application that carried the “Talk+” brand name and included Talk+ e-commerce platform, iOS
and Android Apps and backend end infrastructure, as well as 2-years’ software operating and maintenance service. Under the Agreement,
the Company is allowed to the use and implementation of “Talk+” application software to enhance its operation in ACT business.



On October 25, 2021, the Company’s subsidiary,
Coinllectibles Private Limited (“Coinllectibles”) and the Company entered into two Sale and Purchase Agreements (the “Agreements”)
with two artists, pursuant to which Coinllectibles agreed to purchase collectible art items for £260,000 and US$100,000, payable
through the issuance of 43,633 and 12,500 Shares respectively, at a per share price of $4.00, and £130,000 and US$50,000 in cash
payable after the respective collectible art item has been sold by Coinllectibles. The consummation of the Agreements occurs upon the
issuance of the Shares to the respective artists on October 29, 2021.



On January 19, 2022, the Company issued 100,000
shares of its common stock as Commitment Shares to Williamsburg Venture Holdings, LLC (the “Investor”), under an Equity Purchase
Agreement dated December 31, 2021 (the “Agreement”), in consideration for the Investor’s execution and delivery of,
and performance under the Agreement.



On February 10, 2022, the Company issued 153,060
shares of its common stock, at a price of $4.00 per share at its current market price, in exchange for 80% of equity interest of Grand
Gallery Limited, a Hong Kong limited liability company, which is engaged in the business of selling traditional art and collectible pieces.
The Company believes that this acquisition will strengthen the DOT business by expanding its access to buyers of arts and collectibles.



On May 19, 2022, the Company issued 26,921,356
shares of its common stock to settle the common stock to be issued and accrued consulting and service fee to consultants who have provided
services to the Company.



On May 24, 2022, the Company issued 64,200 shares
of its common stock, at a price of $4.00 per shares at its current market price, to a consultant who has provided service to the Company
under Rule 144.



On August 18, 2022, the Company issued 164,516
shares of its common stock, at a price of $1.50 per shares at its current market price, in exchange for 51% of equity interest of Phoenix
Waters Productions (HK) Limited, a Hong Kong Limited liability company, which is engaged in filmmaking in Hong Kong. The acquisition
was completed on September 1, 2022.





F-31







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



On September 16, 2022, the Company issued 1,452,785
shares of its common stock, at a price of $0.826 per shares at its current market price, to a consultant who has provided service to
the Company under Rule 144.



On December 21, 2022, the Company issued 45,256,142
shares of its common stock to compensate the consultants who have provided service to the Company under the 2022 Stock Incentive Plan.



As December 31, 2022 and 2021, the Company had
a total of 454,398,143 shares and 358,067,481 shares of its common stock issued and outstanding, respectively.



Common stock to be issued



As of December 31, 2021, the Company had 235,294
shares of common stock to be issued to a director, Mr. Tan, for his service to the Company for the year ended December 31, 2021. The Company
recorded the stock-based compensation expense of $941,176, at the average price of $4.00 per share.



During the year ended December 31, 2022, the
Company engaged with 17 consultants to provide different types of business or professional services, in which 10 consultants rendered
administrative service, 4 consultants rendered corporate development service, 2 consultants rendered sale and marketing service and 1
consultant rendered to IT development service. Pursuant to Consultancy Agreements, the Company agreed to compensate their service and with
issuance of an aggregate of 6,086,062 shares of its common stock to these consultants, after their services are vested. The
Company recorded the stock-based compensation of $24,344,248 as consultancy expense, at the average price of $4.00 per share.



On December 15, 2022, the
Company entered into a Settlement Agreement with Lee Ying Chiu Herbert, the former director and current controlling shareholder (“Dr.
Lee”), both parties agreed to settle the Unissued Securities by issuing 400,000,000 shares of common stock, when these stocks are
legally available to issue.



As of December 31, 2022 and 2021, the Company
had 400,000,000 and 806,321,356 shares of its common stock to be issued.



NOTE 19 - NET LOSS PER SHARE



The following table sets forth the computation
of basic and diluted net loss per share for the respective years:



|                                     |  | Years ended December 31, |             
|------------------------------------ |  | ------------------------ | ------------
|                                     |  | 2022                     |             
|                                     |  |                          |             
|Net loss attributable to the Company |  | $                        | (104,126,076
|                                     |  |                          |             
|Weighted average common shares:      |  |                          |             
|- Basic                              |  |                          | 374,086,727 
|- Diluted                            |  |                          | 374,086,727 
|                                     |  |                          |             
|Net loss per share:                  |  |                          |             
|- Basic                              |  | $                        | (0.27       
|- Diluted                            |  | $                        | (0.27       



| | # | less than $0.01
| | - | ---------------



For the years ended December 31, 2022 and 2021,
diluted weighted-average common shares outstanding is equal to basic weighted-average common shares, due to the Company’s net loss
position. Hence, no common stock equivalents were included in the computation of diluted net loss per share since such inclusion would
have been antidilutive.



F-32







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



NOTE 20 - INCOME TAX



For the years ended December 31, 2022 and 2021,
the local (“United States of America”) and foreign components of loss before income taxes were comprised of the following:



|                               |  | Years ended December 31, |            
|------------------------------ |  | ------------------------ | -----------
|                               |  | 2022                     |            
|                               |  |                          |            
|Tax jurisdiction from:         |  |                          |            
|- Local                        |  | $                        | (490,152   
|- Foreign, including           |  |                          |            
|British Virgin Islands (“BVI”) |  |                          | (5,203,746 
|Singapore                      |  |                          | (90,145,335
|Hong Kong                      |  |                          | (1,234,709 
|                               |  |                          |            
|Loss before income taxes       |  | $                        | (97,073,942



The provision for income taxes consisted of the
following:



|                   |  | Years ended December 31, |        
|------------------ |  | ------------------------ | -------
|                   |  | 2022                     |        
|                   |  |                          |        
|Current tax:       |  | $                        | -      
|- Local            |  |                          | -      
|- Foreign          |  |                          | 299,714
|                   |  |                          |        
|Deferred tax       |  |                          |        
|- Local            |  |                          | -      
|- Foreign          |  |                          | -      
|                   |  |                          |        
|Income tax expense |  | $                        | 299,714



The effective tax rate in the years presented
is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rate. The Company mainly
operates in Singapore and Hong Kong that is subject to taxes in the jurisdictions in which they operate, as follows:



United States of America



COSG is registered in the State of Delaware and
is subject to the tax laws of United States of America. The U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”) was signed
into law. The Tax Reform Act significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate
tax rate from 35% to 21% effective January 1, 2018. The Company’s policy is to recognize accrued interest and penalties related
to unrecognized tax benefits in its income tax provision. The Company has not accrued or paid interest or penalties which were not material
to its results of operations for the periods presented. Deferred tax asset is not provided for as the tax losses may not be able to carry
forward after a change in substantial ownership of the Company.



For the years ended December 31, 2022 and 2021,
there were no operating incomes in US tax regime.



BVI



Under the current BVI law, the Company’s
subsidiaries registered in BVI are not subject to tax on income.



Republic of Singapore



The Company’s subsidiary is registered
in Republic of Singapore and is subject to the Singapore corporate income tax at a standard income tax rate of 17% on the assessable
income arising in Singapore during its tax year.



F-33







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



For the year ended December 31, 2022, the operation
in the Singapore incurred $18,552,215 of cumulative net operating losses which can be carried forward to offset future taxable income.
The net operating loss carryforward has no expiration. The Company has provided for a full valuation allowance against the deferred tax
assets of $15,324,707 on the expected future tax benefits from the net operating loss (“NOL”) carryforward as the management
believes it is more likely than not that these assets will not be realized in the future.



|                                     |  | Years ended December 31, |            
|------------------------------------ |  | ------------------------ | -----------
|                                     |  | 2022                     |            
|                                     |  |                          |            
|Loss before income taxes             |  | $                        | (90,145,335
|Statutory income tax rate            |  |                          | 17         
|Income tax expense at statutory rate |  |                          | (15,324,707
|Net operating loss                   |  |                          | 15,324,707 
|Income tax expense                   |  | $                        | -          



Hong Kong



The Company’s subsidiaries operating in
Hong Kong are subject to the Hong Kong Profits Tax at the two-tiered profits tax rates from 8.25% to 16.5% on the estimated assessable
profits arising in Hong Kong during the current year, after deducting a tax concession for the tax year. The reconciliation of income
tax rate to the effective income tax rate for the years ended December 31, 2022 and 2021 is as follows:



|                                               |  | Years ended December 31, |           
|---------------------------------------------- |  | ------------------------ | ----------
|                                               |  | 2022                     |           
|                                               |  |                          |           
|(Loss) income before income taxes              |  | $                        | (1,234,709
|Statutory income tax rate                      |  |                          | 16.5      
|Income tax (benefit) expense at statutory rate |  |                          | (203,727  
|Tax effect of non-deductible items             |  |                          | 498,132   
|Tax effect of non-taxable items                |  |                          | (7,710    
|Net operating loss                             |  |                          | 13,019    
|Income tax expense                             |  | $                        | 299,714   



The following table sets forth the significant
components of the deferred tax assets of the Company:



|                                      |  | As of December 31, |            
|------------------------------------- |  | ------------------ | -----------
|                                      |  | 2022               |            
|                                      |  |                    |            
|Deferred tax assets:                  |  |                    |            
|Net operating loss carryforward, from |  |                    |            
|US tax regime                         |  | $                  | 102,932    
|Singapore tax regime                  |  |                    | 15,324,707 
|Hong Kong tax regime                  |  |                    | 13,019     
|Less: valuation allowance             |  |                    | (15,440,658
|Deferred tax assets, net              |  | $                  | -          



NOTE 21 - PENSION COSTS



The Company is required to make contribution
to their employees under a government-mandated defined contribution pension scheme for its eligible full-times employees in Hong Kong.
The Company is required to contribute a specified percentage of the participants’ relevant income based on their ages and wages
level. During the years ended December 31, 2022 and 2021, $35,618 and $29,760 contributions were made accordingly.



F-34







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



NOTE 22 - RELATED PARTY TRANSACTIONS



From time to time, the
directors of the Company advanced funds to the Company for working capital purpose. Those advances were unsecured, non-interest bearing
and had no fixed terms of repayment.



During the year ended
December 31, 2022, the Company paid the management service fee of $2,746,911, to a company controlled by its major shareholder and
former director, Dr. Lee.



During the year ended
December 31, 2022, the Company paid the director fee of $90,000 to Mr. Tan, a director of the Company, for his service to the Company’s
subsidiary.



On July 1, 2022,
the Company’s wholly-owned subsidiary entered into a technical knowhow license and servicing agreement (the “Servicing
Agreement”) with Total Chase Limited (“Total Chase”), a company controlled by its major shareholder and former
director, Dr. Lee. Pursuant to which the Company engaged Total Chase to develop the technical knowhow for a term of three-year.
Marvel Digital AI Limited (“MDAI”), the subsidiary of Total Chase, owns several intellectual properties and provides
technical development services to Total Chase. The technical knowhow consists of Visual Intelligence Engine, Speech Recognition
Engine, Text Analytics Engine, Emotion Recognition Engine, Motion Recognition Engine, AI Agent Creation Engine and NFT Generation
and Loading Engine for development of metaverse on Roblox. Under the terms of the Servicing Agreement, the Company is required to
pay to Total Chase an aggregate of $50,000,000 for the development of technical knowhow. The consideration is payable in cash or
cryptocurrencies. All MDAI’s proprietary items remain the sole and exclusive property of MDAI, Total Chase will grant the
Company a perpetual, non-exclusive, paid-up license to use certain MDAI’s proprietary items. The Company reserves the right to
terminate services in whole or in part, upon 7 days written notice to Total Chase. The Company charged all related development costs
to expenses as incurred and recognized as “Metaverse and AI development expenses” of $5,000,000 during the year ended December 31, 2022.



On August 2, 2022, the
Company entered into a Sale and Purchase Agreement (“SPA”) with CHAN Hin Yip, pursuant to which the Company agreed to purchase
approximately 58 collectible items from Mr. Chan for a purchase price of HKD1,305,000 (approximately USD167,308) (the “Purchase
Price”), through its subsidiaries holds approximately 80% of the issued and outstanding securities of Grand Gallery Limited (“GGL”),
and Mr. Chan is a director and 5% equity owner of GGL.



On August 2, 2022, the
Company and Mr. Chan entered into a Note Purchase Agreement (“Chan Hin Yip Note”) pursuant to which the Company agreed to
pay the Purchase Price via a promissory note that will be converted into shares of the Company’s common stock at a conversion price
equal to 90% of the volume weighted average closing price of the Company’s common stock for the ten days immediately prior to February
2, 2023. The Chan Hin Yip Note bears interest at 1% per annum and is due on February 2, 2023



On September 1, 2022,
the Company purchased 42 collectibles items from companies controlled by its major shareholder and former director, Dr. Lee, for a purchase
price of $1,851,520.



On September 16, 2022,
the Company issued 1,452,785 shares of its common stock, at a price of $0.826 per shares at market price under Rule 144, to a partnership
fund beneficially owned by its major shareholder and former director, Dr. Lee, which has rendered service to the Company.



On September 30, 2022,
Phoenix Waters Production (HK) Limited (“PWHK”), a subsidiary of the Company, has promissory notes payables to a company controlled
by the Company’s major shareholder and former director, Dr. Lee, amounted to HKD512,000 (approximately USD65,225). The promissory
notes payables are subject to interest at 12% per annum and repayable within 1 year upon delivery of the note.



As of September 30,
2022, PWHK has loan payables to a company controlled by the Company’s major shareholder and former director, Dr. Lee, amounted
to HKD1,939,554 (approximately USD240,086). The loan is unsecured, interest-free with 1% penalty on late repayment and repayable in January
2023.







F-35







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)



During the year ended December 31, 2021, the
Company purchased 55 sets of art collectibles from its director, Dr. Lee, for a consideration of $1,334,710 payable by 180,855 shares
of its common stock.



During the year ended December 31, 2021, the
Company was licensed with a company controlled by its director, Dr. Lee, to use Technical Knowhow Service at the fixed license fee
of $2,000,000, payable by digital assets, in a term of 4 years.



During the year ended December 31, 2021, the
Company paid the technical service fee of $1,200,000 and management service fee of $1,800,000, to a company controlled by its director,
Dr. Lee.



As of December 31, 2021, the Company had 235,294
shares of common stock to be issued to a director, Mr. Tan, for his service to the Company’s subsidiary for the year ended December
31, 2021. The Company recorded the stock-based compensation of $941,176 as expense, at the average price of $4.00 per share.



Apart from the transactions and balances detailed
elsewhere in these accompanying consolidated financial statements, the Company has no other significant or material related party transactions
during the years presented.



NOTE 23 - CONCENTRATIONS OF RISK



The Company is exposed to the following concentrations of risk:



|(a) | Major customers
|--- | ---------------
|    |                

For the years ended December 31, 2022 and 2021,
there was no single customer whose revenue exceeded 10% of the revenue.



|(b) | Economic and
    political risk
|--- | -------------------------------
|    |                                

The Company’s major operations are conducted
in Singapore and Hong Kong. Accordingly, the political, economic, and legal environments in Singapore and Hong Kong, as well as the general
state of Singapore and Hong Kong’s economy may influence the Company’s business, financial condition, and results of operations.



|(c) | Exchange rate
    risk
|--- | ----------------------
|    |                       

The Company cannot guarantee that the current
exchange rate will remain steady; therefore there is a possibility that the Company could post the same amount of profit for two comparable
periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of HKD converted
to US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.



|(d) | Market price
    risk of crypto (“digital”) assets
|--- | --------------------------------------------------
|    |                                                   

The Company generated certain level of its revenue
from the sale and distribution of licensed media token products on its platform by the means of crypto assets by the customers, while
revenue from these products have not been significant to date, most of this revenue will also fluctuate based on the price of crypto assets.
Accordingly, crypto asset price risk could adversely affect its operating results. In particular, the future profitability may depend
upon the market price of BNB, ETH, as well as other crypto assets. Crypto asset prices, along with the operating results, have fluctuated
significantly from quarter to quarter. There is no assurance that crypto asset prices will reflect historical trends. A decline in the
market price of BTC, ETH and other crypto assets could have a material and adverse effect on our earnings, the carrying value of the crypto
assets, and the future cash flows. This may also affect the liquidity and the ability to meet our ongoing obligations.



As of December 31, 2022, the Company has no balance
of crypto assets.





F-36







COSMOS GROUP HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Currency expressed in United States Dollars
(“US$”), except for number of shares)





NOTE 24 - COMMITMENTS AND CONTINGENCIES



As of December 31, 2022, the Company has no material
commitments or contingencies.



Except for, on December 31, 2022, the Company
entered into an Equity Purchase Agreement with Williamsburg Venture Holdings, LLC, a Nevada limited liability company (“Investor”),
pursuant to which the Investor agreed to invest up to Thirty Million Dollars ($30,000,000) over a 36-month period in accordance with
the terms and conditions of that certain Equity Purchase Agreement, dated as of December 31, 2022, by and between the Company and the
Investor (the “Equity Purchase Agreement”). During the term, the Company shall be entitled to put to the Investor, and the
Investor shall be obligated to purchase, such number of shares of the Company’s common stock and at such price as are determined
in accordance with the Equity Purchase Agreement. The per share purchase price for the Williamsburg Put Shares will be equal to 88% the
lowest traded price of the Common Stock on the principal market during the five (5) consecutive trading days immediately preceding the
date which Williamsburg received the Williamsburg Put Shares as DWAC Shares in its brokerage account (as reported by Bloomberg Finance
L.P., Quotestream, or other reputable source).  In connection with the Equity Purchase Agreement, both parties also entered into
a Registration Rights Agreement (the “Registration Rights Agreement”) pursuant to which the Company agreed to register with
the SEC the common stock issuable under the Equity Purchase Agreement, among other securities.



The Company issued 100,000 shares of its common
stock as commitment shares under Equity Purchase Agreement.



NOTE 25 - SUBSEQUENT EVENTS



In accordance with ASC Topic 855, “Subsequent
Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet
date but before consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred after
December 31, 2022, up through the date the Company issued the audited consolidated financial statements.





F-37







ITEM 9. CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.



None.



ITEM 9A. CONTROLS
AND PROCEDURES.



Evaluation of Disclosure Controls and Procedures



Our management is responsible
for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act)
that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange
Act is recorded, processed, summarized and reported, within the time specified in the Commission’s rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an
issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including
its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.



As required by Rule 13a-15
under the Securities Exchange Act of 1934, as of the end of the period covered by this report, we have carried out an evaluation of the
effectiveness of the design and operation of our company’s disclosure controls and procedures. Under the direction of our Chief
Executive Officer and our Chief Financial Officer, we evaluated our disclosure controls and procedures and internal control over financial
reporting and concluded that were effective as of December 31, 2022.



However, it should be noted
that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in =achieving its stated goals under all potential future conditions, regardless of
how remote.



Management’s
Annual Report On Internal Control Over Financial Reporting



Our management is responsible
for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under
the Securities Exchange Act. Our management is also required to assess and report on the effectiveness of our internal control over financial
reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”). Management, under the supervision
and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal
control over financial reporting as of December 31, 2022. In making this assessment, we used the criteria set forth by the Committee
of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. Based on that evaluation,
our management concluded that our internal control over financial reporting was effective as of December 31, 2022.



This Annual Report does not
include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s
report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission
that permit the Company to provide only management’s report.



Changes in Internal Control over Financial
Reporting



There were no changes in
the Company’s internal control over financial reporting that occurred during the last fiscal quarter that have materially affected,
or is reasonably likely to materially affect, the Company’s internal control over financial reporting.



ITEM 9B. OTHER
INFORMATION.



None.



ITEM 9C. DISCLOSURE
REARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS



Not applicable.





55







PART III



ITEM 10. DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.



Set forth below are the present
directors and executive officers of the Company. Note that there are no other persons who have been nominated or chosen to become directors
nor are there any other persons who have been chosen to become executive officers. There are no arrangements or understandings between
any of the directors, officers and other persons pursuant to which such person was selected as a director or an officer. Directors are
elected to serve until the next annual meeting of stockholders and until their successors have been elected and have qualified. Officers
are appointed to serve until the meeting of the board of directors following the next annual meeting of stockholders and until their
successors have been elected and qualified.



|Name                    |  | Age |  |  | Position                                                                
|----------------------- |  | --- |  |  | ------------------------------------------------------------------------
|Chan Man Chung          |  | 64  |  |  | Chief Executive Officer, Chief Financial Officer, Secretary and Director
|Lee Ying Chiu Herbert # |  | 70  |  |  | Director                                                                
|Tan Tee Soo             |  | 57  |  |  | Director                                                                



Biographies



Set forth below are brief
accounts of the business experience during the past five years of each director, executive officer and significant employee of the Company.



Dr. Man Chung Chan,
age 64, was appointed to serve as our Chief Executive Officer, Chief Financial Officer, Secretary and a director of the Company on June
28, 2021. He is currently the founding Director and Executive Chairman of the Sustainable Development Institute for the United Nations
and has served as the founding director of Institute of Systems Management since 2003. From 2015 to September 30, 2021, Dr. Chan served
as Vice President of Marvel Digital Company, a subsidiary of Integrated Media Technology Corporation (IMTE: NASDAQ) and a director of
IMTE. Dr. Chan has served as the Chief Executive Officer, Chief Financial Officer, Secretary and Director of Bonanza Goldfields Corp.
(BONZ: OTC PK) since August 26, 2021. Dr. Chan has taught and lectured at the Hong Kong Polytechnic University and New South Wales University,
Australia, and published more than 22 articles relating to information systems, knowledge systems, data mining and artificial intelligence
and brings to our board his deep experience in these fields. Dr. Chan also engaged in numerous research projects and authored numerous
papers relating information and knowledge management systems, pattern recognition, data mining and artificial intelligence for business
applications.



Dr. Chan received his PHD
in Computer Science in 1992 from La Trobe University, Australia and his Bachelor of Arts in Philosophy (Hons) from Chinese University
of Hong Kong in 1980.



Dr. Herbert Ying Chiu
LEE, aged 70, was appointed to serve as our director on June 28, 2021 and resigned from his position on September 15, 2022. Dr.
Lee is a seasoned businessman with significant experience in the Hong Kong and Chinese digital advertising market sector and technology
development. Over the past 17 years, Dr. Lee has extensive working experience in technology management and 3D auto stereoscopy. Dr. Lee
has served as director of Integrated Media Technology Corporation (IMTE: NASDAQ) and retired on May 31, 2019. During these years, he has
also invested in many technology start-ups and incubated them into successful companies. Dr. Lee has served on the Board of Directors
of Bonanza Goldfields Corp. (BONZ: OTC PK) since August 26, 2021. He brings to our Board his deep experience in technology development
and digital advertising.



Dr. Lee received his Bachelor
of Applied Science in civil engineering in 1977 from the University of British Columbia, B.C., Canada. He obtained his training in structural
design in Hong Kong after his graduation. In 1982, he became a member of the Institute of Structural Engineers (MIStructE.) and subsequently
he obtained his Chartered Engineer title from the Engineering Council of the United Kingdom. In 2004, Dr. Lee finished his Master of
Technology Management degree at the Hong Kong University of Science and Technology. In 2011, Dr. Lee had been conferred the degree of
Doctor of Engineering from the Hong Kong Polytechnic University. In 2014, Dr. Lee was elected by the Council of the Association to be
the Senior Fellowship of Asia College of Knowledge Management.



Mr. Tee Soo
TAN, age 57, was appointed to serve as our Director on June 28, 2021. Mr. Tan has also served as a director of Bonanza Goldfields
Corp. (BONZ: OTC PK) since August 26, 2021. Since April 2017, Mr. Tan served as the Senior Vice President of a boutique investment house
and financial structuring company and has been nominated as director since June 2019. Prior to this time, Mr. Tan served in the Western
Australian Police Force in Perth, Western Australia from June 2000 to April 2017. Mr. Tan received his Bachelor of Commerce from Murdoch
University in Western Australia in 1993. Mr. Tan brings to our Board his investment and financial experience in the industry.





56







Family Relationships.



There are no family relationships
between any of our directors or executive officers.



Involvement in Certain Legal Proceedings



No executive officer or director
has been involved in the last ten years in any of the following:



| | ● | Any
    bankruptcy petition filed by or against any business or property of such person, or of which such person was a general partner or
    executive officer either at the time of the bankruptcy or within two years prior to that time;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Any
    conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor
    offenses);
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Being
    subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
    permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities
    or banking activities;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Being
    found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated
    a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Being
    the subject of or a party to any judicial or administrative order, judgment, decree or finding, not subsequently reversed, suspended
    or vacated relating to an alleged violation of any federal or state securities or commodities law or regulation, or any law or regulation
    respecting financial institutions or insurance companies, including but not limited to, a temporary or permanent injunction, order
    of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order,
    or any law or regulation prohibiting mail, fraud, wire fraud or fraud in connection with any business entity; or
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Being
    the subject of or a party to any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization
    (as defined in Section 3(a)(26) of the Exchange Act, any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange
    Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons
    associated with a member.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Board Committees and Audit Committee Financial
Expert



We do not currently have
a standing audit, nominating or compensation committee of the board of directors, or any committee performing similar functions. Our
board of directors performs the functions of audit, nominating and compensation committees. As of the date of this report, no member
of our board of directors qualifies as an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K
promulgated under the Securities Act. We hope to attract a director who qualifies as an “audit committee financial expert”
as our business operations mature.



Our board of directors
does not have a policy with regards to the consideration of any director candidates recommended by our shareholders. Our board of directors
has determined that it is in the best position to evaluate our company’s requirements as well as the qualifications of each candidate
when the board considers a nominee for a position on our board of directors.



There have not been any
material changes to the procedures by which security holders may recommend nominees to the registrant’s board of directors since December
31, 2022.



Code of Ethics



We have not yet adopted a
code of ethics that applies to our principal executive officer, principal financial officer principal accounting officer or controller
in light of our Company’s current stage of development. We expect to adopt a code of ethics in the near future.



ITEM 11. EXECUTIVE
COMPENSATION.



Compensation Philosophy and Objectives



Our executive compensation
philosophy is to create a long-term direct relationship between pay and our performance. Our executive compensation program is designed
to provide a balanced total compensation package over the executive’s career with us. The compensation program objectives are to
attract, motivate and retain the qualified executives that help to ensure our future success, to provide incentives for increasing our
profits by awarding executives when corporate goals are achieved and to align the interests of executives and long-term stockholders.
The compensation package of our named executive officers consists of two main elements:



| | 1. | base
    salary for our executives that is competitive relative to the market, and that reflects individual performance, retention and other
    relevant considerations; and
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | discretionary
    bonus awards payable in cash and tied to the satisfaction of corporate objectives.
| | -- | ----------------------------------------------------------------------------------------------------





57







Process for Setting Executive Compensation



Until such time as we establish
a Compensation Committee, our Board is responsible for developing and overseeing the implementation of our philosophy with respect to
the compensation of executives and for monitoring the implementation and results of the compensation philosophy to ensure compensation
remains competitive, creates proper incentives to enhance stockholder value and rewards superior performance. We expect to annually review
and approve for each named executive officer, and particularly with regard to the Chief Executive Officer, all components of the executive’s
compensation. We process and factors (including individual and corporate performance measures and actual performance versus such measures)
used by the Chief Executive Officer to recommend such awards. Additionally, we expect to review and approve the base salary, equity-incentive
awards (if any) and any other special or supplemental benefits of the named executive officers.



The Chief Executive Officer
periodically provides the Board with an evaluation of each named executive officer’s performance, based on the individual performance
goals and objectives developed by the Chief Executive Officer at the beginning of the year, as well as other factors. The Board provides
an evaluation for the Chief Executive Officer. These evaluations serve as the bases for bonus recommendations and changes in the compensation
arrangements of our named executives.



Our Compensation Peer Group



We currently engage in informal
market analysis in evaluating our executive compensation arrangements. As the Company and its businesses mature, we may retain compensation
consultants that will assist us in developing a formal benchmark and selecting a compensation peer group of companies similar to us in
size or business for the purpose of comparing executive compensation levels.



Program Components



Our executive compensation
program consists of the following elements:



Base Salary



Our base salary structure
is designed to encourage internal growth, attract and retain new talent, and reward strong leadership that will sustain our growth and
profitability. The base salary for each named executive officer reflects our past and current operating profits, the named executive
officer’s individual contribution to our success throughout his career, internal pay equity and informal market data regarding
comparable positions within similarly situated companies. In determining and setting base salary, the Board considers all of these factors,
though it does not assign specific weights to any factor. The Board generally reviews the base salary for each named executive officer
on an annual basis. For each of our named executive officers, we review base salary data internally obtained by the Company for comparable
executive positions in similarly situated companies to ensure that the base salary rate for each executive is competitive relative to
the market.



Discretionary Bonus



The objectives of our bonus
awards are to encourage and reward our employees, including the named executive officers, who contribute to and participate in our success
by their ability, industry, leadership, loyalty or exceptional service and to recruit additional executives who will contribute to that
success.





58







Summary Compensation Table



The following summary compensation
table sets forth the aggregate compensation we paid or accrued during the fiscal years ended December 31, 2022 and 2021, to (i) our Chief
Executive Officer (principal executive officer), (ii) our Chief Financial Officer (principal financial officer), (iii) our three most
highly compensated executive officers other than the principal executive officer and the principal financial officer who were serving
as executive officers on December 31, 2022, whose total compensation was in excess of $100,000, and (iv) up to two additional individuals
who would have been within the two-other-most-highly compensated but were not serving as executive officers on December 31, 2022.



SUMMARY COMPENSATION TABLE



|Name
                                            and Principal Position |  | Year |  |  | Salary |   |  | Bonus |  |   | Stock Awards |  |  | Option Awards |  |  | Non-Equity Incentive Plan Compensation |   |  | Change in Pension Value and Non-qualified
    Deferred Compensation Earnings |  |   | All Other Compensation in share |  |  | All Other Compensation in cash |  |  | Total |        
|----------------------------------------------------------------------- |  | ---- |  |  | ------ | - |  | ----- |  | - | ------------ |  |  | ------------- |  |  | -------------------------------------- | - |  | ---------------------------------------------------------------------------- |  | - | ------------------------------- |  |  | ------------------------------ |  |  | ----- | -------
|Man Chung                                                               |  | 2022 |  |  |        | – |  |       |  | – |              |  |  | –             |  |  |                                        | – |  |                                                                              |  | – |                                 |  |  | –                              |  |  | $     | –      
|CHAN, CEO, CFO, Secretary and Director (1)                              |  | 2021 |  |  |        | – |  |       |  | – |              |  |  | –             |  |  |                                        | – |  |                                                                              |  | – |                                 |  |  | –                              |  |  | $     | –      
|Ying Chiu Herbert,                                                      |  | 2022 |  |  |        | – |  |       |  | – |              |  |  | –             |  |  |                                        | – |  |                                                                              |  | – |                                 |  |  | –                              |  |  | $     | –      
|LEE, Director (2)                                                       |  | 2021 |  |  |        | – |  |       |  | – |              |  |  | –             |  |  |                                        | – |  |                                                                              |  | – |                                 |  |  | –                              |  |  | $     | –      
|Tee Soo                                                                 |  | 2022 |  |  |        |   |  |       |  | – |              |  |  | –             |  |  |                                        | – |  |                                                                              |  | – |                                 |  |  | –                              |  |  | $     | 123,000
|TAN, Director (3)(4)                                                    |  | 2021 |  |  |        | – |  |       |  | – |              |  |  | –             |  |  |                                        | – |  |                                                                              |  | – |                                 |  |  | –                              |  |  | $     | 941,176










|(1) | Dr. Chan joined us as our Chief Executive Officer, Secretary and Director on June 28, 2021.                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Dr. Lee joined us as our Director on June 28, 2021 and resigned on September 15, 2022                                                                                                                                                                                                                                              
|(3) | The Board approved the issuance to Mr. Tan of 1,500,000 shares of the Company’s common stock at a price of $0.06 per share as a director retainer fee on December 14, 2022.  The Company expects to issue the securities to Mr. Tan in the near future after the increase in the Company’s authorized capital has been effectuated.
|(4) | Mr. Tan joined us as our Director on June 28, 2021.                                                                                                                                                                                                                                                                                





Narrative
disclosure to Summary Compensation



Dr. Chan did not receive
any compensation for services in his capacity as a director and the sole executive officer of the Company.



Other than set out above
and below, there are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive
officers. We expect to establish one or more incentive compensation plans in the future. Our directors and executive officers may receive
securities of the Company as incentive compensation at the discretion of our board of directors in the future. We do not have any material
bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers.



Equity Awards



There are no unvested options,
warrants or convertible securities outstanding.



At no time during the last
fiscal year with respect to any of any of our executive officers was there:



| | ● | any
    outstanding option or other equity-based award repriced or otherwise materially modified (such as by extension of exercise periods,
    the change of vesting or forfeiture conditions, the change or elimination of applicable performance criteria, or the change of the
    bases upon which returns are determined;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                
| | ● | any
    waiver or modification of any specified performance target, goal or condition to payout with respect to any amount included in non-stock
    incentive plan compensation or payouts;                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                
| | ● | any
    option or equity grant;                                                                                                                                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                
| | ● | any
    non-equity incentive plan award made to a named executive officer;                                                                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                
| | ● | any
    nonqualified deferred compensation plans including nonqualified defined contribution plans; or                                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                
| | ● | any
    payment for any item to be included under All Other Compensation in the Summary Compensation Table.                                                                                                                                                                                                                    





59







Compensation of Directors



On December 14, 2022, the Board approved to issue 1,500,000 shares
of its common stock to Mr. Tan at the price of $0.06 per share. Additionally, the amount of $33,000 has been accrued for Mr. Tan as director
retainer fee.



On December 31, 2021, the
Board approved the issuance to Mr. Tan of 235,294 shares of the Company’s common stock at a price of $4.00 per share as a director
retainer fee.  The Company expects to issue the securities to Mr. Tan in the near future after the increase in the Company’s
authorized capital has been effectuated.



Except as set forth above,
during our fiscal year ended December 31, 2021, we did not provide compensation to any of our directors for serving as our director.
We currently have no formal plan for compensating our directors for their services in their capacity as directors, although we may elect
to issue stock options to such persons from time to time. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket
expenses incurred in connection with attendance at meetings of our board of directors. Our board of directors may award special remuneration
to any director undertaking any special services on our behalf other than services ordinarily required of a director.



Compensation Risk Management



Our Board of directors and
human resources staff conducted an assessment of potential risks that may arise from our compensation programs. Based on this assessment,
we concluded that our policies and practices do not encourage excessive and unnecessary risk taking that would be reasonably likely to
have material adverse effect on the Company. The assessment included our cash incentive programs, which awards non-executives with cash
bonuses for punctuality. Our compensation programs are substantially identical among business units, corporate functions and global locations
(with modifications to comply with local regulations as appropriate). The risk-mitigating factors considered in this assessment included:



| | ● | the
    alignment of pay philosophy, peer group companies and compensation amounts relative to local competitive practices to support our
    business objectives; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | effective
    balance of cash, short- and long-term performance periods, caps on performance-based award schedules and financial metrics with individual
    factors and Board and management discretion.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Compensation Committee Interlocks and Insider
Participation



We have not yet established
a Compensation Committee. Our Board of Directors performs the functions that would be performed by a compensation committee. During the
fiscal year ended December 31, 2022, none of our executive officers has served: (i) on the compensation committee (or other board committee
performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose
executive officers served on our board of directors; (ii) as a director of another entity, one of whose executive officers served on
the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire
board of directors) of the registrant; or (iii) as a member of the compensation committee (or other board committee performing equivalent
functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers
served as a director of the company.



Compensation Committee Report



Our board of directors has
reviewed and discussed the Compensation Discussion and Analysis in this report with management. Based on its review and discussion with
management, the board of directors recommended that the Compensation Discussion and Analysis be included in this Annual Report on Form
10-K for the year ended December 31, 2022. The material in this report is not deemed filed with the SEC and is not incorporated by reference
in any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made
on, before, or after the date of this Report on Form 10-K and irrespective of any general incorporation language in such filing.



Submitted by the board of directors:

Chan Man Chung

Lee Ying Chiu Herbert

Tan Tee Soo





60







ITEM 12. SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.



The following table sets
forth certain information concerning the number of shares of our common stock owned beneficially as of March 31, 2023, by: (i) each person
(including any group) known to us to own more than five percent (5%) of any class of our voting securities, (ii) each of our directors
and each of our named executive officers (as defined under Item 402(m)(2) of Regulation S-K), and (iii) officers and directors as a group.
Unless otherwise indicated, the shareholders listed possess sole voting and investment power with respect to the shares shown.



Except as indicated in footnotes
to this table, we believe that the stockholders named in this table will have sole voting and investment power with respect to all shares
of common stock shown to be beneficially owned by them, based on information provided to us by such stockholders. Unless otherwise indicated,
the address for each director and executive officer listed is: c/o Cosmos Group Holdings Inc., 37th Floor, Singapore Land
Tower, 50 Raffles Place, Singapore 048623.



|                                                            |  | Common Stock
 Beneficially Owned                       |            
|----------------------------------------------------------- |  | ------------------------------------------------------ | -----------
|Name and Address of Beneficial Owner                        |  | Number of Shares  and Nature of  Beneficial  Ownership |            
|CHAN Man Chung (2)                                          |  |                                                        | 14,380,288 
|LEE Ying Chiu Herbert (2)(3)                                |  |                                                        | 532,200,502
|TAN Tee Soo (2)                                             |  |                                                        | 2,007,647  
|All executive officers and directors as a Group (3 persons) |  |                                                        | 548,588,437
|                                                            |  |                                                        |            
|5% or Greater Stockholders:                                 |  |                                                        |            
|SO Han Meng Julian                                          |  |                                                        | 58,251,708 








|(1) | Applicable percentage ownership is based on 457,952,322 shares of common stock outstanding as of March 31, 2023, together with securities exercisable or convertible into shares of common stock within 60 days of March 31, 2023 and added 400,000,000 shares of common stock in connection with our acquisition of Massive Treasure and with settlement terms signed and updated on 15 December, 2022, which we are in the process of effectuating such issuance. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock that a person has the right to acquire beneficial ownership of upon the exercise or conversion of options, convertible stock, warrants or other securities that are currently exercisable or convertible or that will become exercisable or convertible within 60 days of March 31, 2023, are deemed to be beneficially owned by the person holding such securities for the purpose of computing the number of shares beneficially owned and percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | On
                                            June 28, 2021, Messrs. Chan Man Chung, Lee Ying Chiu Herbert and Tan Tee Soo were appointed
                                            to the Company’s Board of Directors and Chan Man Chung was appointed to serve as the
                                            CEO, CFO and Secretary of the Company.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | We
                                            are obligated to issue to Lee Ying Chiu Herbert, our ex-director, 400,000,000 shares in connection
                                            with our acquisition of Massive Treasure.  We are in the process of effectuating such
                                            issuance.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | We
                                            are obligated to issue to Tan Tee Soo, our director, 235,294 shares in connection with his
                                            service as director of the Company. We are in the process of effectuating such issuance.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.



Other than as disclosed below,
there are no transactions during our two most recent fiscal years ended December 31, 2022, and December 31, 2021, or any currently proposed
transaction, in which our Company was or to be a participant and the amount exceeds the lesser of $120,000 or one percent of the average
of our Company’s total assets at year end for our last two completed years, and in which any of our directors, officers or principal
stockholders, or any other related person as defined in Item 404 of Regulation S-K, had or have any direct or indirect material interest.



From time to time, our directors
advanced funds to us for working capital purpose. Those advances are unsecured, non-interest bearing and have no fixed terms of repayment.
During the year ended December 31, 2021, companies which are controlled by Lee Ying Chiu Herbert, our director advanced $410,558 and
Chan Man Chung, our director advanced $273,030 to us, respectively.



During
the year ended December 31, 2022, the Company paid the management service fee of $2,746,911, to a company controlled by its major
shareholder and former director, Dr. Lee.



During
the year ended December 31, 2022, the Company paid the director fee of $90,000 to Mr. Tan, a director of the Company, for his service
to the Company’s subsidiary.





61







On July 1, 2021, the Company
entered into a Technical Knowhow License & Servicing Agreement with Marvel Digital Group Limited, a company incorporated in the British
Virgin Islands, a company beneficially owned by Lee Ying Chiu Herbert (“Marvel BVI”), pursuant to which Marvel BVI licensed
certain assets and know-how to the Company and agreed to provide certain technical services in consideration of a fixed license fee of
$2,000,000 over a period of 4 years and a technical service fee of 25% of the sale or auction price of the arts and collectibles pieces
quoted by the Company in marketplaces.  Concurrently, the Company also entered into a Service Agreement with Marvel BVI pursuant
to which Marvel BVI agreed to provide staffing and back office services to the Company until the arrangement is terminated by the parties. 
During the year ended December 31, 2021, the Company paid to Marvel BVI the technical service fee of $1,200,000 pursuant to the Technical
Knowhow License and Servicing Agreement and a management service fee of $1,800,000 pursuant to the Services Agreement.  The foregoing
descriptions of the Technical Knowhow License & Servicing Agreement and the Services Agreement are qualified in their entirety by
reference to such agreements which are filed as Exhibits 10.1 and 10.2 to this Annual Report and is incorporated herein by reference.



During the year ended December
31, 2021, the Company purchased 55 sets of art collectibles from its director, Dr. Lee, for a consideration of $1,334,710, payable by
180,855 shares of its common stock.



On
July 1, 2022, the Company’s wholly-owned subsidiary entered into a technical knowhow license and servicing agreement (the “Servicing
Agreement”) with Total Chase Limited (“Total Chase”), a company controlled by its major shareholder and former director,
Dr. Lee. Pursuant to which the Company engaged Total Chase to develop the technical knowhow for a term of three-year. Marvel Digital AI
Limited (“MDAI”), the subsidiary of Total Chase, owns several intellectual properties and provides technical development services
to Total Chase. The technical knowhow consists of Visual Intelligence Engine, Speech Recognition Engine, Text Analytics Engine, Emotion
Recognition Engine, Motion Recognition Engine, AI Agent Creation Engine and NFT Generation and Loading Engine for development of metaverse
on Roblox. Under the terms of the Servicing Agreement, the Company is required to pay to Total Chase an aggregate of $50,000,000 for the
development of technical knowhow. The consideration is payable in cash or cryptocurrencies. All MDAI’s proprietary items remain
the sole and exclusive property of MDAI, Total Chase will grant the Company a perpetual, non-exclusive, paid-up license to use certain
MDAI’s proprietary items. The Company reserves the right to terminate services in whole or in part, upon 7 days written notice to
Total Chase. The Company charged all related development costs to expenses as incurred and recognized as “Metaverse and AI development
expenses” of $5,000,000 during the year ended December 31, 2022.



On
August 2, 2022, the Company entered into a Sale and Purchase Agreement (“SPA”) with CHAN Hin Yip, pursuant to which the Company
agreed to purchase approximately 58 collectible items from Mr. Chan for a purchase price of HKD1,305,000 (approximately USD167,308) (the
“Purchase Price”), through its subsidiaries holds approximately 80% of the issued and outstanding securities of Grand Gallery
Limited (“GGL”), and Mr. Chan is a director and 5% equity owner of GGL.



On
August 2, 2022, the Company and Mr. Chan entered into a Note Purchase Agreement (“Chan Hin Yip Note”) pursuant to which the
Company agreed to pay the Purchase Price via a promissory note that will be converted into shares of the Company’s common stock
at a conversion price equal to 90% of the volume weighted average closing price of the Company’s common stock for the ten days immediately
prior to February 2, 2023. The Chan Hin Yip Note bears interest at 1% per annum and is due on February 2, 2023



On
September 1, 2022, the Company purchased 42 collectibles items from companies controlled by its major shareholder and former director,
Dr. Lee, for a purchase price of $1,851,520.



On
September 16, 2022, the Company issued 1,452,785 shares of its common stock, at a price of $0.826 per shares at market price under Rule
144, to a partnership fund beneficially owned by its major shareholder and former director, Dr. Lee, which has rendered service to the
Company.



On
September 30, 2022, Phoenix Waters Production (HK) Limited (“PWHK”), a subsidiary of the Company, has promissory notes payables
to a company controlled by the Company’s major shareholder and former director, Dr. Lee, amounted to HKD512,000 (approximately USD65,225).
The promissory notes payables are subject to interest at 12% per annum and repayable within 1 year upon delivery of the note.



As
of September 30, 2022, PWHK has loan payables to a company controlled by the Company’s major shareholder and former director, Dr.
Lee, amounted to HKD1,939,554 (approximately USD240,086). The loan is unsecured, interest-free with 1% penalty on late repayment and repayable
in January 2023.



On December 15, 2022, the
Company entered into a Settlement Agreement with Dr. Lee, pursuant to which the Company and Dr.
Lee agreed to settle the matter of 800,000,000 shares of common stock of the Company due to Dr. Lee (the “Unissued Securities”)
pursuant to the terms of that certain Share Acquisition Agreement, dated June 17, 2021 (the “Share Acquisition Agreement”),
by and among the Company, Massive Treasure Limited (“Massive Treasure”), a British Virgin Islands corporation and holding
company of numerous operating subsidiaries, and the holders of ordinary shares of Massive Treasure. The Settlement Agreement was closed
on December 15, 2022. Pursuant to the terms of the Settlement Agreement, the Company and Dr. Lee agreed to the following, among other
things, as settlement in full of the Unissued Securities:



| | (1) | The
Company will issue to Dr. Lee 400,000,000 shares of its common stock at a per share value of $0.001;
| | --- | --------------------------------------------------------------------------------------------------------





62







| | (2) | The
Company shall cause the transfer to Dr. Lee or his designees all the assets and liabilities of following entities as such assets and
liabilities are described in the financial statements of the Company as of November 30, 2022:
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | i) | Coinllectibles
Limited, (BVI company number: 2067445), a company incorporated in the British Virgin Islands,
with registered address at Mandar House, 3rd Floor, Johnson’s Ghut, Tortola, British Virgin Islands and its branch,
(Singapore company registration number: T21FC0080G);
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii) | Coinllectibles
(HK) Limited, (Hong Kong business registration
number: 72228307), a company incorporated in Hong Kong, with registered address at 7/F, K11 Atelier Victoria Dockside, 18 Salisbury Road,
Tsim Sha Tsui, Hong Kong; and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iii) | Coinllectibles
Wealth Limited, (Hong Kong business registration
number: 70756483), a company incorporated in Hong Kong, with registered address at 7/F, K11 Atelier Victoria Dockside, 18 Salisbury Road,
Tsim Sha Tsui, Hong Kong.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | The
Company and Dr. Lee agreed to the allocation of certain inventories, accounts payables, and intellectual
properties.
| | --- | ------------------------------------------------------------------------------------------------------------------------



Except as set forth above,
the Company had no other significant or material related party transactions during the years ended December 31, 2022 and 2021.



We have not adopted policies
or procedures for approval of related person transactions but review them on a case-by-case basis. We believe that all related party
transactions were on terms at least as favorable as we would have secured in arm’s-length transactions with third parties. Except
as set forth above, we have not entered into any material transactions with any director, executive officer, and promoter, beneficial
owner of five percent or more of our common stock, or family members of such persons.



Director Independence



Though not a NASDAQ listed
company, we intend to adhere to the corporate governance standards adopted by NASDAQ. NASDAQ rules require our Board to make an affirmative
determination as to the independence of each director. Consistent with these rules, our Board conducted its annual review of director
independence. During the review, our Board considered relationships and transactions since incorporation between each director or any
member of her immediate family, on the one hand, and us and our subsidiaries and affiliates, on the other hand. The purpose of this review
was to determine whether any such relationships or transactions were inconsistent with a determination that the director is independent.
Based on this review, our Board determined that none of the current members of our Board are independent directors under the criteria
established by NASDAQ and by our Board.



ITEM 14. PRINCIPAL
ACCOUNTING FEES AND SERVICES.



J&S Associate (“J&S”)
audited our financial statements for the fiscal year ended December 31, 2021.



Fortune CPA, Inc. (“Fortune”)
audited our financial statements for the fiscal year ended December 31, 2022.



All audit work was performed
by the full time employees of Fortune and J&S for the above mentioned fiscal years. Our board of directors does not have an audit
committee. The functions customarily delegated to an audit committee are performed by our full board of directors. Our board of directors
approves in advance, all services performed by Fortune and J&S, but have not adopted pre-approval policies or procedures. Our board
of directors has considered whether the provision of non-audit services is compatible with maintaining the principal accountant’s
independence, and has approved such services.



The following table sets
forth fees billed by our auditors during the last two fiscal years for services rendered for the audit of our annual financial statements
and the review of our quarterly financial statements, services by our auditors that are reasonably related to the performance of the
audit or review of our financial statements and that are not reported as audit fees, services rendered in connection with tax compliance,
tax advice and tax planning, and all other fees for services rendered.



|                   |  | December 31,
2022 |         |  | December 31,
2021 |  
|------------------ |  | ----------------- | ------- |  | ----------------- | -
|                   |  |                   |         |  |                   |  
|Audit fees         |  | $                 | 280,000 |  |                   | $
|Audit related fees |  |                   | –       |  |                   |  
|Tax fees           |  |                   | –       |  |                   |  
|All other fees     |  |                   | –       |  |                   |  
|Total              |  | $                 | 280,000 |  |                   | $





63







PART IV



ITEM 15. EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES.



The following documents are
filed as part of this report:



(1)
Financial Statements



Financial Statements are
included in Part II, Item 8 of this report.



(2)
Financial Statement Schedules



No financial statement schedules
are included because such schedules are not applicable, are not required, or because required information is included in the financial
statements or notes thereto.



(3)
Exhibits



|Exhibit No. |  | Description                                                                                                                                                                           
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1         |  | Articles
    of Incorporation and Certificate of Amendment to Articles of Incorporation (1)                                                                                           
|3.2         |  | Amended and Restated Bylaws (2)                                                                                                                                                       
|4.1         |  | Specimen certificate evidencing shares of Common Stock(3)                                                                                                                             
|4.2         |  | Description
    of Securities (4)                                                                                                                                                     
|10.1        |  | Technical Knowhow License
    & Servicing Agreement, dated July 1, 2021, by and between Coinllectibles Limited and Marvel Digital Group Limited
    (5)                               
|10.2        |  | Services Agreement, dated
    July 1, 2021, by and between Coinllectibles Limited and Marvel Digital Group Limited (6)                                                                
|10.3        |  | Sale and Purchase Agreement, dated August 2, 2022, by and between Coinllectibles Private Limited and CHAN Hin Yip. (7)                                                                
|10.4        |  | Note Purchase Agreement, dated August 2, 2022, by and between Cosmos Group Holdings, Inc. aka Coinllectibles Inc. and CHAN Hin Yip.(8)                                                
|10.5        |  | Settlement Agreement, dated December 15, 2022, by and between Cosmos
Group Holdings Inc. and Lee Ying Chiu Herbert(9)                                                                 
|21.1        |  | Subsidiaries*                                                                                                                                                                         
|31.1        |  | Certification of Chief
    Executive Officer and Chief Financial Officer required under Rule 13a-14(a)/15d-14(a) under the Exchange Act.*                                             
|32.1        |  | Certification of Chief
    Executive Officer and Chief Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002.*
|101.INS     |  | Inline XBRL Instance Document**                                                                                                                                                       
|101.SCH     |  | Inline XBRL Taxonomy Extension Schema Document**                                                                                                                                      
|101.CAL     |  | Inline XBRL Taxonomy Extension Calculation Linkbase
    Document**                                                                                                                    
|101.DEF     |  | Inline XBRL Taxonomy Extension Definition Linkbase
    Document**                                                                                                                     
|101.LAB     |  | Inline XBRL Taxonomy Extension Label Linkbase Document**                                                                                                                              
|101.PRE     |  | Inline XBRL Taxonomy Extension Presentation Linkbase
    Document**                                                                                                                   
|104         |  | Cover Page Interactive Data File (formatted as Inline
    XBRL and contained in Exhibit 101).**                                                                                       










|*  | Filed
                                            herewith
|-- | ----------------------------------------------------------
|** | To be filed by amendment                                  



|(1) | Incorporated
                                            by reference from our Form 10 filed with the Securities and Exchange Commission on May 23,
                                            2017.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Incorporated by reference from Exhibit 2.3 of our Form 10-SB filed with the Securities
and Exchange Commission on January 19, 2000, under the name Interactive Marketing Technology, Inc.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Incorporated
                                            by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q filed with the Securities
                                            and Exchange Commission on November 19, 2021.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | Incorporated
                                            by reference to Exhibit 4.2 to the Annual Report on Form 10-K filed with the Securities and
                                            Exchange Commission on June 25, 2021.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | Incorporated by reference to Exhibit 10.1 to the Annual Report
on Form 10-K filed with the Securities and Exchange Commission on April 15, 2022.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------



|(6) | Incorporated by reference to Exhibit 10.3 to the Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 15, 2022.   
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                    
|(7) | Incorporated by reference to Exhibit 10.1 to the Annual Report on Form 10-K filed with the Securities and Exchange Commission on August 4, 2022.   
|    |                                                                                                                                                    
|(8) | Incorporated by reference to Exhibit 10.2 to the Annual Report on Form 10-K filed with the Securities and Exchange Commission on August 4, 2022.   
|    |                                                                                                                                                    
|(9) | Incorporated by reference to Exhibit 10.1 to the Current Report
on Form 8-K filed with the Securities and Exchange Commission on December 20, 2022.



ITEM 16. FORM
10-K SUMMARY.



None.





64







SIGNATURES



Pursuant to the requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.



|                     | COSMOS GROUP
    HOLDINGS INC.
|-------------------- | ------------------------------
|                     |                               
|Date: April 17, 2023 | By:                           
|                     |                               
|                     |                               
|                     |                               





65