# EDGAR Filing Document

**Accession Number:** 0001572384
**File Stem:** 0001640334-23-000162
**Filing Date:** 2023-2
**Character Count:** 241059
**Document Hash:** cb7cbeb698f6b099c0d09fb5f1d22a6d
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001640334-23-000162.hdr.sgml**: 20230616

**ACCESSION NUMBER**: 0001640334-23-000162

**CONFORMED SUBMISSION TYPE**: 10-K/A

**PUBLIC DOCUMENT COUNT**: 80

**CONFORMED PERIOD OF REPORT**: 20211231

**FILED AS OF DATE**: 20230206

**DATE AS OF CHANGE**: 20230206

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Phoenix Rising Companies
- **CENTRAL INDEX KEY:** 0001572384
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990]
- **IRS NUMBER:** 461993448
- **STATE OF INCORPORATION:** NV
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K/A
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-55319
- **FILM NUMBER:** 23589783

**BUSINESS ADDRESS:**
- **STREET 1:** 641 10TH STREET
- **CITY:** CEDARTOWN
- **STATE:** GA
- **ZIP:** 30125
- **BUSINESS PHONE:** 844-487-4636

**MAIL ADDRESS:**
- **STREET 1:** 641 10TH STREET
- **CITY:** CEDARTOWN
- **STATE:** GA
- **ZIP:** 30125

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Phoenix Rising Companies, Inc.
- **DATE OF NAME CHANGE:** 20210223

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Resort Savers, Inc.
- **DATE OF NAME CHANGE:** 20130318

?xml version='1.0' encoding='ASCII'? prcx_10ka.htm

**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**AMENDMENT NO. 2**

**TO**

**FORM 10-K/A**

**ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF**

**THE SECURITIES EXCHANGE ACT OF 1934**

For the fiscal year ended **<u>December 31, 2021</u>**

Commission File No. **<u>000-55319</u>**

---

| |
|:---|
| **PHOENIX RISING COMPANIES** |
| (Exact name of registrant as specified in its charter) |

---

---

| | |
|:---|:---|
| **Nevada** | **46-1993448** |
| (State or other jurisdiction of | (I.R.S. Employer |
| incorporation or organization) | Identification No.) |

---

**641 10th Street**

**<u>Cedartown, Georgia 30125</u>**

(Address of principal executive offices, zip code)

**<u>(844) 487-4636</u>**

(Registrant's telephone number, including area code)

____________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

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

---

| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |

---

**SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:**

**Common Stock, $.001 Par Value**

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

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐&nbsp;&nbsp;&nbsp;&nbsp; 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 x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth 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. ☐

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

At June 30, 2020, the last business day of the Registrant's most recently completed second fiscal quarter, the aggregate market value of the voting common stock held by non-affiliates of the Registrant (without admitting that any person whose shares are not included in such calculation is an affiliate) was approximately $103,913,805.

As of March 28, 2022, there were 286,069,451 shares of the Registrant's common stock, par value $0.001 per share, outstanding.

**PHOENIX RISING COMPANIES **TABLE OF CONTENTS****

---

| | | |
|:---|:---|:---|
|  |  | **Page No.** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**[PART I](#p1)** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**[PART I](#p1)** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**[PART I](#p1)** |
| [Item 1.](#i1) | [Business](#i1) | 4 |
| [Item 1A.](#i1a) | [Risk Factors](#i1a) | 11 |
| [Item 1B.](#i1b) | [Unresolved Staff Comments](#i1b) | 21 |
| [Item 2.](#i2) | [Properties](#i2) | 21 |
| [Item 3.](#i3) | [Legal Proceedings](#i3) | 21 |
| [Item 4.](#i4) | [Mine Safety Disclosures](#i4) | 21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**[PART II](#p2)** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**[PART II](#p2)** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**[PART II](#p2)** |
| [Item 5.](#i5) | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#i5) | 22 |
| [Item 6.](#i6) | [\[Reserved\]](#i6) | 22 |
| [Item 7.](#i7) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#i7) | 22 |
| [Item 7A.](#i7a) | [Quantitative and Qualitative Disclosures About Market Risk](#i7a) | 25 |
| [Item 8.](#i8) | [Financial Statements and Supplementary Data](#i8) | F-1 |
| [Item 9.](#i9) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#i9) | 26 |
| [Item 9A.](#i9a) | [Controls and Procedures](#i9a) | 26 |
| [Item 9B.](#i9b) | [Other Information](#i9b) | 27 |
| [Item 9C.](#i9c) | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.](#i9c) | 27 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**[PART III](#p3)** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**[PART III](#p3)** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**[PART III](#p3)** |
| [Item 10.](#i10) | [Directors, Executive Officers and Corporate Governance](#i10) | 28 |
| [Item 11.](#i11) | [Executive Compensation](#i11) | 30 |
| [Item 12.](#i12) | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#i12) | 32 |
| [Item 13.](#i13) | [Certain Relationships and Related Transactions, and Director Independence](#i13) | 33 |
| [Item 14.](#i14) | [Principal Accounting Fees and Services](#i14) | 34 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**[PART IV](#p4)** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**[PART IV](#p4)** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**[PART IV](#p4)** |
| [Item 15.](#i15) | [Exhibits and Financial Statement Schedules](#i15) | 35 |
| [Item 16.](#i16) | [Form 10-K Summary](#i16) | 35 |
|  | [Signatures](#sig) | 36 |

---

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K of Phoenix Rising Companies, a Nevada corporation (the "Company"), contains "forward-looking statements," as defined in the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "could", "expects", "plans", "intends", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of such terms and other comparable terminology. These forward-looking statements include, without limitation, statements about our market opportunity, our strategies, competition, expected activities and expenditures as we pursue our business plan, and the adequacy of our available cash resources. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Actual results may differ materially from the predictions discussed in these forward-looking statements. The economic environment within which we operate could materially affect our actual results. Additional factors that could materially affect these forward-looking statements and/or predictions include, among other things: (i) our investment decisions, (ii) development and protection of our intellectual property, (iii) the Company's need for and ability to obtain additional financing, (iv) industry competition, (v) other factors over which we have little or no control; and (vi) other factors discussed in the Company's filings with the Securities and Exchange Commission ("SEC").

Our management has included projections and estimates in this Form 10-K, which are based primarily on management's experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the SEC or otherwise publicly available. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

**PART I**

**ITEM 1. BUSINESS**

**DESCRIPTION OF BUSINESS**

**Our Corporate History and Background**

As used herein, references to the "Company", "we", "our", "us", and "Phoenix Rising" refer to Phoenix Rising Companies, a Nevada corporation,and its subsidiaries, unless the context otherwise indicates.

We were incorporated in the State of Nevada on June 25, 2012, under the name Resort Savers, Inc. On May 28, 2020, we filed a Certificate of Amendment with the Nevada Secretary of State, changing our name to Phoenix Rising Companies. The name change was effected with the OTC Markets Group, Inc. on March 10, 2021.

A diagram of our corporate structure is as follows:

![prcx_10kaimg161.jpg](prcx_10kaimg161.jpg)

![prcx_10kaimg162.jpg](prcx_10kaimg162.jpg)

![prcx_10kaimg79.jpg](prcx_10kaimg79.jpg)

**<u>Change of Management</u>**

On February 9, 2018, concurrently with the execution of the Admall Exchange Agreement and the Dusun Termination Agreement, Zhou Gui Bin resigned from his positions as President, CEO, Secretary and Director of the Company, and Zhou Wei resigned from his positions as Treasurer, CFO and Director of the Company. The departing Directors approved, by written consent in lieu of special meeting of the Board of Directors, the appointment of Mr. Ding-Shin "DS" Chang and Mr. Boon Jin "Patrick" Tan as the new Directors of the Company and submitted such appointment for approval and ratification by the Company's stockholders. The Company's departing Directors also appointed Mr. Ding-Shin "DS" Chang as the Company's President and CEO, Mr. Boon Jin "Patrick" Tan as the Company's Treasurer and CFO, and Mr. Liang-Yu "Jacky" Chang as the Company's Secretary, all of whom are to serve on an at-will basis until their resignation or removal by the Board of Directors.

**<u>Change in Fiscal Year End; Change to Bylaws; Reverse Stock Split; Corporate Name Change</u>**

On July 3, 2018, our Board of Directors approved a change in our fiscal year end from January 31 to December 31. The Company now operates on a fiscal year ending on December 31. The Company changed its bylaws to reflect the change in fiscal year end.

Contemporaneously with the change in fiscal year end, our Board of Directors approved a reverse one-for-thirty (1-for-30) stock split of the Company's issued and outstanding Common Stock and a change of corporate name from "Resort Savers, Inc." to "SCGI Group Holding, Inc." (the "Name Change"). Following these corporate approvals, the management of the Company delayed implementation of the reserve stock split and corporate name change, and management never submitted an Issuer Company-Related Action Notification Form ("Notification Form") with the Financial Industry Regulatory Authority ("FINRA") to effect such actions.

---

| |
|:---|
| 4 |
| *[**Table of Contents**](#toc)* |

---

On July 15, 2019, the Board of Directors approved a reverse one-for-one hundred (1-for-100) stock split (the "Reverse Split") of the Company's issued and outstanding Common Stock. The Reverse Split will have no effect on the number of authorized Common Stock of the Company, nor will it affect the authorized or issued and outstanding shares of its Preferred Stock, since the Company has no shares of Preferred Stock issued or outstanding. The Reverse Split will be effective following a review by FINRA, which the Company anticipates will be approximately thirty to sixty days following submission of a Notification Form with FINRA, which occurred on July 23, 2019. Upon effectiveness of the Reverse Split, the Company intends to file a Certificate of Change with the Nevada Secretary of State, pursuant to Nevada Revised Statute ("NRS") 78.209. The Reverse Split was approved by the Board of Directors and the stockholders of the Company on July 15, 2019. The record date for the Reverse Split is July 30, 2019. For more information on the Reverse Split, please refer to the Company's Current Report on Form 8-K, which was filed with the U.S. Securities and Exchange Commission ("SEC") on July 22, 2019.

On July 15, 2019, the Board of Directors and the stockholders of the Company, each by executing a written consent, approved of an amended and restated articles of incorporation (the "Restated Articles"), which contain the Name Change. The officers of the Company intended to filed the Restated Articles with the Nevada Secretary of State following review of the Notification Form by FINRA. For more information on the Name Change, please refer to the Company's Current Report on Form 8-K, which was filed with the SEC on July 22, 2019.

On August 14, 2019, the Board of Directors and the stockholders of the Company, each by executing a written consent, voted to abandon the Name Change and Restated Articles. However, the Company proceeded with and implemented the Reverse Split. The Company submitted an amended notification to FINRA for abandonment of the Name Change and Restated Articles, and received approval from FINRA for the reverse split. The Reverse Split was effective on September 16, 2019.

On February 9, 2022, the Company filed a Certificate of Amendment to its Articles of Incorporation, increasing its authorized shares of common stock from 1,000,000 shares to 8,000,000 shares.

Our principal administrative offices are located at 641 10th Street, Cedartown, Georgia 30125, and our telephone number is (844) 487-4636. Our website is www.phoenix-cos.com. Information on our website is not part of this filing or otherwise incorporated herein.

**Disclosures Related to Our China-Based Operations**

Phoenix Holding Companies is a holding company incorporated in Nevada, the United States, with no material operations of its own. We conduct our business through our operating subsidiaries in China. This structure involves unique risks to investors, and you may never directly hold equity interests in the operating entities.

There are significant legal and operational risks and uncertainties associated with having substantially all operations in China, such as the enforcement of laws and changes in the legal, political and economic policies of the Chinese government. Any such changes may take place quickly and with very little notice, which may materially and adversely affect our business, financial condition, results of operations and the market price of our securities. Moreover, the Chinese government may exert significant oversight and control over the conduct of our business and may intervene in or influence our overseas offerings and foreign investment at any time, which could result in a material change in our operations and/or the value of our securities or 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.

The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value. China has not developed a fully integrated legal system, and recently enacted laws, rules and regulations may not sufficiently cover all aspects of economic activities in China or may be subject to a significant degree of interpretation by PRC regulatory agencies and courts. In particular, because these laws, rules and regulations are relatively new, and because of the limited number of published decisions and the non-precedential nature of these decisions, and because the laws, rules and regulations often give the relevant regulator significant discretion in how to enforce them, the interpretation and enforcement of these laws, rules and regulations involve uncertainties and can be inconsistent and unpredictable. Therefore, it is possible that our existing operations may be found not to be in full compliance with relevant laws and regulations in the future. In addition, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all, and which may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until after the occurrence of the violation.

---

| |
|:---|
| 5 |
| *[**Table of Contents**](#toc)* |

---

The PRC government recently initiated a series of regulatory actions and made a number of public statements on the regulation of business operations in China, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using a variable interest entity ("VIE") structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding efforts in anti-monopoly enforcement. We do not believe that our subsidiaries in China are directly subject to these regulatory actions or statements, as we have not carried out any monopolistic behavior, we have never adopted a VIE structure, and our business does not involve any restricted industry or implicate cybersecurity. However, since these statements and regulatory actions by the PRC government are newly published and detailed official guidance and related implementation rules have not been issued or taken effect, uncertainties exist as to how soon the regulatory bodies in China will finalize implementation measures, and the impacts the 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 additional information, see *"Risk Factors—Risks Related to Doing Business in China—The Chinese government may intervene or influence our operations in China at any time, or may exert more control over offerings conducted outside China by and/or foreign investment in China-based issuers, which could result in a material change in our operations and in the value of our securities. Any actions by the Chinese government to exert more oversight and control over offerings that are conducted outside China by and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer securities to investors and cause the value of such securities to significantly decline or be worthless" on page ___, "Risk Factors—Risks Related to Doing Business in China—Changes in U.S. and Chinese regulations or in relations between the United States and China may adversely impact our business, our operating results, our ability to raise capital and the value of our securities. Any such changes may take place quickly and with very little notice" on page ___ and "Risk Factors—Risks Related to Doing Business in China—There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations" on page ___.*

**The Holding Foreign Companies Accountable Act**

The Holding Foreign Companies Accountable Act (the "HFCA Act"), was enacted in December 2020 and may affect our ability to maintain our quotation on the over-the-counter markets. Pursuant to the HFCA Act, if the SEC determines that we are an issuer, or a Commission-Identified Issuer, that has filed audit reports issued by a registered public accounting firm that has not been subject to inspection for the U.S. Public Company Accounting Oversight Board (the "PCAOB"), for three consecutive years, the SEC shall prohibit our common stock from being traded on a national securities exchange or in the over-the-counter trading market in the United States. Pursuant to the HFCA Act, the PCAOB issued a Determination Report on December 16, 2021 which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong because of a position taken by the authorities in such jurisdictions. The PCAOB's report identified specific registered public accounting firms which are subject to these determinations; however, our current registered public accounting firm, BF Borgers CPA PC, which is headquartered in the United States of America, is not subject to these determinations. On May 31, 2022, we were identified by the SEC pursuant to the HCFA Act as a Commission-Identified Issuer. On August 26, 2022, the China Securities Regulatory Commission ("CSRC"), the Ministry of Finance of the PRC, and PCAOB signed a Statement of Protocol (the "Protocol"), governing inspections and investigations of audit firms based in China and Hong Kong. Pursuant to the Protocol, the PCAOB has independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. However, uncertainties still exist whether this new framework will be fully complied with. If the PCAOB continues to be prohibited from conducting complete inspections and investigations of PCAOB-registered public accounting firms in mainland China and Hong Kong, the PCAOB is likely to determine by the end of 2022 that positions taken by authorities in the PRC obstructed its ability to inspect and investigate registered public accounting firms in mainland China and Hong Kong completely, then the companies audited by those registered public accounting firms would be subject to a trading prohibition on U.S. markets pursuant to the HFCA Act. As a result, trading in our securities may be prohibited under the HFCA Act if the PCAOB determines our audit work is performed by auditors that the PCAOB is unable to inspect or investigate completely for three consecutive years thereafter, our securities will be removed from quotation on the over-the-counter markets. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (the "AHFCAA"), which, if enacted, would amend the HFCA Act and require the SEC to prohibit an issuer's securities from trading on any U.S. exchange or the over-the-counter markets if its auditor is not subject to the PCAOB inspections for two consecutive years instead of three. We plan to identify and engage an independent public accounting firm that satisfies the PCAOB inspection requirements for the audit of our consolidated financial statements, subject to compliance with SEC and other requirements prior to the three-year (or two-year under the Accelerating Holding Foreign Companies Accountable Act) deadline of the HFCA Act.

For additional information, see "*Risk Factor—Risks Related to Doing Business in China— The audit report included in this Annual Report on Form 10-K was prepared by an auditor who is not inspected by the PCAOB and, as such, you are deprived of the benefits of such inspection. Our common stock may be delisted under the HFCA Act if the PCAOB is unable to inspect our auditors for three consecutive years after we are identified by the SEC as a Commission-Identified Issuer, or two consecutive years if the AHFCAA is enacted. The delisting of our securities, or the threat of our securities being delisted, may materially and adversely affect the value of your investment*" *on page _____.*

---

| |
|:---|
| 6 |
| *[**Table of Contents**](#toc)* |

---

**Permissions Required from the PRC Authorities for Our Business Operations and Securities Offering**

In addition to regular business licenses, we are required to obtain the pollutants discharge permit to operate our business in the PRC. We believe that our PRC operating subsidiaries have obtained all requisite permissions for our operations in all material aspects from relevant Chinese authorities and none of the requisite permissions for our operations in all material aspects have been denied by the Chinese authorities. However, we cannot assure you that our PRC subsidiaries are always able to successfully update or renew the licenses or permits required for the relevant business in a timely manner or that these licenses or permits are sufficient to conduct all of our present or future business. If our PRC subsidiaries (i) do not receive or maintain required permissions or approvals, (ii) inadvertently conclude that such permissions or approvals are not required, or (iii) applicable laws, regulations, or interpretations change and our PRC subsidiaries are required to obtain such permissions or approvals in the future, we could be subject to fines, legal sanctions or an order to suspend our PRC operating subsidiaries' business, which may materially and adversely affect the business, financial condition and results of operations of us.

In connection with our previous issuance of securities, under current PRC laws, regulations and regulatory rules, as of the date of this annual report, we believe that we and our PRC subsidiaries, (i) are not required to obtain permissions from the CSRC, (ii) are not required to go through cybersecurity review by the Cyberspace Administration of China (the "CAC"), and (iii) have not received or were denied such requisite permissions by any PRC authority.

However, we cannot guarantee that the regulators will agree with us. As of the date hereof, we have not been involved in any investigations on cybersecurity review made by the CAC, and we have not received any inquiry, notice, warning, or sanctions in such respect. However, as these are new regulations, there remains uncertainties as to how they will be interpreted or implemented in the context of an overseas offering.

For additional information, see *"Risk Factor—Risks Related to Doing Business in China— The approval of the CSRC or other Chinese regulatory agencies may be required in connection with our future capital-raising activities outside China under Chinese law." on page ___.*

**Cash and Asset Flows through Our Organization**

Current PRC regulations permit our PRC subsidiaries to pay dividends to us, only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. As of the date hereof, we have had no transactions that involved the transfer of cash or assets throughout our corporate structure and no transfers, dividends or distributions have been made to investors. Our PRC subsidiaries have not transferred cash or other assets to Phoenix Rising Companies including by way of dividends. Phoenix Rising Companies does not currently plan or anticipate transferring cash or other assets from our operations in the PRC to any non-Chinese entity.

We do not have any cash management policies that dictate how funds are transferred between Phoenix Rising Companies and its subsidiaries. To the extent cash and/or assets in our business in the PRC or in any of our PRC subsidiaries, such funds and/or assets may not be available to fund operations or for other use outside of the PRC due to interventions in or the imposition of restrictions and limitations on the ability of us or our subsidiaries by the PRC government to transfer cash and/or assets.

**Summary of Risk Factors Related to China**

Investing in our securities involves a high degree of risk. The following is a summary of significant risk factors and uncertainties that may affect our business, which are discussed in more detail below under "Item 1A. Risk Factors" included in this Annual Report on Form 10-K:

● The Chinese government may intervene or influence our operations in China at any time, or may exert more control over offerings conducted outside China by and/or foreign investment in China-based issuers, which could result in a material change in our operations and in the value of our securities. Any actions by the Chinese government to exert more oversight and control over offerings that are conducted outside China by and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

● Changes in U.S. and Chinese regulations or in relations between the United States and China may adversely impact our business, our operating results, our ability to raise capital and the value of our securities. Any such changes may take place quickly and with very little notice.

● There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations.

● Investors may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China based upon U.S. laws, including the federal securities laws or other foreign laws against us or our management.

● The approval of the CSRC or other Chinese regulatory agencies may be required in connection with our future capital-raising activities outside China under Chinese law.

---

| |
|:---|
| 7 |
| *[**Table of Contents**](#toc)* |

---

**Enforceability of Civil Liabilities**

A portion of our current operations are conducted in China. One person who is a director and officer of one of our subsidiaries is a national or resident of China. There is uncertainty as to whether the courts of China would:

● recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States; or

● entertain original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

The recognition and enforcement of foreign judgments are provided for under PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on reciprocity between jurisdictions. China does not have any treaties or other form of reciprocity with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC law or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States. Under the PRC Civil Procedures Law, foreign shareholders may originate actions based on PRC law against us in the PRC, if they can establish sufficient nexus to the PRC for a PRC court to have jurisdiction, and meet other procedural requirements, including, among others, the plaintiff must have a direct interest in the case, and there must be a concrete claim, a factual basis and a cause for the suit. However, it would be difficult for foreign shareholders to establish sufficient nexus to the PRC by virtue only of holding our shares of common stock.

**The officers and directors of our subsidiaries are as follows:**

Xing Rui International Seychelles: Sole director and officer - Ding-Shin "DS" Chang.

Xing Rui International Hong Kong: Sole director and officer - Ding-Shin "DS" Chang.

Huaxin Changrong Shenzhen: Sole director and officer - Ding-Shin "DS" Chang.

Tieshan Beijing: Sole director and officer – Wen Cui.

**Summary Financial Information**

The tables and information below are derived from our audited financial statements as of December 31, 2021.

---

| | |
|:---|:---|
|  | **December 31,**<br>**2021** |
| **Financial Summary** |  |
| Cash and Cash Equivalents | $101876 |
| Total Assets | 19284954 |
| Total Liabilities | 13961595 |
| Total Stockholders' Equity (Deficit) | $19284954 |

---

**Business Operations.**

The Company has engaged in the following business activities, through the listed subsidiary entities:

**<u>Worx America, Inc</u>.**

From January 2015 through March 2015, the Company, by and through its wholly owned subsidiary, Xing Rui International Investment Holding Group Co., Ltd. ("Xing Rui"), acquired 20,068,750 shares of common stock (representing 20% of the issued and outstanding common stock) of Worx America, Inc. ("Worx"), a private company based in Houston, Texas, in exchange for $1,650,000 cash and 1,000,000 shares of common stock of Borneo Resource Investments Ltd. ("BRNE") with a value of $350,000. Specifically, on January 28, 2015, the Company paid $350,000 cash in exchange for 5,403,728 common shares of Worx, on March 20, 2015, the Company paid $1,300,000 cash and transferred 1,000,000 shares of common stock of BRNE in exchange for 14,665,022 common shares of Worx. The Company accounted for this investment using the equity method, with an initial cost of $2,000,000.

Worx designed automated solutions for industrial, environmental and energy industries to improve efficiency and systems output. The Worx automated robotic tank cleaning system was intended to reduce tank cleaning time, reduce or eliminate the need for personnel to enter tanks, and may reduce the volume of solvents used to clean a tank.

---

| |
|:---|
| 8 |
| *[**Table of Contents**](#toc)* |

---

On June 6, 2016, Worx sold all of its assets ("Asset Sale"), including, but not limited to, its technologies and intellectual property, to Bay WorxRail, LLC ("Bay WorxRail") for $1,000,000 ("Purchase Price"), subject to a holdback of $250,000 of the Purchase Price, pursuant to the terms set forth in that certain Asset Purchase Agreement, dated June 6, 2016, among Worx, Bay WorxRail, and Michael Zilai, as majority stockholder of Worx. The Company reviewed Worx's financial condition at July 31, 2016 and concluded that as a result of the Asset Sale there is a 100% impairment loss related to the Company's investment in Worx, and recorded an impairment loss of $1,907,308, for the year ended January 31, 2017. At present, the Company's carrying value of its Worx investment is $0.

**<u>Shenzhen Amuli Industrial Development Co. Ltd</u>.**

On October 1, 2015, the Company issued 3,033,926 shares of its Common Stock to Xu Xiao Yun in exchange for sixty percent (60%) of Shenzhen Amuli Industrial Development Co. Ltd., a PRC corporation ("Amuli"). The equity of Amuli that was transferred by Xu Xiao Yun was held by Huaxin Changrong (Shenzhen) Technology Service Co., Ltd. ("Huaxin"), which was formed by Xing Rui for the purpose of holding the equity of Amuli and other PRC subsidiaries. The purchase price was valued $2,400,000.

On November 19, 2018, the Company disposed of its partial ownership interest in Amuli by causing Huaxin and Amuli to enter into a Share Purchase Agreement (the "Amuli Disposition Agreement") with Ms. An Wenhui, a citizen of the PRC and minority shareholder of Amuli (the "Purchaser"), pursuant to which, among other things and subject to the terms and conditions contained therein, Huaxin sold its sixty percent (60%) Amuli equity stake (the "Amuli Shares") to the Purchaser (the "Amuli Disposition"). Pursuant to the Amuli Disposition Agreement, in exchange for the Amuli Shares, the Purchaser paid to Huaxin a cash price of $1 or the equivalent thereof in Chinese Yuan (the "Purchase Price"). Our Board of Directors approved the Amuli Disposition Agreement, the Amuli Disposition and the Purchase Price, because among other reasons the Board of Directors believed that Amuli would not produce significant future income or cash flow. The Amuli Disposition Agreement contains substantially fewer representations and warranties in comparison to other agreements entered into by the Company and its subsidiaries. Additionally, the closing of the Amuli Disposition occurred contemporaneously with the signing of the Amuli Disposition Agreement, which resulted in little or no covenants or closing conditions imposed on the parties. As a result, Amuli is no longer a partially-owned subsidiary of the Company.

**<u>Beijing Yandong Tieshan Oil Products Co., Ltd</u>.**

On January 29, 2016, the Company entered into an exchange agreement (the "Tieshan Oil Exchange Agreement") with Mr. Yang Baojin ("Mr. Yang"), a citizen of the PRC, and the Company's subsidiary Huaxin. Mr. Yang was the president and majority owner of Beijing Yandong Tieshan Oil Products Co., Ltd. ("Tieshan Oil"). Pursuant to the Tieshan Oil Exchange Agreement, the Company issued 4,800,000 shares of its Common Stock to Mr. Yang, who delivered to Huaxin an ownership interest in Tieshan Oil such that Huaxin at the time of closing owned 51% of all ownership interests in Tieshan Oil (the "Tieshan Oil Exchange"). The Company held 1,200,000 shares of its Common Stock in escrow (the "Escrow Shares") to issue to Mr. Yang twelve months following the closing of the Tieshan Oil Exchange, in connection with the successful performance of certain covenants by Mr. Yang. The Company did not issue the Escrow Shares to Mr. Yang in connection with the Tieshan Oil Exchange.

On May 16, 2018, the Company completed its acquisition of Tieshan Oil by entering into a second share exchange agreement (the "Second Tieshan Oil Exchange Agreement") with Mr. Yang. Pursuant to the Second Tieshan Oil Exchange Agreement, the Company, through Huaxin, agreed to acquire the remaining 49% of Tieshan Oil held by Mr. Yang, in exchange for the issuance to Mr. Yang of 16,000,000 shares of the Company's Common Stock (the "Tieshan Oil Acquisition"). The Tieshan Oil Acquisition closed simultaneously with the execution of the Second Tieshan Oil Exchange Agreement.

Apart from the Tieshan Oil Acquisition, neither the Company nor Huaxin has a material relationship with either Mr. Yang or Tieshan Oil.

A description of the products, services, principal market and distribution methods of Tieshan Oil can be found within this Part I, Item 2 under the heading "Principal Products, Services and Their Markets."

**<u>Abandonment of Plans to Acquire Dusun Eco Resort (2005) Sdn. Bhd</u>.**

On December 7, 2017, the Company entered into a Share Exchange Agreement (the "Dusun Exchange Agreement") with Dusun Eco Resort (2005) Sdn. Bhd., a limited liability company registered under the laws of Malaysia ("Dusun Eco"), and the shareholders of Dusun Eco (the "Dusun Sellers"), by which the Company agreed to acquire all of the issued and outstanding stock of Dusun Eco in exchange for the issuance of 400,000,000 shares of the Company's Common Stock. After further review of the due diligence materials related to the Exchange, our Board of Directors felt that it was in the Company's best interest to terminate the Dusun Exchange Agreement. On February 9, 2018, the Company, Dusun Eco and the Dusun Sellers entered into a Termination of Share Exchange Agreement (the "Dusun Termination Agreement"), by which the Company, Dusun Eco and the Dusun Sellers agreed to terminate the Dusun Exchange Agreement with no legal consequence to any of the parties to the Dusun Exchange Agreement.

---

| |
|:---|
| 9 |
| *[**Table of Contents**](#toc)* |

---

**<u>Admall Sdn. Bhd.</u>**

On February 9, 2018, the Company entered into a Share Exchange Agreement (the "Admall Exchange Agreement") with Admall Sdn. Bhd., a limited liability company incorporated in Malaysia ("Admall"), and each of Admall's shareholders (collectively, the "Admall Sellers"), pursuant to which the Company acquired from the Admall Sellers all outstanding equity interests of Admall in exchange for 400,000,000 shares of Common Stock of the Company (the "Admall Acquisition"). On May 16, 2018, the Company closed the Admall Acquisition.

Concurrently with the execution of the Admall Exchange Agreement, our Board of Directors appointed Mr. Boon Jin "Patrick" Tan to be the treasurer, CFO and Director of the Company. Mr. Tan is the founder and director of Admall. Apart from the appointment of Mr. Tan as Director and officer of the Company, and the transactions pursuant to the Admall Exchange Agreement, the Company did not have a prior material relationship with Admall or any of the Admall Sellers.

A description of the products, services, principal market and distribution methods of Admall can be found within this Part I, Item 2 under the heading "Principal Products, Services and Their Markets."

**<u>Beijing Yandong Tieshan Oil Products Co., Ltd</u>.**

Tieshan Oil acquires a variety of chemical products and compounds that are extracted and processed from crude oil and hydrocarbons. Tieshan Oil acts as an intermediary broker of methyl tert-butyl ether, mineral oil, paraffin oil, petrolatum liquids, alcohol based liquid fuel, trimethylpentane, pentane foamer, natural gasoline, xylene dimethylbenzene, aromatics solvent, and other chemical products and compounds. It identifies sources of supply and purchasers of these chemical products and compounds, and Tieshan Oil principally engages in the trading of these oil, gas and lubricant products within the PRC. Since it's incorporation, Tieshan Oil has had a number of clients for these brokered products, including two gasoline operators in China, YanDongPetrol Group and YanDon Hao Teng. All of its clients are licensed gasoline operators. While this is a dynamic market, subject to fluctuations and unexpected changes brought on by a variety of political and market matters, Tieshan Oil has successfully managed the impact of these factors and remains an important part of the oil refining industry in Beijing, PRC.

**<u>Admall Sdn. Bhd.</u>**

Admall provides nutrition consultancy services and training. Admall also sells health, nutrition, and supplement products through an online store. Headquartered in Malaysia, Admall provides its services and sells its products in Southeast Asia, China, Hong Kong, Taiwan, and Korea. Utilizing technology, Admall delivers its services and sells its products via internet and e-commerce applications. Admall's services include personal training, life coaching, and total life enhancement programmes, all centered around its "BE the BEST" platform. Admall has partnered with educational institutions, e-commerce platforms, nutritional development groups, and wellness service providers to expand the marketing and delivery of its services, training, and product sales.

We also continue to actively seek additional global investment opportunities in emerging companies with products that have potential for expanding regional and international sales and revenues.

**<u>Competitive Business Conditions and Strategy; Our Position in the Industry</u>**

In addition to the operating entities and businesses described above, we are actively involved in the acquisition of businesses which we believe will generate cash within an acceptable time horizon, and we primarily use our capital stock as consideration in such acquisitions. We face many competitors in the strategic investment and acquisition sector, including private equity funds, sovereign wealth and pension funds, corporate conglomerates, single family offices and multi-family offices, asset management firms, corporate acquirors which are strategically positioned in industries competitive with ours, and other small-cap public companies which primarily use equity securities to finance investments and acquisitions. In the latter category, barriers to entry are extremely low, and we face intense competition to source investment targets and to close investments. Our competitors have significantly greater financial and marketing resources than we do, including sufficient cash to pay consideration for acquisitions. There are no assurances that our efforts to compete in the marketplace will be successful or that we will continue to be able to compete with other funds, companies or other sources of capital to secure competitive acquisition targets and consummate future transactions.

---

| |
|:---|
| 10 |
| *[**Table of Contents**](#toc)* |

---

**Patents, Trademarks, Licenses, Franchise Restrictions and Contractual Obligations & Concessions**

We rely on a combination of trademark laws, trade secrets, confidentiality provisions and other contractual provisions to protect our proprietary rights, which are primarily our brand names, product designs and marks.

**Compliance with Government Regulation**

We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the construction and operation of any facility in any jurisdiction which we would conduct activities. We do not believe that government regulation will have a material impact on the way we conduct our business, however, any government regulation imposing greater fees for Internet use or restricting information exchange over the Internet could result in a decline in the use of the Internet and the viability of Internet-based services, which could harm our business and operating results.

**Research and Development Activities and Costs**

We have not incurred any research and development costs for the fiscal years ended December 31, 2021.

**Employees**

Including our subsidiaries, we have 20 full-time employees and we do not anticipate hiring more employees in the near future.

**Description of Properties**

Our executive offices are located at 641 10th Street, Cedartown, Georgia 30125, and our telephone number is (844) 487-4636. We do not own any real estate or other physical properties.

**Bankruptcy or Similar Proceedings**

We have never been subject to bankruptcy, receivership or any similar proceeding.

**ITEM 1A. RISK FACTORS**

**RISKS RELATED TO DOING BUSINESS IN THE PEOPLE'S REPUBLIC OF CHINA**

***Changes in the political and economic policies of the People's Republic of China ("PRC") government may materially and adversely affect our business, financial condition and results of operations and may result in our inability to sustain our growth and expansion strategies.***

We are a holding company that operates part of our business through our Hong Kong and PRC subsidiaries. The PRC government has sovereignty of Hong Kong, and Hong Kong's legislature adopts laws that are congruent with PRC government policies and laws. Because part of our operations are in the Hong Kong, economic, political and legal developments in the PRC will significantly affect our business, financial condition, results of operations and prospects.

---

| |
|:---|
| 11 |
| *[**Table of Contents**](#toc)* |

---

The PRC economy differs from the economies of most developed countries in many respects, including the extent of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the PRC government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. The PRC government also exercises significant control over China's economic growth by allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, regulating financial services and institutions and providing preferential treatment to particular industries or companies.

While the PRC economy has experienced significant growth in the past three decades, growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall PRC economy, but may also have a negative effect on us. Our financial condition and results of operation could be materially and adversely affected by government control over capital investments or changes in tax regulations that are applicable to us. In addition, the PRC government has implemented in the past certain measures, including interest rate increases, to control the pace of economic growth. These measures may cause decreased economic activity, which in turn could lead to a reduction in demand for our services and consequently have a material adverse effect on our businesses, financial condition and results of operations.

***There are uncertainties regarding the interpretation and enforcement of PRC and Hong Kong laws, rules and regulations.***

Part of our operations are conducted in the Hong Kong, and are governed by PRC and Hong Kong laws, rules and regulations. Our Hong Kong subsidiaries may become subject to laws, rules and regulations applicable to foreign investment in China. The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value.

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

Any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems.

***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 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 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.

---

| |
|:---|
| 12 |
| *[**Table of Contents**](#toc)* |

---

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. 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.

***Compliance with China's new Data Security Law, Measures on Cybersecurity Review (revised draft for public consultation), Personal Information Protection Law (second draft for consultation), regulations and guidelines relating to the multi-level protection scheme and any other future laws and regulations may entail significant expenses and could materially affect our business.***

Recently, the Cyberspace Administration of China has taken action against several Chinese internet companies in connection with their initial public offerings on U.S. securities exchanges, for alleged national security risks and improper collection and use of the personal information of Chinese data subjects. According to the official announcement, the action was initiated based on the National Security Law, the Cyber Security Law and the Measures on Cybersecurity Review, which are aimed at "preventing national data security risks, maintaining national security and safeguarding public interests." Additionally, regulations announced by the Cyberspace Administration of China on January 4, 2022, The Cybersecurity Review Measures (2021) (the "Measures"), became effective on February 15, 2022. According to the Measures, to go public abroad, an online platform operator that possesses the personal information of more than 1,000,000 users must seek cybersecurity review from the Office of Cybersecurity Review. Currently, we have not been involved in any investigations on cybersecurity review initiated by the CAC or related governmental regulatory authorities, and we have not received any inquiry, notice, warning, or sanction in such respect. Since these cybersecurity rules were recently enacted and uncertainties exist as to the interpretation or implementation of the Measures, if the Measures require us to obtain clearance or permissions from the CAC, we would file an application with CAC and seek to obtain the clearance or permissions from the CAC as required. However, there can be no assurance we will obtain clearance or permission which could adversely affect our business. Compliance with the Measures, as well as additional laws, regulations and guidelines that the PRC government promulgates in the future, may entail significant expenses and could materially affect our business.

It is unclear at the present time how widespread the cybersecurity review requirement and the enforcement action will be and what effect they will have on our business. China's regulators may impose penalties for non-compliance ranging from fines or suspension of operations, and this could lead to us delisting or removal from the over-the-counter markets.

Also, on August 20, 2021, the National People's Congress passed the Personal Information Protection Law, which will be implemented on November 1, 2021. The law creates a comprehensive set of data privacy and protection requirements that apply to the processing of personal information and expands data protection compliance obligations to cover the processing of personal information of persons by organizations and individuals in China, and the processing of personal information of persons in China outside of China if such processing is for purposes of providing products and services to, or analyzing and evaluating the behavior of, persons in China. The law also proposes that critical information infrastructure operators and personal information processing entities who process personal information meeting a volume threshold to-be-set by Chinese cyberspace regulators are also required to store in China personal information generated or collected in China, and to pass a security assessment administered by Chinese cyberspace regulators for any export of such personal information. Lastly, the draft contains proposals for significant fines for serious violations of up to RMB 50 million or 5% of annual revenues from the prior year.

We believe that the CAC does not apply to our operations in because we do not possess an amount of information in our business operations that would trigger the CAC; and the kind of data processed in our operations does not relate to national security. We have not obtained an opinion counsel because our operations do not fall within the scope of the CAC.

---

| |
|:---|
| 13 |
| *[**Table of Contents**](#toc)* |

---

***The Chinese government may intervene or influence our operations in China at any time, or may exert more control over offerings conducted outside China by and/or foreign investment in China-based issuers, which could result in a material change in our operations and in the value of our securities. Any actions by the Chinese government to exert more oversight and control over offerings that are conducted outside China by and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer securities to investors and cause the value of such securities to significantly decline or be worthless.***

A portion of our operations are conducted in the PRC. Accordingly, our financial condition and results of operations are affected to a significant extent by the economic, political and legal developments in the PRC. The PRC economy differs from the economies of most developed countries in many respects, including the extent of government involvement, level of development, growth rate, and control of foreign exchange and allocation of resources. The PRC government has implemented various measures to encourage economic growth and to guide the allocation of resources. Some of these measures may benefit the overall PRC economy but may also have a negative effect on us. Our financial condition and results of operations could be materially and adversely affected by government control over capital investments or changes in tax regulations that are applicable to us.

The Chinese government recently has published new policies that significantly affected certain industries such as the education and internet industries, and we cannot rule out the possibility that it will not in the future release regulations or policies regarding our industry that could require us or our PRC subsidiaries to seek permission from Chinese authorities to continue to operate our business in China, which may adversely affect our business, financial condition and results of operations. Furthermore, recent statements made by the Chinese government have indicated an intent to increase the government's oversight and control over offerings of companies with significant operations in China that are to be conducted in foreign markets, as well as foreign investment in China-based issuers like us. Any such action, once taken by the Chinese government, could significantly limit or completely hinder our ability to offer our securities, and could cause the value of such securities to significantly decline or become worthless.

For example, in July 2021, the Chinese government provided new guidance on China-based companies raising capital outside of China, including through arrangements via VIEs. In light of such developments, the SEC has imposed enhanced disclosure requirements on China-based companies seeking to register securities with the SEC. Although we have never adopted a VIE structure and our business in China does not involve any type of restricted industry under Chinese regulations, any future Chinese, U.S. or other rules and regulations that place restrictions on capital raising or other activities by companies with extensive operations in China could adversely affect our business. If the business environment in China deteriorates from the perspective of domestic or international investment, or if relations between China and the United States or other governments deteriorate, the Chinese government may intervene with our operations, and our business in China, as well as the value of our securities, may also be adversely affected.

***Changes in U.S. and Chinese regulations or in relations between the United States and China may adversely impact our business, our operating results, our ability to raise capital and the value of our securities. Any such changes may take place quickly and with very little notice.***

The U.S. government, including the SEC, has made statements and taken certain actions that led to changes to United States and international relations, and will impact companies with connections to the United States or China. The SEC has issued statements primarily focused on companies with significant China-based operations, such as us. For example, on July 30, 2021, Gary Gensler, Chairman of the SEC, issued a Statement on Investor Protection Related to Recent Developments in China, pursuant to which Chairman Gensler stated that he has asked the SEC staff to engage in targeted additional reviews of filings for companies with significant China-based operations. The statement also addressed risks inherent in companies with VIE structures. We have never adopted a VIE structure and are not in any industry that is subject to foreign ownership limitations by China. However, it is possible that the Company's filings with the SEC may be subject to enhanced review by the SEC.

In response to the SEC's July 30, 2021 statement, the CSRC announced on August 1, 2021, that "it is our belief that Chinese and U.S. regulators shall continue to enhance communication with the principle of mutual respect and cooperation, and properly address the issues related to the supervision of China-based companies listed in the U.S. so as to form stable policy expectations and create benign rules framework for the market." The CSRC pledged to continue to collaborate "closely with different stakeholders including investors, companies, and relevant authorities to further promote transparency and certainty of policies and implementing measures," and emphasized that it "has always been open to companies' choices to list their securities on international or domestic markets in compliance with relevant laws and regulations." If any new legislation, executive orders, laws and/or regulations are implemented, if the U.S. or Chinese governments take retaliatory actions due to the recent U.S.-China tension or if the Chinese government exerts more oversight and control over securities offerings that are conducted in the United States, such changes could have an adverse effect on our business, financial condition and results of operations, our ability to raise capital and the value of our securities.

---

| |
|:---|
| 14 |
| *[**Table of Contents**](#toc)* |

---

***There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations.***

Substantially all of our operations are conducted in the PRC, and are governed by PRC laws, rules and regulations. Our PRC subsidiaries are subject to laws, rules and regulations applicable to foreign investment in China. The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value. In 1979, the PRC government began to promulgate a comprehensive system of laws, rules and regulations governing economic matters in general. The overall effect of legislation over the past four decades has significantly enhanced the protections afforded to various forms of foreign investment in China. However, China has not developed a fully integrated legal system, and recently enacted laws, rules and regulations may not sufficiently cover all aspects of economic activities in China or may be subject to significant degrees of interpretation by PRC regulatory agencies. In particular, because these laws, rules and regulations are relatively new, and because of the limited number of published decisions and the nonbinding nature of such decisions, and because the laws, rules and regulations often give the relevant regulator significant discretion in how to enforce them, the interpretation and enforcement of these laws, rules and regulations involve uncertainties and can be inconsistent and unpredictable. In addition, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all, and may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until after the occurrence of the violation. Any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention.

The PRC government has recently announced its plans to enhance its regulatory oversight of Chinese companies listing overseas. The Opinions on Strictly Cracking Down on Illegal Securities Activities issued on July 6, 2021 called for:

● tightening oversight of data security, cross-border data flow and administration of classified information, as well as amendments to relevant regulation to specify responsibilities of overseas listed Chinese companies with respect to data security and information security;

● enhanced oversight of overseas listed companies as well as overseas equity fundraising and listing by Chinese companies; and

● extraterritorial application of China's securities laws.

On December 24, 2021, the CSRC released the Administrative Provisions of the State Council Regarding Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments) (the "Administrative Provisions"), and the Measures Regarding Recordation of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments) (the "Measures"). The Administrative Provisions and Measures aim to establish a unified supervision system and promote cross-border regulatory cooperation. The Measures lay out filing procedures for domestic companies to record their initial public offerings and follow-on offerings abroad with the CSRC. Issuers are required to file follow-on offerings with the CSRC within 3 business days after the closing of such offerings.

According to the Q&A held by CSRC officials for journalists thereafter, the CSRC will adhere to the principle of non-retroactive application of law and first focus on issuers conducting initial public offerings and follow-on offerings by requiring them to complete the recordation procedures. Other issuers will be given a sufficient transition period. The CSRC officials also noted that the regulation system contemplated by the draft Administrative Provisions and Measures differentiates between IPOs and follow-on offerings to take into account overseas capital markets' fast and efficient features and to reduce impacts on overseas financing activities by domestic companies. If the Administrative Provisions and the Measures are enacted as proposed, we expect to perform necessary recordation filings with the CSRC for our listing on the Nasdaq within the prescribed transition period and for future offerings that take place after the Administrative Provisions and the Measures enter into force.

As there are still uncertainties regarding the enactment, interpretation and implementation of regulations and rules under the umbrella of the Opinions on Strictly Cracking Down on Illegal Securities Activities, there is no assurance that our business, operating results, cash flows and prospect will not be negatively affected by new regulatory requirements in the future in China.

---

| |
|:---|
| 15 |
| *[**Table of Contents**](#toc)* |

---

***PRC laws and regulations establish complex procedures in connection with certain acquisitions of China-based companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions or mergers in China.***

On August 8, 2006, six PRC regulatory agencies, including the Ministry of Commerce ("MOFCOM"), the State-Owned Assets Supervision and Administration Commission, the State Administration of Taxation, the State Administration for Industry and Commerce, the CSRC, and the State Administration of Foreign Exchange, jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, which came into effect on September 8, 2006 and were amended on June 22, 2009. The M&A Rules include, among other things, provisions that purport to require that an offshore special purpose vehicle formed for the purpose of an overseas listing of securities of a PRC company obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle's securities on an overseas stock exchange. On September 21, 2006, the CSRC published on its official website procedures regarding its approval of overseas listings through special purpose vehicles. However, substantial uncertainty remains regarding the scope and applicability of the M&A Rules to offshore special purpose vehicles.

The regulations also 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 the MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, or that the approval from the MOFCOM be obtained in circumstances where overseas companies established or controlled by PRC enterprises or residents acquire affiliated domestic companies.

Moreover, according to the Anti-Monopoly Law of the People's Republic of China promulgated on August 30, 2007 and the Provisions on Thresholds for Reporting of Concentrations of Undertakings (the "Prior Reporting Rules") issued by the State Council in August 2008 and amended in September 2018, the concentration of business undertakings by way of mergers, acquisitions or contractual arrangements that allow one market player to take control of or to exert decisive impact on another market player must also be notified in advance to the anti-monopoly enforcement agency of the State Council when the applicable threshold is crossed and such concentration shall not be implemented without the clearance of prior reporting. In addition, the Regulations on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprise by Foreign Investors (the "Security Review Rules") issued by the MOFCOM that became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise "national defense and security" concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise "national security" concerns are subject to strict review by the MOFCOM, and the rules prohibit any activities attempting to bypass a security review by structuring the transaction through, among other things, trusts, entrustment or contractual control arrangements.

In the event that our acquisition of other companies in China falls within the scope of these regulations, compliance with these regulations to complete such transactions could be time-consuming, and any required approval processes, including approval from the MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

---

| |
|:---|
| 16 |
| *[**Table of Contents**](#toc)* |

---

***As a holding company incorporated in the State of Nevada without material operations of its own, we may in the future rely on dividends and other distributions on equity paid by its PRC operating subsidiaries for our cash needs.***

We are a holding company, and we conduct most of our of our operations through our PRC subsidiaries. In the future, we may rely on dividends and other distributions on equity paid by its PRC subsidiaries for its cash needs, including the funds necessary to pay dividends and other cash distributions to its stockholders, to service any debt it may incur and to pay its operating expenses. Current regulations in the PRC permit payment of dividends only out of accumulated profits as determined in accordance with PRC accounting standards and regulations. According to the articles of association of our PRC subsidiaries, each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profit based on the PRC accounting standards and regulations each year to its statutory general reserve, until the balance in the reserve reaches 50% of the registered capital of the company. Funds in the reserve are not distributable to us in forms of cash dividends, loans or advances. In addition, if our PRC 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, which in turn will adversely affect its available cash.

In addition, our PRC subsidiaries' ability to pay dividends and other cash distributions is subject to foreign exchange restrictions in China. For example, to address persistent capital outflows and the RMB's depreciation against the U.S. dollar in the fourth quarter of 2016, the People's Bank of China and the State Administration of Foreign Exchange, or SAFE, implemented a series of capital control measures in the subsequent months, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments and shareholder loan repayments. The PRC government may continue to strengthen its capital controls and our PRC subsidiaries' dividends and other distributions may be subject to tightened scrutiny in the future. 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.

As a matter of fact, we have never declared or paid any dividends to our stockholders, nor do we have any present plan to pay any cash dividends on the common stock in the foreseeable future. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

***Fluctuations in exchange rates could adversely affect our business and the value of our securities.***

The value of our securities will be indirectly affected by the foreign exchange rate between the U.S. dollar and RMB and between those currencies and other currencies in which our sales may be denominated. Appreciation or depreciation in the value of the RMB relative to the U.S. dollar would affect our financial results reported in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. Fluctuations in the exchange rate will also affect the relative value of any dividend we issue that will be exchanged into U.S. dollars, as well as earnings from, and the value of, any U.S. dollar-denominated investments we make in the future.

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

---

| |
|:---|
| 17 |
| *[**Table of Contents**](#toc)* |

---

***Investors may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China based upon U.S. laws, including the federal securities laws or other foreign laws against us or our management.***

All of our current operations are conducted in China. Moreover, most of our current directors and officers are nationals or residents of China. All or a substantial portion of the assets of these persons are located outside the United States and in the PRC. As a result, it may not be possible to effect service of process within the United States or elsewhere outside China upon these persons. In addition, uncertainty exists as to whether the courts of China would recognize or enforce judgments of U.S. courts obtained against us or such officers and/or directors predicated upon the civil liability provisions of the securities laws of the United States or any state thereof, or be competent to hear original actions brought in China against us or such persons predicated upon the securities laws of the United States or any state thereof.

***The approval of the CSRC or other Chinese regulatory agencies may be required in connection with our future capital-raising activities outside China under Chinese law.***

The "M&A Rules" purport to require offshore special purpose vehicles that are controlled by Chinese companies or individuals and that have been formed for the purpose of seeking a public listing on an overseas stock exchange through acquisitions of Chinese domestic companies or assets in exchange for the shares of the offshore special purpose vehicles shall obtain CSRC approval prior to publicly listing their securities on an overseas stock exchange.

Based on our understanding of the Chinese laws and regulations currently in effect, we or any of our PRC subsidiaries will not be required to submit an application to the CSRC for its approval of any of our offerings of securities to investors outside China under the M&A Rules. However, there remains some uncertainties as to how the M&A Rules will be interpreted or implemented, and our view of our obligations under the M&A Rules is subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules. We cannot assure you that relevant Chinese government agencies, including the CSRC, would reach the same conclusion.

Furthermore, on July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly promulgated the Opinions on Strictly Cracking Down on Illegal Securities Activities, pursuant to which Chinese regulators are required to accelerate rulemaking related to the overseas issuance and listing of securities, and update the existing laws and regulations related to data security, cross-border data flow, and management of confidential information. Numerous regulations, guidelines and other measures have been or are expected to be adopted under the umbrella of or in addition to the Cybersecurity Law and Data Security Law. On December 24, 2021, the CSRC released the Administrative Provisions of the State Council Regarding Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments) and the Measures Regarding Recordation of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments).

As there are still uncertainties regarding the interpretation and implementation of such regulatory guidance, we cannot assure you that we will be able to comply with China's new regulatory requirements relating to our future capital-raising activities outside China and we may become subject to more stringent requirements with respect to matters including cross-border investigation and enforcement of legal claims. Notwithstanding the foregoing, as of the date hereof, we are not aware of any Chinese laws or regulations in effect requiring that we or any of our PRC subsidiaries obtain permission from any Chinese authority to issue securities to investors outside China, and we or any of our PRC subsidiaries have not received any inquiry, notice, warning, or sanction in relation to the trading of our common stock on the Nasdaq from the CSRC, the CAC or any other Chinese authorities.

We believe that we or any of our PRC subsidiaries are not required to submit an application to the CSRC or the CAC for the approval of any of our offerings of securities to investors outside China or trading of our common stock on the Nasdaq. However, there remains significant uncertainty as to the enactment, interpretation and implementation of regulatory requirements related to overseas securities offerings and other capital markets activities under Chinese laws. If it is determined in the future that the approval of the CSRC, CAC or any other regulatory authority is required for any of our offerings, we may face sanctions by the CSRC, the CAC or other Chinese regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in China, limit our ability to pay dividends out of China, limit our operations in China, delay or restrict the repatriation of the proceeds from overseas offerings into China or take other actions that could have a material adverse effect on our business, financial condition, results of operations and prospects, the value of our securities, as well as our ability to offer or continue to offer securities to investors or cause such securities to significantly decline in value or become worthless.

---

| |
|:---|
| 18 |
| *[**Table of Contents**](#toc)* |

---

***PRC regulation of loans to, and direct investment in, PRC entities by offshore holding companies and governmental control of currency conversion may restrict or prevent us from making additional capital contributions or loans to its PRC subsidiaries.***

As an offshore holding company, we are permitted under PRC laws and regulations to provide funding to its PRC subsidiaries through loans or capital contributions. However, loans by us to our PRC subsidiaries to finance their activities cannot exceed statutory limits and must be registered with the local counterpart of the State Administration of Foreign Exchange and capital contributions to its PRC subsidiaries are subject to the requirement of making necessary filings in the Foreign Investment Comprehensive Management Information System, and registration with other governmental authorities in China.

The State Administration of Foreign Exchange promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested Enterprises, or Circular 19, effective on June 1, 2015, in replacement of the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign- Invested Enterprises, the Notice from the State Administration of Foreign Exchange on Relevant Issues Concerning Strengthening the Administration of Foreign Exchange Businesses, and the Circular on Further Clarification and Regulation of the Issues Concerning the Administration of Certain Capital Account Foreign Exchange Businesses. According to Circular 19, the flow and use of the RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company is regulated such that RMB capital may not be used for the issuance of RMB entrusted loans, the repayment of inter-enterprise loans or the repayment of bank loans that have been transferred to a third party. Although Circular 19 allows RMB capital converted from foreign currency-denominated registered capital of a foreign-invested enterprise to be used for equity investments within the PRC, it also reiterates the principle that RMB converted from the foreign currency-denominated capital of a foreign-invested company may not be directly or indirectly used for purposes beyond its business scope. Thus, it is unclear whether the State Administration of Foreign Exchange will permit such capital to be used for equity investments in the PRC in actual practice. The State Administration of Foreign Exchange promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or Circular 16, effective on June 9, 2016, which reiterates some of the rules set forth in Circular 19, but changes the prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against using such capital to grant loans to non-associated enterprises. Violations of Circular 19 and Circular 16 could result in administrative penalties. Circular 19 and Circular 16 may significantly limit our ability to transfer any foreign currency we holds to our PRC subsidiaries, which may adversely affect our liquidity and our ability to fund and expand our business in the PRC.

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

***Failure to comply with PRC regulations relating to the investment in offshore special purpose companies by PRC residents may subject our PRC resident stockholders to personal liability, limit our ability to acquire PRC companies or to inject capital into our PRC subsidiaries, limit our PRC subsidiaries' ability to distribute profits to us or otherwise materially adversely affect us.***

On July 14, 2014, SAFE issued the Circular on Relevant Issues Relating to Domestic Residents' Investment and Financing and Roundtrip Investment through Special Purpose Vehicles ("Circular 37"), which replaced the Circular 75, promulgated by SAFE on October 21, 2005. Circular 37 requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents' legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in Circular 37 as a "special purpose vehicle."

We have notified substantial beneficial owners of our company who we know are PRC residents to comply with the registration obligation. However, we may not be aware of the identities of all our beneficial owners who are PRC residents. In addition, we do not have control over our beneficial owners and cannot assure you that all of our PRC resident beneficial owners will comply with Circular 37. The failure of our beneficial owners who are PRC residents to register or amend their SAFE registrations in a timely manner pursuant to Circular 37 or the failure of future beneficial owners of our company who are PRC residents to comply with the registration procedures set forth in Circular 37 may subject such beneficial owners or our PRC subsidiaries to fines and legal sanctions. Failure to register or amend the registration may also limit our ability to contribute additional capital to our PRC subsidiaries or receive dividends or other distributions from our PRC subsidiaries or other proceeds from disposal of our PRC subsidiaries, or we may be penalized by SAFE. These risks may have a material adverse effect on our business, financial condition and results of operations.

---

| |
|:---|
| 19 |
| *[**Table of Contents**](#toc)* |

---

***Under the Enterprise Income Tax 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.***

On March 16, 2007, the National People's Congress of China passed a new Enterprise Income Tax Law, or the EIT Law, and on November 28, 2007, the State Council of China passed its implementing rules, which took effect on January 1, 2008. Under the EIT Law, an enterprise established outside of China with "de facto management bodies" within China is considered a "resident enterprise," meaning that it can be treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. The implementing rules of the EIT Law define de facto management as "substantial and overall management and control over the production and operations, personnel, accounting, and properties" of the enterprise.

On April 22, 2009, the State Administration of Taxation issued the Notice Concerning Relevant Issues Regarding Cognizance of Chinese Investment Controlled Enterprises Incorporated Offshore as Resident Enterprises pursuant to Criteria of de facto Management Bodies, or the Notice, further interpreting the application of the EIT Law and its implementation non-Chinese enterprise or group controlled offshore entities. Pursuant to the Notice, an enterprise incorporated in an offshore jurisdiction and controlled by a Chinese enterprise or group will be classified as a "non-domestically incorporated resident enterprise" if (i) its senior management in charge of daily operations reside or perform their duties mainly in China; (ii) its financial or personnel decisions are made or approved by bodies or persons in China; (iii) its substantial assets and properties, accounting books, corporate chops, board and shareholder minutes are kept in China; and (iv) at least half of its directors with voting rights or senior management often resident in China. A resident enterprise would be subject to an enterprise income tax rate of 25% on its worldwide income and must pay a withholding tax at a rate of 10% when paying dividends to its non-PRC shareholders. In addition, the SAT issued the Announcement of the State Administration of Taxation on Issues concerning the Determination of Resident Enterprises Based on the Standards of Actual Management Institutions in January 2014 to provide more guidance on the implementation of Circular 82. This bulletin further provides that, among other things, an entity that is classified as a "resident enterprise" in accordance with the circular shall file the application for classifying its status of residential enterprise with the local tax authorities where its main domestic investors are registered. From the year in which the entity is determined to be a "resident enterprise," any dividend, profit and other equity investment gains from other resident enterprises within China in previous years (on or after January 1, 2008) shall be taxed in accordance with the enterprise income tax law and its implementing rules.

We may be deemed to be a resident enterprise by Chinese tax authorities. If the PRC tax authorities determine that we are a "resident enterprise" for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. First, we may be subject to the enterprise income tax at a rate of 25% on our worldwide taxable income as well as PRC enterprise income tax reporting obligations. In our case, this would mean that income such as interest on financing proceeds and non-China source income would be subject to PRC enterprise income tax at a rate of 25%. Second, although under the EIT Law and its implementing rules dividends paid to us from our PRC subsidiaries would qualify as "tax-exempt income," we cannot guarantee that such dividends will not be subject to a 10% withholding tax, as the PRC foreign exchange control authorities, which enforce the withholding tax, have not yet issued guidance with respect to the processing of outbound remittances to entities that are treated as resident enterprises for PRC enterprise income tax purposes. Finally, it is possible that future guidance issued with respect to the new "resident enterprise" classification could result in a situation in which a 10% withholding tax is imposed on dividends we pay to our non-PRC shareholders and with respect to gains derived by our non-PRC stockholders from transferring our shares. If we were treated as a "resident enterprise" by the PRC tax authorities, we would be subject to taxation in both the U.S. and China, and our PRC tax may not be used as a credit to reduce our U.S. tax.

***We and our stockholders face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises or other assets attributed to a Chinese establishment of a non-Chinese company, or immovable properties located in China owned by non-Chinese companies.***

In October 2017, the State Administration of Taxation issued the Bulletin on Issues Concerning the Withholding of Non-PRC Resident Enterprise Income Tax at Source, or Bulletin 37, which replaced the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises issued by the State Administration of Taxation on December 10, 2009, and partially replaced and supplemented rules under the Bulletin on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises, or Bulletin 7, issued by the State Administration of Taxation on February 3, 2015. Pursuant to Bulletin 7, an "indirect transfer" of PRC assets, including a transfer of equity interests in an unlisted non-PRC holding company of a PRC resident enterprise, by non-PRC resident enterprises may be re-characterized and treated as a direct transfer of the underlying PRC assets, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax. According to Bulletin 7, "PRC taxable assets" include assets attributed to an establishment in China, immoveable properties located in China, and equity investments in PRC resident enterprises and any gains from the transfer of such asset by a direct holder, who is a non-PRC resident enterprise, would be subject to PRC enterprise income taxes. When determining whether there is a "reasonable commercial purpose" of the transaction arrangement, features to be taken into consideration include: whether the main value of the equity interest of the relevant offshore enterprise derives from PRC taxable assets; whether the assets of the relevant offshore enterprise mainly consists of direct or indirect investment in China or if its income mainly derives from China; whether the offshore enterprise and its subsidiaries directly or indirectly holding PRC taxable assets have real commercial nature which is evidenced by their actual function and risk exposure; the duration of existence of the business model and organizational structure; the replicability of the transaction by direct transfer of PRC taxable assets; and the tax situation of such indirect transfer and applicable tax treaties or similar arrangements. In the case of an indirect offshore transfer of assets of a PRC establishment, the resulting gain is to be included with the enterprise income tax filing of the PRC establishment or place of business being transferred, and may consequently be subject to PRC enterprise income tax at a rate of 25%. Where the underlying transfer relates to immoveable properties located in China or to equity investments in a PRC resident enterprise, which is not related to a PRC establishment or place of business of a non-resident enterprise, a PRC enterprise income tax of 10% would apply, subject to available preferential tax treatment under applicable tax treaties or similar arrangements, and the party who is obligated to make the transfer payments has the withholding obligation. Pursuant to Bulletin 37, the withholding agent shall declare and pay the withheld tax to the competent tax authority in the place where such withholding agent is located within 7 days from the date of occurrence of the withholding obligation, while the transferor is required to declare and pay such tax to the competent tax authority within the statutory time limit according to Bulletin 7. Late payment of applicable tax will subject the transferor to default interest. Both Bulletin 37 and Bulletin 7 do not apply to transactions of sale of shares by investors through a public stock exchange where such shares were acquired from a transaction through a public stock exchange.

---

| |
|:---|
| 20 |
| *[**Table of Contents**](#toc)* |

---

There is uncertainty as to the application of Bulletin 37 or previous rules under Bulletin 7. We face uncertainties as to the reporting and other implications of certain past and future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in our offshore subsidiaries or investments. Our company may be subject to filing obligations or taxes if our company is transferor in such transactions, and may be subject to withholding obligations if our company is transferee in such transactions, under Bulletin 37 and Bulletin 7. For transfer of shares in our company by investors that are non-PRC resident enterprises, our PRC subsidiary may be requested to assist in the filing under Bulletin 37 and Bulletin 7. As a result, we may be required to expend valuable resources to comply with Bulletin 37 and Bulletin 7 or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our company should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.

***We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption laws, and any determination that we violated these laws 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 have operations, have agreements with third parties, and make most of our sales in China. The PRC also strictly prohibits bribery of government officials. Our activities in China create the risk of unauthorized payments or offers of payments by the employees, consultants, sales agents, or distributors of our subsidiaries, even though they may not always be subject to our control. It is our policy to implement safeguards to discourage these practices by our employees. However, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants, sales agents, or distributors of our subsidiaries may engage in conduct for which we might be held responsible. Violations of the FCPA or Chinese anti-corruption laws 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 U.S. government may seek to hold our subsidiaries liable for successor liability FCPA violations committed by companies in which we invest or that we acquire.

***It may be difficult for U.S. regulators, such as the Department of Justice, the SEC, and other authorities, to conduct investigation or collect evidence within China.***

Shareholder claims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to providing information needed for regulatory investigations or litigations initiated outside China. Although the authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such cooperation with regulatory authorities in the Unities States—including the SEC and the Department of Justice—may not be efficient in the absence of mutual and practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the PRC territory. While detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase the difficulties you face in protecting your interests.

**ITEM 1B. UNRESOLVED STAFF COMMENTS**

None.

**ITEM 2. PROPERTIES**

We currently do not own any physical property or real property. Our executive offices are located at 641 10th Street, Cedartown, Georgia 30125. We believe that this space is adequate for our present operations.

**ITEM 3. LEGAL PROCEEDINGS**

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company.

**ITEM 4. MINE SAFETY DISCLOSURES**

None.

---

| |
|:---|
| 21 |
| *[**Table of Contents**](#toc)* |

---

**PART II**

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

Since March 10, 2021, our common stock has been quoted on the OTCQB tier of the OTC Markets Group Inc. (the "OTC Markets"), under the symbol "PRCX." Between April 1, 2014 and March 9, 2021, our common stock was quoted on the OTCQB tier of the OTC Markets under the stock symbol "RSSV." On March 25, 2022, the closing bid price on the OTCQX tier for our common stock was $0.00215.

**Holders**

As of March 28, 2022, there were 286,069,451 shares of common stock issued and outstanding held by approximately 304 holders of record.

**Dividends**

We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future. There are no restrictions in our Articles of Incorporation or Bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

· we would not be able to pay our debts as they become due in the usual course of business; or

· our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution, unless otherwise permitted under our Articles of Incorporation.

**Recent Sales of Unregistered Securities**

There are no unreported sales of equity securities at December 31, 2021.

**Securities Authorized for Issuance Under Equity Compensation Plans**

The Company does not have any equity compensation plans.

**Penny Stock Regulations**

The SEC has adopted regulations that generally define "penny stock" to be an equity security that has a market price of less than $5.00 per share. Our Common Stock, when and if a trading market develops, may fall within the definition of penny stock and be subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual incomes exceeding $0.20 million individually, or $300,000, together with their spouse).

For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser's prior written consent to the transaction. Additionally, for any transaction, other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the "penny stock" rules may restrict the ability of broker-dealers to sell our Common Stock and may affect the ability of investors to sell their Common Stock in the secondary market.

**Purchases of Equity Securities by the Registrant and Affiliated Purchasers**

We did not purchase any of our shares of common stock or other securities during the year ended December 31, 2021.

**ITEM 6. [RESERVED]**

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

**Results of Operations**

Our operations for the years ended December 31, 2021 and 2020 are outlined below:

---

| |
|:---|
| 22 |
| *[**Table of Contents**](#toc)* |

---

*Year ended December 31, 2021 compared to year ended December 31, 2020*

---

| | | | |
|:---|:---|:---|:---|
|  | **Years Ended** | **Years Ended** | |
|  | **December 31,** | **December 31,** | |
|  | **2021** | **2020** | <br>**Change**<br>**Amount** |
| Revenue | $13430991 | $14355341 | $(924350) |
| Cost of goods sold | $13362614 | $14281300 | $(918686) |
| Gross profit  | $68377 | $74041 | $(5664) |
| Operating expenses | $799370 | $3086862 | $(2287492) |
| Other income (expense) | $11096752 | $(22767970) | $33864722 |
| Provision for income taxes | $(14895) | $(20541) | $5646 |
| Net income (loss) | $10350864 | $(25801332) | $36152196 |

---

The revenue for the year ended December 31, 2021 decreased by $924,350 to $13,430,991 compared with the same period in 2020. The decrease is mainly due to the effects of COVID-19 causing a decrease in demand and consequently the pricing in this period.

Cost of goods sold for the year ended December 31, 2021 decreased by $918,686 to $13,362,614 compared with the same period in 2020. The decrease is mainly due to the effects of COVID-19 causing a decrease in revenue in this period.

Operating expenses for the year ended December 31, 2021 increased by $2,287,492 to $799,370 compared with the same period in 2020. The decrease is mainly due to a decrease in stock-based compensations.

Other income (expense) for the year ended December 31, 2021 increased by $33,864,722 to $11,096,752 compared with the same period in 2019. The increase in other income is mainly due to change in fair value of derivative liabilities related to convertible notes.

Net income for the year ended December 31, 2021 was $10,350,864 compared to net loss of $25,801,332 in the same period in 2020. The change is mainly due to change in fair value of derivative liabilities related to convertible notes.

For the year ended December 31, 2021 and 2020 our results of operations segment, are as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Year Ended December 31, 2021** | **Holding Company** | **Oil and gas** | **Total Consolidated** |
| Revenue | $- | $13430991 | $13430991 |
| Cost of goods sold |  | (13362614) | (13362614) |
| Operating expenses | (754087) | (45283) | (799370) |
| Other income | 11096752 |  | 11096752 |
| Provision for income taxes | - | (14895) | (14895) |
| Net income | $10342665 | $8199 | $10350864 |

---

---

| | | | |
|:---|:---|:---|:---|
| **Year Ended December 31, 2020** | **Holding** <br>**Company** | **Oil and gas** | **Total** <br>**Consolidated** |
| Revenue | $- | $14355341 | $14355341 |
| Cost of goods sold |  | (14281300) | (14281300) |
| Operating expenses | (3041551) | (45311) | (3086862) |
| Other expenses | (22767970) |  | (22767970) |
| Provision for income taxes | - | (20541) | (20541) |
| Net income (loss) | $(25809521) | $8189 | $(25801332) |

---

---

| |
|:---|
| 23 |
| *[**Table of Contents**](#toc)* |

---

Holding Company

---

| | | | |
|:---|:---|:---|:---|
|  | **Years Ended** | **Years Ended** | |
|  | **December 31,** | **December 31,** | |
|  | **2021** | **2020** | <br>**Change**<br>**Amount** |
| Revenue | $- | $- | $- |
| Operating expenses | $754087 | $3041551 | $(2287464) |
| Other income (expense) | $11096752 | $(22767970) | $33864722 |
| Provision for income taxes | $- | $- | $- |
| Net income (loss) | $10342665 | $(25809521) | $36152186 |

---

Operating expense mainly consists of professional fees for ongoing regulatory requirements and compensation for our management. The decrease in operating expense is primarily due to a decrease in our management fee and professional fee.

Other income (expense) mainly consists of interest expense and change in fair value of derivative liability from convertible notes.

*Oil and Gas*

---

| | | | |
|:---|:---|:---|:---|
|  | **Years Ended** | **Years Ended** | |
|  | **December 31,** | **December 31,** | |
|  | **2021** | **2020** | <br>**Change**<br>**Amount** |
| Revenue | $13430991 | $14355341 | $(924350) |
| Cost of goods sold | $13362614 | $14281300 | $(918686) |
| Gross profit | $68377 | $74041 | $(5664) |
| Operating expenses | $45283 | $45311 | $(28) |
| Other income (expense) | $- | $- | $- |
| Provision for income taxes | $14895 | $20541 | $(5646) |
| Net income | $8199 | $8189 | $10 |

---

The decrease in revenue is primarily due to the effects of COVID-19 which caused a decrease in demand and consequently the pricing in prior period. The decrease in cost of goods sold is primarily due to a decrease in revenue. The percentage of gross profit is 0.5% in 2021 and 2020.

**Liquidity and Capital Resources**

The following table provides selected financial data about our Company as of December 31, 2021 and 2020, respectively.

<u>Working Capital</u>

The following table provides selected financial data about our Company as of December 31, 2021 and 2020, respectively.

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31,**<br>**2021** | **December 31,**<br>**2020** | **Change**<br>**Amount** |
| Cash | $101876 | $185948 | $(84072) |
| Current Assets | $17305167 | $10129206 | $7175961 |
| Current Liabilities | $13961595 | $20245188 | $(6283593) |
| Working Capital (Deficiency) | $3343572 | $(10115982) | $13459554 |

---

The increase in working capital was primarily attributed to a decrease in current liabilities and an increase in current assets. The increase in current assets was primarily attributed to an increase in accounts receivable. The decrease in current liabilities was primarily attributed to a decrease in derivative liabilities offset by an increase in accounts payable.

---

| |
|:---|
| 24 |
| *[**Table of Contents**](#toc)* |

---

<u>Cash Flow</u>

---

| | | | |
|:---|:---|:---|:---|
|  | **Years Ended** | **Years Ended** | |
|  | **December 31,** | **December 31,** | <br>**Change** |
|  | **2021** | **2020** | **Amount** |
| Cash Flows used in operating activities | $(676568) | $(903260) | $226692 |
| Cash Flows used in investing activities | $- | $(20044) | $20044 |
| Cash Flows provided by financing activities | $591093 | $827944 | $(236851) |
| Effects on changes in foreign exchange rate | $1403 | $3679 | $(2276) |
| Net change in cash during period | $(84072) | $(91681) | $7609 |

---

**Cash Flow from Operating Activities**

During the year ended December 31, 2021, our Company used $676,568 in operating activities, compared to $903,260 during the year ended December 31, 2020. The increase in cash used in operation activities is primarily due to an increase in operating assets.

**Cash Flow from Investing Activities**

During the year ended December 31, 2021 and 2020, we used $0 and $20,044 in investing, respectively. For the year ended December 31, 2020, the amount of $20,044 relates to the available cash of the subsidiary deconsolidated during the year.

**Cash Flow from Financing Activities**

During the year ended December 31, 2021 and 2020, our Company received $591,093 and $827,944 from financing activities, respectively. For the year ended December 31, 2021, the Company received $688,500 from convertible notes and $10,131 from loans from related parties, and repaid loans from related parties for $107,538. For the year ended December 31, 2020, the Company received $912,000 from convertible notes and $2,500 from loans from related parties, and repaid loans from related parties for $23,556 and convertible notes for $63,000.

**Critical Accounting Policies and Estimates**

The preparation of consolidated financial statements and related disclosures in conformity with U.S. generally accepted accounting principles and the Company's discussion and analysis of its financial condition and operating results require the Company's management to make judgments, assumptions and estimates that affect the amounts reported. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates, and such differences may be material.

**How cash is transferred through our organization**

**We do not transfer, and have never transferred, cash *though or between* our subsidiaries, or between Phoenix Rising and any of its subsidiaries.** 

**We do not have any intention to distribute earnings or settle amounts owed.** 

**No dividends, transfers or distributions have ever bween made from a subsidiary to Phoenix Rising Companies. Similarly, no dividends or distributions have ever been made to by us to any investor.** 

**Describe any restrictions on foreign exchange and your ability to transfer cash between entities, across borders, and to U.S. investors. Describe any restrictions and limitations on your ability to distribute earnings from the company, including your subsidiaries to the parent company and U.S. investors.**

**To the extent cash in the business is in any PRC or Hong Kong subsidiary of Phoenix Rising, such funds may not be available to fund operations or for other use outside of the PRC and/or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of you or your subsidiaries, by the PRC government to transfer cash*.***

We do not have any cash management policies that dictate how funds are transferred between Phoenix Rising Companies and its subsidiaries.

**Off-Balance Sheet Arrangements**

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

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

As a "smaller reporting company," as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.

---

| |
|:---|
| 25 |
| *[**Table of Contents**](#toc)* |

---

**ITEM 8. FINANCIAL STATEMENTS**

**Phoenix Rising Companies**

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
| [Report of Independent Registered Public Accounting Firm – (PCAOB ID: 5041)](#re1) | F-2 |
| [Report of Independent Registered Public Accounting Firm – (PCAOB ID: 6743)](#re2) | F-3 |
| [Consolidated Balance Sheets as of December 31, 2021 and 2020](#bs) | F-4 |
| [Consolidated Statements of Operations and other Comprehensive Income (Loss) for the years ended December 31, 2021 and 2020](#so) | F-5 |
| [Consolidated Statements of Stockholders' Equity (Deficit) for the years ended December 31, 2021 and 2020](#sh) | F-6 |
| [Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020](#cf) | F-7 |
| [Notes to Consolidated Financial Statements](#note) |  |

---

---

| |
|:---|
| F-1 |
| *[**Table of Contents**](#toc)* |

---

**Report of Independent Registered Public Accounting Firm**

To the shareholders and the board of directors of Phoenix Rising Companies

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheet of Phoenix Rising Companies (the "Company") as of December 31, 2021, the related statement of operations, stockholders' equity (deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States.

**Substantial Doubt about the Company's Ability to Continue as a Going Concern**

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company's significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

**Basis for Opinion**

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

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

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

/s BF Borgers CPA PC

**BF Borgers CPA PC**

We have served as the Company's auditor since 2022

Lakewood, CO

March 31, 2022

---

| |
|:---|
| F-2 |
| *[**Table of Contents**](#toc2)* |

---

---

| | |
|:---|:---|
| ![prcx_10kimg3.jpg](prcx_10kimg3.jpg) | **J&S ASSOCIATE (AF002380)**<br>*(Registered with PCAOB and MIA)*<br>UNIT B222,SOLARIS DUTAMAS 1, <br>JALAN DUTAMAS 1,<br>50480, Kuala Lumpur, Malaysia. <br>Tel : 03-62053622<br>Fax : 03-62053623<br>Email :  |

---

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

The Board of Director and Stockholder of

**PHOENIX RISING COMPANIES**

**(Formerly RESORT SAVERS, INC.)**

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheet of Phoenix Rising Companies and its subsidiaries (the 'Company') as of December 31, 2020 and the related consolidated statements of operations and comprehensive income, changes in stockholders' deficit and cash flows for the year ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

**Basis for Opinion**

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

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

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

**Substantial Doubt about the Company's Ability to Continue as a Going Concern**

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company suffered an accumulated deficit of $26,145,758 and net loss of $25,801,332. These matters raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3 to the financial statements. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

<u>/s/ *J&S Associate*</u>

Certified Public Accountants

May 29, 2021

Malaysia

We have served as the Company's auditor since 2021.

UNIT B222, SOLARIS DUTAMAS 1, JALAN DUTAMAS 1,50480, Kuala Lumpur, Malaysia. Tel: +603-62053622

---

| |
|:---|
| F-3 |
| *[**Table of Contents**](#toc2)* |

---

**PHOENIX RISING COMPANIES**

**Consolidated Balance Sheets**

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2021** | **December 31,** <br>**2020** |
| **ASSETS** |  |  |
| **Current Assets** |  |  |
| &nbsp;&nbsp;&nbsp;Cash | $101876 | $185948 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | 9318431 |  |
| &nbsp;&nbsp;&nbsp;Inventory | 7733568 | 5309894 |
| &nbsp;&nbsp;&nbsp;Purchase deposit for inventory |  | 4610015 |
| &nbsp;&nbsp;&nbsp;Other current assets | 151292 | 23349 |
| Total Current Assets | 17305167 | 10129206 |
| Goodwill | 1979787 | 1979787 |
| **TOTAL ASSETS** | $19284954 | $12108993 |
| **LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)** |  |  |
| **Current Liabilities** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $8489790 | $2282395 |
| &nbsp;&nbsp;&nbsp;Accrued liabilities and other payables | 131197 | 118994 |
| &nbsp;&nbsp;&nbsp;Advance payment | 1814499 | 834595 |
| &nbsp;&nbsp;&nbsp;Convertible notes, net of unamortized discounts | 730981 | 287298 |
| &nbsp;&nbsp;&nbsp;Due to related parties | 24193 | 107538 |
| &nbsp;&nbsp;&nbsp;Derivative liabilities | 2768484 | 16614368 |
| &nbsp;&nbsp;&nbsp;Tax payable | 2451 | - |
| Total Current Liabilities | 13961595 | 20245188 |
| Convertible notes non-current, net of unamortized discounts | 217069 | 182057 |
| TOTAL LIABILITIES | 14178664 | 20427245 |
| COMMITMENTS AND CONTINGENCIES |  |  |
| **SHAREHOLDERS' EQUITY (DEFICIT)** |  |  |
| Preferred stock, $0.0001 par value; 15,000,000 shares authorized; no shares issued and outstanding |  |  |
| &nbsp;&nbsp;&nbsp;Series A Preferred stock, $0.0001 par value; 1,500,000 shares designated; 1,500,000 shares issued and outstanding, respectively | 150 | 150 |
| Common stock, $0.0001 par value; 1,000,000,000 shares authorized; 169,127,299 and 121,169,368 shares issued and outstanding, respectively | 16912 | 12117 |
| Additional paid-in capital | 45317109 | 42434390 |
| Subscription receivable | (24522000) | (24522000) |
| Accumulated deficit | (15794894) | (26145758) |
| Accumulated other comprehensive income (loss) | 89013 | (97151) |
| Total shareholders' equity (deficit) | 5106290 | (8318252) |
| **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)** | $19284954 | $12108993 |

---

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

---

| |
|:---|
| F-4 |
| *[**Table of Contents**](#toc2)* |

---

**PHOENIX RISING COMPANIES**

**Consolidated Statements of Operations and Other Comprehensive Income (Loss)**

---

| | | |
|:---|:---|:---|
|  | **Years Ended**  | **Years Ended**  |
|  | **December 31,** | **December 31,** |
|  | **2021** | **2020** |
| **Revenue** | $13430991 | $14355341 |
| Cost of goods sold | 13362614 | 14281300 |
| **Gross Profit**  | 68377 | 74041 |
| **Operating Expenses** |  |  |
| General and administrative | 462155 | 2193542 |
| Professional fees | 337215 | 893320 |
| &nbsp;&nbsp;&nbsp;Total Operating Expenses | 799370 | 3086862 |
| **Income (Loss) from Operations** | (730993) | (3012821) |
| **Other Income (Expense)** |  |  |
| Impairment loss on goodwill |  | (1219807) |
| Loss on deconsolidation |  | (1188024) |
| Interest expense | (1110728) | (797821) |
| Change in fair value of derivative liabilities | 12207480 | (19562318) |
| &nbsp;&nbsp;&nbsp;Total Other Income (Expense) | 11096752 | (22767970) |
| **Income (Loss) Before Income Taxes** | 10365759 | (25780791) |
| Provision for income taxes | (14895) | (20541) |
| **Net Income (Loss)** | $10350864 | $(25801332) |
| Dividend on Series A Preferred Stock | - | (1999373) |
| **Net income (loss) attributable to common stockholders** | $10350864 | $(27800705) |
| **Other Comprehensive Income (Loss)** |  |  |
| Foreign currency translation adjustments | 186164 | 408825 |
| **Total Comprehensive Income (Loss)** | $**10537028** | $**(27391880)** |
| Basic Income (Loss) per Common Share | $0.07 | $(0.30) |
| Diluted Loss per Common Share | $(0.00) | $(0.30) |
| Basic Weighted Average Common Shares Outstanding | 139754668 | 94019998 |
| Diluted Weighted Average Common Shares Outstanding | 636042148 | 94019998 |

---

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

---

| |
|:---|
| F-5 |
| *[**Table of Contents**](#toc2)* |

---

**PHOENIX RISING COMPANIES**

**Consolidated Statements of Stockholders' Equity (Deficit)**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Preferred Stock** | **Preferred Stock** | **Common Stock** | **Common Stock** | | | | | |
|  | **Number**<br> **of** <br>**Shares** | **Amount** | **Number of Shares** | **Amount** | <br>**Additional** <br>**Paid-in** <br>**Capital** | <br><br>**Subscription**<br>**receivable** | <br>**Retained**<br>**Earnings**<br>**(Deficit)** | **Accumulated**<br>**Other**<br>**Comprehensive**<br>**Income (loss)** | <br>**Total** <br>**Shareholders'** <br>**Equity (deficit)** |
| Balance - December 31, 2019 |  |  | 5209881 | $521 | $8936263 | $- | $1654947 | $(505976) | $10085755 |
| Common stock issued for acquisition of Wandi |  |  | 60000000 | 6000 | 24516000 | (24522000) |  |  |  |
| Common stock issued for conversion of debt |  |  | 33802868 | 3380 | 450365 |  |  |  | 453745 |
| Common stock issued for services |  |  | 9450000 | 945 | 232780 |  |  |  | 233725 |
| Common stock issued for services - related party | 1500000 | 150 | 4500000 | 450 | 2058754 |  |  |  | 2059354 |
| Common stock issued for Settlement of debt  |  |  | 2206619 | 221 | 110110 |  |  |  | 110331 |
| Common stock issued for exercised cashless warrant |  |  | 6000000 | 600 | (600) |  |  |  |  |
| Resolution of derivative liabilities |  |  |  |  | 4131345 |  |  |  | 4131345 |
| Beneficial conversion feature |  |  |  |  | 1999373 |  |  |  | 1999373 |
| Deemed dividend on amortization of beneficial conversion feature on Series A Preferred Stock |  |  |  |  |  |  | (1999373) |  | (1999373) |
| Net income |  |  |  |  |  |  | (25801332) |  | (25801332) |
| Other comprehensive loss |  |  |  |  |  |  |  | 408825 | 408825 |
| Balance - December 31, 2020 | 1500000 | $150 | 121169368 | $12117 | $42434390 | $(24522000) | $(26145758) | $(97151) | $(8318252) |
| Common stock issued for conversion of debt |  |  | 35317393 | 3531 | 592079 |  |  |  | 595610 |
| Common stock issued for exercised cashless warrant |  |  | 12890538 | 1289 | (1289) |  |  |  |  |
| Resolution of derivative liabilities |  |  |  |  | 2291904 |  |  |  | 2291904 |
| Cancellation common stock  |  |  | (250000) | (25) | 25 |  |  |  |  |
| Net income |  |  |  |  |  |  | 10350864 |  | 10350864 |
| Other comprehensive loss |  |  |  |  |  |  |  | 186164 | 186164 |
| Balance - December 31, 2021 | 1500000 | $150 | 169127299 | $16912 | $45317109 | $(24522000) | $(15794894) | $89013 | $5106290 |

---

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

---

| |
|:---|
| F-6 |
| *[**Table of Contents**](#toc2)* |

---

**PHOENIX RISING COMPANIES**

**Consolidated Statements of Cash Flows**

---

| | | |
|:---|:---|:---|
|  | **Years Ended**  | **Years Ended**  |
|  | **December 31,**  | **December 31,**  |
|  | **2021** | **2020** |
| **CASH FLOWS FROM OPERATING ACTIVITIES** |  |  |
| Net income (loss) | $10350863 | $(25801332) |
| Adjustments to reconcile net loss to net cash from operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Stock based compensation |  | 2293078 |
| &nbsp;&nbsp;&nbsp;Impairment loss on goodwill |  | 1219807 |
| &nbsp;&nbsp;&nbsp;Loss on deconsolidation |  | 1188024 |
| &nbsp;&nbsp;&nbsp;Amortization of debt discount | 967101 | 683951 |
| &nbsp;&nbsp;&nbsp;Change in fair value of derivative liabilities | (12207480) | 19562318 |
| &nbsp;&nbsp;&nbsp;Penalty interest | 31500 |  |
| Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts receivable | (9179306) | 552881 |
| &nbsp;&nbsp;&nbsp;Inventories | 2217531 | (57655) |
| &nbsp;&nbsp;&nbsp;Other current assets | 80179 | (3507637) |
| &nbsp;&nbsp;&nbsp;Accounts payable | 6055985 | 2162696 |
| &nbsp;&nbsp;&nbsp;Advance payment  | 942183 | 790440 |
| &nbsp;&nbsp;&nbsp;Amount due to related party | 444 | 32844 |
| &nbsp;&nbsp;&nbsp;Tax payable | 2414 | (136572) |
| &nbsp;&nbsp;&nbsp;Accrued liabilities and other payable | 62018 | 113897 |
| Net cash provided by (used in) operating activities | (676568) | (903260) |
| **CASH FLOWS FROM INVESTING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;Cash of subsidiary deconsolidated  | - | (20044) |
| Net cash used in investing activities | - | (20044) |
| **CASH FLOWS FROM FINANCING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from convertible notes | 688500 | 912000 |
| &nbsp;&nbsp;&nbsp;Repayment of convertible notes |  | (63000) |
| &nbsp;&nbsp;&nbsp;Loans from related parties | 10131 | 2500 |
| &nbsp;&nbsp;&nbsp;Repayments of loans from related parties | (107538) | (23556) |
| Net cash provided by financing activities | 591093 | 827944 |
| Effects on changes in foreign exchange rate | 1403 | 3679 |
| Net change in cash | (84072) | (91681) |
| Cash - beginning of period  | 185948 | 277629 |
| Cash - end of period  | $101876 | $185948 |
| Supplemental Cash Flow Disclosures |  |  |
| &nbsp;&nbsp;&nbsp;Cash paid for interest | $- | $23435 |
| &nbsp;&nbsp;&nbsp;Cash paid for income taxes | $5061 | $148201 |
| Non-Cash Investing and Financing Activity: |  |  |
| &nbsp;&nbsp;&nbsp;Common stock issued for settlement of debt - related party | $- | $110331 |
| &nbsp;&nbsp;&nbsp;Common stock issued for conversion of debt | $1973189 | $4049568 |
| &nbsp;&nbsp;&nbsp;Common stock issued for exercised cashless warrant  | $914325 | $600 |
| &nbsp;&nbsp;&nbsp;Beneficial conversion feature | $- | $1999373 |
| &nbsp;&nbsp;&nbsp;Derivative liability recognized as debt discount | $653500 | $827000 |
| &nbsp;&nbsp;&nbsp;Cancellation common stock  | $25 | $- |

---

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

---

| |
|:---|
| F-7 |
| *[**Table of Contents**](#toc2)* |

---

**PHOENIX RISING COMPANIES**

**Notes to the Consolidated Financial Statements**

**December 31, 2021**

**Expressed in United States Dollars**

**NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS**

Phoenix Rising Companies. ("we," "us," "our," the "Company "PRCX") is a Nevada corporation incorporated on June 25, 2012 under the name Resort Savers, Inc. On May 28, 2020, the Company's corporate name was changed to Phoenix Rising Companies. It is based in Puchong, Malaysia. The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America, and the Company's fiscal year end is December 31.

The Company makes investments and acquisitions into sound, transparent markets and industries throughout the world. The Company is principally engaged in the trading of oil, gas and lubricant,. From January 1, 2020, the Company deconsolidated the operations in nutrition and health products.

**Admall Share Exchange and Recapitalization**

*Admall Sdn. Bhd.*

On May 16, 2018, the Company closed the acquisition of Admall Sdn. Bhd., a limited liability company incorporated in Malaysia ("Admall") by way of share exchange (the "Admall Acquisition"). The Company effected the Admall Acquisition pursuant to the terms of that certain Share Exchange Agreement (the "Admall Agreement"), dated February 9, 2018, by and between the Company, Admall, and Mr. Boon Jin "Patrick" Tan, an individual who prior to the closing of the Admall Acquisition held 100% of the outstanding equity interests of Admall. See Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Securities Exchange Commission on February 9, 2018, which is incorporated herein by reference, for a detailed description of the Admall Agreement.

At the closing of the Admall Acquisition, the Company acquired 100% of the outstanding equity interests of Admall from Mr. Tan, and the Company issued 400,000,000 shares of its common stock, par value $0.0001 per share ("Common Stock") to Mr. Tan, which at the time of closing represented approximately 81.47% of the Company's issued and outstanding Common Stock. As a result, Mr. Tan became a stockholder of the Company and Admall became a wholly-owned subsidiary of the Company. For federal income tax purposes, the Admall Acquisition was intended to qualify as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended.

For financial accounting purposes, the Admall Agreement has been accounted for as a reverse acquisition by Admall and resulted in a recapitalization of the Company, with Admall being the accounting acquirer and the Company as the acquired entity. The consummation of the Admall Agreement resulted in a change of control of PRCX. Accordingly, the historical financial statements prior to the acquisition are those of the accounting acquirer, Admall, and have been prepared to give retroactive effect to the reverse acquisition completed on May 16, 2018 and represent the operations of Admall.

As a result of the above, these consolidated financial statements represent Admall as the accounting acquirer (legal acquiree) and PRCX, from May 16, 2018 forward, as the accounting acquiree (legal acquirer), and the legal capital stock (number and type of equity interests issued) is that of PRCX, the legal parent, in accordance with guidance on reverse acquisitions accounted for as a business combination. Therefore, the Company recognized goodwill of $1,219,807.

On January 1, 2020, the Company deconsolidated Admall. As a result, the Company recorded loss on deconsolidation of $1,188,024 and the related goodwill was written off.

---

| |
|:---|
| F-8 |
| *[**Table of Contents**](#toc2)* |

---

**NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

***Basis of Presentation***

The Consolidated Financial Statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The Consolidated Financial Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles ("GAAP") of the United States and presented in US dollars.

***Principles of Consolidation***

At December 31, 2021, the principal subsidiaries of the Company were listed as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Entity** <br>**Name** | **Acquisition**<br>**Date** | **Ownership** | **Jurisdiction** | **Investments**<br>**Held By** | **Nature of**<br>**Operation** | **Fiscal**<br>**Year** |
| Xing Rui International Investment Holding Group Co., Ltd. ("Xing Rui")# | December 22, 2014 | 100% | Seychelles | PRCX | Holding Company | January 31 |
| Xing Rui International Investment Group Ltd. ("Xing Rui HK") # | December 22, 2014 | 100% | Hong Kong, the PRC | Xing Rui | Holding Company | January 31 |
| Huaxin Changrong (Shenzhen) Technology Service Co., Ltd. ("Huaxin") \*# | August 27, 2015 | 100% | the PRC | Xing Rui | Holding Company | December 31 |
| Beijing Yandong Tieshan Oil Products Co., Ltd. ("Tieshan Oil") \* | January 29, 2016 | 51% | the PRC | Huaxin | Trading of oil products | December 31 |
|  | May 16, 2018 | 49% |  |  |  |  |

---

____________

\* The English names used are translated only.

# Consolidated based on management accounts.

These consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany balances and transactions have been eliminated.

***Use of Estimates and Assumptions***

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.

***Foreign Currency Translation and Re-measurement***

The Company translates its foreign operations to U.S. dollars in accordance with ASC 830, "*Foreign Currency Matters*".

The Company's functional currency and reporting currency is the U.S. dollar, and our subsidiaries' functional currency is the Chinese Yuan Renminbi ("CNY"), Malaysian Ringgit ("MYR") and Hong Kong Dollar ("HKD").

The Company translates the foreign subsidiaries' records into U.S. dollar as follows:

· Assets and liabilities at the rate of exchange in effect at the balance sheet date

· Equities at historical rate

· Revenue and expense items at the average rate of exchange prevailing during the period

***Concentrations of Credit Risk***

The Company's financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents, and accounts receivable. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company also reviews its accounts receivable in a timely manner. The Company's management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.

<u>Tieshan Oil</u>

During the years ended December 31, 2021 and 2020, two customers accounted for 100% of revenues (79% and 21%) and one customer accounted for 90% of revenues, respectively.

During the years ended December 31, 2021 and 2020, two vendors accounted for 100% (61% and 39%) and 99% of a total purchase.

As of December 31, 2021 and 2020, one customer accounted for approximately 100% and 98% of accounts receivable and three vendors accounted for approximately 99% and two vendors accounted for approximately 96% of accounts payable, respectively.

***Financial Instruments***

The Company's financial instruments consist primarily of cash and cash equivalents, accounts receivable, and deposits, amount due from related parties, accounts payable and accrued liabilities, advanced payments, and due to related parties. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.

***Inventory***

Inventories, consisting of raw material, are primarily accounted for using the first-in-first-out ("FIFO") method of accounting. Inventories are measured at the lower of cost and net realizable value. The Company estimates the net realizable value of inventories based on an assessment of expected sales prices. Demand levels and pricing competition could change from time to time. If such factors result in an adverse effect on the Company's products, the Company might be required to reduce the value of its inventories.

***Property and equipment***

Fixed assets are recorded at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets.

Maintenance and repairs are charged to operations as incurred. Expenditures which substantially increase the useful lives of the related assets are capitalized. When properties are disposed of, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is reported in the period the transaction takes place.

***Accounting for the impairment of long-lived assets***

The long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Determination of recoverability of assets to be held and used is by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During the year ended December 31, 2020, the Company recorded impairment loss on goodwill of $1,219,807.

***Revenue Recognition***

Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company determines a sale price in each contract, and normally has a unique price in each contract. The Company sells oil products to a customer and when the products are transferred to a customer, the Company recognizes the revenue.

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.

***Income Taxes and Deferred Taxes***

Tax expense in profit or loss comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination or items recognized directly in equity or other comprehensive income.

Deferred tax is recognized using the liability method for all temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognized for the temporary differences arising from the initial recognition of goodwill, the initial recognition of assets and liabilities in a transaction which is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

***Financial Instruments and Fair Value Measurements***

As defined in ASC 820" Fair *Value Measurements,"* fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

***Derivative Financial Instruments***

The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company used a Black Scholes valuation model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within twelve (12) months of the balance sheet date.

***Earnings Per Share of Common Stock***

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

For the years ended December 31, 2021 and 2020, the following common stock equivalents were included in the computation of diluted net income per share.

---

| | | |
|:---|:---|:---|
|  | **Years Ended** | **Years Ended** |
|  | **December 31,** | **December 31,** |
|  | **2021** | **2020** |
|  | **(Shares)** | **(Shares)** |
| Preferred Stock | 150000000 | 150000000 |
| Convertible notes | 135837972 | 24380149 |
| Warrant | 245366811 | 245232491 |
| &nbsp;&nbsp;&nbsp;Total | 531204783 | 419612640 |

---

***Recent Accounting Pronouncements***

In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 "Debt—Debt with "Conversion and Other Options" and ASC subtopic 815-40 "Hedging—Contracts in Entity's Own Equity". The standard reduced the number of accounting models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting; and, (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently assessing the impact of the adoption of this standard on its consolidated financial statements.

Management has considered all recent accounting pronouncements issued since the last audit of our consolidated financial statements. The Company's management believes that these recent pronouncements will not have a material effect on the Company's consolidated financial statements.

**NOTE 3 - GOING CONCERN**

The Company's consolidated financial statements are prepared using GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet had sufficient revenues to cover its operating cost, and requires additional capital to commence its operating plan. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. These factors raise substantial doubt about its ability to continue as a going concern.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan to obtain such resources for the Company include: sales of equity instruments; traditional financing, such as loans; and obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.

There is no assurance that the Company will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to the Company. In addition, profitability will ultimately depend upon the level of revenues received from business operations. However, there is no assurance that the Company will attain profitability. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

**NOTE 4 – ACCOUNTS RECEIVABLE**

The Company has performed an analysis on all of its accounts receivable and determined that all amounts are collectible by the Company. As such, all accounts receivable are reflected as a current asset and no allowance for bad debt has been recorded as of December 31, 2021 and 2020. As at December 31, 2021 and 2020, the Company had accounts receivable of $9,318,431 and $0, respectively.

**NOTE 5 – INVENTORIES**

At December 31, 2021 and 2020, inventories consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2021** | **December 31,**<br>**2020** |
| Finished goods | $7733568 | $5309894 |

---

**NOTE 6 – ACCRUED LIABILITIES AND OTHER PAYABLE**

At December 31, 2021 and 2020, accrued liabilities and other payable consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2021** | **December 31,**<br>**2020** |
| Accrued interest | $125722 | $54299 |
| Other payables | 5475 | 64695 |
|  | $131197 | $118994 |

---

**NOTE 7 – CONVERTIBLE NOTE**

At December 31, 2021 and 2020, convertible loans consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2021** | **December 31,**<br>**2020** |
| Convertible Notes - originated in November 22, 2019 | $4064 | $4064 |
| Convertible Notes - issued during fiscal year 2020 | 605000 | 893656 |
| Convertible Notes - issued during fiscal year 2021 | 508750 | - |
| Total convertible notes payable | 1117814 | 897720 |
| Less: Unamortized debt discount | (169764) | (428365) |
| Total convertible notes | 948050 | 469355 |
| Less: current portion of convertible notes | 730981 | 287298 |
| Long-term convertible notes | $217069 | $182057 |

---

For the years ended December 31, 2021 and 2020, the interest expense on convertible notes was $112,128 and $113,870, and amortization of discount, including interest expense, of $967,101 and $683,951, respectively. As of December 31, 2021 and 2020, the accrued interest was $125,722 and $54,299, respectively.

***Conversion***

During the year ended December 31, 2021, the Company converted notes with principal amounts and accrued interest of $595,610 into 35,317,393 shares of common stock. The corresponding derivative liability at the date of conversion of $1,377,579 was credited to additional paid in capital

During the year ended December 31, 2020, the Company converted notes with principal amounts and accrued interest of $453,745 into 33,802,868 shares of common stock. The corresponding derivative liability at the date of conversion of $3,599,202 was credited to additional paid in capital.

*<u>Convertible Notes – Issued during year ended December 31, 2021</u>*

During the year ended December 31, 2021, the Company issued a total principal amount of $743,500 convertible note for cash proceeds of $688,500. The terms of convertible note are summarized as follows:

---

| |
|:---|
| Term: 12 months - 18 months; |
| Annual interest rates: 8%; |
| Convertible at the option of the holders at any time or 180 days from issuance |
| Conversion prices are based on discounted (35% - 40% discount) lowest trading prices of the Company's shares during various periods prior to conversion. |

---

*Convertible Notes – Issued during the year ended December 31, 2020*

During the year ended December 31, 2020, the Company issued a total principal amount of $1,034,750 convertible note for cash proceeds of $912,000. The terms of convertible note are summarized as follows:

---

| |
|:---|
| Term: a range from 9 months to 18 months; |
| Annual interest rates: 8% - 13%; |
| Convertible at the option of the holders at any time or 180 days from issuance; |
| Conversion prices are based on discounted (10% - 50% discount) lowest trading prices of the Company's shares during various periods prior to conversion. |
| Certain note allows the principal amount will increase by $15,000 and the discount rate of conversion price will decrease by 20% if the conversion price is less than $0.10 or $0.01. As a result, the discount rate of conversion price changed from 50% to 70% and the Company recognized the penalty of $15,000 and recorded principal amount of $15,000. |

---

*Convertible Notes – Issued during the year ended December 31, 2019*

During the year ended December 31, 2019, the Company issued a total principal amount of $338,000 convertible notes for cash proceeds of $310,000. The convertible notes were also provided with a total of 112,500 warrants. The terms of convertible notes are summarized as follows:

---

| |
|:---|
| Term: 12 months - 18 months; |
| Annual interest rates: 8% - 10%; |
| Convertible at the option of the holders at any time or 180 days from issuance. |
| Conversion prices are based on discounted (35% - 40% discount) lowest trading prices of the Company's shares during various periods prior to conversion. Certain note has a fixed conversion price of $1. |

---

The Company determined that the conversion feature met the definition of a liability in accordance with ASC Topic No. 815-40, "*Derivatives and Hedging - Contracts in Entity's Own Stock"* and therefore bifurcated the embedded conversion option once the note becomes convertible and accounted for it as a derivative liability. The fair value of the conversion feature was recorded as a debt discount and amortized to interest expense over the term of the note.

The Company valued the conversion feature and warrant using the Black Scholes valuation model. The fair value of the derivative liability for all warrant and the notes that became convertible, including the notes issued in prior years, during the year ended December 31, 2021 amounted to $1,124,804. $653,500 of the value assigned to the derivative liability was recognized as a debt discount to the notes while the balance of $4,713,047 was recognized as a "day 1" derivative loss.

The Company valued the conversion feature and warrant using the Black Scholes valuation model. The fair value of the derivative liability for all warrant and the notes that became convertible, including the notes issued in prior years, during the year ended December 31, 2020 amounted to $3,004,972. $827,000 of the value assigned to the derivative liability was recognized as a debt discount to the notes while the balance of $2,177,972 was recognized as a "day 1" derivative loss.

**NOTE 8 – WARRANTS**

A summary of activity regarding warrants issued as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Warrants Outstanding** | **Warrants Outstanding** | **Warrants Outstanding** |
|  |<br>**Shares** | **Weighted** <br>**Average**<br>**Exercise** <br>**Price** | **Contractual life** <br>**(in years)** |
| Outstanding, December 31, 2019 | 116500 | $1.78 | 2.89 |
| Granted | 4441500 | 0.36 | 5.00 |
| Reset feature | 246981856 | 0.0069 |  |
| Exercised | (6307365) | 0.0040 |  |
| Forfeited/canceled | - | - | - |
| Outstanding, December 31, 2020 | 245232491 | $0.0069 | 4.35 |
| Granted |  |  |  |
| Reset feature | 17554301 | 0.0065 | 3.37 |
| Exercised | (17419981) | 0.0075 | 3.73 |
| Forfeited/canceled | - | - | - |
| Outstanding, December 31, 2021 | 245366811 | $0.0065 | 3.37 |
| Exercisable warrant at December 31, 2021 | 245366811 | $0.0065 | 3.37 |

---

During the year ended December 31, 2020, the Company issued warrants with convertible notes. Each warrant is immediately exercisable into one share of common stock at a price ranging from $0.25 to $5.00 (2019: $1.25 to $5.00) per share. The warrants will expire on the three to five year anniversary of the issuance date. As a result of the reset features, the warrants increased by 17,554,301 and 246,981,856, respectively for the period ended December 31, 2021 and 2020, at a weighted average exercise price of $0.0065 and $0.0070 per share, respectively, as of December 31, 2021 and 2020. The reset feature of warrants was effective at the time that a separate convertible instrument with lower exercise price was issued.

The Company determined that the warrants qualify for derivative accounting due to the reset feature of warrants, which led to no explicit limit to the number of shares to be delivered upon future settlement of the exercised warrants.

Aggregate intrinsic value is the sum of the amounts by which the quoted market price of the Company's stock exceeded the exercise price of the warrants at December 31, 2020 for those warrants for which the quoted market price was in excess of the exercise price ("in-the-money" warrants). The intrinsic value of the warrants as of December 31, 2021 is $436,049.

**NOTE 9 – DERIVATIVE LIABILITIES**

The Company analyzed the conversion option for derivative accounting consideration under ASC 815, "*Derivatives and Hedging, and hedging,"* and determined that the instrument should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.

The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of December 31, 2021. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note and warrant is estimated using the Black-Scholes valuation model. The following weighted-average assumptions were used in the years ended December 31, 2021 and 2020:

---

| | | |
|:---|:---|:---|
|  | **Year ended**<br>**December 31,**<br>**2021** | **Year ended**<br>**December 31,**<br>**2020** |
| Expected term | 0.09 - 4.47 years  | 0.04 - 5.00 years  |
| Expected average volatility | 162% - 363% | 175% - 494% |
| Expected dividend yield |  |  |
| Risk-free interest rate | 0.02% - 0.97% | 0.08% - 1.47% |

---

The following table summarizes the changes in the derivative liabilities during the years ended December 31, 2021 and 2020:

---

| | |
|:---|:---|
| **Fair Value Measurements Using Significant Observable Inputs (Level 3)** | **Fair Value Measurements Using Significant Observable Inputs (Level 3)** |
| Balance - December 31, 2019 | $356395 |
| Addition of new derivatives recognized as debt discounts | 827000 |
| Addition of new derivatives recognized as loss on derivatives | 2177972 |
| Settled on issuance of common stock | (4131345) |
| Gain on change in fair value of the derivative | 17384346 |
| Balance - December 31, 2020 | $16614368 |
| Addition of new derivatives recognized as debt discounts | 653500 |
| Addition of new derivatives recognized as loss on derivatives | 471304 |
| Settled on issuance of common stock | (2291904) |
| Gain on change in fair value of the derivative | (12678784) |
| Balance - December 31, 2021 | $2768484 |

---

The following table summarizes the loss on derivative liability included in the income statement for the years ended December 31, 2021 and 2020, respectively.

---

| | | |
|:---|:---|:---|
|  | **Years Ended** | **Years Ended** |
|  | **December 31,** | **December 31,** |
|  | **2021** | **2020** |
| Day one loss due to derivative liabilities on convertible notes | $471304 | $2177972 |
| Change in fair value of the derivative liabilities | (12678784) | 17384346 |
|  | $(12207480) | $19562318 |

---

**NOTE 10 - STOCKHOLDERS' (DEFICIT) EQUITY**

The capitalization of the Company consists of the following classes of capital stock as of December 31, 2021:

***Preferred Stock***

The Company has authorized 15,000,000 shares of preferred stock with a par value of $0.0001 per share. The Board of Directors are authorized to divide the authorized shares of Preferred Stock into one or more series, each of which shall be so designated as to distinguish the shares thereof from the shares of all other series and classes. No shares of preferred stock have been issued.

*Series A Preferred Stock*

The Company is designated to issue 1,500,000 shares of Series A Preferred Stock at a par value of $0.0001. The Series A Preferred Stock shall have liquidation preference over any other class of stock and voting rights on the basis of one hundred votes for each shares of Series A Preferred Stock. The Preferred Stock can be converted to common stock, at a conversion rate of 100 common shares for each preferred stock. The Company evaluated the conversion feature and concluded that it did not qualify as a derivative transaction. The Company evaluated the convertible preferred stock under FASB ACS 470-20-30 and recorded a beneficial conversion feature of $1,999,373 as deemed dividend.

During the year ended December 31, 2020, the Company issued 1,500,000 shares of Series A Preferred Stock to our officer for compensation valued at $1,999,373.

As at December 31, 2021 and 2020, the Company had 1,500,000 preferred shares issued and outstanding.

***Common Stock***

The Company has authorized 1,000,000,000 shares of common stock with a par value of $0.0001 per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.

During the year ended December 31, 2021, the Company issued 48,207,931 shares of common stock as follows;

· 35,317,393 shares of common stock issued for conversion of debt of $565,610

· 12,890,538 shares of common stock issued for cashless exercise of warrant

During the year ended December 31, 2021, the Company cancelled 250,000 shares of common stock.

During the year ended December 31, 2020, the Company issued 115,959,487 shares of common stock as follows;

---

| |
|:---|
| 33,802,868 shares for conversion of debt of $453,745 |
| 60,000,000 shares valued at $24,522,000 for acquisition of Wandi, in which 7,600,000 shares to a related party at $3,106,120 |
| 9,450,000 shares valued at $233,724 for services |
| 4,500,000 shares to related parties valued at $59,981 for services |
| 2,206,619 shares to a related party for settlement of debt of $110,331 |
| 6,000,000 shares for exercise of cashless warrant |

---

As at December 31, 2021 and 2020, the Company had 169,127,299 and 121,169,368 common shares issued and outstanding.

***Subscription receivable***

On February 24, 2020 the Company entered into a Purchase Agreement (the "Agreement") with Mr. Liu FaKuan ("Seller"), the sole owner of Henan Wandi Mining Product Development Co., Ltd. ("Wandi"), a corporation organized in the People's Republic of China ("PRC"), pursuant to which the Company will effect an acquisition of Wandi by acquiring from the Seller all outstanding equity interests of Wandi. Wandi owns 49% of a coal mine known as You Zhou Shenhuo Kuanfa Mining Company Ltd., (the "Mine"), with Zhengshou Yshong Coal Industry Co., Ltd. (a State-owned enterprise) owning the remaining 51% of the Mine.

Pursuant to the Agreement, the Company issued 60,000,000 restricted common shares of stock of the Company to the Seller, valued at $24,522,000. The obligations of the parties to complete the acquisition is subject to the fulfillment (or, in some cases waiver) of due diligence and certain closing conditions. Upon closing of the acquisition Seller shall transfer to Company 100% of the issued and outstanding equity interests of Wandi, which will then become a wholly owned subsidiary of the Company.

As of December 31, 2021, the Company does not have control of Wandi. As a result, the Company determined not to consolidate Wandi and recorded share issuance for acquisition of Wandi as a subscription receivable for $24,522,000, until the common shares of Wandi are delivered.

**NOTE 11 – RELATED PARTY TRANSACTIONS**

<u>Due to related party</u>

As of December 31, 2021 and 2020, the Company recorded due to related parties as follows. The loan is non-interest bearing and due on demand.

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2021** | **December 31,**<br>**2020** |
| Loan from directors | $24193 | $90826 |
| Loan from related party | - | 16712 |
|  | $24193 | $107538 |

---

During the years ended December 31, 2021 and 2020, the Company borrowed $10,131 and $2,500 from a director and a related party respectively and repaid $107,538 and $23,556 to the related parties, respectively.

During the year ended December 31, 2020, the Company offered and sold 4,250,000 shares of common stock valued at $56,649 to a director in exchange for consideration of performance as an officer and director of the Company and issued 250,000 shares of common stock valued at $3,332 to a related party for services rendered. A further 2,206,619 shares of common stock were to a related party for settlement of debt of $110,331.

**NOTE 12 – INCOME TAXES**

The Company operates in the United States and its wholly-owned subsidiaries operate in Hong Kong and China and files tax returns in these jurisdictions.

Income (loss) from continuing operations before income tax expense (benefit) is as follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended** | **Years Ended** |
|  | **December 31,** | **December 31,** |
|  | **2021** | **2020** |
| Tax jurisdiction from: |  |  |
| &nbsp;&nbsp;&nbsp;United States | $10352594 | $(25800824) |
| &nbsp;&nbsp;&nbsp;Foreign | 13164 | 20033 |
| Loss before income taxes | $10365758 | $(25780791) |

---

Income tax provision is as follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended** | **Years Ended** |
|  | **December 31,** | **December 31,** |
|  | **2021** | **2020** |
| Tax jurisdiction from: |  |  |
| &nbsp;&nbsp;&nbsp;United States | $- | $- |
| &nbsp;&nbsp;&nbsp;Foreign | 14895 | 303979 |
| Income taxes | $14895 | $303979 |

---

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2021** | **2020** |
| Deferred tax assets: |  |  |
| NOL carryforwards |  |  |
| &nbsp;&nbsp;&nbsp;United States | 894821 | 708386 |
| &nbsp;&nbsp;&nbsp;Foreign | 8653 | 6122 |
| Less: valuation allowance | (903475) | (714508) |
| Net deferred tax asset | - | - |

---

The expected approximate income tax rate for 2021, for United States is 21%, Hong Kong is 17%, the PRC is 25%. The total income tax benefit differs from the expected income tax benefit principally due to the valuation allowance recorded against the deferred tax assets which are principally comprised of net operating losses ("NOLs") and net of deferred tax liabilities.

The Company applies the authoritative accounting guidance under ASC 740 for the recognition, measurement, classification and disclosure of uncertain tax positions taken or expected to be taken in a tax return. The Company provided a full valuation allowance against its deferred tax assets as of December 31, 2021 and 2020. This valuation allowance reflects the estimate that it is more likely than not that the net deferred tax assets may not be realized.

The Company has approximately $4,261,000 of U.S. and foreign carryforwards, the tax effect of which is approximately $895,821 as of December 31, 2021.

The U.S. NOL carryforwards are subject to certain limitations due to the change in control of the Company pursuant to Internal Revenue Code Section 382. The Company has not performed a study to determine if the NOL carryforwards are subject to these Section 382 limitations. In addition, the Company has foreign NOLs. The Company is still evaluating the impact of a change in stock ownership and the potential limitation of foreign NOLs.

A valuation allowance is recorded on certain deferred tax assets if it has been determined it is more likely than not that all or a portion of these assets will not be realized. The Company has recorded a full valuation allowance of $903,475 and $714,508 for deferred tax assets existing as of December 31, 2021 and 2020, respectively. The valuation allowance as of December 31, 2021 and 2020 is attributable to NOL carryforwards in the United States and foreign jurisdictions.

**NOTE 13 - SEGMENTED INFORMATION**

At December 31, 2021 and 2020, the Company operates in one industry segment, oil and gas, and two geographic segments with China being where majority current assets and equipment are located.

At December 31, 2021 and 2020, segment assets and liabilities were as follows:

---

| | | | |
|:---|:---|:---|:---|
| **December 31, 2021** | **Holding Company** | **Oil and gas** | **Total Consolidated** |
| Assets |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Current assets | $201429 | $17103738 | $17305167 |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-current assets | 1979787 |  | 1979787 |
| Liabilities |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Current liabilities | 3720085 | 10241510 | 13961595 |
| &nbsp;&nbsp;&nbsp;&nbsp;Long term liabilities | 217069 | - | 217069 |
| Net assets | $(1755938) | $6862228 | $5106290 |

---

---

| | | | |
|:---|:---|:---|:---|
| **December 31, 2020** | **Holding**<br>**Company** | **Oil and**<br>**gas** | **Total**<br>**Consolidated** |
| Assets |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Current assets | $355490 | $9773716 | $10129206 |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-current assets | 1979787 |  | 1979787 |
| Liabilities |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Current liabilities | 17138155 | 3107033 | 20245188 |
| &nbsp;&nbsp;&nbsp;&nbsp;Long term liabilities | 182057 | - | 182057 |
| Net assets | $(14984935) | $6666683 | $(8318252) |

---

For the year ended December 31, 2021 and 2020, segment revenue and net income were as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Year Ended December 31, 2021** | **Holding Company** | **Oil and gas** | **Total Consolidated** |
| Revenue | $- | $13430991 | $13430991 |
| Cost of goods sold |  | (13362614) | (13362614) |
| Operating expenses | (754087) | (45283) | (799370) |
| Other income | 11096752 |  | 11096752 |
| Provision for income taxes | - | (14895) | (14895) |
| Net income | $10342665 | $8199 | $10350864 |

---

---

| | | | |
|:---|:---|:---|:---|
| **Year Ended December 31, 2020** | **Holding**<br>**Company** | **Oil and**<br>**gas** | **Total**<br>**Consolidated** |
| Revenue | $- | $14355341 | $14355341 |
| Cost of goods sold |  | (14281300) | (14281300) |
| Operating expenses | (3041551) | (45311) | (3086862) |
| Other expenses | (22767970) |  | (22767970) |
| Provision for income taxes | - | (20541) | (20541) |
| Net income (loss) | $(25809521) | $8189 | $(25801332) |

---

**NOTE 14 – EARNINGS (LOSS) PER SHARES**

Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the periods. Diluted net income per common share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the periods. Common equivalent shares consist of convertible preferred stock and convertible notes that are computed using the if-converted method, and outstanding warrants that are computed using the treasury stock method.

---

| | | |
|:---|:---|:---|
|  | **Years Ended**  | **Years Ended**  |
|  | **December 31,**  | **December 31,**  |
|  | **2021** | **2020** |
| Numerator: |  |  |
| &nbsp;&nbsp;&nbsp;Net income (loss) | $10350864 | $(27800705) |
| &nbsp;&nbsp;&nbsp;Change in fair value of derivative liabilities | (12207480) |  |
| &nbsp;&nbsp;&nbsp;Interest on convertible debts | (137045) | - |
| &nbsp;&nbsp;&nbsp;Net loss - diluted | $(1993661) | $(27800705) |
| Denominator: |  |  |
| &nbsp;&nbsp;&nbsp;Weighted average common shares outstanding - Basic | 139754668 | 87872217 |
| &nbsp;&nbsp;&nbsp;Effect of dilutive shares |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Series A Preferred Stock | 150000000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Convertible notes | 126394828 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Warrants | 219892652 | - |
| &nbsp;&nbsp;&nbsp;Weighted average common shares outstanding - Diluted | 636042148 | 87872217 |
| Net income per common share: |  |  |
| &nbsp;&nbsp;&nbsp;Basic | $0.07 | $(0.32) |
| &nbsp;&nbsp;&nbsp;Diluted | $(0.00) | $(0.32) |

---

For the year ended December 31, 2020, the convertible instruments are anti-dilutive and therefore, have been excluded from earnings (loss) per share.

**NOTE 15 - 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 this audited financial statements are issued, the Company has evaluated all events or transactions that occurred after December 31, 2021, up through the date was the Company issued the audited consolidated financial statements.

Subsequent to December 31, 2021, the following transactions occurred:

· The Company issued 73,050,000 shares for conversion of debt of $242,581.

· The Company issued convertible notes a total of $112,500, which the term of notes is 1 year and annual interest rate is 8%. Notes are convertible at the option of the holders after 6 months of issuance date of the note and conversion price are Conversion prices are based on the discounted (35% discount) lowest trading prices of the Company's shares during 10 periods prior to conversion. Certain note has a floor price of $0.01.

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

None.

**ITEM 9A. CONTROLS AND PROCEDURES**

**Evaluation of Disclosure Controls and Procedures**

Our management, with the participation and supervision of our Chief Executive Officer and our Chief Financial Officer, are responsible for our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified under SEC rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, including our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2021. Based on this evaluation, our management concluded that as of December 31, 2021 these disclosure controls and procedures were not effective at the reasonable assurance level. As discussed below, our internal control over financial reporting is an integral part of our disclosure controls and procedures.

**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 Rule 13a-15(f) under the Exchange Act). Internal control over financial reporting is a process, including policies and procedures, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.

Our Chief Executive Officer and Chief Financial Officer performed an evaluation of our internal control over financial reporting under the framework in *Internal Control—Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on the results of this assessment, our management concluded that our internal control over financial reporting was not effective as of December 31, 2021, based on such criteria. Deficiencies existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses. The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (i) lack of a majority of independent members and a lack of a majority of outside directors on our Board, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; and (ii) inadequate segregation of duties consistent with control objectives. Management believes that the lack of a majority of outside directors on our Board results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

**Auditor's Report on Internal Control over Financial Reporting**

This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us to provide only management's report in this Annual Report.

**Changes in Internal Controls over Financial Reporting**

In connection with our continued monitoring and maintenance of our controls procedures as part of the implementation of Section 404 of the Sarbanes-Oxley Act, we continue to review, test, and improve the effectiveness of our internal controls. There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter and since the year ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

---

| |
|:---|
| 26 |
| *[**Table of Contents**](#toc)* |

---

**Inherent Limitation on the Effectiveness of Internal Controls**

The effectiveness of any system of internal control over financial reporting is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting can only provide reasonable, not absolute, assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business but cannot assure that such improvements will be sufficient to provide us with effective internal control over financial reporting.

**ITEM 9B. OTHER INFORMATION**

None.

**ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS**

None.

---

| |
|:---|
| 27 |
| *[**Table of Contents**](#toc)* |

---

**PART III**

**ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE**

The following table sets forth the names and ages of our current directors and executive officers, the principal offices and positions held by each person, and the year such director or officer commenced serving in such capacity:

---

| | | |
|:---|:---|:---|
| **Name** | **Age** | **Positions** |
| Ding-Shin "DS" Chang | 52 | President, Chief Executive Officer and Director |
| Boon Jin "Patrick" Tan | 51 | Treasurer, Chief Financial Officer and Director |
| Liang-Yu "Jacky" Chang | 46 | Secretary |

---

**Ding-Shin "DS" Chang**

**President, Chief Executive Officer and Director**

Ding-Shin "DS" Chang, has served as our President, Chief Executive Officer and a Director since February 9, 2018. *Mr. Chang* has since 2016 owned and operated his own financial services company, SGCI, with offices in Paris, London, Frankfurt, Hong Kong and Beijing, providing consulting services in the areas of lease financing, term financing, project financing, investment funds, fund management, corporate restructuring, and company reorganization. In 2013, he became the Vice-Chairman at a French financial group, a listing sponsor for NYSE-Euronext. His clients included companies from different countries across the globe. He worked for 16 years as a financial specialist and corporate Director serving the IT industry. Mr. Chang's international professional career has spanned over 25 years, and he is fluent in French, English, and Mandarin Chinese.

**Boon Jin "Patrick" Tan**

**Treasurer, Chief Financial Officer and Director**

*Dr. Boon-Jin "Patrick" Tan* has served as our Secretary, Chief Financial Officer and a Director since February 9, 2018. He founded Admall in 2015 and serves as its chairman. Mr. Tan specializes in corporate branding and identity and has many years of experience researching the human brain and cognition in the context of applied marketing, advertising and branding. Mr. Tan received the Asia Pacific Entrepreneurship Award in 2008 and has been awarded honorary degrees by Shenzhen University (China), Victoria University (Hong Kong), Carlton College (USA), California University School of International Business Studies (USA) and Sabi University (France). He was granted the honorary title of Dato' Sri in 2016, by the Sultan of Pahang.

**Liang-Yu "Jacky" Chang**

**Secretary**

*Liang-Yu "Jack" Chang has served as our Secretary since February 9, 2018. He* specializes in investor relations in connection with initial public offerings in the United States, the People's Republic of China and Taiwan. He has held positions with Taiwan's Chip Hope (8084:TT) and J Touch Corporation (TPE:3584), and United States listed companies GIA Investments Corp. (OTCMKTS:GIAI) and Nownews Digital Media Technology Co. Ltd. (OTCMKTS:NDMT). From 2015 to 2017 Mr. Chang served as Vice President of Asia for Marechal & Associates Limited, and since 2017 he has served Vice President for the German company, SGCI Corporate Finance GmbH.

---

| |
|:---|
| 28 |
| *[**Table of Contents**](#toc)* |

---

**Director Qualifications**

We believe that our directors should have the highest professional and personal ethics and values, consistent with our values and standards. They should have broad experience at the policy-making level in business or banking. They should be committed to enhancing stockholder value and should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. Their service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform responsibly all director duties for us. Each director must represent the interests of all stockholders. When considering potential director candidates, the Board also considers the candidate's character, judgment, diversity, age and skills, including financial literacy and experience in the context of our needs and the needs of the Board.

**Term of Office**

All directors hold office until the next annual meeting of the stockholders of the Company and until their successors have been duly elected and qualified. The Company's Bylaws provide that the Board of Directors will consist of no less than one member. Officers are elected by and serve at the discretion of the Board of Directors.

**Director Independence**

Our board of directors is currently composed of two members, neither of whom qualifies as an independent director in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us. In addition, our board of directors has not made a subjective determination as to each director that no relationships exist which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our board of directors made these determinations, our board of directors would have reviewed and discussed information provided by the directors and us with regard to each director's business and personal activities and relationships as they may relate to us and our management.

**Involvement in Certain Legal Proceedings**

To our knowledge, our directors and executive officers have not been involved in any of the following events during the past ten years:

· Any bankruptcy petition filed by or against such person or any business 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 him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities 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 subject of, or a party to, any Federal or state 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, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

· Being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

---

| |
|:---|
| 29 |
| *[**Table of Contents**](#toc)* |

---

**Significant Employees and Consultants**

As of December 31, 2021, the Company has no significant employees. The Company is managed by Ding-Shin "DS" Chang, our sole director and officer.

**Audit Committee and Conflicts of Interest**

Since we do not have an audit, compensation or governance and nominating committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. The Board of Directors has not established an audit committee and does not have an audit committee financial expert, nor has the Board of Directors established a nominating committee. The Board is of the opinion that such committees are not necessary since the Company is an early stage company and has only one director, and to date, such director has been performing the functions of such committees. Thus, there is a potential conflict of interest in that our sole director and officer has the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions.

**Family Relationships**

There are no family relationships among our directors or officers. Other than as described above, we are not aware of any other conflicts of interest with any of our executive officers or directors.

**Stockholder Communications with the Board Of Directors**

We have not implemented a formal policy or procedure by which our stockholders can communicate directly with our Board of Directors. Nevertheless, every effort has been made to ensure that the views of stockholders are heard by the Board of Directors or individual directors, as applicable, and that appropriate responses are provided to stockholders in a timely manner. We believe that we are responsive to stockholder communications, and therefore have not considered it necessary to adopt a formal process for stockholder communications with our Board. During the upcoming year, our Board will continue to monitor whether it would be appropriate to adopt such a process.

**Code of Ethics**

The Company has adopted a code of ethics that applies to its principal executive officers, principal financial officer, principal accounting officer or controller, and persons performing similar functions.

**Employment Agreements**

We have no employment agreements with any of our directors.

**Indemnification Agreements**

We have no indemnification agreements with our officers, directors or any other person.

**ITEM 11. EXECUTIVE COMPENSATION**

The following tables set forth certain information about compensation paid, earned or accrued for services by our President and all other executive officers (collectively, the "Named Executive Officers") in the fiscal years ended December 31, 2021 and 2020:

**SUMMARY COMPENSATION TABLE**

The table below summarizes all compensation awarded to, earned by, or paid to our officers for all services rendered in all capacities to us for the fiscal periods indicated.

---

| |
|:---|
| 30 |
| *[**Table of Contents**](#toc)* |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| <br>**Name and**<br>**Principal**<br>**Position** | <br>**Year** |<br><br>**Salary** <br>($) |<br><br>**Bonus**<br>**($)** |<br>**Stock**<br>**Awards** <br>($) |<br>**Option**<br>**Awards** <br>($) | **Non-Equity**<br>**Incentive**<br>**Plan**<br>**Compensation($)** |<br>**Nonqualified**<br>**Deferred**<br>**Compensation($)** |<br>**All Other**<br>**Compensation($)** |<br><br>**Total** <br>($) |
| Ding-Shin | 2021 | 110931 | 0 | 0 | 0 | 0 | 0 | 0 | 110931 |
| "DS" Chang (1) | 2020 | 0 | 0 | 0 | 2056022 | 0 | 0 | 0 | 2056022 |
| Boon Jin | 2021 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| "Patrick" Tan (2) | 2020 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Liang-Yu | 2021 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Chang (3) | 2020 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |

---

__________

(1) Appointed President, Chief Executive Officer and a Director on February 9, 2018.

(2) Appointed Secretary, Chief Financial Officer and a Director on February 9, 2018.

(3) Appointed Secretary on February 9, 2018.

**Narrative to Executive Compensation Table**

Ding-Shin "DS" Chang, our Chief Executive Officer, received a salary of $110,931 in 2021, but no salary in prior years, because we had cash on hand to pay such salary in $110,931, only after what we determined to be payment of essential operations of the Company, including, basic operating expenses, which we determined does not include the payment of salary to our Chief Executive Officer. Mr. Chang received option awards of $2,056,022 in 2020, but none in 2021, because after what we determined to be payment of essential operations of the Company, including, basic operating expenses, which we determined does not include the payment of salary to our Chief Executive Officer, the company determined to pay Mr. Change by way of option awards instead of cash.

**Employment Contracts, Termination of Employment, Change-in-Control Arrangements**

The Company has no employment agreements with its officers or any significant employee and did not enter into any employment contracts, termination of employment, or change-in-control arrangements during the year ended December 31, 2021.

***Option Exercises and Fiscal Year-End Option Value Table.***

There were no stock options exercised by the named executive officers as of the end of the fiscal period ended December 31, 2021.

***Long-Term Incentive Plans and Awards***

There were no awards made to a named executive officer, under any long-term incentive plan, as of the end of the fiscal period ended December 31, 2021.

We currently do not pay any compensation to our directors serving on our board of directors.

**STOCK OPTION GRANTS**

The following table sets forth stock option grants and compensation or the fiscal year ended December 31, 2021:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Option Awards** | **Option Awards** | **Option Awards** | **Option Awards** | **Option Awards** | **Stock Awards** | **Stock Awards** | **Stock Awards** | **Stock Awards** |
| <br>**Name** | **Number of Securities Underlying Unexercised Options (#) Exercisable** | **Number of Securities Underlying Unexercised Options (#) Unexercisable** | **Equity**<br> **Incentive**<br> **Plan** <br>**Awards:**<br> **Number of Securities Underlying Unexercised Unearned** <br>**Options (#)** | **Option**<br> **Exercise**<br> **Price ($)** | **Option**<br>**Expiration**<br>**Date** | **Number**<br> **of** <br>**Shares**<br> **or Units**<br> **of Stock** <br>**That**<br> **Have**<br> **Not**<br> **Vested**<br> **(#)** | **Market** <br>**Value of** <br>**Shares or**<br> **Units of**<br> **Stock**<br> **That** <br>**Have Not** <br>**Vested**<br> **($)** | **Equity**<br> **Incentive**<br> **Plan**<br> **Awards:**<br> **Number**<br> **of**<br> **Unearned**<br> **Shares,**<br> **Units or**<br> **Other**<br> **Rights**<br> **That Have**<br> **Not**<br> **Vested (#)** | **Equity** <br>**Incentive**<br> **Plan**<br> **Awards:**<br> **Market or**<br> **Payout**<br> **Value of** <br>**Unearned** <br>**Shares,**<br> **Units or**<br> **Other**<br> **Rights**<br> **That** <br>**Have Not**<br> **Vested ($)** |
| Ding-Shin "DS" Chang (1) | -0- | -0- | -0- | $-0- | N/A | -0- | -0- | -0- | -0- |
| Boon Jin "Patrick" Tan (2) | -0- | -0- | -0- | $-0- | N/A | -0- | -0- | -0- | -0- |
| Liang-Yu Chang (3) | -0- | -0- | -0- | $-0- | N/A | -0- | -0- | -0- | -0- |

---

_____________

(1) Appointed President, Chief Executive Officer and a Director on February 9, 2018.

(2) Appointed Secretary, Chief Financial Officer and a Director on February 9, 2018.

(3) Appointed Secretary on February 9, 2018.

---

| |
|:---|
| 31 |
| *[**Table of Contents**](#toc)* |

---

**DIRECTOR COMPENSATION**

The following table sets forth director compensation or the fiscal year ended December 31, 2021:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name** | **Fees**<br> **Earned**<br> **or Paid**<br> **inCash** <br>**($)** | **Stock Awards** <br>**($)** | **Option Awards** <br>**($)** | **Non-Equity** <br>**Incentive Plan Compensation($)** | **Nonqualified**<br>**Deferred Compensation Earnings ($)** | **All Other**<br> **Compensation($)** | **Total** <br>**($)** |
| Ding-Shin "DS" Chang (1) | -0- | -0- | -0- | -0- | -0- | -0- | -0- |
| Boon Jin "Patrick" Tan (2) | -0- | -0- | -0- | -0- | -0- | -0- | -0- |

---

______________

(1) Appointed President, Chief Executive Officer and a Director on February 9, 2018.

(2) Appointed Secretary, Chief Financial Officer and a Director on February 9, 2018.

We currently do not pay any compensation to our directors for serving on our board of directors.

**Narrative to Director Compensation Table**

The following is a narrative discussion of the material information that we believe is necessary to understand the information disclosed in the previous table.

Ding-Shin "DS" Chang and Boon Jin "Patrick" Tan receive no compensation solely in their capacities as directors of the Company. All travel and lodging expenses associated with corporate matters are reimbursed by us, if and when incurred.

**ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS**

The following table lists, as of March 28, 2022, the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using "beneficial ownership" concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.

The percentages below are calculated based on 286,069,451 shares of our common stock issued and outstanding as February 4, 2022. We do not have any outstanding warrant, options or other securities exercisable for or convertible into shares of our common stock.

---

| |
|:---|
| 32 |
| *[**Table of Contents**](#toc)* |

---

---

| | | |
|:---|:---|:---|
| **Name and Address of Beneficial Owner** | **Amount and** <br>**Nature of** <br>**Beneficial**<br>**Ownership** | **Percentage**<br> **of**<br>**Class <sup>(1)</sup>** |
| Ding-Shin "DS" Chang <sup>(2)</sup> | 4250000 | 1.4% |
| Boon Jin "Patrick" Tan <sup>(3)</sup> | 414638 | \* |
| Liang-Yu "Jacky" Chang <sup>(4)</sup> | 30000 | \* |
| **Directors and Executive Officers as a Group (3 persons)** | 4694638 | 1.6% |
| **5% or greater shareholders** |  |  |
| Fakuan Liu <sup>(5)</sup> | 30600000 | 10.6% |
| Likable (HK) Company Ltd. <sup>(6)</sup> | 9800000 | 3.4% |
| SGCI Corporate Finance GMBH <sup>(7)</sup> | 10056619 | 3.5% |

---

____________

\*Less than 1%.

(1) Percentages are calculated based on 169,127,299 shares of the Company's common stock issued and outstanding on February 4, 2022.

(2) Address at Neue Mainzer Strasse 6-10, 60311 Frankfurt am Main, Germany.

(3) Address at D-15-05 Menara Mitraland, Jalan Pju 5/1, Kota Damansara, 47810 Selangor, Malaysia.

(4) Address at 2F, No. 63, Sec 6, Xinhai Road, Taipei, Taiwan.

(5) Address at 8 Zu Shang Gou Cun Mo Jie Xiang Yu Zhou Shi, Henan Prov, China 461683.

(6) Address at Flat D 8/F Blk 18 Phase 2 Wham Poa Garden, Kowloon, Hong Kong.

(7) Address at Neue Mainzer Strasse 6-10, 60311 Frankfurt am Main, Germany.

The following table lists, as of February 4, 2022, the number of shares of Series A Preferred Stock of our Company that are beneficially owned by each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding Series A Preferred Stock.

---

| | | |
|:---|:---|:---|
| **Name and Address of Beneficial Owner** | <br>**Amount and Nature of Beneficial Ownership**<br> **of Series A Preferred Stock** | **Percentage** <br>**of**<br>**Class <sup>(1)</sup>** |
| Ding-Shin "DS" Chang <sup>(2)</sup> | 1,500,000 shares directly held<sup>(3)</sup> | 100% |

---

__________

(1) Percentages are calculated based on 1,500,000 shares of the Company's Series A Preferred Stock issued and outstanding on February 4, 2022. Each share of Series A Preferred Stock has voting rights equal to 100 shares of common stock. Accordingly, the 1,500,000 shares of Series A Preferred Stock has voting power equal to 150,000,000 shares of common stock.

(2) Address at 12 Rue de Lorraine 92300, Levallois-Perret, France.

**ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE**

**Related Party Transactions**

During the past fiscal year, there have been no transactions, whether directly or indirectly, between us and any of our respective officers, directors, beneficial owners of more than 5.0% of our outstanding common stock or their family members, that exceeded the lesser of $120,000 million or 1.0% of the average of our total assets at year-end for the last completed fiscal year.

**Director Independence**

Our board of directors is currently composed of two members, neither of whom qualifies as an independent director in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of her family members has engaged in various types of business dealings with us. In addition, our board of directors has not made a subjective determination as to each director that no relationships exist which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our board of directors made these determinations, our board of directors would have reviewed and discussed information provided by the directors and us with regard to each director's business and personal activities and relationships as they may relate to us and our management.

Our board of directors has not separately designated and standing committees. Accordingly, the duties customarily performed by an audit committee, compensation committee, and governance and nominating committee are performed by our board of directors.

---

| |
|:---|
| 33 |
| *[**Table of Contents**](#toc)* |

---

**ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES**

---

| | | |
|:---|:---|:---|
|  | **Year Ended**<br>**December 31,**<br>**2021** | **Year Ended**<br>**December 31,**<br>**2020** |
| Audit Fees | $65000 | $26000 |
| Audit Related Fees | $- | $- |
| Tax Fees | $- | $- |
| All Other Fees | $- | $- |
| Total | $65000 | $26000 |

---

Our Board of Directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the Board of Directors either before or after the respective services were rendered.

Our Board of Directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors' independence.

---

| |
|:---|
| 34 |
| *[**Table of Contents**](#toc)* |

---

**PART IV**

**ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES**

(a) The following Exhibits, as required by Item 601 of Regulation SK, are attached or incorporated by reference, as stated below.

---

| | |
|:---|:---|
| **Number** | **Description** |
| 3.1.1 | Articles of Incorporation (1) |
| [3.1.2](http://www.sec.gov/Archives/edgar/data/1572384/000164033416001065/ex-3_2.htm) | [Certificate of Amendment (2)](http://www.sec.gov/Archives/edgar/data/1572384/000164033416001065/ex-3_2.htm) |
| [3.1.3](http://www.sec.gov/Archives/edgar/data/1572384/000164033421001266/prcx_ex31.htm) | [Certificate of Amendment (3)](http://www.sec.gov/Archives/edgar/data/1572384/000164033421001266/prcx_ex31.htm) |
| [3.1.5](http://www.sec.gov/Archives/edgar/data/1572384/000164033421001266/prcx_ex31.htm) | [Certificate of Amendment (4)](http://www.sec.gov/Archives/edgar/data/1572384/000164033421001266/prcx_ex31.htm) |
| [3.2](http://www.sec.gov/Archives/edgar/data/1572384/000164033422000450/prcx_pre14c.htm) | [Amended and Restated Bylaws (5)](http://www.sec.gov/Archives/edgar/data/1572384/000164033422000450/prcx_pre14c.htm) |
| [21.1](prcx_ex211.htm) | [Subsidiaries of Registrant\*](prcx_ex211.htm) |
| [31.1](prcx_ex311.htm) | [Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.\*](prcx_ex311.htm) |
| [31.2](prcx_ex312.htm) | [Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.\*](prcx_ex312.htm) |
| [32.1](prcx_ex321.htm) | [Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.\*](prcx_ex321.htm) |
| [32.2](prcx_ex322.htm) | [Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.\*](prcx_ex322.htm) |
| 101 | Inline XBRL Document Set for the consolidated financial statements and accompanying notes in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.\*\* |
| 104 | Inline XBRL for the cover page of this Annual Report on Form 10-K, included in the Exhibit 101 Inline XBRL Document Set.\*\* |

---

_______________

(1) Incorporated by reference to the Registrant's Registration Statement on Form S-1 (File No. 333-187437), filed with the Securities and Exchange Commission on March 22, 2019.

(2) Incorporated by reference to the Registrant's Annual Report on Form 10-K (File No. 001-55319), filed with the Securities and Exchange Commission on May 13, 2016.

(3) Incorporated by reference to the Registrant's Annual Report on Form 10-K (File No. 001-55319), filed with the Securities and Exchange Commission on June 1, 2021.

(4) Incorporated by reference to the Registrant's Annual Report on Form 10-K (File No. 001-55319), filed with the Securities and Exchange Commission on June 1, 2021.

(5) Incorporated by reference to the Registrant's preliminary Information Statement on Schedule 14C (File No. 001-55319), filed with the Securities and Exchange Commission on March 10, 2022.

\*Filed herewith.

\*\*Furnished herewith

**ITEM 16. FORM 10-K SUMMARY**

None.

---

| |
|:---|
| 35 |
| *[**Table of Contents**](#toc)* |

---

**SIGNATURES**

Pursuant to the requirements Section 13 or 15(d) of the Securities Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | **PHOENIX RISING COMPANIES** | **PHOENIX RISING COMPANIES** |
| Date: February 6, 2023 | By: | */s/ Ding-Shin "DS" Chang* |
|  | Name: | Ding-Shin "DS" Chang |
|  | Title: | President and Chief Executive Officer <br>(principal executive officer) |
| Date: February 6, 2023 | By: | */s/ Boon Jin "Patrick" Tan* |
|  | Name: | Boon Jin "Patrick" Tan |
|  | Title: | Chief Financial Officer <br>(principal accounting officer, and principal financial officer) |

---

Pursuant to the requirements Section 13 or 15(d) of the Securities Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | |
|:---|:---|:---|
| Date: February 6, 2023 | By: | */s/ Ding-Shin "DS" Chang* |
|  | Name: | Ding-Shin "DS" Chang |
|  | Title: | President and Chief Executive Officer and Director<br>(principal executive officer) |
| Date: February 6, 2023 | By: | */s/ Boon Jin "Patrick" Tan* |
|  | Name: | Boon Jin "Patrick" Tan |
|  | Title: | Treasurer, Chief Financial Officer and Director<br>(principal accounting officer, and principal financial officer) |

---

## Exhibit 31.1

**EXHIBIT 31.1**

**SECTION 302 CERTIFICATION**

**OF PRINCIPAL EXECUTIVE OFFICER OF PHOENIX RISING COMPANIES**

I, Ding-Shin "DS" Chang, certify that:

1. I have reviewed this report on Form 10-K of Phoenix Rising Companies

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: February 6, 2023 | By: | */s/ Ding-Shin "DS" Chang* |
|  |  | Ding-Shin "DS" Chang |
|  |  | Chief Executive Officer (principal executive officer and principal financial officer) |

---

## Exhibit 31.2

**EXHIBIT 31.2**

**SECTION 302 CERTIFICATION**

**OF PRINCIPAL FINANCIAL OFFICER OF PHOENIX RISING COMPANIES**

I, Boon Jin "Patrick" Tan, certify that:

1. I have reviewed this report on Form 10-K of Phoenix Rising Companies

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: February 6, 2023 | By: | */s/ Boon Jin "Patrick" Tan* |
|  |  | Boon Jin "Patrick" Tan |
|  |  | Chief Executive Officer (principal executive officer and principal financial officer) |

---

## Exhibit 32.1

**EXHIBIT 32.1**

**SECTION 906 CERTIFICATION OF**

 **PRINCIPAL EXECUTIVE OFFICER**

 **OF PHOENIX RISING COMPANIES**

In connection with the accompanying Annual Report on Form 10-K of Phoenix Rising Companies for the year ended December 31, 2021, the undersigned, Ding-Shin "DS" Chang, Chief Executive Officer of Phoenix Rising Companies, does hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) such Annual Report on Form 10-K for the year ended December 31, 2021 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in such Annual Report on Form 10-K for the year ended December 31, 2021 fairly presents, in all material respects, the financial condition and results of operations of Phoenix Rising Companies

---

| | | |
|:---|:---|:---|
| Date: February 6, 2023 | By: | /s/ *Ding-Shin "DS" Chang* |
|  |  | Ding-Shin "DS" Chang |
|  |  | Chief Executive Officer (principal executive officer) |

---

## Exhibit 32.2

**EXHIBIT 32.2**

**SECTION 906 CERTIFICATION OF**

 **PRINCIPAL FINANCIAL OFFICER**

 **OF PHOENIX RISING COMPANIES**

In connection with the accompanying Annual Report on Form 10-K of Phoenix Rising Companies for the year ended December 31, 2021, the undersigned, Boon Jin "Patrick" Tan, Chief Financial Officer of Phoenix Rising Companies, does hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) such Annual Report on Form 10-K for the year ended December 31, 2021 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in such Annual Report on Form 10-K for the year ended December 31, 2021 fairly presents, in all material respects, the financial condition and results of operations of Phoenix Rising Companies

---

| | | |
|:---|:---|:---|
| Date: February 6, 2023 | By: | /s/ *Boon Jin "Patrick" Tan* |
|  |  | Boon Jin "Patrick" Tan |
|  |  | Chief Financial Officer (principal accounting officer and principal financial officer) |

---

## Exhibit 21.1

**EXHIBIT 21.1**

Xing Rui International Seychelles

Xing Rui International Hong Kong

Huaxin Changrong Shenzhen

Tieshan Beijing

## Corresp

**Law Offices of Thomas E. Puzzo, PLLC** <br>

3823 44<sup>th</sup> Ave. NE

Seattle, WA 98105

USA

Direct: +1 (206) 522-2256

E-mail: tpuzzo@puzzolaw.com

February 6, 2023

**<u>VIA EDGAR</u>**

Office of Trade & Services

Division of Corporation Finance

United States Securities and Exchange Commission

100 F Street, NE

Washington, DC 20549

---

| | |
|:---|:---|
| **Re:**  | **Phoenix Rising Companies**<br> **Annual Report on Form 10-K**<br> **Response Filed September 7, 2022**<br> **File No. 000-55319** |

---

Dear Sir or Madam:

On behalf of our client, Phoenix Rising Companies, a Nevada corporation (the "Company"), we hereby submit the information in this letter, on behalf of the Company, in response to that certain letter of the staff (the "Staff") of the Securities and Exchange Commission (the "Commission") dated October 7, 2022.

The Staff's comments in its October 7, 2022, letter are reproduced in bold italics in this letter, and the Company's responses to the Staff's comments follow each comment.

***<u>Amendment No. 1 to Form 10-K filed June 28, 2022</u>***

***<u>Item 1. Business</u>***

***<u>Description of Business, page 4</u>***

***1.*** ***Please disclose prominently that and that this structure involves unique risks to investors. Your disclosure should acknowledge that Chinese regulatory authorities could disallow this structure, which would likely result in a material change in your operations and/or a material change in the value of your securities, including that it could cause the value of such securities to significantly decline or become worthless. Provide a cross-reference to your detailed discussion of risks facing the company as a result of this structure.*** 

<u>Company response</u>: The Company has included the requested disclosure on page 5.

***2.*** ***In your description of your business, please provide prominent disclosure about the legal and operational risks associated with being based in or having the majority of the company's operations in China. Your disclosure should make clear whether these risks could result in a material change in your operations and/or the value of your securities and cause the value of such securities to significantly decline or be worthless. Your disclosure should address how recent statements and regulatory actions by China's government, such as those related to data security or anti-monopoly concerns, have or may impact the company's ability to conduct its business, accept foreign investments, or list on a U.S. or other foreign exchange. Please disclose whether your auditor is subject to the determinations announced by the PCAOB on December 16, 2021 and whether and how the Holding Foreign Companies Accountable Act (HFCAA) and related regulations will affect your company. Disclose that trading in your securities may be prohibited under the Holding Foreign Companies Accountable Act if the PCAOB determines that it cannot inspect or investigate completely your auditor, and that as a result an exchange may determine to delist your securities. Where you discuss the HFCAA, you should also discuss the Accelerating Holding Foreign Companies Accountable Act.*** 

<u>Company response</u>: The Company has included the requested disclosure on page 5.

***3.*** ***Clearly disclose how you will refer to the holding company and subsidiaries when providing the disclosure throughout the document so that it is clear to investors which entity the disclosure is referencing and which subsidiaries or entities are conducting the business operations. Disclose clearly the entity (including the domicile) in which investors would purchase an interest, when investing in your company.*** 

<u>Company response</u>: The Company has included the requested disclosure on page 4.

***4.*** ***We note your written response to Dear Issuer Letter comment 4. Provide a description of how cash is transferred through your organization and disclose your intentions to distribute earnings. State whether any transfers, dividends, or distributions have been made to date between the holding company, its subsidiaries, or to investors, and quantify the amounts where applicable. Provide cross-references to the condensed consolidating schedule and the consolidated financial statements. Additionally, please revise to:*** 

·  ***amend your disclosure here and in the summary risk factors and risk factors sections to state that, to the extent cash in the business is in the PRC/Hong Kong or a PRC/Hong Kong entity, the funds may not be available to fund operations or for other use outside of the PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of you or your subsidiaries, by the PRC government to transfer cash. Provide cross-references to these other discussions.*** 

·  ***discuss whether there are limitations on your ability to transfer cash between you, your subsidiaries, or investors. Provide a cross-reference to your discussion of this issue in your summary risk factors, and risk factors sections, as well.*** 

---

| | |
|:---|:---|
| ·  | ***discuss any cash management policies that you have that dictate how funds are transferred between you, your subsidiaries, or investors, summarize the policies, and disclose the source of such policies (e.g., whether they are contractual in nature, pursuant to regulations, etc.); alternatively, state that you have no such cash management policies that dictate how funds are transferred.*** |
|  | ***The disclosure here should not be qualified by materiality. Please make appropriate revisions to your disclosure.*** |

---

<u>Company response</u>: The Company has included the requested disclosure on page 5.

***5.*** ***Provide a diagram of the company's corporate structure, identifying the person or entity that owns the equity in each depicted entity. Identify clearly the entity in which investors would purchase their interest and the entity(ies) in which the company's operations are conducted.*** 

<u>Company response</u>: The Company has included the requested disclosure on page 4.

***6.*** ***Revise to include a summary risk factor section. In your summary of risk factors, disclose the risks that your corporate structure and being based in or having the majority of the company's operations in China poses to investors. In particular, describe the significant regulatory, liquidity, and enforcement risks with cross-references to the more detailed discussion of these risks in the filing. For example, specifically discuss risks arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and that rules and regulations in China can change quickly with little advance notice; and the risk that the Chinese government may intervene or influence your operations at any time, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change in your operations and/or the value of your securities. Acknowledge any risks that 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 could significantly limit or completely hinder your ability to offer securities to investors and cause the value of such securities to significantly decline or be worthless. Include a crossreference to each relevant individual detailed risk factor.*** 

<u>Company response</u>: The Company has included the requested disclosure on page 5.

***7.*** ***We note your written response to Dear Issuer Letter comment 8. Disclose each permission or approval that you and your subsidiaries are required to obtain from Chinese authorities to operate your business and to offer securities to foreign investors. Please state whether you or your subsidiaries are covered by permissions requirements from the China Securities Regulatory Commission (CSRC), Cyberspace Administration of China (CAC) or any other governmental agency that is required to approve operations. Please also revise your disclosure to state affirmatively whether you have received all requisite permissions or approvals and whether any permissions or approvals have been denied. Please also describe the consequences to you and your investors if you or your subsidiaries (i) do not receive or maintain such permissions or approvals, (ii) inadvertently conclude that such permissions or approvals are not required, or (iii) applicable laws, regulations, or interpretations change and you are required to obtain such permissions or approvals in the future. In this regard, we note that the disclosure here should not be qualified by materiality. Finally, please disclose whether you relied on an opinion of counsel with respect to your conclusions regarding permissions and approvals. If you relied on counsel, please name such counsel. If not, please state as much and explain why such an opinion was not obtained.*** 

<u>Company response</u>: The Company has included the requested disclosure on page 5.

***<u>Item 1A. Risk Factors, page 8</u>***

***8.*** ***Please revise your risk factors to discus the Holding Foreign Companies Accountable Act and disclose that the United States Senate has passed the Accelerating Holding Foreign Companies Accountable Act, which, if enacted, would decrease the number of "noninspection years" from three years to two years, and thus, would reduce the time before your securities may be prohibited from trading or delisted. Update your disclosure to reflect that the Commission adopted rules to implement the HFCAA and that, pursuant to the HFCAA, the PCAOB has issued its report notifying the Commission of its determination that it is unable to inspect or investigate completely accounting firms headquartered in mainland China or Hong Kong. To the extent that your auditor is not subject to such acts, please state as much.*** 

<u>Company response</u>: The Company has included the requested disclosure on page 10.

***9.*** ***Given the Chinese government's significant oversight and discretion over the conduct of your business, please revise to highlight separately the risk that the Chinese government may intervene or influence your operations at any time, which could result in a material change in your operations and/or the value of the securities you are registering. Also, given recent statements by the Chinese government indicating an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, acknowledge the risk that any such action could significantly limit or completely hinder your ability to offer securities to investors and cause the value of such securities to significantly decline or be worthless.*** 

<u> </u>

<u>Company response</u>: The Company has included the requested disclosure on page 10.

***10.*** ***We note your disclosure on page 10 regarding the Cybersecurity Review Measures, please revise your disclosure to explain how this oversight impacts your business and any offering and to what extent you believe that you are compliant with the regulations or policies that have been issued by the CAC to date. Please revise to state conclusions here. To the extent that you have relied on the opinion of counsel with respect to your conclusions, please revise to state as much and name counsel here. If you did not rely on the opinion of counsel, please state as much and explain why an opinion of counsel was not obtained.*** 

<u>Company response</u>: The Company has included the requested disclosure on page 10.

***<u>Item 7. Management's Discussion and Analysis of Financial Condition and Results of</u>***

***<u>Operations, page 12</u>***

***11.*** ***We note your written response to Dear Issuer Letter comment 9. Provide a clear description of how cash is or can be transferred through your organization. Disclose your intentions to distribute earnings or settle amounts owed. Quantify any cash flows and transfers of other assets by type that have occurred between the holding company, and its subsidiaries, and the direction of transfer. Quantify any dividends or distributions that a subsidiary have made to the holding company and which entity made such transfer, and their tax consequences. Similarly quantify dividends or distributions made to U.S. investors, the source, and their tax consequences. Your disclosure should make clear if no transfers, dividends, or distributions have been made to date. Describe any restrictions on foreign exchange and your ability to transfer cash between entities, across borders, and to U.S. investors. Describe any restrictions and limitations on your ability to distribute earnings from the company, including your subsidiaries to the parent company and U.S. investors. Provide cross-references to the condensed consolidating schedule and consolidated financial statements. Additionally, please revise to:*** 

---

| | |
|:---|:---|
| ·  | ***state that, to the extent cash in the business is in the PRC/Hong Kong or a PRC/Hong Kong entity, the funds may not be available to fund operations or for other use outside of the PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of you or your subsidiaries, by the PRC government to transfer cash.*** |
| ·  | ***discuss whether there are limitations on your ability to transfer cash between you, your subsidiaries, or investors.*** |
| ·  | ***discuss any cash management policies that you have that dictate how funds are transferred between you, your subsidiaries, or investors, summarize the policies, and disclose the source of such policies (e.g., whether they are contractual in nature, pursuant to regulations, etc.); alternatively, state that you have no such cash management policies that dictate how funds are transferred.*** |
|  | ***The disclosure here should not be qualified by materiality. Please make appropriate revisions to your disclosure and revise to include cross-references to your other discussions, as appropriate.*** |

---

<u>Company response</u>: The Company has included the requested disclosure on page 15.

***<u>General</u>***

***12.*** ***In an appropriate place in your annual report, please name the directors, officers, or members of senior management located in the PRC/Hong Kong and include a separate "Enforceability" section that addresses whether or not investors may bring actions under the civil liability provisions of the U.S. federal securities laws against you, your officers or directors who are residents of a foreign country, and whether investors may enforce these civil liability provisions when your assets, officers, and directors are located outside of the United States.*** 

<u>Company response</u>: The Company has included the requested disclosure on page 5.

Please contact the undersigned with any questions or comments.

---

| |
|:---|
| Very truly yours, |
| /s/ Thomas E. Puzzo |
| Thomas E. Puzzo |

---