What changed in this filing

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Item 1A. Risk Factors

2021-06-29 compared with 2020-06-29 · 611 added, 505 removed, 120 unchanged (90% of the section changed)

should carefully consider the risks described below and elsewhere in this Form 10-K, which could materially and adversely

affect our business, results of operations or financial condition.

Our business faces significant risks and the risks described

below may not be the only risks we face.

Additional risks not presently known to us or that we currently believe are immaterial

may materially affect our business, results of operations, or financial condition.

If any of these risks occur, the trading price

of our common stock could decline, and you may lose all or part of your investment.

You should consider our business and prospects

in light of the challenges we face, including the ones discussed in this section.

In the event that any of the events described

in the risk factors below occur, it could have a material adverse effect on our operations and cash flow and cause the value of

our securities to decline in value or become worthless.

should carefully consider the risks described below and elsewhere in this Form 10-K, which could materially and adversely affect our

business, results of operations or financial condition.

Our business faces significant risks and the risks described below may not be

the only risks we face.

Additional risks not presently known to us or that we currently believe are immaterial may materially affect

our business, results of operations, or financial condition.

If any of these risks occur, the trading price of our common stock could

decline, and you may lose all or part of your investment.

You should consider our business and prospects in light of the challenges we

face, including the ones discussed in this section.

In the event that any of the events described in the risk factors below occur, it

could have a material adverse effect on our operations and cash flow and cause the value of our securities to decline in value or become

Associated with Our Company

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of operations are directly affected by the demand of their end customers for their products supplied by us.

Drastic changes in

consumer preferences are beyond our control and will affect the demand for certain products supplied by us.

We may not be able

to anticipate and respond to such changes in consumer preferences in a timely manner.

Drastic changes in consumer

preferences are beyond our control and will affect the demand for certain products supplied by us.

We may not be able to anticipate and

respond to such changes in consumer preferences in a timely manner.

If the sales of our customers’

decrease or do not grow as we expect, our customers may decrease the volume or purchase price of their orders, which could materially

and adversely affect our business, financial condition and results of operations.

products decrease or do not

grow as we expect, our customers may decrease the volume or purchase price of their orders, which could materially and adversely affect

our business, financial condition and results of operations.

future expansion plans are subject to uncertainties and risks.

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section in this report.

The implementation of

such future plans requires us to effectively manage our sales, procurement, new logistics points and other aspects of our operations.

If we fail to effectively and efficiently implement our future plans, we may not be successful in achieving desirable and profitable

Even if we effectively and efficiently implement our future plans, there may be other unexpected events or factors that

prevent us from achieving the desirable and profitable results from the implementation of our future plans, such as changes in

our ability to comply with local rules and regulations or any delays or difficulties in obtaining the necessary licenses and approvals

from local governments.

Our business, financial condition, results of operations and growth prospects may be materially and adversely

affected if our future expansion plans fail to achieve positive results.

The implementation of such future

plans requires us to effectively manage our sales, procurement, new logistics points and other aspects of our operations.

to effectively and efficiently implement our future plans, we may not be successful in achieving desirable and profitable results.

if we effectively and efficiently implement our future plans, there may be other unexpected events or factors that prevent us from achieving

the desirable and profitable results from the implementation of our future plans, such as changes in our ability to comply with local

rules and regulations or any delays or difficulties in obtaining the necessary licenses and approvals from local governments.

Our business,

financial condition, results of operations and growth prospects may be materially and adversely affected if our future expansion plans

fail to achieve positive results.

we are unable to create brand influence, we may face difficulties in attracting new business partners and clients.

brand is still being nurtured.

It is of critical importance that we create and develop brand awareness in our industry in order

to attract new clients and business partners.

Our major competitors have built well-known brands and continue to increase their

Our failure to create and develop brand awareness for any reason may result in a material adverse effect on our business,

operational results, and financial position.

ability to adequately protect our trade names, trademarks and patents could have an impact on our brand images and ability to

penetrate new markets.

It is of critical importance that we create and develop brand awareness in our industry in order to attract

new clients and business partners.

Our major competitors have built well-known brands and continue to increase their influence.

to create and develop brand awareness for any reason may result in a material adverse effect on our business, operational results, and

financial position.

ability to adequately protect our trade names, trademarks and patents could have an impact on our brand images and ability to penetrate

believe that our trade names, trademarks and patents are important assets and an essential element of our strategy.

We have applied

the registration of these trade names, trademarks and patents in China and Hong Kong, and these registrations are currently pending

approval from the corresponding departments.

There can be no assurance that we will obtain such registrations or that the registrations

we obtain will prevent the imitation of our products or infringement of our intellectual property rights by others.

In particular,

the laws of certain foreign countries may not protect proprietary rights to the same extent as the laws of the U.S.

If any third-party

copies our products or our stores in a manner that projects lesser quality or carries a negative connotation, it could have a

material adverse effect on our brand image and reputation as well as our results of operations, financial condition and cash flows.

We have applied the

registration of these trade names, trademarks and patents in China and Hong Kong, and these registrations are currently pending approval

from the corresponding departments.

There can be no assurance that we will obtain such registrations or that the registrations we obtain

will prevent the imitation of our products or infringement of our intellectual property rights by others.

In particular, the laws of

certain foreign countries may not protect proprietary rights to the same extent as the laws of the U.S.

If any third-party copies our

products or our stores in a manner that projects lesser quality or carries a negative connotation, it could have a material adverse effect

on our brand image and reputation as well as our results of operations, financial condition and cash flows.

may be impacted by our ability to adequately source, distribute and sell merchandise and other materials in China.

face a variety of other risks generally associated with doing business in China.

instability, significant health hazards, environmental hazards or natural disasters which could negatively affect international

economies, financial markets and business activity;

instability, significant health hazards, environmental hazards or natural disasters which could negatively affect international economies,

financial markets and business activity;

of new or retaliatory trade duties, sanctions or taxes and other charges on imports or exports;

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in currency exchange rates;

business practice and political issues (including issues relating to compliance with domestic or international labor standards)

which may result in adverse publicity or threatened or actual adverse consumer actions, including boycotts;

business practice and political issues (including issues relating to compliance with domestic or international labor standards) which

may result in adverse publicity or threatened or actual adverse consumer actions, including boycotts;

delays or disruptions in shipping and transportation and related pricing impacts;

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expectations regarding product safety due to new legislation or other factors.

also rely upon third-party transportation providers for certain of our product shipments, including shipments to and from our

distribution centers, to our customers.

Our utilization of these delivery services for shipments is subject to risks, including

increases in labor costs and fuel prices, which would increase our shipping costs, and associate strikes and inclement weather,

which may impact our transportation providers’

also rely upon third-party transportation providers for certain of our product shipments, including shipments to and from our distribution

centers, to our customers.

Our utilization of these delivery services for shipments is subject to risks, including increases in labor

costs and fuel prices, which would increase our shipping costs, and associate strikes and inclement weather, which may impact our transportation

providers’

ability to provide delivery services that adequately meet our shipping needs.

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purchase of raw materials accounted for a substantial amount of our total purchases.

The price of finished fabric and yarns can

be volatile and affected by factors such as weather, industry demand and supply.

We cannot assure you that we can fully pass on

the increased cost in raw materials to our customers.

Future price increases in raw materials or changes in the supply of raw

materials may materially and adversely affect our business, financial condition and results of operations.

labor shortages, increased labor costs or other factors affecting labor supply for our production materials may materially and

adversely affect our business operations.

rely on skilled workers to a significant extent as our production process in our garment manufacturing business is labor intensive

The price of finished fabric and yarns can be volatile

and affected by factors such as weather, industry demand and supply.

We cannot assure you that we can fully pass on the increased cost

in raw materials to our customers.

Future price increases in raw materials or changes in the supply of raw materials may materially and

adversely affect our business, financial condition and results of operations.

increases in cost of epidemic prevention supplies or changes in the demand and supply may materially and adversely affect our business,

financial condition and results of operations.

purchase of epidemic prevention supplies accounted for a substantial amount of our total purchases for the fiscal year 2021.

of finished face masks and nitrile gloves can be volatile and affected by factors such as COVID-19 outbreak condition, weather, industry

demand and supply.

We cannot assure you that we can fully pass on the increased cost to our customers.

Future increases in cost of epidemic

prevention supplies or changes in the demand and supply may materially and adversely affect our business, financial condition and results

of operations.

company’s revenue increased in the first nine months of fiscal 2021 due to a new business segment of epidemic prevention supplies

The company made a significant net loss despite of its overall revenue increase and the addition of a new business segment.

During first nine months of fiscal 2021, we accepted a nitrile glove purchase order from a customer.

However, due to significant price

increase in nitrile glove due to the COVID-19 driven demand surge and the shortage of raw materials, the Company incurred a significant

loss during this period.

top customers accounted for a major portion of our total revenue for the years ended March 31, 2021 and 2020 and may materially adversely

affect our financial condition and results of operations.

the year ended March 31, 2021, two customers accounted for approximately 76.2%, and 13.5% of the Company’s total garment manufacturing

revenues, respectively.

For the year ended March 31, 2020, two customers accounted for approximately 85.5% and 10.2% of the Company’s

total garment manufacturing revenues.

For the year ended March 31, 2021, three customers accounted for approximately 13.6%, 13.2% and

10.5% of the Company’s total logistic services revenues, respectively.

For the year ended March 31, 2020, three customers

accounted for approximately 22.4%, 18.3% and 17.8% of the Company’s total logistic services revenues.

However, our top customers

are not obligated in any way to continue to provide us with new businesses in the future at a level similar to that in the past or at

If any of our top customers reduce their orders with us or terminate their business relationship with our Group and if we

are not able to secure orders of a comparable size from other customers as replacement, our business operations and financial performance

may be materially and adversely affected.

are exposed to concentration risk of heavy reliance on our major supplier for the supply of our products, and any shortage of, or delay

in, the supply may significantly impact on our business and results of operation.

the years ended March 31, 2021 and 2020, approximately 98.7% and 92.7% of total inventory purchases were from the Company’s five

largest suppliers, respectively.

Our business, financial condition and operating results depend on the continuous supply of products

from our largest suppliers and our continuous supplier-customer relationship with them.

Our heavy reliance on our largest

suppliers for the supply of our products will have significant impact on our business and results of operation in the event of any

shortage of, or delay in the supply.

labor shortages, increased labor costs or other factors affecting labor supply for our production materials may materially and adversely

affect our business operations.

rely on skilled workers to a significant extent as our production process in our garment manufacturing business is labor intensive in

Our business performance relies on the steady supply of relatively low cost labor in the PRC.

There is no guarantee

that our supply of labor will not be disrupted or that our labor costs will not increase.

If we fail to retain our existing labor

resources and/or recruit sufficient labor in a timely manner, we may not be able to accommodate sudden increases in demand for

our products.

There is no guarantee that our

supply of labor will not be disrupted or that our labor costs will not increase.

If we fail to retain our existing labor resources and/or

recruit sufficient labor in a timely manner, we may not be able to accommodate sudden increases in demand for our products.

costs are affected by the demand for and supply of labor and economic factors, such as the inflation rate and costs of living.

Labor costs may further increase in the future due to a shortage of skilled labor and growing industry demands.

The failure to

identify and recruit replacement staff immediately following the unexpected loss of skilled workers could reduce our competitiveness.

In addition, we expect continued increases in labor costs in the PRC.

In these circumstances, our business, financial condition,

results of operations and prospects could be materially and adversely affected.

costs may further increase in the future due to a shortage of skilled labor and growing industry demands.

The failure to identify and

recruit replacement staff immediately following the unexpected loss of skilled workers could reduce our competitiveness.

we expect continued increases in labor costs in the PRC.

In these circumstances, our business, financial condition, results of operations

and prospects could be materially and adversely affected.

may be impacted by our ability to attract, develop and retain qualified associates and manage labor-related costs.

believe our competitive advantage is providing a positive, engaging and satisfying experience for each customer, which requires

us to have highly trained and engaged associates.

Our success depends in part upon our ability to attract, develop and retain

a sufficient number of qualified associates, including skill intensive labor.

The turnover rate in the textile industry is generally

high, and qualified individuals of the requisite caliber and number needed to fill these positions may be in short supply in our

Competition for such qualified individuals or changes in labor laws could require us to incur higher labor costs.

Our inability to recruit a sufficient number of qualified individuals in the future may delay planned delivery of finished products

or affect the speed with which we expand.

Delayed deliveries, significant increases in associate turnover rates or significant

increases in labor-related costs could have a material adverse effect on our results of operations, financial condition and cash

believe our competitive advantage is providing a positive, engaging and satisfying experience for each customer, which requires us to

have highly trained and engaged associates.

Our success depends in part upon our ability to attract, develop and retain a sufficient

number of qualified associates, including skill intensive labor.

The turnover rate in the textile industry is generally high, and qualified

individuals of the requisite caliber and number needed to fill these positions may be in short supply in our operations.

for such qualified individuals or changes in labor laws could require us to incur higher labor costs.

Our inability to recruit a sufficient

number of qualified individuals in the future may delay planned delivery of finished products or affect the speed with which we expand.

Delayed deliveries, significant increases in associate turnover rates or significant increases in labor-related costs could have a material

adverse effect on our results of operations, financial condition and cash flows.

may be impacted by our vendors’

ability to manufacture and deliver raw materials in a timely manner, meet quality standards

and comply with applicable laws and regulations.

ability to manufacture and deliver raw materials in a timely manner, meet quality standards and

comply with applicable laws and regulations.

purchase raw materials from third-party vendors.

Factors outside our control, such as production or shipping delays or quality

problems, could disrupt merchandise deliveries and result in lost sales, cancellation charges or excessive markdowns.

addition, quality problems could result in a product liability judgment or a widespread product recall that may negatively impact

our sales and profitability for a period of time depending on product availability, competition reaction and consumer attitudes.

Even if the product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertions

could adversely impact our reputation with existing and potential customers and our brand image.

Factors outside our control, such as production or shipping delays or quality problems,

could disrupt merchandise deliveries and result in lost sales, cancellation charges or excessive markdowns.

addition, quality problems could result in a product liability judgment or a widespread product

recall that may negatively impact our sales and profitability for a period of time depending

on product availability, competition reaction and consumer attitudes.

Even if the product

liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding

any assertions could adversely impact our reputation with existing and potential customers

and our brand image.

business could also suffer if our third-party vendors fail to comply with applicable laws and regulations.

While our internal

and vendor’s operating guidelines promote ethical business practices and our associates visit and monitor the operations

of our third-party vendors, we do not control these vendors or their practices.

The violation of labor, environmental or other

laws by third-party vendors used by us, or the divergence of a third-party vendor’s or partner’s labor or environmental

practices from those generally accepted as ethical or appropriate, could interrupt or otherwise disrupt the shipment of finished

products to us or damage our reputation.

While our internal and vendor’s

operating guidelines promote ethical business practices and our associates visit and monitor the operations of our third-party vendors,

we do not control these vendors or their practices.

The violation of labor, environmental or other laws by third-party vendors used by

us, or the divergence of a third-party vendor’s or partner’s labor or environmental practices from those generally accepted

as ethical or appropriate, could interrupt or otherwise disrupt the shipment of finished products to us or damage our reputation.

and similar sized competitors could steal our market share by offering lower prices.

endeavor to provide the highest possible quality service to our clients at the best possible price, however, large and similar

sized competitors might steal some of our market share by offering lower prices, causing us to lose some of our clients.

happens, we might not be able to generate adequate revenues and may soon find ourselves lacking the capital that is required to

continue operations.

we are unable to attract additional customers and clients to purchase our services (and future products we may develop or sell),

it will have a negative effect on our ability to generate the revenue.

endeavor to provide the highest possible quality service to our clients at the best possible price, however, large and similar sized

competitors might steal some of our market share by offering lower prices, causing us to lose some of our clients.

If this happens, we

might not be able to generate adequate revenues and may soon find ourselves lacking the capital that is required to continue operations.

we are unable to attract additional customers and clients to purchase our services (and future products we may develop or sell), it will

have a negative effect on our ability to generate the revenue.

currently have a limited number of clients and customers.

We have identified additional potential clients, but we cannot guarantee

that we will be able to secure them as clients.

Even if we obtain additional clients and customers, there is no guarantee that

we will be able develop products and/or services that our clients and customers will want to purchase.

If we are unable to attract

enough customers and clients to purchase services (and any products we may develop or sell) it will have a negative effect on

our ability to generate the revenue that is necessary to operate or expand our business.

The lack of sufficient revenue will have

a negative effect on the ability of our company to continue operations and could force us to cease operations.

We have identified additional potential clients, but we cannot guarantee that

we will be able to secure them as clients.

Even if we obtain additional clients and customers, there is no guarantee that we will be

able develop products and/or services that our clients and customers will want to purchase.

If we are unable to attract enough customers

and clients to purchase services (and any products we may develop or sell) it will have a negative effect on our ability to generate

the revenue that is necessary to operate or expand our business.

The lack of sufficient revenue will have a negative effect on the ability

of our company to continue operations and could force us to cease operations.

may be adversely affected by the performance of third-party contractors.

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and track record, high performance reliability and adequate financial resources.

However, any such third-party contractor may

still fail to provide satisfactory logistics services at the level of quality or within the timeframe required by us or our customers.

While we generally require our logistics contractors to fully reimburse us for any losses arising from delay in delivery or non-delivery,

our results of operation and financial condition may be adversely affected if any of the losses are not borne by them.

performance of any third-party contractor is not satisfactory, we may need to replace such contractor or take other remedial actions,

which could adversely affect the cost structure and delivery schedule of our products and thus have a negative impact on our reputation,

financial position and business operations.

In addition, as we are expanding our business into other geographical locations in

the PRC, there may be a shortage of third-party contractors that meet our quality standards and other selection criteria in such

locations and, as a result, we may not be able to engage a sufficient number of high-quality third-party contractors in a timely

manner, which may adversely affect our delivery schedules and delivery costs and hence our business, results of operations and

financial conditions.

However, any such third-party contractor may still fail

to provide satisfactory logistics services at the level of quality or within the timeframe required by us or our customers.

generally require our logistics contractors to fully reimburse us for any losses arising from delay in delivery or non-delivery, our

results of operation and financial condition may be adversely affected if any of the losses are not borne by them.

If the performance

of any third-party contractor is not satisfactory, we may need to replace such contractor or take other remedial actions, which could

adversely affect the cost structure and delivery schedule of our products and thus have a negative impact on our reputation, financial

position and business operations.

In addition, as we are expanding our business into other geographical locations in the PRC, there may

be a shortage of third-party contractors that meet our quality standards and other selection criteria in such locations and, as a result,

we may not be able to engage a sufficient number of high-quality third-party contractors in a timely manner, which may adversely affect

our delivery schedules and delivery costs and hence our business, results of operations and financial conditions.

insurance may not be sufficient.

carry insurance that we consider adequate in regard to the nature of the covered risks and the costs of coverage.

We are not fully

insured against all possible risks, nor are all such risks insurable.

We are not fully insured

against all possible risks, nor are all such risks insurable.

business depends on the continued contributions made by Mr.

Hong Zhida, as our key executive officer, the loss of who may result

in a severe impediment to our business.

Hong Zhida, as our key executive officer, the loss of who may result in a

severe impediment to our business.

success is dependent upon the continued contributions made by our CEO and President, Mr.

We rely on his expertise

in business operations when we are developing new products and services.

We rely on his expertise in business

operations when we are developing new products and services.

The Company has no “Key Man”

cover the resulting losses in the event that any of our officer or directors should die or resign.

Hong Zhida cannot serve the Company or is no longer willing to do so, the Company may not be able to find alternatives in

a timely manner or at all.

This would likely result in a severe damage to our business operations and would have an adverse material

impact on our financial position and operational results.

To continue as a viable operation, the Company may have to recruit and

train replacement personnel at a higher cost.

insurance to cover the resulting

losses in the event that any of our officer or directors should die or resign.

Hong Zhida cannot serve the Company or is no longer willing to do so, the Company may not be able to find alternatives in a timely

manner or at all.

This would likely result in a severe damage to our business operations and would have an adverse material impact on

our financial position and operational results.

To continue as a viable operation, the Company may have to recruit and train replacement

personnel at a higher cost.

Additionally,

Hong Zhida joins our competitors or develops similar businesses that are in competition with our Company, our business

may also be negatively impacted.

Hong Zhida joins our competitors or develops similar businesses that are in competition with our Company, our business may also

be negatively impacted.

future success depends on our ability to attract and retain qualified long-term staff to fill management, technology, sales, marketing,

and customer services positions.

We have a great need for qualified talent, but we may not be successful in attracting, hiring,

developing, and retaining the talent required for our success.

We have a great need for qualified talent, but we may not be successful in attracting, hiring, developing,

and retaining the talent required for our success.

may be adversely impacted by certain compliance or legal matters.

along with third parties we do business with, are subject to complex compliance and litigation risks.

Actions filed against us

from time to time include commercial, tort, intellectual property, customer, employment, wage and hour, data privacy, securities,

anti-corruption and other claims, including purported class action lawsuits.

The cost of defending against these types of claims

against us or the ultimate resolution of such claims, whether by settlement or adverse court decision, may harm our business.

Further, potential claimants may be encouraged to bring lawsuits based on a settlement from us or adverse court decisions against

We cannot currently assess the likely outcome of such suits, but if the outcome were negative, it could have a material adverse

effect on our reputation, results of operations, financial condition and cash flows.

addition, we may be impacted by litigation trends, including class action lawsuits involving consumers and shareholders, that

could have a material adverse effect on our reputation, the market price of our common stock, results of operations, financial

condition and cash flows.

Actions filed against us from time

to time include commercial, tort, intellectual property, customer, employment, wage and hour, data privacy, securities, anti-corruption

and other claims, including purported class action lawsuits.

The cost of defending against these types of claims against us or the ultimate

resolution of such claims, whether by settlement or adverse court decision, may harm our business.

Further, potential claimants may be

encouraged to bring lawsuits based on a settlement from us or adverse court decisions against us.

We cannot currently assess the likely

outcome of such suits, but if the outcome were negative, it could have a material adverse effect on our reputation, results of operations,

financial condition and cash flows.

addition, we may be impacted by litigation trends, including class action lawsuits involving consumers and shareholders, that could have

a material adverse effect on our reputation, the market price of our common stock, results of operations, financial condition and cash

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

operating in China are required to participate in various government sponsored employee benefit plans, including certain social insurance,

housing funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages of

salaries, including bonuses and allowances, of employees up to a maximum amount specified by the local government from time to time at

locations where they operate their businesses.

The requirement of employee benefit plans has not been implemented consistently by the

local governments in China given the different levels of economic development in different locations.

As of December 31, 2020, we have

made adequate employee benefit payments in strict compliance with the relevant PRC regulations for and on behalf of our employees.

is no guarantee that we will not fail in making adequate employee benefit payments in strict compliance with applicable PRC labor related

laws and regulations in the future.

Our failure in making contributions to various employee benefits plans in strict compliance with

applicable PRC labor related laws and regulations may subject us to late payment penalties, and we could also be required to make up

the contributions for these plans as well as to pay late fees and fines.

If we are subject to late fees or fines in relation to the underpaid

employee benefits, our financial condition and results of operations may be adversely affected.

recent joint statement by the SEC and the Public Company Accounting Oversight Board (United States), or the “PCAOB,”

rule changes submitted by Nasdaq, and the newly enacted “Holding Foreign Companies Accountable Act”

all call for additional

and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially

auditors who are not inspected by the PCAOB.

These developments could add uncertainties to our offering.

April 21, 2020, the SEC and the PCAOB released a joint statement highlighting the risks associated with investing in companies based

in or having substantial operations in emerging markets including China.

The joint statement emphasized the risks associated with lack

of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets.

May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply a minimum offering size requirement for companies primarily operating

in a “Restrictive Market,”

(ii) adopt a new requirement relating to the qualification of management or the board of directors

for Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the

qualifications of the company’s auditor.

December 18, 2020, the “Holding Foreign Companies Accountable Act”

was signed by previous President of the United States

and became law.

This legislation requires certain issuers of securities to establish that they are not owned or controlled by a foreign

Specifically, an issuer must make this certification if the PCAOB is unable to audit specified reports because the issuer

has retained a foreign public accounting firm not subject to inspection by the PCAOB.

Furthermore, if the PCAOB is unable to inspect

the issuer’s public accounting firm for three consecutive years, the issuer’s securities are banned from trade on a national

exchange or through other methods.

lack of access to the PCAOB inspection in China prevents the PCAOB from fully evaluating audits and quality control procedures of the

auditors based in China.

As a result, investors may be deprived of the benefits of such PCAOB inspections.

The inability of the PCAOB

to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of these accounting firm’s audit

procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could

cause investors and potential investors in our Ordinary Shares to lose confidence in our audit procedures and reported financial information

and the quality of our financial statements.

auditor, BF Borgers CPA PC, is an independent registered public accounting firm with the PCAOB, and as an auditor of publicly traded

companies in the U.S., is subject to laws in the U.S.

pursuant to which the PCAOB conducts regular inspections to assess its compliance

with the applicable professional standards.

Our auditor has been inspected by the PCAOB on a regular basis.

If we were to be found out

of compliance with the existing or future guidelines discussed above, it may impair or halt the ability to trade our shares on Nasdaq

or other applicable trading market within the US.

are uncertainties under the PRC Securities Law relating to the procedures and requisite timing for the U.S.

securities regulatory agencies

to conduct investigations and collect evidence within the territory of the PRC.

December 28, 2019, the newly amended Securities Law of the PRC (the “PRC Securities Law”) was promulgated, which became effective

on March 1, 2020.

According to Article 177 of the PRC Securities Law (“Article 177”), the securities regulatory authority

of the State Council may establish a regulatory cooperation mechanism with securities regulatory authorities of another country or region

for the implementation of cross-border supervision and administration.

Article 177 further provides that overseas securities regulatory

authorities shall not engage in activities pertaining to investigations or evidence collection directly conducted within the territories

of the PRC, and that no Chinese entities or individuals shall provide documents and information in connection with securities business

activities to any organizations and/or persons aboard without the prior consent of the securities regulatory authority of the State Council

and the competent departments of the State Council.

of the date of this prospectus, we are not aware of any implementing rules or regulations which have been published regarding application

of Article 177.

advised by our PRC counsel, Article 177 is only applicable where the activities of overseas authorities constitute a direct investigation

or evidence collection by such authorities within the territory of the PRC.

Our principal business operation is conducted in the PRC.

In the event that the U.S.

securities regulatory agencies carry out an investigation on us such as an enforcement action by the Department

of Justice, the SEC or other authorities, such agencies’

activities will constitute conducting an investigation or collecting evidence

directly within the territory of the PRC and accordingly fall within the scope of Article 177.

In that case, the U.S.

securities regulatory

agencies may have to consider establishing cross-border cooperation with the securities regulatory authority of the PRC by way of judicial

assistance, diplomatic channels or establishing a regulatory cooperation mechanism with the securities regulatory authority of the PRC.

However, there is no assurance that the U.S.

securities regulatory agencies will succeed in establishing such cross-border cooperation

in this particular case and/or establish such cooperation in a timely manner.

as Article 177 is a recently promulgated provision and, as the date of this prospectus, there have not been implementing rules or regulations

regarding the application of Article 177, it remains unclear as to how it will be interpreted, implemented or applied by the Chinese

Securities Regulatory Commission or other relevant government authorities.

As such, there are uncertainties as to the procedures and

requisite timing for the U.S.

securities regulatory agencies to conduct investigations and collect evidence within the territory of the

securities regulatory agencies are unable to conduct such investigations, there exists a risk that they may determine

to suspend or de-register our registration with the SEC and may also delist our securities from Nasdaq or other applicable trading market

within the US.

are exposed to liabilities relating to environmental protection and safety laws and regulations.

operations are subject to comprehensive and frequently changing laws and regulations relating to environmental protection and

health and safety.

The discharge of waste and pollutants from our manufacturing operations into the environment may give rise

to liabilities that may require us to incur costs to remedy such discharge.

If we violate such laws or regulations, we may be

required to implement corrective actions and could be subject to civil or criminal fines or penalties or other sanctions.

we cannot assure you that any environmental laws adopted in the future will not materially increase our operating costs and other

We cannot assure you that we will not have to make significant capital or operating expenditures in the future in order

to comply with existing or new laws and regulations or that we will comply with applicable environmental laws at all times.

violations or liability could have a material adverse effect on our business, financial condition and results of operations.

our employees do not maintain a strong work ethic and comply with our code of ethics, including our confidentiality requirements,

their actions may negatively influence our business and reputation.

operations are subject to comprehensive and frequently changing laws and regulations relating to environmental protection and health

The discharge of waste and pollutants from our manufacturing operations into the environment may give rise to liabilities

that may require us to incur costs to remedy such discharge.

If we violate such laws or regulations, we may be required to implement

corrective actions and could be subject to civil or criminal fines or penalties or other sanctions.

we cannot assure you that any environmental laws adopted in the future will not materially increase our operating costs and other expenses.

We cannot assure you that we will not have to make significant capital or operating expenditures in the future in order to comply with

existing or new laws and regulations or that we will comply with applicable environmental laws at all times.

Such violations or liability

could have a material adverse effect on our business, financial condition and results of operations.

our employees do not maintain a strong work ethic and comply with our code of ethics, including our confidentiality requirements, their

actions may negatively influence our business and reputation.

with good professional ethics are important for any company’s development.

An employee might, either intentionally or unintentionally,

disclose confidential information about our Company or our clients and particularly unscrupulous employees might endeavor to sell

material information to industry competitors.

Furthermore, our employees will develop relationships with our business partners

and clients, and may acquire information that could be used to harm their business interests.

If this should happen, our partners

and clients might lose faith in our company.

While we can never eliminate these ethical risks entirely, we will attempt to reduce

the likelihood of breaches of trust and mitigate their impacts of it by hiring highly professional employees and establishing

strong internal information management systems.

disclose confidential information about our Company or our clients and particularly unscrupulous employees might endeavor to sell material

information to industry competitors.

Furthermore, our employees will develop relationships with our business partners and clients, and

may acquire information that could be used to harm their business interests.

If this should happen, our partners and clients might lose

faith in our company.

While we can never eliminate these ethical risks entirely, we will attempt to reduce the likelihood of breaches

of trust and mitigate their impacts of it by hiring highly professional employees and establishing strong internal information management

also plan to establish a series of policies to reduce the likelihood of such events.

in the event that any employee discloses confidential information about our Company or our clients or sells material information

to industry competitors, it could have a material adverse effect on our reputation, operations and cash flow.

in the event that any employee discloses confidential information about our Company or our clients or sells material information to industry

competitors, it could have a material adverse effect on our reputation, operations and cash flow.

face risks associated with future Chinese regulations.

there are no government regulations in China regarding our type of services.

The Chinese government encourages small-medium sized

traditional industry companies to conduct business model transformation and technology updates, which may help companies gain

more competitive advantages in international markets.

than the required adherence to general business laws and regulatory disclosures, our services are not affected by any specific

additional Chinese government regulations.

However, this does not preclude the possibility that China may institute regulations

that will make it difficult or impossible for us to operate successfully, if at all, in the future.

If that occurs, we may have

to focus our business on companies located outside China.

This could cause our results of operations to be materially adversely

effected, reduce our revenues and cause the value of our securities to decline in value.

may require additional financing in the future and our operations could be curtailed if we are unable to obtain required additional

financing when needed.

The Chinese government encourages small-medium sized traditional

industry companies to conduct business model transformation and technology updates, which may help companies gain more competitive advantages

in international markets.

than the required adherence to general business laws and regulatory disclosures, our services are not affected by any specific additional

Chinese government regulations.

However, this does not preclude the possibility that China may institute regulations that will make it

difficult or impossible for us to operate successfully, if at all, in the future.

If that occurs, we may have to focus our business on

companies located outside China.

This could cause our results of operations to be materially adversely effected, reduce our revenues

and cause the value of our securities to decline in value.

may require additional financing in the future and our operations could be curtailed if we are unable to obtain required additional financing

may need to obtain additional debt or equity financing to fund future capital expenditures.

While we do not anticipate seeking

additional financing in the immediate future, any additional equity may result in dilution to the holders of our outstanding shares

of capital stock.

Additional debt financing may include conditions that would restrict our freedom to operate our business, such

as conditions that:

While we do not anticipate seeking additional

financing in the immediate future, any additional equity may result in dilution to the holders of our outstanding shares of capital stock.

Additional debt financing may include conditions that would restrict our freedom to operate our business, such as conditions that:

our ability to pay dividends or require us to seek consent for the payment of dividends;

our vulnerability to general adverse economic and industry conditions;

us to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our

cash flow to fund capital expenditures, working capital and other general corporate purposes;

us to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash

flow to fund capital expenditures, working capital and other general corporate purposes;

our flexibility in planning for, or reacting to, changes in our business and our industry.

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disasters and other events beyond our control could materially adversely affect us.

disasters or other catastrophic events may cause damage or disruption to our operations, international commerce and the global

economy, and thus could have a strong negative effect on us.

Our business operations are subject to interruption by natural disasters,

fire, power shortages, pandemics and other events beyond our control.

This may result in delivery delays, malfunctioning of facilities

or shutdown of logistic points.

Such events could make it difficult or impossible for us to deliver our products and services

to our customers and could decrease demand for our services.

In the past, there was no significant disruption of operation at

our production facilities and logistic points.

However, we could not assure you that the production facilities and logistic points

will always operate normally in the future.

disasters or other catastrophic events may cause damage or disruption to our operations, international commerce and the global economy,

and thus could have a strong negative effect on us.

Our business operations are subject to interruption by natural disasters, fire, power

shortages, pandemics and other events beyond our control.

This may result in delivery delays, malfunctioning of facilities or shutdown

of logistic points.

Such events could make it difficult or impossible for us to deliver our products and services to our customers and

could decrease demand for our services.

In the past, there was no significant disruption of operation at our production facilities and

logistic points.

However, we could not assure you that the production facilities and logistic points will always operate normally in

are an “emerging growth company”

and we cannot be certain if the reduced disclosure requirements applicable to emerging

growth companies will make our common stock less attractive to investors.

and we cannot be certain if the reduced disclosure requirements applicable to emerging growth

companies will make our common stock less attractive to investors.

are an “emerging growth company,”

as defined in the JOBS Act, and we may take advantage of certain exemptions from

various reporting requirements that are applicable to other public companies that are not “emerging growth companies”

including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced

disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements

of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not

previously approved.

We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.

If some investors find our common stock less attractive as a result, there may be a less active trading market for our common

stock and our stock price may be more volatile.

as defined in the JOBS Act, and we may take advantage of certain exemptions from various

reporting requirements that are applicable to other public companies that are not “emerging growth companies”

including not

being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations

regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding

advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

predict if investors will find our common stock less attractive because we may rely on these exemptions.

If some investors find our common

stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

Risks Associated with Business Operations in China

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are a Nevada corporation and most of our assets are and will be located outside of the United States.

Almost all of our operations

will be conducted in China.

In addition, our officers and directors are nationals and residents of a country other than the United

Almost all of our operations will

be conducted in China.

In addition, our officers and directors are nationals and residents of a country other than the United States.

All of their assets are located outside the United States.

As a result, it may be difficult for you to effect service

of process within the United States upon them.

As a result, it may be difficult for you to effect service of process within

the United States upon them.

It may also be difficult for you to enforce in U.S.

courts judgments on the civil

liability provisions of the U.S.

federal securities laws against us and our officer and director, since he is not a resident in

the United States.

In addition, there is uncertainty as to whether the courts of China would recognize or enforce judgments of

courts judgments on the civil liability provisions of

federal securities laws against us and our officer and director, since he is not a resident in the United States.

there is uncertainty as to whether the courts of China would recognize or enforce judgments of U.S.

exchange fluctuations may affect our business.

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Dollars (USD).

Therefore, foreign exchange

fluctuations may influence our business in unpredictable ways.

Therefore, foreign exchange fluctuations

may influence our business in unpredictable ways.

value of the Renminbi against the U.S.

dollar and other currencies may fluctuate and is affected by, among other things, changes

in political and economic conditions and the foreign exchange policy adopted by the PRC government.

For instance, in August 2015,

the People’s Bank of China, or PBOC, changed the way it calculates the mid-point price of Renminbi against the U.S.

requiring the market-makers who submit for reference rates to consider the previous day’s closing spot rate, foreign-exchange

demand and supply as well as changes in major currency rates.

In 2016 and 2017, the value of the Renminbi depreciated approximately

7.2% and appreciated 6.3% against the U.S.

dollar and other currencies may fluctuate and is affected by, among other things, changes in political

and economic conditions and the foreign exchange policy adopted by the PRC government.

For instance, in August 2015, the People’s

Bank of China, or PBOC, changed the way it calculates the mid-point price of Renminbi against the U.S.

dollar, requiring the market-makers

who submit for reference rates to consider the previous day’s closing spot rate, foreign-exchange demand and supply as well as

changes in major currency rates.

In 2016 and 2017, the value of the Renminbi depreciated approximately 7.2% and appreciated 6.3% against

dollar, respectively.

From the April of 2019 through the end of June 2020,

the value of the Renminbi appreciated by approximately 5.51% against the U.S.

It is difficult to predict

how market forces or PRC or U.S.

government policy, including any interest rate increases by the Federal Reserve, may impact the

exchange rate between the Renminbi and the U.S.

From April 2020 through the end of March 2021, the value of the Renminbi appreciated by approximately

7.4% against the U.S.

It is difficult to predict how market forces or PRC or U.S.

government policy, including any interest rate

increases by the Federal Reserve, may impact the exchange rate between the Renminbi and the U.S.

dollar in the future.

There remains significant international pressure on the

PRC government to adopt a more flexible currency policy, including from the U.S.

government, which has threatened to label China

as a “currency manipulator,”

which could result in greater fluctuation of the Renminbi against the U.S.

substantial percentage of our revenues and costs are denominated in Renminbi, and a significant portion of our assets are also

denominated in Renminbi.

We are a holding company and we rely on dividends, loans and other distributions on equity paid by our

operating subsidiaries in China.

Any significant fluctuations in the value of the Renminbi may materially and adversely affect

our liquidity and cash flows.

There remains

significant international pressure on the PRC government to adopt a more flexible currency policy, including from the U.S.

which has threatened to label China as a “currency manipulator,”

which could result in greater fluctuation of the Renminbi

against the U.S.

substantial percentage of our revenues and costs are denominated in Renminbi, and a significant portion of our assets are also denominated

We are a holding company and we rely on dividends, loans and other distributions on equity paid by our operating subsidiaries

Any significant fluctuations in the value of the Renminbi may materially and adversely affect our liquidity and cash flows.

Appreciation of the U.S.

dollar against the Renminbi would have a negative effect on the U.S.

amount we would receive.

Conversely, to the extent that we need to convert U.S.

dollars into Renminbi for our operations, appreciation

of the Renminbi against the U.S.

dollar would have an adverse effect on the Renminbi amount we would receive.

dollar amount we would receive.

to the extent that we need to convert U.S.

dollars into Renminbi for our operations, appreciation of the Renminbi against the U.S.

would have an adverse effect on the Renminbi amount we would receive.

could pose a risk to our business.

is an important factor that must be considered as we move forward.

A change in the rate of inflation could influence the profits

that we generate from our business.

When the rate of inflation rises, the operational costs of running our company would increase,

such as labor costs, raw materials and public utilities, affecting our ability to provide our services at competitive prices.

An increase in the rate of inflation would force our clients to search for other service providers, causing us to lose business

face the risk that changes in the policies of the PRC government could have a significant impact upon the business we may be able

to conduct in the PRC and the profitability of such business.

PRC’s economy is in a transition from a planned economy to a market oriented economy subject to five-year and annual plans

adopted by the central government that set national economic development goals.

Policies of the PRC government can have significant

effects on the economic conditions of the PRC.

The PRC government has confirmed that economic development will follow the model

of a market economy.

Under this direction, we believe that the PRC will continue to strengthen its economic and trading relationships

with foreign countries and business development in the PRC will follow market forces.

While we believe that this trend will continue,

we cannot assure you that this will be the case.

A change in policies by the PRC government could adversely affect our interests

by, among other factors:

changes in laws, regulations or the interpretation thereof, confiscatory taxation, restrictions on currency

conversion, imports or sources of supplies, or the expropriation or nationalization of private enterprises.

Although the PRC government

has been pursuing economic reform policies for more than two decades, we cannot assure you that the government will continue to

pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership,

social or political disruption, or other circumstances affecting the PRC’s political, economic and social environment.

A change in the rate of inflation could influence the profits that

we generate from our business.

When the rate of inflation rises, the operational costs of running our company would increase, such as

labor costs, raw materials and public utilities, affecting our ability to provide our services at competitive prices.

An increase in

the rate of inflation would force our clients to search for other service providers, causing us to lose business and revenue.

face the risk that changes in the policies of the PRC government could have a significant impact upon the business we may be able to

conduct in the PRC and the profitability of such business.

PRC’s economy is in a transition from a planned economy to a market oriented economy subject to five-year and annual plans adopted

by the central government that set national economic development goals.

Policies of the PRC government can have significant effects on

the economic conditions of the PRC.

The PRC government has confirmed that economic development will follow the model of a market economy.

Under this direction, we believe that the PRC will continue to strengthen its economic and trading relationships with foreign countries

and business development in the PRC will follow market forces.

While we believe that this trend will continue, we cannot assure you that

this will be the case.

A change in policies by the PRC government could adversely affect our interests by, among other factors:

in laws, regulations or the interpretation thereof, confiscatory taxation, restrictions on currency conversion, imports or sources of

supplies, or the expropriation or nationalization of private enterprises.

Although the PRC government has been pursuing economic reform

policies for more than two decades, we cannot assure you that the government will continue to pursue such policies or that such policies

may not be significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances

affecting the PRC’s political, economic and social environment.

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

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

1979, the PRC government began to promulgate a comprehensive system of laws, rules and regulations governing economic matters

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

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.

it is possible that our existing operations may be found not to be in full compliance with relevant laws and regulations in the

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.

administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and

management attention.

Since PRC administrative and court authorities have significant discretion in interpreting and implementing

statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and

the level of legal protection we enjoy than in more developed legal systems.

These uncertainties may impede our ability to enforce

the contracts we have entered into and could materially and adversely affect our business, financial condition and results of

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.

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 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

As a result, we may not be aware of our violation of these policies and rules until after the occurrence of the violation.

administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management

Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and

contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection

we enjoy than in more developed legal systems.

These uncertainties may impede our ability to enforce the contracts we have entered into

and could materially and adversely affect our business, financial condition and results of operations.

regulations regarding acquisitions impose significant regulatory approval and review requirements, which could make it more difficult

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agency, in advance of any transaction where the parties’

revenues in the China market exceed certain thresholds and the

buyer would obtain control of, or decisive influence over, the other party.

In addition, on August 8, 2006, six PRC regulatory

agencies, including the MOFCOM, the State-Owned Assets Supervision and Administration Commission, the State Administration of

Taxation, the SAIC, the China Securities Regulatory Commission, or the CSRC, and the State Administration of Foreign Exchange,

or SAFE, 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 was amended on June 22, 2009.

Under the M&A Rules, the approval of

MOFCOM must be obtained in circumstances where overseas companies established or controlled by PRC enterprises or residents acquire

domestic companies affiliated with such PRC enterprises or residents.

Applicable PRC laws, rules and regulations also require

certain merger and acquisition transactions to be subject to security review.

regulations relating to investments in offshore companies by PRC residents may subject our PRC-resident beneficial owners or our

PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries or limit our PRC subsidiaries’

revenues in the China market exceed certain thresholds and the buyer would

obtain control of, or decisive influence over, the other party.

In addition, on August 8, 2006, six PRC regulatory agencies, including

the MOFCOM, the State-Owned Assets Supervision and Administration Commission, the State Administration of Taxation, the SAIC, the China

Securities Regulatory Commission, or the CSRC, and the State Administration of Foreign Exchange, or SAFE, 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 was amended on June 22, 2009.

Under the M&A Rules, the approval of MOFCOM must be obtained in circumstances where overseas

companies established or controlled by PRC enterprises or residents acquire domestic companies affiliated with such PRC enterprises or

Applicable PRC laws, rules and regulations also require certain merger and acquisition transactions to be subject to security

regulations relating to investments in offshore companies by PRC residents may subject our PRC-resident beneficial owners or our PRC

subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries or limit our PRC subsidiaries’

ability to increase their registered capital or distribute profits.

promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’

Offshore Investment

and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, on July 4, 2014, which replaced

the former circular commonly known as “SAFE Circular 75”

Offshore Investment and

Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, on July 4, 2014, which replaced the former

circular commonly known as “SAFE Circular 75”

promulgated by SAFE on October 21, 2005.

SAFE 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 SAFE Circular 37 as a “special purpose vehicle.”

SAFE Circular

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 SAFE Circular 37 as a “special

purpose vehicle.”

SAFE Circular 37 further requires amendment to the registration in the event of any significant changes

with respect to the special purpose vehicle, such as increase or decrease of capital contributed by PRC individuals, share transfer

or exchange, merger, division or other material event.

In the event that a PRC shareholder holding interests in a special purpose

vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited

from making profit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities,

and the special purpose vehicle may be restricted in its ability to contribute additional capital into its PRC subsidiary.

failure to comply with the various SAFE registration requirements described above could result in liability under PRC law for

evasion of foreign exchange controls.

have notified substantial beneficial owners of shares of common stock who we know are PRC residents of their filing obligation,

and pursuant to SAFE Circular 37, we have periodically filed and updated the above-mentioned foreign exchange registration on

behalf of certain employee shareholders who we know are PRC residents.

However, we may not be aware of the identities of all of

our beneficial owners who are PRC residents.

We do not have control over our beneficial owners and cannot assure you that all

of our PRC-resident beneficial owners will comply with SAFE Circular 37 and subsequent implementation rules.

The failure of our

beneficial owners who are PRC residents to register or amend their SAFE registrations in a timely manner pursuant to SAFE Circular

37 and subsequent implementation rules, or the failure of future beneficial owners of our company who are PRC residents to comply

with the registration procedures set forth in SAFE Circular 37 and subsequent implementation rules, may subject the beneficial

owners or our PRC subsidiaries to fines and legal sanctions.

On February 13, 2015, SAFE promulgated a Notice on Further Simplifying

and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became effective on June 1,

Pursuant to SAFE Notice 13, entities and individuals are required to apply for foreign exchange registration of foreign

direct investment and overseas direct investment, including those required under the SAFE Circular 37, with designated domestic

banks, instead of SAFE.

The designated domestic banks will directly review the applications and conduct the registration.

since it is unclear how those new SAFE regulations, and any future regulation concerning offshore or cross-border transactions,

will be interpreted, amended and implemented by the relevant PRC government authorities, we cannot predict how these regulations

will affect our business operations or future strategy.

Failure to register or comply with relevant requirements may also limit

our ability to contribute additional capital to our PRC subsidiaries and limit our PRC subsidiaries’

ability to distribute

dividends to our company.

These risks may have a material adverse effect on our business, financial condition and results of operations.

may be treated as a resident enterprise for PRC tax purposes under the PRC Enterprise Income Tax Law, and we may therefore be

subject to PRC income tax on our global income.

37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle,

such as increase or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material

In the event that a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration,

the PRC subsidiaries of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from

carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to

contribute additional capital into its PRC subsidiary.

Moreover, failure to comply with the various SAFE registration requirements described

above could result in liability under PRC law for evasion of foreign exchange controls.

have notified substantial beneficial owners of shares of common stock who we know are PRC residents of their filing obligation, and pursuant

to SAFE Circular 37, we have periodically filed and updated the above-mentioned foreign exchange registration on behalf of certain employee

shareholders who we know are PRC residents.

However, we may not be aware of the identities of all of our beneficial owners who are PRC

We do not have control over our beneficial owners and cannot assure you that all of our PRC-resident beneficial owners will

comply with SAFE Circular 37 and subsequent implementation rules.

The failure of our beneficial owners who are PRC residents to register

or amend their SAFE registrations in a timely manner pursuant to SAFE Circular 37 and subsequent implementation rules, or the failure

of future beneficial owners of our company who are PRC residents to comply with the registration procedures set forth in SAFE Circular

37 and subsequent implementation rules, may subject the beneficial owners or our PRC subsidiaries to fines and legal sanctions.

13, 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment,

or SAFE Notice 13, which became effective on June 1, 2015.

Pursuant to SAFE Notice 13, entities and individuals are required to apply

for foreign exchange registration of foreign direct investment and overseas direct investment, including those required under the SAFE

Circular 37, with designated domestic banks, instead of SAFE.

The designated domestic banks will directly review the applications and

conduct the registration.

since it is unclear how those new SAFE regulations, and any future regulation concerning offshore or cross-border transactions, will

be interpreted, amended and implemented by the relevant PRC government authorities, we cannot predict how these regulations will affect

our business operations or future strategy.

Failure to register or comply with relevant requirements may also limit our ability to contribute

additional capital to our PRC subsidiaries and limit our PRC subsidiaries’

ability to distribute dividends to our company.

risks may have a material adverse effect on our business, financial condition and results of operations.

may be treated as a resident enterprise for PRC tax purposes under the PRC Enterprise Income Tax Law, and we may therefore be subject

to PRC income tax on our global income.

the PRC Enterprise Income Tax Law and its implementing rules, both of which came into effect on January 1, 2008, enterprises established

under the laws of jurisdictions outside of China with “de facto management bodies”

located in China may be considered

PRC tax resident enterprises for tax purposes and may be subject to the PRC enterprise income tax at the rate of 25% on their

global income.

located in China may be considered PRC

tax resident enterprises for tax purposes and may be subject to the PRC enterprise income tax at the rate of 25% on their global income.

“De facto management body”

refers to a managing body that exercises substantive and overall management

and control over the production and business, personnel, accounting books and assets of an enterprise.

The State Administration

of Taxation issued the Notice Regarding the Determination of Chinese-Controlled Offshore-Incorporated Enterprises as PRC Tax Resident

Enterprises on the basis of de facto management bodies, or Circular 82, on April 22, 2009.

Circular 82 provides certain specific

criteria for determining whether the “de facto management body”

of a Chinese-controlled offshore-incorporated enterprise

is located in China.

Although Circular 82 only applies to offshore enterprises controlled by PRC enterprises, not those controlled

by foreign enterprises or individuals, the determining criteria set forth in Circular 82 may reflect the State Administration

of Taxation’s general position on how the “de facto management body”

test should be applied in determining the

tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises.

If we were to be considered

a PRC resident enterprise, we would be subject to PRC enterprise income tax at the rate of 25% on our global income.

In such case,

our profitability and cash flow may be materially reduced as a result of our global income being taxed under the Enterprise Income

We believe that none of our entities outside of China is a PRC resident enterprise for PRC tax purposes.

tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect

to the interpretation of the term “de facto management body.”

refers to a managing body that exercises substantive and overall management and control over the

production and business, personnel, accounting books and assets of an enterprise.

The State Administration of Taxation issued the Notice

Regarding the Determination of Chinese-Controlled Offshore-Incorporated Enterprises as PRC Tax Resident Enterprises on the basis of de

facto management bodies, or Circular 82, on April 22, 2009.

Circular 82 provides certain specific criteria for determining whether the

“de facto management body”

of a Chinese-controlled offshore-incorporated enterprise is located in China.

Although Circular

82 only applies to offshore enterprises controlled by PRC enterprises, not those controlled by foreign enterprises or individuals, the

determining criteria set forth in Circular 82 may reflect the State Administration of Taxation’s general position on how the “de

facto management body”

test should be applied in determining the tax resident status of offshore enterprises, regardless of whether

they are controlled by PRC enterprises.

If we were to be considered a PRC resident enterprise, we would be subject to PRC enterprise

income tax at the rate of 25% on our global income.

In such case, our profitability and cash flow may be materially reduced as a result

of our global income being taxed under the Enterprise Income Tax Law.

We believe that none of our entities outside of China is a PRC

resident enterprise for PRC tax purposes.

However, the tax resident status of an enterprise is subject to determination by the PRC tax

authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.”

on currency exchange may limit our ability to utilize our PRC revenue effectively.

2 unchanged sentences

The Renminbi is currently convertible under the “current account,”

which includes dividends, trade and service-related foreign exchange transactions, but requires approval from or registration

with appropriate government authorities or designated banks under the “capital account,”

which includes foreign direct

investment and loans, including loans we may secure from our onshore subsidiaries or variable interest entities.

Currently, our

PRC subsidiaries, which are wholly-foreign owned enterprises, may purchase foreign currency for settlement of “current account

transactions,”

including payment of dividends to us, without the approval of SAFE by complying with certain procedural requirements.

However, the relevant PRC governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future

for current account transactions.

which includes

dividends, trade and service-related foreign exchange transactions, but requires approval from or registration with appropriate government

authorities or designated banks under the “capital account,”

which includes foreign direct investment and loans, including

loans we may secure from our onshore subsidiaries or variable interest entities.

Currently, our PRC subsidiaries, which are wholly-foreign

owned enterprises, may purchase foreign currency for settlement of “current account transactions,”

including payment of dividends

to us, without the approval of SAFE by complying with certain procedural requirements.

However, the relevant PRC governmental authorities

may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions.

2016, PRC governmental authorities have imposed more stringent restrictions on outbound capital flows, including heightened scrutiny

1 unchanged sentence

overseas investments for certain industries, as well as over four kinds of “abnormal”

offshore investments, which are:

investments, which are:

investments through enterprises established for only a few months without substantive operation;

investments with amounts far exceeding the registered capital of onshore parent and not supported by its business performance

shown on financial statements;

investments with amounts far exceeding the registered capital of onshore parent and not supported by its business performance shown on

financial statements;

investments in targets which are unrelated to onshore parent’s main business;

investments with abnormal sources of Renminbi funding suspected to be involved in illegal transfer of assets or illegal operation

of underground banking.

January 26, 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing

Genuineness and Compliance Verification, which tightened the authenticity and compliance verification of cross-border transactions

and cross-border capital flow, including requiring banks to verify board resolutions, tax filing forms and audited financial statements

before wiring foreign invested enterprises’

investments with abnormal sources of Renminbi funding suspected to be involved in illegal transfer of assets or illegal operation of

underground banking.

January 26, 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness

and Compliance Verification, which tightened the authenticity and compliance verification of cross-border transactions and cross-border

capital flow, including requiring banks to verify board resolutions, tax filing forms and audited financial statements before wiring

foreign invested enterprises’

foreign exchange dividend distribution of over US$50,000.

In addition, the Outbound

Investment Sensitive Industry Catalogue (2018) lists certain sensitive industries that are subject to NDRC pre-approval requirements

prior to remitting investment funds offshore, which subjects us to increased approval requirements and restrictions with respect

to our overseas investment activity.

Since a significant amount of our PRC revenue is denominated in Renminbi, any existing and

future restrictions on currency exchange may limit our ability to utilize revenue generated in Renminbi to fund our business activities

outside of the PRC, make investments, service any debt we may incur outside of China or pay dividends in foreign currencies to

our shareholders.

disclosures in our reports and other filings with the SEC and our other public pronouncements are not subject to the scrutiny

of any regulatory bodies in the PRC.

are regulated by the SEC and our reports and other filings with the SEC are subject to SEC review in accordance with the rules

and regulations promulgated by the SEC under the Securities Act and the Exchange Act.

Our SEC reports and other disclosure and

public pronouncements are not subject to the review or scrutiny of any PRC regulatory authority.

For example, the disclosure in

our SEC reports and other filings are not subject to the review by China Securities Regulatory Commission, a PRC regulator that

is responsible for oversight of the capital markets in China.

Accordingly, you should review our SEC reports, filings and our

other public pronouncements with the understanding that no local regulator has done any review of us, our SEC reports, other filings

or any of our other public pronouncements.

In addition, the Outbound Investment Sensitive

Industry Catalogue (2018) lists certain sensitive industries that are subject to NDRC pre-approval requirements prior to remitting investment

funds offshore, which subjects us to increased approval requirements and restrictions with respect to our overseas investment activity.

Since a significant amount of our PRC revenue is denominated in Renminbi, any existing and future restrictions on currency exchange may

limit our ability to utilize revenue generated in Renminbi to fund our business activities outside of the PRC, make investments, service

any debt we may incur outside of China or pay dividends in foreign currencies to our shareholders.

disclosures in our reports and other filings with the SEC and our other public pronouncements are not subject to the scrutiny of any

regulatory bodies in the PRC.

are regulated by the SEC and our reports and other filings with the SEC are subject to SEC review in accordance with the rules and regulations

promulgated by the SEC under the Securities Act and the Exchange Act.

Our SEC reports and other disclosure and public pronouncements

are not subject to the review or scrutiny of any PRC regulatory authority.

For example, the disclosure in our SEC reports and other filings

are not subject to the review by China Securities Regulatory Commission, a PRC regulator that is responsible for oversight of the capital

markets in China.

Accordingly, you should review our SEC reports, filings and our other public pronouncements with the understanding

that no local regulator has done any review of us, our SEC reports, other filings or any of our other public pronouncements.

of new laws or changes to existing laws by the PRC government may adversely affect our business.

PRC legal system is a codified legal system made up of written laws, regulations, circulars, administrative directives and internal

Unlike common law jurisdictions like the U.S., decided cases (which may be taken as reference) do not form part of

the legal structure of the PRC and thus have no binding effect on subsequent cases with similar issues and fact patterns.

in line with its transformation from a centrally-planned economy to a more free market-oriented economy, the PRC government is

still in the process of developing a comprehensive set of laws and regulations.

As the legal system in the PRC is still evolving,

laws and regulations or the interpretation of the same may be subject to further changes.

For example, the PRC government may

impose restrictions on the amount of service fees that may be payable by municipal governments to wastewater and sludge treatment

service providers.

Also, the PRC central and municipal governments may impose more stringent environmental regulations which would

affect our ability to comply with, or our costs to comply with, such regulations.

Such changes, if implemented, may adversely

affect our business operations and may reduce our profitability.

PRC legal system is a codified legal system made up of written laws, regulations, circulars, administrative directives and internal guidelines.

Unlike common law jurisdictions like the U.S., decided cases (which may be taken as reference) do not form part of the legal structure

of the PRC and thus have no binding effect on subsequent cases with similar issues and fact patterns.

Furthermore, in line with its transformation

from a centrally-planned economy to a more free market-oriented economy, the PRC government is still in the process of developing a comprehensive

set of laws and regulations.

As the legal system in the PRC is still evolving, laws and regulations or the interpretation of the same

may be subject to further changes.

For example, the PRC government may impose restrictions on the amount of service fees that may be

payable by municipal governments to wastewater and sludge treatment service providers.

Also, the PRC central and municipal governments

may impose more stringent environmental regulations which would affect our ability to comply with, or our costs to comply with, such

Such changes, if implemented, may adversely affect our business operations and may reduce our profitability.

Related to our Common Stock

9 unchanged sentences

operating and stock price performance of other companies, other industries and other events or factors beyond our control.

addition, the securities markets have from time to time experienced significant price and volume fluctuations that are not related

to the operating performance of particular companies.

These market fluctuations may also materially and adversely affect the market

price of the shares.

addition, the securities markets have from time to time experienced significant price and volume fluctuations that are not related to

the operating performance of particular companies.

These market fluctuations may also materially and adversely affect the market price

of the shares.

may never be able to pay dividends and are unlikely to do so.

date, we have not paid, nor do we intend to pay in the foreseeable future, dividends on our common stock, even if we become profitable.

Earnings, if any, are expected to be used to advance our activities and for working capital and general corporate purposes, rather

than to make distributions to stockholders.

Since we are not in a financial position to pay dividends on our common stock and

future dividends are not presently being contemplated, investors are advised that return on investment in our common stock is

restricted to an appreciation in the share price.

Earnings, if any, are expected to be used to advance our activities and for working capital and general corporate purposes, rather than

to make distributions to stockholders.

Since we are not in a financial position to pay dividends on our common stock and future dividends

are not presently being contemplated, investors are advised that return on investment in our common stock is restricted to an appreciation

in the share price.

The potential or likelihood of an increase in share price is uncertain.

addition, under Nevada law, we may only pay dividends subject to our ability to service our debts as they become due and provided

that our assets will exceed our liabilities after the dividend.

Our ability to pay dividends will therefore depend on our ability

to generate sufficient profits.

Further, because of the various rules applicable to our operations in China and the regulations

on foreign investments as well as the applicable tax law, we may be subject to further limitations on our ability to declare and

pay dividends to our shareholders.

addition, under Nevada law, we may only pay dividends subject to our ability to service our debts as they become due and provided that

our assets will exceed our liabilities after the dividend.

Our ability to pay dividends will therefore depend on our ability to generate

sufficient profits.

Further, because of the various rules applicable to our operations in China and the regulations on foreign investments

as well as the applicable tax law, we may be subject to further limitations on our ability to declare and pay dividends to our shareholders.

may be diluted significantly through our efforts to obtain financing and satisfy obligations through the issuance of securities.

possible, our board of directors will attempt to use non-cash consideration to satisfy obligations.

In many instances, we believe

that the non-cash consideration will consist of shares of our common stock, warrants to purchase shares of our common stock or

other securities.

Our board of directors has authority, without action or vote of the shareholders, to issue all or part of the

authorized but unissued shares of common stock or warrants to purchase such shares of common stock.

In addition, we may attempt

to raise capital by selling shares of our common stock, possibly at a discount to market in the future.

These actions will result

in dilution of the ownership interests of existing shareholders and may further dilute common stock book value, and that dilution

may be material.

Such issuances may also serve to enhance existing management’s ability to maintain control of us, because

the shares may be issued to parties or entities committed to supporting existing management.

In many instances, we believe that

the non-cash consideration will consist of shares of our common stock, warrants to purchase shares of our common stock or other securities.

Our board of directors has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued

shares of common stock or warrants to purchase such shares of common stock.

In addition, we may attempt to raise capital by selling shares

of our common stock, possibly at a discount to market in the future.

These actions will result in dilution of the ownership interests

of existing shareholders and may further dilute common stock book value, and that dilution may be material.

Such issuances may also serve

to enhance existing management’s ability to maintain control of us, because the shares may be issued to parties or entities committed

to supporting existing management.

shares may trade under $5.00 per share and thus will be a penny stock.

Trading in penny stocks has many restrictions and these

restrictions could severely affect the price and liquidity of our shares.

the event that our stock trades below $5.00 per share, our stock would be known as a “penny stock”, which is subject

to various regulations involving disclosures to be given to you prior to the purchase of any penny stock.

The SEC has adopted

regulations which generally define a “penny stock”

to be any equity security that has a market price of less than

$5.00 per share, subject to certain exceptions.

Depending on market fluctuations, our common stock could be considered to be a

“penny stock”.

A penny stock is subject to rules that impose additional sales practice requirements on broker/dealers

who sell these securities to persons other than established Members and accredited investors.

For transactions covered by these

rules, the broker/dealer must make a special suitability determination for the purchase of these securities.

In addition, he must

receive the purchaser’s written consent to the transaction prior to the purchase.

He must also provide certain written disclosures

to the purchaser.

Trading in penny stocks has many restrictions and these restrictions

could severely affect the price and liquidity of our shares.

the event that our stock trades below $5.00 per share, our stock would be known as a “penny stock”, which is subject to various

regulations involving disclosures to be given to you prior to the purchase of any penny stock.

The SEC has adopted regulations which

generally define a “penny stock”

to be any equity security that has a market price of less than $5.00 per share, subject

to certain exceptions.

Depending on market fluctuations, our common stock could be considered to be a “penny stock”.

stock is subject to rules that impose additional sales practice requirements on broker/dealers who sell these securities to persons other

than accredited investors.

For transactions covered by these rules, the broker/dealer must make a special suitability determination for

the purchase of these securities.

In addition, he must receive the purchaser’s written consent to the transaction prior to the

He must also provide certain written disclosures to the purchaser.

Consequently, the “penny stock”

rules may restrict the ability of broker/dealers to sell our securities,

and may negatively affect the ability of holders of shares of our common stock to resell them.

These disclosures require you to

acknowledge that you understand the risks associated with buying penny stocks and that you can absorb the loss of your entire

rules may restrict

the ability of broker/dealers to sell our securities, and may negatively affect the ability of holders of shares of our common stock

to resell them.

These disclosures require you to acknowledge that you understand the risks associated with buying penny stocks and that

you can absorb the loss of your entire investment.

Penny stocks are low priced securities that do not have a very high trading volume.

Consequently, the price of the

stock is often volatile and you may not be able to buy or sell the stock when you want to.

Consequently, the price of the stock is often volatile and you may not be able to buy or sell the stock when you want to.

Unresolved Staff Comments

applicable to smaller reporting companies.

Our principal place of business is located

at Kingkey 100, Block A, Room 4805, Luohu District, Shenzhen City, China 518000 and the telephone number is +(86) 755 8233

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors