What changed in this filing

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Item 1. Business

2023-03-31 compared with 2022-04-01 · 861 added, 541 removed, 1344 unchanged (51% of the section changed)

conduct our business through our PRC subsidiaries, which are a food and beverage supply chain company group based in Guangdong

province, China.

With the mission to improve people’s lives by offering safe and quality foods, we are committed to building a

first class food supply chain business in China and in the global markets.

Through quality control and sales of selected branded products,

we provide a one-stop quality food purchase experience for both businesses and individual customers.

Our products are well recognized

among consumer groups in the Pearl River Delta region of China.

conduct our business through our PRC subsidiaries, which are a food and beverage supply chain company group based in Guangdong province,

With the mission to improve people’s lives by offering safe and quality foods, we are committed to building a first class

food supply chain business in China and in the global markets.

Through quality control and sales of selected branded products, we provide

a one-stop quality food purchase experience for both businesses and individual customers.

Our products are well recognized among consumer

groups in the Pearl River Delta region of China.

vision is “Safe Foods for the People.” We strive to improve the consumers’ food experience in respect of brand, quality,

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our deeply rooted brand image, fast and efficient multi-channel sales model, precise consumer positioning, superior service experience,

and an online platform connecting suppliers, core enterprises, and customers in the food supply chain, today we are well positioned to

and an online platform connecting suppliers, core enterprises, and customers in the food supply chain, we are well positioned to

become a competitive leader in the food supply chain market in China.

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Our business has also returned to normal operations,

although management assessed that our results of operations had been negatively impacted for the 2020 fiscal year.

COVID-19 could

adversely affect our business and results of operations in 2022 if any COVID resurgence causes significant disruptions to our

operations or the business of our supply chain, logistics and service providers.

We cannot predict the severity and duration of the impact

from such resurgence, if any.

If any new outbreak of COVID-19 is not effectively and timely controlled, or if government responses to

outbreaks or potential outbreaks are severe or long-lasting, our business operations and financial condition may be materially and adversely

affected as a result of the deteriorating market outlook, the slowdown in regional and national economic growth, weakened liquidity and

financial condition of our customers or other factors that we cannot foresee.

Any of these factors and other factors beyond our control

could have an adverse effect on the overall business environment, cause uncertainties in the regions where we conduct business, and could

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

Holdings Acquisition

business plan is to extend our market share through acquiring quality businesses in the food and beverage industries, in order to increase

although management assessed that our results of operations had been negatively impacted for the 2021 and 2022 fiscal years.

In 2022, the sporadic outbreaks of COVID-19 had material impact on

the industry in China.

The government’s “zero-COVID” policy required, from time to time, quarantines, rolling

lockdowns, office closures and travel restrictions to control outbreaks in affected local areas.

As a result of the COVID control

measures, we were unable to implement some of our business and marketing plans, and our operating results were negatively affected

by the sporadic COVID outbreaks and strict government response measures.

In December 2022, the PRC government ended the

implementation of the “zero-COVID” policy and the overall market condition has shown improvement since then.

However, COVID-19

could adversely affect our business and results of operations in the future if any COVID resurgence causes significant disruptions

to our operations or the business of our supply chain, logistics and service providers.

We cannot predict the severity and duration

of the impact from such resurgence, if any.

If any new outbreak of COVID-19 is not effectively and timely controlled, or if

government responses to outbreaks or potential outbreaks are severe or long-lasting, our business operations and financial condition

may be materially and adversely affected as a result of the deteriorating market outlook, the slowdown in regional and national

economic growth, weakened liquidity and financial condition of our customers or other factors that we cannot foresee.

factors and other factors beyond our control could have an adverse effect on the overall business environment, cause uncertainties

in the regions where we conduct business, and could materially and adversely impact our business, financial condition and results of

Business Plans

One of our business development strategies is to extend our market share through acquiring quality businesses in the food and beverage industries, in order to increase

our customer base and supply channels, as well as to acquire more skilled employees and business connections in the industries.

to further develop our online marketing platform and internal operation management system by engaging an external IT company during 2023.

In the past year, we successfully acquired Xixingdao, a drinking water distribution business.

In 2020, we successfully acquired Xixingdao, a drinking water distribution business.

We expect to continue to explore new opportunities

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of the target.

January 6, 2021, we entered into an equity interest transfer agreement (the “Valley Holdings Agreement”) with Valley Holdings

Limited (“Valley Holdings”), a Hong Kong company, and Angel International Investment Holdings Limited (the “Valley

Holdings Seller”), a 70% shareholder of Valley Holdings.

Valley Holdings owns approximately 88.44% of the equity interest of Valley

Foods Holdings (Guangzhou) Co., Ltd.

(“Valley Food”), a limited liability company incorporated in China and engaged in the

business of food wholesale and production and sale of food additives in China.

Pursuant to the agreement, we would purchase 70% of Valley

Holdings’ equity interest from the Valley Holdings Seller in consideration of shares of our common stock valued at $10.5 million

(subject to certain adjustments).

According to the agreement, the total number of issuable shares will be determined based on the average

of the closing prices of our common stock for the 30 business days preceding the date of the closing.

closing of the acquisition has not occurred as of the date of the report as a result of delays in satisfaction of the closing

The closing is subject to certain conditions, including but not limited to (a) completion of due diligence review of Valley

Holdings and its subsidiaries to our satisfaction, (b) completion of the audited consolidated financial statements of Valley Holdings

as provided in the agreement, (c) execution of non-competition agreements and confidentiality agreements with the senior management members

of Valley Holdings and its subsidiaries, and (d) assignment to Valley Holdings of all of the intellectual property related to the operations

of Valley Holdings and its subsidiaries.

industry and Market

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as well as our estimates based on such data.

All of the market data and estimates used in this report involve a number of

assumptions and limitations, and you are cautioned not to give undue weight to such data and estimates.

We believe that the data from

these third-party sources is reliable;

however, we have not independently verified the data, besides our business and the industry which

we are operating is subject to a high degree of risk and uncertainties.

All of the market data and estimates used in this report involve a number of assumptions

and limitations, and you are cautioned not to give undue weight to such data and estimates.

We believe that the data from these third-party

sources is reliable;

however, we have not independently verified the data, besides our business and the industry which we are operating

is subject to a high degree of risk and uncertainties.

in food and beverage market in China

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products and dairy products.

In 2020, the COVID-19 pandemic led to a sharp decrease in the growth rate of the industry, the market

reached RMB4,590.2 billion, and a year-over-year (“YoY”) growth of 0.86%.

The decrease in the growth rate was mainly due

to the quarantine measures implemented in some areas, store and office closures, lockdown and social gatherings restrictions to control

the COVID-19 outbreaks in China.

In 2020, the COVID-19 pandemic led to a sharp decrease in the growth rate of the industry, the market reached

RMB4,590.2 billion, and a year-over-year (“YoY”) growth of 0.86%.

The decrease in the growth rate was mainly due to the quarantine

measures implemented in some areas, store and office closures, lockdown and social gatherings restrictions to control the COVID-19 outbreaks

and Beverage Market Scale in China from 2016 to 2020

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of alcohol beverage market in China

In 2018, the growth rate of alcohol beverage market

in China reached 10.68% driven by multiple factors, such as industrial restructure adjustment, consumption upgrading,

and the rapidly growth of the Baijiu (Chinese alcohol beverage) industry.

2018, the growth rate of alcohol beverage market in China reached 10.68% driven by multiple factors, such as industrial restructure adjustment,

consumption upgrading, and the rapidly growth of the Baijiu (Chinese alcohol beverage) industry.

In 2019, the growth rate dropped to

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the bottled water, which is suitable for the household consumption.

Based on China Economic Vision’s estimate, even with

the gradual replacement of disposable medium and large packaged water, it will have a limited impact on the bottled water market

in the short term, but the growth rate of bottled water market will slow down in the long run.

The bottled water market in China

is expected to reach RMB223.7 billion by 2025, and the YoY growth was 14.13%.

Based on China Economic Vision’s estimate, even with the gradual

replacement of disposable medium and large packaged water, it will have a limited impact on the bottled water market in the short term,

but the growth rate of bottled water market will slow down in the long run.

The bottled water market in China is expected to reach RMB223.7

billion by 2025, and the YoY growth was 14.13%.

Water Market Forecast in China from 2021 to 2025

China Economic Vision

sell a variety of wines, such as dry red wine, dry white wine, rosé wine, and sweet wine.

Currently we sell about 40 different

brands of wine, most of which are imported from France and Spain.

sell a variety of water, peanut oil, soybean oil and blended oil.

Currently we sell about 30 different brands of water and 3 different

brands of oil.

have put significant efforts in developing and promoting our brand name in different regions of China.

Our products are mainly sold to

retailers, such as wine and water retail stores, convenience stores and supermarkets.

The selling price varies by quantities of products

each retailer orders from us.

have cultivated business relationships and achieved recognitions with different organizations over the years, which have improved our

business and management efficacy.

Specifically, we have been collaborating with Shenzhen Institute of Tsinghua University since 2011,

who has been helping us develop an innovative management model, operating model and franchising model.

We have been a member of Guangdong

Provincial Liquor Industry Association since 2011.

wine product operations are based in Humen Town, Dongguan City.

We lease a six-floor building with a total floor area of 1,200 square

Our wine retail store is located on the first floor which we use exclusively as a retail store and for sample products display.

We use the remaining five floors as the Company’s conference room, offices and storage.

water and oil product management office is also located in Humen Town, Dongguan City.

We lease the building which has over 1,300 square

It includes sales, customer service, warehouse, delivery and finance departments.

The office manages one office, seven wholesales

stores and one warehouse.

We also maintain one registered office for the subsidiary with lease term of three years.

As of December 31,

2021, the Company has total three office spaces, one warehouse and thirteen stores in PRC with remaining lease terms of from

21 months to 76 months.

have developed our WeChat applet “FVTI food safety & healthy supply platform” (short name “Fu Gu Online”).

Some of our agents and wholesalers have ordered from this platform.

purchase, distribute and sell a wide range of beverage and foods through our supply chain online platform and offline sales channels.

purchase, distribute and sell a wide range of beverage and foods through our supply chain online platform and offline sales

We also develop some of the water products we distribute.

We offer the following four categories of food and beverage products:

We have offered the following four categories of food and beverage

of brands offered

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liquor and domestically produced spirits.

We currently sell over 30 different types of wine, liquor and spirits products.

We currently sell 109 different types of wine, liquor and spirits products.

launched our brand “Falantu Art Winery,” with the goal to cultivate a wine-centered food and art culture, advocate healthy

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foods include various brands of edible oils, condiments and seasonings.

have selected to sell edible oil based on their quality and popularity among the customers

(b) Condiments

have selected to sell edible oil based on their quality and popularity among the customers in 2021.

We have stopped the sales of edible

oil in 2022 because edible oil sales results in 2021 did not meet the Company’s expectations.

and seasonings

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Providing a wide variety of wine and liquor products to the customers will continue to be our alcohol beverage segment operational strategies.

Product Distribution / Supply Chain Operations

Our Operations

We have cultivated business relationships and achieved

recognitions with different organizations over the years, which have improved our business and management efficacy.

Specifically, we have

been collaborating with Shenzhen Institute of Tsinghua University since 2011, who has been helping us develop an innovative management

model, operating model and franchising model.

We have been a member of Guangdong Provincial Liquor Industry Association since 2011.

Our wine and oil product operations are based in

Humen Town, Dongguan City.

We lease a six-floor building with a total floor area of 1,200 square meters.

Our wine retail store is

located on the first floor which we use exclusively as a retail store and for sample products display.

We use the remaining five

floors as the Company’s conference room, offices and storage.

Our water and condiments and seasoning product management office is also

located in Humen Town, Dongguan City.

We lease the building which has over 1,300 square meters.

It includes sales, customer service, warehouse,

delivery and finance departments.

The office manages one office, seven wholesales stores and one warehouse.

We also maintain one registered

office for the subsidiary with lease term of three years.

As of December 31, 2022, the Company has total three office spaces, one warehouse

and sixteen stores in PRC with remaining lease terms ranging from 3 months to 52 months.

Supply Chain Operations

supply chain system manages the entire process of product procurement, warehousing, distribution, logistics and delivery.

digital management system, we can fully track our products from upstream suppliers to downstream end customers.

emphasize to provide products with high standard of food safety and quality, therefore we carefully select high quality products.

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sample checking on the products on a regular basis and evaluate the suppliers’ performance annually.

mainly have two types of customers:

retailer customers and wholesale distributors.

For the year ended December 31, 2019, sales to one

customer accounted for 10% or more of our revenue and approximately 80% of our revenue were generated from that customer.

we had successfully expanded our customer base and launched more products.

As a result, none of our customers accounted for 10% or more

of our revenue.

We have two major categories of customers:

customers and wholesale distributors.

We also make direct sales to businesses and individual consumers through our supply chain platform,

online stores at major e-commerce platforms and offline sales.

For the year ended December 31, 2022 and 2021, no customer accounted for

10% or more of our total revenue.

We have generated income from a wider range of customers for the years ended December 31, 2022 and 2021.

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our information systems, it also serves as our O2O management platform, which can provide marketing services to traditional merchants.

Our online and offline bulk sales through our agents and independent distributors help enhance the brand awareness of our products among

Bulk sales through our agents and independent distributors help enhance the brand awareness of our products among

end customers and collect feedback for us to improve our product selection and management.

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believe our brands and reputation are critical to our business development.

To further enhance customer awareness of our brands, we

will continue our effective and targeted marketing efforts.

This may include (i) placing mass media commercials, (ii) advertising in

newspapers, magazines, the internet, billboards and banners, and (iii) sponsoring programs.

We also utilize innovative multimedia

promotional channels such as social media and mobile phone applications.

To further enhance customer awareness of our brands, we will

continue our effective and targeted marketing efforts.

This may include (i) placing mass media commercials, (ii) advertising in newspapers,

magazines, the internet, billboards and banners, and (iii) sponsoring programs.

We also utilize innovative multimedia promotional channels

such as social media and mobile phone applications.

motivate and retain high-quality talent.

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to amplify our one-stop services to our customers, we believe we can strengthen and maintain our position in the food and beverage industry

Required from the PRC Authorities to Operate and Securities Listing and Issuance

Required From the PRC Authorities With Respect To Operations And Securities Listing And Issuance

required for the Operations of Our PRC Subsidiaries

PRC subsidiaries are required to obtain certain permits and licenses from the PRC government agencies to operate our business in China,

(a) business licenses, (b) food business licenses, and (c) Electronic Data Interchange License (“EDI”) license.

(a) business licenses, (b) food business licenses, and (c) Electronic Data Interchange License (“EDI”).

one of our PRC subsidiaries is subject to certain certification and registration requirements in connection with limited product import

and export operations.

conduct our business in China through our PRC subsidiaries.

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to obtain food business licenses and have received such licenses pursuant to the PRC Food Safety Law:

Dongguan City FVT Supply Chain

Technology Co., Ltd.

(“FVTL or FVT Supply Chain”), Dongguan Xixingdao Technology Co., Ltd.

(“Xixingdao”), Dongguan

FVT Supply Chain, Xixingdao, Dongguan

City Fu La Tu Trade Co., Ltd.

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Companies engaged in the sale of prepacked food must report to the food safety regulatory agencies of the local government for recordation.

Four of our subsidiaries, Dongguan City Fu Guan Healthy Industry Technology Co., Ltd.

(“FGHL”), Dongguan City Fu Xi Drinking

Water Co., Ltd.

(“FXWL”), Dongguan City Fu Li Trading Co., Ltd.

(“FLTL”) and Guangdong Fu Gu Supply Chain Group

(“FGGC” or “FG Supply Chain”), are subject to such reporting requirement and are in the process of

completing the recordation procedure.

Guangdong provincial government has not issued detailed implementation rules, and as such, changes

in rules and regulations may impose additional requirements for our subsidiaries in China.

Eight of our subsidiaries, Dongguan City Fu Zhi Gu Trade Co., Ltd.

(“FZGT”), Dongguan City Chang Fu Trade Co., Ltd.

Dongguan City La Tong Trade Co., Ltd.

(“LTT”), Dongguan City Kai Fu Trade Co., Ltd.

(“KFT”), Dongguan City Fu

Guan Healthy Industry Technology Co., Ltd.

(“FGHL”), Dongguan City Fu Xi Drinking Water Co., Ltd.

(“FXWL”), Dongguan

City Fu Li Trading Co., Ltd.

(“FLTL”) and Dongguan City Fu Gu Supply Chain Group Co., Ltd.

(“FGGC” or “FG

Supply Chain”), are subject to such reporting requirement and are in the process of completing the recordation procedure.

provincial government has not issued detailed implementation rules, and as such, changes in rules and regulations may impose additional

requirements for our subsidiaries in China.

relevant PRC Telecommunications Regulations require a telecommunication service provider in China to obtain an operating license from

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We may be subject to additional license requirements if we further expand our online operations and services.

addition, on November 14, 2021, the CAC published the Regulations of Internet Data Security Management (Draft for Comments) (the “Internet

Data Security Regulations”), which further regulate the internet data processing activities and emphasize the supervision and management

of network data security, and further stipulate the obligations of internet platform operators, such as to establish a system for disclosure

of platform rules, privacy policies and algorithmic strategies related to data.

The draft regulations require data processors to (i)

adopt immediate remediation measures when finding that network products and services they use or provide have security defects and vulnerabilities,

or threaten national security or endanger public interest, and (ii) follow a series of detailed requirements with respect to processing

of personal information, management of important data and proposed overseas transfer of data.

As of the date of this report,

the draft regulations have not been adopted and the final provisions are subject to changes.

If the above proposed regulations are adopted

as proposed, based on our initial evaluation, while we have implemented some of the data security measures, we would not be in full compliance

with the new draft regulations.

We are also still evaluating any additional necessary actions we should take pursuant to the proposed

regulations to satisfy the personal information protection and internet data security regulatory requirements.

Failure to comply with

the effective cybersecurity, data privacy and internet data security regulatory requirements in a timely manner may subject us to government

enforcement actions and investigations, fines, penalties, suspension or disruption of our operations, among other things.

December 28, 2021, the CAC, NDRC, and several other agencies jointly issued the Cybersecurity Review Measures, or the Measures,

which took effect on February 15, 2022 and replaced the previously issued Revised Measures for Cybersecurity Review.

Under the Measures, an “online platform operator” in possession of personal data of more than one million users must apply

for a cybersecurity review if it intends to list its securities on a foreign stock exchange.

The operators of critical information infrastructure

purchasing network products and services, and the online platform operators (together with the operators of critical information infrastructure,

the “Operators”) carrying out data processing activities that affect or may affect national security, shall conduct a cybersecurity

review, and any online platform operator who controls more than one million users’ personal information must go through a cybersecurity

review by the cybersecurity review office if it seeks to be listed in a foreign country.

Pursuant to the Measures, we don’t believe

we will be subject to the cybersecurity review by the CAC, given that (i) we possess personal information of a relatively small number

of users in our business operations as of the date of this report, significantly less than the one million user threshold set

for a data processing operator applying for listing on a foreign exchange that is required to pass such cybersecurity review;

data processed in our business does not have a bearing on national security and thus shall not be classified as core or important data

by the authorities.

We don’t believe that we are an Operator within the meaning of the Measures, nor do we control more than one

million users’ personal information, and as such, we should not be required to apply for a cybersecurity review under the Measures.

However, in view of the fact that the Measures was released recently and there is a general lack of guidance and substantial uncertainties

Supply Chain is subject to certain certification and registration requirements in connection with its limited product import and export

FVT Supply Chain has applied and obtained the relevant certificates and government approvals, including the Record Registration

Form for Foreign Trade Business Operators, Customs Declaration Entity Registration Certificate, and Filing Form for Enterprises Applying

for Entry-Exit Inspection for the importing and exporting of certain categories of wines.

If FVT Supply Chain is unable to obtain the

requisite certificates and approvals, the PRC Customs would not perform the Customs declaration, acceptance and release procedures, and

the limited product import and export operations conducted by FVT Supply Chain would be delayed, halted or otherwise materially adversely

addition, on November 14, 2021, the CAC published the Regulations of Network Data Security Management (Draft for Comments) (the “Draft

Regulations on Network Data Security Management”), which further regulate the internet data processing activities and emphasize

the supervision and management of network data security, and further stipulate the obligations of internet platform operators, such as

us, to establish a system for disclosure of platform rules, privacy policies and algorithmic strategies related to data.

The draft regulations

require data processors to (i) adopt immediate remediation measures when finding that network products and services they use or provide

have security defects and vulnerabilities, or threaten national security or endanger public interest, and (ii) follow a series of detailed

requirements with respect to processing of personal information, management of important data and proposed overseas transfer of data.

As of the date of this report, the draft regulations have not been adopted and the final provisions are subject to changes.

proposed regulations are adopted as proposed, based on our initial evaluation, while we have implemented some of the data security measures,

we would not be in full compliance with the new draft regulations.

We are also still evaluating any additional necessary actions we should

take pursuant to the proposed regulations to satisfy the personal information protection and internet data security regulatory requirements.

Failure to comply with the effective cybersecurity, data privacy and internet data security regulatory requirements in a timely manner

may subject us to government enforcement actions and investigations, fines, penalties, suspension or disruption of our operations, among

other things.

December 28, 2021, the CAC, NDRC, and other government agencies jointly issued the final version of the Revised Measures for Cybersecurity

Review, or the Revised Cybersecurity Measures, which took effect on February 15, 2022 and replaced the previously issued Revised Measures

for Cybersecurity Review.

Under the Revised Cybersecurity Measures, an “online platform operator” in possession of personal

data of more than one million users must apply for a cybersecurity review if it intends to list its securities on a foreign stock exchange.

The operators of critical information infrastructure purchasing network products and services, and the online platform operators (together

with the operators of critical information infrastructure, the “Operators”) carrying out data processing activities that

affect or may affect national security, shall conduct a cybersecurity review, and any online platform operator who controls more than

one million users’ personal information must go through a cybersecurity review by the cybersecurity review office if it seeks to

be listed in a foreign country.

Pursuant to the Revised Cybersecurity Measures, we don’t believe we will be subject to the cybersecurity

review by the CAC, given that (i) we possess personal information of a relatively small number of users in our business operations as

of the date of this report, significantly less than the one million user threshold set for a data processing operator applying for listing

on a foreign exchange that is required to pass such cybersecurity review;

and (ii) data processed in our business does not have a bearing

on national security and thus shall not be classified as core or important data by the authorities.

We don’t believe that we are

an Operator within the meaning of the Revised Cybersecurity Measures, nor do we control more than one million users’ personal information,

and as such, we should not be required to apply for a cybersecurity review under the Revised Cybersecurity Measures.

However, in view

of the fact that the Revised Cybersecurity Measures was released recently and there is a general lack of guidance and substantial uncertainties

exist with respect to their interpretation and implementation.

For example, there is still no clear definition of “online platform

operator.” Whether the data processing activities carried out by traditional enterprises (such as food, medicine, automobile and

other production enterprises) are subject to such review and the scope of the review remain to be further clarified by the regulatory

operator.” Whether the data processing activities carried out by traditional enterprises (such as food, medicine, manufacturing,

and merchandise sales enterprises) are subject to such review and the scope of the review remain to be further clarified by the regulatory

authorities in the subsequent implementation process.

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review for listing overseas.

However, according to the Regulations on Network Data Security Management (Draft for Comment), as an overseas

listed company, we will be required to conduct an annual data security review and to comply with the relevant reporting obligations.

We have been closely monitoring the development in the regulatory landscape in China, particularly regarding the requirement of approvals,

including on a retrospective basis, from the CSRC, the CAC or other PRC authorities with respect to this offering, as well as regarding

any annual data security review or other procedures that may be imposed on us.

If any approval, review or other procedure is in fact

required, we cannot assure you that we will be able to obtain such approval or complete such review or other procedure timely or at all.

For any approval that we may be able to obtain, it could nevertheless be revoked and the terms of its issuance may impose restrictions

on our operations and offerings relating to our securities.

The regulatory requirements with respect to cybersecurity and data privacy

are constantly evolving and can be subject to varying interpretations, and significant changes, resulting in uncertainties about the

scope of our responsibilities in that regard.

Failure to comply with the cybersecurity and data privacy requirements in a timely manner,

or at all, may subject us to government enforcement actions and investigations, fines, penalties, suspension or disruption of our operations,

among other things.

See “Risk Factor — The Chinese government may intervene or influence the operations of our PRC subsidiaries

and exercise significant oversight and discretion over the conduct of their business and may intervene in or influence their operations

at any time, which could result in a material change in operations of our PRC subsidiaries and/or the value of our common stock”;“Risk

Factor — Recent regulatory developments in China, including greater oversight and control by the CAC over data security, particularly

for companies seeking to list on a foreign exchange, may subject us to additional regulatory review or otherwise restrict our ability

to raise capitals outside China;

and any actions by the Chinese government to exert more oversight and control over overseas securities

offerings could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause

the value of such securities to significantly decline or be worthless.”

Required to Issue Securities

are subject to PRC rules and regulations relating to overseas listing and securities offering, and a substantial extension of the PRC

However, according to the Draft Regulations on Network Data Security Management, as an overseas listed company,

we will be required to conduct an annual data security review and to comply with the relevant reporting obligations.

We have been closely

monitoring the development in the regulatory landscape in China, particularly regarding the requirement of approvals, including on a

retrospective basis, from the CSRC, the CAC or other PRC authorities with respect to securities issuances or overseas listing, as well

as regarding any annual data security review or other procedures that may be imposed on us.

If any approval, review or other procedure

is in fact required, we cannot assure you that we will be able to obtain such approval or complete such review or other procedure timely

For any approval that we may be able to obtain, it could nevertheless be revoked and the terms of its issuance may impose

restrictions on our operations and offerings relating to our securities.

The regulatory requirements with respect to cybersecurity and

data privacy are constantly evolving and can be subject to varying interpretations, and significant changes, resulting in uncertainties

about the scope of our responsibilities in that regard.

Failure to comply with the cybersecurity and data privacy requirements in a timely

manner, or at all, may subject us to government enforcement actions and investigations, fines, penalties, suspension or disruption of

our operations, among other things.

See “Risk Factors — Risks Related to Our Business and Industry — We may

be unable to obtain or renew required permits, licenses or approvals necessary for our business operations, and could be imposed with

fines and penalties for any violations of the license requirements”;

“ Risk Factors — Risks

Related to Doing Business in China — The Chinese government may intervene or influence the operations of our PRC

subsidiaries and exercise significant oversight and discretion over the conduct of their business and may intervene in or influence their

operations at any time, which could result in a material change in operations of our PRC subsidiaries and/or the value of our common

and “ Risk Factors — Recent regulatory developments in China, including greater oversight and control

by the CAC over data security, may subject us to additional regulatory review, and any actions by the Chinese government to exert more

oversight and control over foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer

or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

Required With Respect To Securities Listing And Issuance

are subject to PRC rules and regulations relating to overseas listing and securities offerings, and a substantial extension of the PRC

government’s oversight over our business operations or overseas listings may hinder our ability to offer or continue to offer our

Based on PRC laws and regulations effective as of the date of this report and subject to different interpretations

of these laws and regulations that may be adopted by PRC authorities, we believe that, as of the date of this report, we or

our PRC subsidiaries are not required to obtain any permission from the CSRC, the CAC, or any other PRC authority in connection with

this offering.

As a result, we have not submitted any application to the CSRC, the CAC or other PRC authorities for the approval of this

offering or the Nasdaq listing.

As of the date of this report, we and our PRC subsidiaries have not received any inquiry,

notice, warning or objection in relation to this offering or Nasdaq listing from the CSRC, the CAC or any other PRC authorities.

We believe that neither we nor our PRC subsidiaries are required to obtain any permission from the CSRC, the CAC, or any

other PRC authorities for us to issue securities to investors or to list our securities on overseas stock exchanges, such as the Nasdaq.

We have not submitted any application to the CSRC, the CAC or other PRC authorities for the approval of securities issuance, including

this offering, or the Nasdaq listing.

As of the date of this report, we and our PRC subsidiaries have not received any inquiry, notice,

warning or objection in relation to our stock issuances or trading or Nasdaq listing from the CSRC, the CAC or any other PRC authorities.

We have been closely monitoring regulatory developments in China regarding any necessary approvals from the CSRC, the CAC or other PRC

governmental authorities required for securities offerings and overseas listings.

August 8, 2006, six PRC regulatory agencies, including the Ministry of Commerce, the State-owned Assets Supervision and Administration

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similar matters.

As of the date of this report, no official guidance or related implementation rules have been issued, and

our PRC counsel is of the opinion that this offering does not constitute illegal securities activities under the Opinions.

the Company has obtained all requisite licenses and operational permits and none of our permits has been denied.

Notwithstanding the

forgoing, there are still uncertainties as to how the Opinions will be interpreted and implemented by the relevant PRC governmental authorities.

As of the date of this report, no official guidance or related implementation rules have been issued, and our PRC counsel

is of the opinion that this offering does not constitute illegal securities activities under the Opinions.

In addition, the Company has

obtained all requisite licenses and operational permits and none of our permits has been denied.

Notwithstanding the forgoing, there

are still uncertainties as to how the Opinions will be interpreted and implemented by the relevant PRC governmental authorities.

addition, on December 28, 2021, the CAC, the National Development and Reform Commission (“NDRC”), and several other governmental

agencies jointly issued the Revised Measures for Cybersecurity Review, or the Revised Cybersecurity Measures, which took effect

on February 15, 2022.

Under the Revised Cybersecurity Measures, an “online platform operator” in possession of personal data

of more than one million users must apply for a cybersecurity review if it intends to list its securities on a foreign stock exchange.

The operators of critical information infrastructure purchasing network products and services, and the online platform operators (together

with the operators of critical information infrastructure, the “Operators”) carrying out data processing activities that

affect or may affect national security, shall conduct a cybersecurity review, and any online platform operator who controls more than

one million users’ personal information must go through a cybersecurity review by the cybersecurity review office if it seeks to

be listed in a foreign country.

agencies jointly issued the Revised Cybersecurity Measures, which took effect on February 15, 2022.

Under the Revised Cybersecurity Measures,

an “online platform operator” in possession of personal data of more than one million users must apply for a cybersecurity

review if it intends to list its securities on a foreign stock exchange.

The operators of critical information infrastructure purchasing

network products and services, and the online platform operators (together with the operators of critical information infrastructure,

the “Operators”) carrying out data processing activities that affect or may affect national security, shall conduct a cybersecurity

review, and any online platform operator who controls more than one million users’ personal information must go through a cybersecurity

review by the cybersecurity review office if it seeks to be listed in a foreign country.

the CAC released the Draft Regulations on Network Data Security Management in November 2021 for public comments, which among other things,

stipulates that a data processor listed overseas must conduct an annual data security review by itself or by engaging a data security

service provider and submit the annual data security review report for a given year to the municipal cybersecurity department before

January 31 of the following year.

If the Draft Regulations on Network Data Security Management are enacted in the current form, we, as

an overseas listed company, would be required to carry out an annual data security review and comply with the relevant reporting obligations.

the data security regulations currently in effect, we don’t believe that we are required to conduct data security review for listing

However, according to the Draft Regulations on Network Data Security Management, as an overseas listed company, we would be

required to conduct an annual data security review and to comply with the relevant reporting obligations.

We have been closely monitoring

the development in the regulatory landscape in China, particularly regarding the requirement of approvals, including on a retrospective

basis, from the CSRC, the CAC or other PRC authorities in relation to this offering, as well as regarding any annual data security review

or other procedures that may be imposed on us.

If any approval, review or other procedure is in fact required, we cannot assure you that

we will be able to obtain such approval or complete such review or other procedure timely or at all.

For any approval that we may be

able to obtain, it could nevertheless be revoked and the terms of its issuance may impose restrictions on our operations and/or securities

The PRC regulatory requirements with respect to cybersecurity and data security are constantly evolving and can be subject

to varying interpretations and significant changes, resulting in uncertainties about the scope of our responsibilities in that regard.

Failure to comply with these cybersecurity and data privacy requirements in a timely manner, or at all, may subject us to government

enforcement actions and investigations, fines, penalties, suspension or disruption of our operations, among other things.

December 24, 2021, the CSRC issued the Administrative Provisions of the State Council Regarding the Overseas Issuance and Listing of

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Securities and Listing Record-Filings by Domestic Enterprises (Draft for Comments) (the “Draft Filing Measures”), collectively,

the Draft Overseas Listing Rules, which are currently published for public comments only.

The Draft Overseas Listing Rules require that

companies applying for overseas securities issuance, listing, and post-listing capital operations, including IPO, multi-listing, spin-off

listing, SPAC, refinancing, issuance for asset acquisitions, equity incentives, changes of control and certain other transactions, shall

be subject to statutory procedures, such as filing and information reporting requirement.

According to the Draft Overseas Listing Rules,

among other things, after making initial applications with overseas stock markets for offerings or listings, all China-based companies

shall file with the CSRC within three business days.

In addition, overseas offerings and listings may be prohibited for such China-based

companies when any of the following applies:

(a) if the securities offerings and listings are prohibited by applicable PRC laws and rules;

(b) if securities offerings and listings may constitute a threat to, or endanger national security as reviewed and determined by PRC

(d) if a PRC company or its controlling shareholders or de facto controllers have committed certain crimes, under investigation

for suspicion of major violations in the prior three years;

(e) if any directors, supervisors, or senior executives of applicants have

been subject to administrative punishments for severe violations, or are under investigations for crimes or major violations;

other circumstances as provided.

The Draft Administrative Provisions further stipulate that a fine between RMB 1 million and RMB 10 million

the Draft Overseas Listing Rules.

The Draft Overseas Listing Rules require that companies applying for overseas securities issuance,

listing, and post-listing capital operations, including IPO, multi-listing, spin-off listing, SPAC, refinancing, issuance for asset acquisitions,

equity incentives, changes of control and certain other transactions, shall be subject to statutory procedures, such as filing and information

reporting requirement.

February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises,

or the Trial Measures, and five application guidelines (collectively, the “Overseas Listing Rules”), which will become effective

on March 31, 2023.

According to the Overseas Listing Rules, among other things, after making initial applications with overseas

stock markets for offerings or listings, all China-based companies shall file with the CSRC within three business days.

Subsequent securities

offerings of an issuer in the same overseas market where it has previously offered and listed securities shall be filed with the CSRC

within three business days after the offering is completed.

Subsequent securities offerings and listings of an issuer in other overseas

markets than where it has offered and listed shall be filed with the CSRC within three business days after the applications are made.

In addition, overseas offerings and listings are prohibited for such China-based companies when any of the following applies:

such securities offering and listing is explicitly prohibited by provisions in PRC laws, administrative regulations and relevant state

(b) where the intended securities offering and listing may endanger national security as reviewed and determined by competent

authorities under the State Council in accordance with law;

and listing, or its controlling shareholders and the actual controller, have committed crimes such as corruption, bribery, embezzlement,

misappropriation of property or undermining the order of the socialist market economy during the latest three years;

(d) where the domestic

company intending to make the securities offering and listing is suspected of committing crimes or major violations of laws and regulations,

and is under investigation according to law, and no conclusion has yet been made thereof;

(e) where there are material ownership disputes

over equity held by the domestic company’s controlling shareholder or by other shareholders that are controlled by the controlling

shareholder and/or actual controller.

The Overseas Listing Rules further stipulate that a fine between RMB 1 million and RMB 10 million

may be imposed if a company fails to fulfill the filing requirements with the CSRC or conducts an overseas offering or listing in violation

of the Draft Overseas Listing Rules.

In the case of severe violations, an order to suspend relevant businesses or halt operations for

rectification may be issued, and relevant business permits or operational license revoked.

issuance and listings subject to the Draft Overseas Listing Rules include direct and indirect issuance and listings.

of the Overseas Listing Rules.

offerings and listings subject to the Overseas Listing Rules include direct and indirect offerings and listings.

Where an enterprise

whose principal business activities are conducted in PRC seeks to issue and list its shares in the name of an overseas enterprise based

on equity ownership, assets, income or other similar rights and interests of an PRC domestic enterprise, such activities are deemed an

indirect overseas issuance and listing (the “Indirect Overseas Issuance and Listing”) under the Draft Overseas Listing Rules.

Our PRC counsel has advised us that this offering and the proposed listing of our shares on Nasdaq Capital Market would be deemed an

Indirect Overseas Issuance and Listing under the Draft Overseas Listing Rules and will be required to complete the filing procedures

and submit the relevant information to CSRC after the Draft Overseas Listing Rules become effective.

As of the date hereof, the rules

have not become effective and we are not required to complete the filing procedures if we complete the offering and transferring the

trading of our securities on the Nasdaq before the rules take effect.

In addition, our PRC counsel advised us that, even if the filing

procedures are implemented, we would only submit the filing materials as provided by the rules and no CSRC approve is required under

Because we are relying on an opinion of counsel, there is uncertainty inherent in relying on an opinion of counsel in connection

with whether we are required to obtain permissions from a governmental agency that is required to approve of our operations and/or listings.

the CSRC requires that we obtain its approval prior to the completion of this offering, the offering would be delayed until we have obtained

CSRC approval, which may take several months.

There is also the possibility that we may not be able to obtain or maintain such approval

or that we inadvertently concluded that such approval was not required.

If prior CSRC approval was required while we inadvertently concluded

that such approval was not required or if applicable laws and regulations or the interpretation of such were modified to require us to

obtain the CSRC approval in the future, we may face regulatory actions or other sanctions from the CSRC or other Chinese regulatory authorities.

on equity ownership, assets, income or other similar rights and interests of an PRC domestic enterprise, such activities are defined

as an indirect overseas offering and listing under the Overseas Listing Rules.

to the Notice on the Filing Management Arrangements for Overseas Offerings and Listings by Domestic Companies published by the CSRC on

February 17, 2023, existing listed companies are not required to make any filings until they conduct a new offering or financing transaction

in the future.

A company is regarded as an existing listed company if it (a) has already completed overseas listing or offering, or (b)

has already obtained the approval for the offering or listing from overseas securities regulatory authorities or stock exchanges but

has not completed such offering or listing before the effective date of the Overseas Listing Rules and also completes the offering or

listing before September 30, 2023.

On the effective date of the Overseas Listing Rules, PRC companies that have already submitted offering

and listing applications but have not yet obtained the approvals from overseas securities regulators or exchanges shall make filings

with the CSRC at a reasonable time before the completion of the offerings or listings.

For those that have already obtained CSRC’s

approvals for overseas listings or offerings may continue their process without additional filings but shall make the filing pursuant

to the Overseas Listing Rules if they cannot complete the offering or listing before the expiration of the original approval from CSRC.

of the date of this report, the Overseas Listing Rules have not impacted our ability to conduct our business or trade our securities

at an overseas securities market.

The listing of our shares on the Nasdaq and related securities offering should be deemed as an

indirect overseas offering and listing under the Overseas Listing Rules and therefore we are required to complete the filing

procedures and submit the relevant information to CSRC but no CSRC approval is required under the rules.

However, there is

uncertainty with respect to whether we are required to obtain permissions from a governmental agency for

our operations and/or listings.

the CSRC, CAC or any other governmental agency requires that we obtain their respective approval(s) for our securities issuances or overseas

listing, securities offerings would be delayed until we have obtained such approval.

There is also the possibility that we may not be able to

obtain or maintain such approval or that we inadvertently concluded that such approval was not required.

If we do not receive or maintain

required permissions or approvals, inadvertently conclude that such permissions or approvals are not required, or applicable laws, regulations,

or interpretations change and we are required to obtain such permissions or approvals in the future, we may face regulatory actions,

investigations, disruption of our subsidiaries’ operations, or other sanctions from the CSRC, CAC or other Chinese regulatory authorities.

These authorities may impose fines and penalties upon our subsidiaries’ operations in China, limit our operating privileges in

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of our common stock.

The CSRC or other Chinese regulatory agencies may also take actions requiring us, or making it advisable for us,

to terminate this offering prior to closing.

Any failure of us to fully comply with new regulatory requirements may significantly limit

or completely hinder our ability to offer or continue to offer the common stock, causing significant disruption to our business operations,

severely damage our reputation, materially and adversely affect our financial condition and results of operations and cause the common

stock to significantly decline in value or become worthless.

See “Risk Factor — “China Securities Regulatory Commission

and other government agencies may exert more oversight and control over offerings that are conducted overseas and foreign investment

in China-based issuers, and we face uncertainty with respect to future actions by the PRC government that could significantly affect

our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be

worthless.” “Risk Factor — The Chinese government may intervene or influence the operations of our PRC subsidiaries

and exercise significant oversight and discretion over the conduct of their business and may intervene in or influence their operations

at any time, which could result in a material change in operations of our PRC subsidiaries and/or the value of our common stock”;

“Risk Factor — Recent regulatory developments in China, including greater oversight and control by the CAC over data security,

may subject us to additional regulatory review, and any actions by the Chinese government to exert more oversight and control over foreign

investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities

to investors and cause the value of such securities to significantly decline or be worthless.”

The CSRC, CAC or other Chinese regulatory agencies may also take actions requiring us, or making it advisable for

us, to terminate this offering prior to closing.

Any failure of us to fully comply with new or changed regulatory requirements may significantly

limit or completely hinder our ability to offer or continue to offer the common stock, causing significant disruption to our business

operations, severely damage our reputation, materially and adversely affect our financial condition and results of operations and cause

the common stock to significantly decline in value or become worthless.

See “Risk Factor — “ The Chinese government

may intervene or influence our operations at any time, or may exert more control over offerings conducted overseas and/or foreign investment

in China-based issuers, which could result in a material change in our operations and/or the value of the securities we are registering

“Risk Factor — The Chinese government may intervene or influence the operations of our

PRC subsidiaries and exercise significant oversight and discretion over the conduct of their business and may intervene in or influence

their operations at any time, which could result in a material change in operations of our PRC subsidiaries and/or the value of our common

and “Risk Factor — Recent regulatory developments in China, including greater oversight and control by the

CAC over data security, may subject us to additional regulatory review, and any actions by the Chinese government to exert more oversight

and control over foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue

to offer securities to investors and cause the value of such securities to significantly decline or be worthless.”

is a country with both an ancient wine tradition and a new and an emerging wine-consuming market.

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Online platform identifies the customers ‘consumption habits and present relevant products to targeted customers through the information

Online is also served as our O2O management platform, which can provide marketing services to traditional merchants such as supermarkets,

Online also serves as our O2O management platform, which can provide marketing services to traditional merchants such as supermarkets,

retail stores, hotels and restaurants.

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Through the operation of online

platform, we diversify the product type on our platform and strengthen the customers ‘confidence to our products.

platform, we diversify the product type on our platform and strengthen the customers’ confidence in our products.

also maintain a “Fugu Online” WeChat mini-program through which we include mobile coupons and customized offers based on

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through the Fugu Online platform with an average sales amount of RMB8,465 per order.

Although the Fugu Online platform is still being

developed, the first five months’ sales amount already indicated a high revenue growth potential of the Fugu Online platform.

Although the Fugu Online platform is being

developed, the sales amounts generated since its launching indicated a high revenue growth potential of the Fugu Online platform.

make online or offline bulk sales through our agents and independent distributors.

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a factor in retaining and attracting customers.

also seek to expand our sales into the international food supply chain markets and are in the process of establishing our online

store on the Amazon platform targeting the food supply and distribution markets outside of China.

We engaged a third-party

consultant to assist with marketing and sales strategies to further increase our sales.

In addition to other online sales channels,

we have also begun to promote our product sales on major e-commerce platforms in China, such as Tao.1688.com and

also seek to expand our sales into the international food supply chain markets and are in the process of establishing our online store

on the Amazon platform targeting the food supply and distribution markets outside of China.

We engaged a third-party consultant to assist

with marketing and sales strategies to further increase our sales.

In addition to other online sales channels, we also promote our product sales on major e-commerce platforms in China, such as Tao.1688.com and Pinduoduo.

still dominates the Chinese wine market with a share of 48 per cent according to Euromonitor International.

The best sales in Chinese

supermarkets are imported wines from RMB60-180, or approximately $9.00 - $27.00 per bottle.

One major challenge is that Chinese consumers

switch from one brand to another rather quickly, exhibiting little brand loyalty.

Online sales particularly enable the consumers to source

and purchase budget wines.

Management believes that wineries will most benefit from growth in China will be those that demonstrate patience,

professional service while building brand awareness and a long-term strategy to develop the market with their Chinese partners.

The best sales in

Chinese supermarkets are imported wines from RMB60-180, or approximately $9.00 - $27.00 per bottle.

One major challenge is that Chinese

consumers switch from one brand to another rather quickly, exhibiting little brand loyalty.

Online sales particularly enable the consumers

to source and purchase budget wines.

Management believes that wineries will most benefit from growth in China will be those that demonstrate

patience, professional service while building brand awareness and a long-term strategy to develop the market with their Chinese partners.

our Company, there are two major competitors in our market, Aussino Liquor and ASC Fine Wines.

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Supply Chain Solutions provides comprehensive food supply chain services for food enterprises and retail customers.

modern cooling logistics centers, food processing factories and other operation bases.

With its strengths in the areas of clean

vegetable production industry standardization, Shuhai is recognized by the industry and customers as a benchmark enterprise in the

food supply chain industry.

Shuhai has modern

cooling logistics centers, food processing factories and other operation bases.

With its strengths in the areas of clean vegetable production

industry standardization, Shuhai is recognized by the industry and customers as a benchmark enterprise in the food supply chain industry.

is a subsidiary of Beijing Wajiu E-Commerce Co., Ltd., a cross-border B2B trading website for beverages.

It operates a B2B platform

for foreign wineries and China domestic wine distribution channels based on an “overseas direct procurement + cross-border

supply chain + warehousing lo business is to connect the upstream global winery suppliers with the downstream Chinese and foreign

small and medium wholesalers and retailers.

It operates a B2B platform for

foreign wineries and China domestic wine distribution channels based on an “overseas direct procurement + cross-border supply chain

+ warehousing lo business is to connect the upstream global winery suppliers with the downstream Chinese and foreign small and medium

wholesalers and retailers.

is an F2B (farm-to-business) fresh produce supply chain company providing one-stop food ingredient procurement services to restaurants

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in December 2014, Shenzhen Farmgirl Supply Chain is a nationwide agricultural B2B trading platform.

Mainly serving Shenzhen and

Guangzhou, its main products include vegetables, fruits, meat, frozen products, aquatic seafood, dry foods and seasoning

It h marketing teams, and cooperates with food production bases and large wholesale markets to ensure the quality of

the vegetables exported.

Mainly serving Shenzhen and Guangzhou,

its main products include vegetables, fruits, meat, frozen products, aquatic seafood, dry foods and seasoning ingredients.

It h marketing

teams, and cooperates with food production bases and large wholesale markets to ensure the quality of the vegetables exported.

Flows, Dividends and Other Asset Transfers between the U.S.

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or other distributions to us through our intermediate holding subsidiaries.

following table describes transfers among us and our subsidiaries made during the periods presented:

For the years ended December 31

Capital contributions from

us to our offshore subsidiaries (1)

Loans from us to our offshore subsidiaries

Capital contributions from our offshore subsidiaries or WFOEs to PRC operating subsidiaries

Loans from our WFOEs to PRC operating subsidiaries

Loans from PRC operating subsidiaries to our WFOEs

Other amounts paid by WFOEs

to our offshore subsidiaries (2)

Other amounts paid by PRC

operating subsidiaries to WFOEs (3)

Other amounts paid by WFOEs

to our PRC operating subsidiaries (4)

subsidiaries” refer to all of our subsidiaries except our PRC subsidiaries;

paid by one of our WFOEs to our Hong Kong subsidiaries for expenses;

paid by one of PRC operating subsidiaries to one of our WFOEs for sales of goods;

paid by one of our WFOEs to one of our PRC operating subsidiaries for purchases.

of the date of this report, none of our subsidiaries have made any dividends or other distributions to us or their respective shareholders,

nor have we ever made a dividend or distribution to our shareholders.

Our PRC subsidiaries presently intend to retain all earnings to

fund their operations and business expansions.

a result of PRC laws and regulations (noted below) that require annual appropriations of 10% of after-tax income to be set aside in a

general reserve fund prior to payment of dividends, our WFOE subsidiary, QHDX, is restricted in that respect, as well as in other respects

noted below, in its ability to transfer a portion of their net assets to our Hong Kong subsidiary as a dividend.

We note the following:

PRC regulations currently permit the payment of dividends only out of accumulated profits, as determined in accordance with accounting

standards and PRC regulations;

Our PRC subsidiaries, including QHDX, are required to set aside, at a minimum, 10% of their net income after taxes, based on PRC accounting

standards, each year as statutory surplus reserves until the cumulative amount of such reserves reaches 50% of their registered capital;

in addition, they may, subject to a resolution of their shareholder, draw a discretionary common reserve from its after-tax profits;

Those reserves may not be distributed as cash dividends and may be used to cover losses made in past years, to enhance the company’s

productivity and expand its business or to increase its registered capital;

The incurrence of debt, specifically the instruments governing such debt, may restrict a PRC subsidiary’s ability to pay shareholder

dividends or make other cash distributions.

the PRC laws and regulations, our PRC subsidiaries, as wholly foreign-owned enterprises in China, may pay dividends only out of their

respective accumulated after-tax profits as determined in accordance with PRC accounting standards and regulations.

In addition, a wholly

foreign-owned enterprise is required to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund certain

statutory reserve funds, until the aggregate amount of such funds reaches 50% of its registered capital.

At its discretion, a wholly

foreign-owned enterprise may allocate a portion of its after-tax profits based on PRC accounting standards to discretional funds.

reserve funds and discretional funds are not distributable as cash dividends.

Remittance of dividends by a wholly foreign-owned company

out of China is subject to examination by the banks designated by SAFE and declaration and payment of withholding tax.

Additionally,

if our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability

to pay dividends or make other distributions or payments to us.

As a holding company, we may rely on dividends and other distributions

on equity paid by our subsidiaries, including our PRC subsidiaries, for our cash and financing requirements.

However, our PRC subsidiaries

will not be able to pay dividends until they generate accumulated profits and meet the requirements described above.

Please see “Risk

Factor — PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us

from using the proceeds of this Offering to make loans or additional capital contributions to our PRC subsidiary, which could materially

and adversely affect our liquidity and our ability to fund and expand our business”;

“Risk Factor — Payment

of dividends is subject to restrictions under Nevada and the PRC laws;

and “ Risk Factor — Governmental control of

currency conversion may affect the value of your investment.”

are a holding company with no material operations of our own and do not generate any revenue.

We currently conduct substantially all

of our operations through our PRC operating subsidiaries, QHDX and Xixingdao, and their subsidiaries.

We are permitted under PRC laws

and regulations to provide funding to PRC subsidiaries through loans or capital contributions, only if we satisfy the applicable PRC

government registration and approval requirements.

Any loans from us or our holding subsidiaries outside of China to our PRC subsidiaries,

which are treated as FIEs under PRC law, are subject to PRC regulations and foreign exchange loan registration requirements.

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

our assets will exceed our liabilities after the payment of such dividends.

As a holding company, we may rely on dividends and other

distributions on equity paid by our subsidiaries for our cash and liquidity requirements, including funds necessary to pay dividends

and other cash distributions to our shareholders or investors, or service any debt we may incur outside of China and pay our expenses.

If any of our subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict their ability

to pay dividends to us.

To the extent cash or assets in the business is in the PRC or Hong Kong or a PRC or Hong King subsidiary, the

cash or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in or the

imposition of restrictions and limitations on our or our subsidiaries’ ability by the PRC government to transfer cash or assets.

Under the PRC laws and regulations, our PRC subsidiaries may pay dividends only out of their respective accumulated after-tax profits

as determined in accordance with PRC accounting standards and regulations.

In addition, each of our PRC subsidiaries is required to set

aside at least 10% of its accumulated after-tax profits each year, after making up for previous year’s accumulated losses, to fund

certain statutory reserve funds, until the aggregate amount of such funds reaches 50% of its registered capital.

At its discretion, a

subsidiary may allocate a portion of its after-tax profits based on PRC accounting standards to discretional funds.

These reserve funds

and discretional funds are prohibited from being distributed to their shareholders as dividends.

As of the date of this report, there

are no restrictions or limitations imposed by the Hong Kong government on the transfer of capital within, into and out of Hong Kong (including

funds from Hong Kong to the PRC), except for transfer of funds involving money laundering and criminal activities.

of funds by our subsidiaries out of China is subject to examination by the banks designated by SAFE and declaration and payment

of withholding tax.

Cash dividends, if any, on our common stock will be paid in U.S.

The PRC government also imposes restrictions

on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC.

Foreign exchange transactions under

the capital account remain subject to limitations and require approvals from, or registration with, SAFE and other relevant PRC governmental

As such, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign

currency for the payment of dividends from our profits, if any.

In addition, there can be no assurance that the PRC government will not

intervene or impose additional restrictions on our ability to transfer cash or assets within our organization or to foreign investors,

which could result in an inability or prohibition on making transfers or distributions outside of PRC, which may adversely affect our

business, financial condition and results of operations.

we are deemed by the PRC tax authorities as a PRC tax resident enterprise for tax purposes, any dividends we pay to our non-PRC resident

shareholders may be regarded as China-sourced income and as a result, may be subject to PRC withholding tax at a rate of up to 10.0%.

Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation

and Tax Evasion on Income, or the Double Tax Avoidance Arrangement, the 10% withholding tax rate may be reduced to 5% if a Hong Kong

resident enterprise owns no less than 25% of a PRC entity.

However, the 5% withholding tax rate does not automatically apply and certain

requirements must be satisfied, including, without limitation, that (a) the Hong Kong entity must be the beneficial owner of the relevant

and (b) the Hong Kong entity must directly hold no less than 25% share ownership in the PRC entity during the 12 consecutive

months preceding its receipt of the dividends.

In practice, a Hong Kong entity must obtain a tax resident certificate from the Hong Kong

tax authority to apply for the 5% lower PRC withholding tax rate.

As the Hong Kong tax authority will issue such a tax resident certificate

on a case-by-case basis, we cannot be certain that we will be able to obtain the tax resident certificate from the relevant Hong Kong

tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to any dividends

to be paid by our WFOE, QHDX, to our Hong Kong subsidiary.

Our WFOE currently does not have any plan to declare and pay dividends, and

we have not applied for the tax resident certificate from the relevant Hong Kong tax authority.

Our Hong Kong subsidiary will apply for

the tax resident certificate when our WFOE plans to declare and pay dividends.

shareholders and gains received by our non-PRC stockholders from sale of our shares may be regarded as China-sourced income and as a

result, may be subject to PRC withholding tax at a rate of up to 10.0%.

Pursuant to the Arrangement between Mainland China and the Hong

Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, or the Double Tax Avoidance Arrangement,

the 10% withholding tax rate may be reduced to 5% if a Hong Kong resident enterprise owns no less than 25% of a PRC entity.

the 5% withholding tax rate does not automatically apply and certain requirements must be satisfied, including, without limitation, that

(a) the Hong Kong entity must be the beneficial owner of the relevant dividends;

and (b) the Hong Kong entity must directly hold no less

than 25% share ownership in the PRC entity during the 12 consecutive months preceding its receipt of the dividends.

In practice, a Hong

Kong entity must obtain a tax resident certificate from the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate.

As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case basis, we cannot be certain that we will

be able to obtain the tax resident certificate from the relevant Hong Kong tax authority and enjoy the preferential withholding tax rate

of 5% under the Double Taxation Arrangement with respect to any dividends to be paid by our WFOE, QHDX, to our Hong Kong subsidiary.

Our WFOE currently does not have any plan to declare and pay dividends, and we have not applied for the tax resident certificate from

the relevant Hong Kong tax authority.

Our Hong Kong subsidiary will apply for the tax resident certificate when our WFOE plans to declare

and pay dividends.

following discussions illustrate taxes we would hypothetically be required to pay in China, assuming that:

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taxable earnings, and (ii) they determine to pay dividends in the future:

Taxation Scenario Statutory Tax and Standard Rates

Hypothetical pre-tax earnings

Tax on earnings at statutory

rate of 25% (2)

Net earnings available for distribution

Withholding tax at standard

rate of 10% (3)

Net distribution to Parent/Shareholders

Scenario Statutory Tax and Standard Rates

pre-tax earnings

on earnings at statutory rate of 25% (2)

earnings available for distribution

tax at standard rate of 10% (3)

distribution to Parent/Shareholders

purposes of this example, the tax calculation has been simplified.

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on a separate company basis.

of our subsidiaries qualify for preferential income tax rates 20% in China.

However, such rates are subject to qualification, are

temporary in nature, and may not be available in a future when distributions are paid.

For purposes of this hypothetical example,

the table above reflects a maximum tax scenario under which the full statutory rate would be effective.

of our PRC subsidiaries qualify for the preferential income tax rate of 5% for small-scale and low-profit enterprises in China.

such rates are subject to qualification, are temporary in nature, and may not be available in the future when distributions are paid.

For purposes of this hypothetical example, the table above reflects a maximum tax scenario under which the full statutory rate would

be effective.

PRC Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise,

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of this hypothetical example, the table above assumes a maximum tax scenario under which the full withholding tax would be applied.

of the date of this report, we have not made any cash transfers, capital contributions or loans to any of our subsidiaries.

from us or our holding subsidiaries outside of China to our PRC subsidiaries, which are treated as FIEs under PRC law, are subject to

PRC regulations and foreign exchange loan registrations.

Such loans to our FIE subsidiaries to finance their activities must be registered

with the SAFE, or its local counterparts, or filed with SAFE in its information system.

Funds are transferred among our PRC subsidiaries

for working capital purposes, primarily between our WFOE subsidiary, QHDX, and our operating subsidiaries.

As advised by our PRC counsel,

PRC laws and regulations, as well as judicial interpretations thereof, do not prohibit using cash generated from one subsidiary to fund

another subsidiary’s operations by way of short term interest free loans.

The transfer of funds among our subsidiaries are subject

to the Provisions of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Private Lending

Cases (2020 Revision, the “Provisions on Private Lending Cases”) issued on August 20, 2020, which are applicable to financing

activities among individuals, legal entities and unincorporated organizations.

We have not been notified of any other restriction which

could limit our PRC subsidiaries’ ability to transfer cash to other PRC subsidiaries.

In addition, QHDX has maintained cash management

policies which dictate the corporate approvals and procedure with respect to cash transfers with other PRC subsidiaries.

QHDX conducts

review and management of its subsidiaries’ cash transfers and reports to its board of directors.

The funds are transferred among

our PRC subsidiaries mainly for two purposes, including capital injections for working capital and intercompany advances.

injections, funds are transferred based on shareholders’ resolutions and related corporate approval documents.

Intercompany advances

are mainly for short term borrowings between our subsidiaries.

Once the borrowing subsidiary has a surplus, it will repay the funds to

its WFOE shareholder or other PRC subsidiaries.

All cash transfer requests must be (a) first reported to and reviewed by the head of

the Finance/Accounting Department at QHDX and the relevant PRC subsidiary’s chief executive officer, and (b) then be approved by

the Chief Financial Officer and Chairman of QHDX.

If the transfer amount is material, the transfer must be approved by all directors

Other than QHDX, neither us nor other subsidiaries have cash management policies dictating how funds are transfer, provided

each entity must comply with applicable law or regulations with respect to transfer of funds, dividends and distributions.

In the future,

cash proceeds raised from overseas financing activities, including this offering, may be transferred by us to our Hong Kong subsidiaries

and PRC subsidiaries via capital contributions or shareholder loans.

following table describes transfers among us and our subsidiaries made during the periods presented:

For the years ended December 31

Capital contributions from us to our offshore subsidiaries (1)

Loans from us to our offshore subsidiaries

Capital contributions from our offshore subsidiaries or WFOEs to PRC operating subsidiaries

Loans from our WFOEs to PRC operating subsidiaries

Loans from PRC operating subsidiaries to our WFOEs

Other amounts paid by WFOEs to our offshore subsidiaries (2)

Other amounts paid by PRC operating subsidiaries to WFOEs (3)

Other amounts paid by WFOEs to our PRC operating subsidiaries (4)

Other amounts paid by our WFOE on our behalf (5)

subsidiaries” refer to all of our subsidiaries except our PRC subsidiaries.

paid by one of our WFOEs to our Hong Kong subsidiaries for expenses.

paid by one of PRC operating subsidiaries to one of our WFOEs for sales of goods.

paid by one of our WFOEs to one of our PRC operating subsidiaries for purchases.

PRC subsidiary, QHDX, paid fees and expense on our behalf via a related party as a result of PRC law restrictions on foreign

exchange and restrictions on cash transfers outside of China.

During the fiscal years ended December 31, 2022

and 2021, the related party paid for our professional fees and expenses in USD, and QHDX transferred cash in Renminbi to the related

The cash flows of these activities were reflected in operating or financing activities in our consolidated statements of cash

flows based on the nature and timing of cash flows.

of the date of this report, none of our subsidiaries have made any dividends or other distributions to us or their respective shareholders,

nor have we ever made a dividend or distribution to our shareholders.

Our PRC subsidiaries presently intend to retain all earnings to

fund their operations and business expansions.

operate our business in China under a legal regime consisting of the National People’s Congress, which is the country’s highest

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halt operations for rectification may be issued, and relevant business permits or operational license revoked.

February 17, 2023, the CSRC issued the Trial Measures and five application guidelines, or the Overseas Listing Rules, which will become

effective on March 31, 2023.

According to the Overseas Listing Rules, among other things, after making initial applications with overseas

stock markets for offerings or listings, all China-based companies shall file with the CSRC within three business days.

Subsequent securities

offerings of an issuer in the same overseas market where it has previously offered and listed securities shall be filed with the CSRC

within three business days after the offering is completed.

Subsequent securities offerings and listings of an issuer in other overseas

markets than where it has offered and listed shall be filed with the CSRC within three business days after the applications are made.

In addition, overseas offerings and listings are prohibited for such China-based companies when any of the following applies:

such securities offering and listing is explicitly prohibited by provisions in PRC laws, administrative regulations and relevant state

(b) where the intended securities offering and listing may endanger national security as reviewed and determined by competent

authorities under the State Council in accordance with law;

and listing, or its controlling shareholders and the actual controller, have committed crimes such as corruption, bribery, embezzlement,

misappropriation of property or undermining the order of the socialist market economy during the latest three years;

(d) where the domestic

company intending to make the securities offering and listing is suspected of committing crimes or major violations of laws and regulations,

and is under investigation according to law, and no conclusion has yet been made thereof;

(e) where there are material ownership disputes

over equity held by the domestic company’s controlling shareholder or by other shareholders that are controlled by the controlling

shareholder and/or actual controller.

The Overseas Listing Rules further stipulate that a fine between RMB 1 million and RMB 10 million

may be imposed if a company fails to fulfill the filing requirements with the CSRC or conducts an overseas offering or listing in violation

of the Overseas Listing Rules.

According to the Notice on the Filing Management Arrangements for Overseas Offerings and Listings by Domestic

Companies published by the CSRC on February 17, 2023, existing listed companies are not required to make any filings until they conduct

a new offering or financing transaction in the future.

A company is regarded as an existing listed company if it (a) has already completed

overseas listing or offering, or (b) has already obtained the approval for the offering or listing from overseas securities regulatory

authorities or stock exchanges but has not completed such offering or listing before the effective date of the Overseas Listing Rules

and also completes the offering or listing before September 30, 2023.

On the effective date of the Overseas Listing Rules, PRC companies

that have already submitted offering and listing applications but have not yet obtained the approvals from overseas securities regulators

or exchanges shall make filings with the CSRC at a reasonable time before the completion of the offerings or listings.

For those that

have already obtained CSRC’s approvals for overseas listings or offerings may continue their process without additional filings

but shall make the filing pursuant to the Overseas Listing Rules if they cannot complete the offering or listing before the expiration

of the original approval from CSRC.

Relating to Foreign Investment

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to the competent commerce department.

Regulations related to Anti-Monopoly and Competition

On August 17, 2021, the State Administration

for Market Regulation, or the SAMR, issued a discussion draft of Provisions on the Prohibition of Unfair Competition on the Internet,

under which business operators should not use data or algorithms to hijack traffic or influence users’ choices, or use technical

means to illegally capture or use other business operators’ data.

Furthermore, business operators are not allowed to (i) fabricate

or spread misleading information to damage the reputation of competitors, or (ii) employ marketing practices such as fake reviews

or use coupons or “red envelopes” to entice positive ratings.

On September 11, 2020, the Anti-Monopoly

Commission of the State Council issued Anti-Monopoly Compliance Guideline for Operators, which requires operators to establish anti-monopoly

compliance management systems under the PRC Anti-Monopoly Law to manage anti-monopoly compliance risks.

On February 7, 2021, the

Anti-Monopoly Commission of the State Council published Anti-Monopoly Guidelines for the Internet Platform Economy Sector that specified

circumstances where an activity of an internet platform will be identified as monopolistic act as well as concentration filing procedures

for business operators, including those involving variable interest entities, or the VIEs.

According to the PRC Anti-Monopoly Law, if

a business operator carries out a concentration in violation of the law, the relevant authority shall order the business operator to

terminate the concentration, dispose of the shares or assets or transfer the business within a specified time limit, or take other measures

to restore the pre-concentration status, and impose a fine of up to RMB500,000.

On October 23, 2021, the Standing Committee

of the National People’s Congress issued a discussion draft of the amended Anti-Monopoly Law, which proposes to increase the fines

for illegal concentration of business operators to no more than ten percent of its last year’s sales revenue if the concentration

of business operator has or may have an effect of excluding or limiting competitions;

or a fine of up to RMB5 million if the concentration

of business operator does not have an effect of excluding or limiting competition.

The draft also proposes that the relevant authority

shall investigate a transaction where there is any evidence that the concentration has or may have the effect of eliminating or restricting

competitions, even if such concentration does not reach the filing threshold.

related to Anti-Monopoly and Competition

August 17, 2021, the State Administration for Market Regulation, or the SAMR, issued a discussion draft of Provisions on the Prohibition

of Unfair Competition on the Internet, under which business operators should not use data or algorithms to hijack traffic or influence

users’ choices, or use technical means to illegally capture or use other business operators’ data.

Furthermore, business

operators are not allowed to (i) fabricate or spread misleading information to damage the reputation of competitors, or (ii) employ marketing

practices such as fake reviews or use coupons or “red envelopes” to entice positive ratings.

September 11, 2020, the Anti-Monopoly Commission of the State Council issued Anti-Monopoly Compliance Guideline for Operators, which

requires operators to establish anti-monopoly compliance management systems under the PRC Anti-Monopoly Law to manage anti-monopoly compliance

On February 7, 2021, the Anti-Monopoly Commission of the State Council published Anti-Monopoly Guidelines for the Internet Platform

Economy Sector that specified circumstances where an activity of an internet platform will be identified as monopolistic act as well

as concentration filing procedures for business operators, including those involving variable interest entities, or the VIEs.

to the PRC Anti-Monopoly Law, if a business operator carries out a concentration in violation of the law, the relevant authority shall

order the business operator to terminate the concentration, dispose of the shares or assets or transfer the business within a specified

time limit, or take other measures to restore the pre-concentration status, and impose a fine of up to RMB500,000.

October 23, 2021, the Standing Committee of the National People’s Congress issued a discussion draft of the amended Anti-Monopoly

Law, which proposes to increase the fines for illegal concentration of business operators to no more than ten percent of its last year’s

sales revenue if the concentration of business operator has or may have an effect of excluding or limiting competitions;

up to RMB5 million if the concentration of business operator does not have an effect of excluding or limiting competition.

also proposes that the relevant authority shall investigate a transaction where there is any evidence that the concentration has or may

have the effect of eliminating or restricting competitions, even if such concentration does not reach the filing threshold.

Relating to Value-added Telecommunications Services

158 unchanged sentences

As of the date of this report, the draft regulations have been released for public comment only and have not been formally adopted.

The final provisions and the timeline for its adoption are subject to changes and uncertainties.

currently operate an online trading platform, primarily engaged in sales of products to our customers in China, where our customers can

Our online platform collects

and transmits product, supplier and customer information and data.

Since our online trading platform has only been in operation for about a year, we are in the process of studying the newly issued rules and regulations governing cybersecurity and data protection and the

industry best practice, as well as assessing the extent to which our information and data system is not in full compliance with the various

requirements under the newly proposed regulations.

final provisions and the timeline for its adoption are subject to changes and uncertainties.

currently operate an online trading platform, primarily engaged in sales of products to our customers in China, where our customers

can register as members first, and then search for, purchase or sell any desired food and beverage products.

Our online platform

collects and transmits product, supplier and customer information and data.

Since our online trading platform has only been in

operation for about two years, we are in the process of studying the newly issued rules and regulations governing cybersecurity and

data protection and the industry best practice, as well as assessing the extent to which our information and data system is not in

full compliance with the various requirements under the newly proposed regulations.

are committed to taking the necessary actions to satisfy the effective personal information protection and internet data security regulatory

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We have designed a user information protection mechanism, which includes the following measures:

adopt data security technical measures by the introduction of an extended verification (EV) SSL certificate at the user information security

technology implementation level, offering strong encryption technology and extended verification function, and providing security guarantee

for online transactions;

(ii) improve the technical level protection and the monitoring mechanism for data use, and for the data modules

related to user information in the e-commerce platform system, use MD5 irreversible encryption for storage and display of information

security sensitive fields;

(iii) develop a complete personal information operation process and system, and designate responsible personnel

system for information security work;

(iv) develop a user information collection, storage and user rules and privacy agreement, following

the “inform + express consent” model, informing users of the purpose, method and scope of information collection and use,

as well as the channels for inquiring and correcting inaccuracies in information and data;

(v) conduct assessments on technology, operational

risks and system common issues, and data security governance;

(vi) voluntarily engage a data security service organization to conduct

an annual data security assessment and fulfil reporting obligations if required by applicable rules and regulations;

(vii) establish

an emergency plan for personal information security incidents, which includes, among other things, an emergency response mechanism for

security incidents, incident impact assessment and mitigation measures, and emergency response training and drills;

(viii) provide training

to employees;

and (ix) promote consumer data protection awareness and education engagement.

We have implemented most of above measures

and plan to put in place the remaining measures by mid-2022.

We are committed to taking the necessary actions to satisfy the effective

personal information protection and internet data security regulatory requirements in accordance with the applicable laws.

(i) adopt data security

technical measures by the introduction of an extended verification (EV) SSL certificate at the user information security technology implementation

level, offering strong encryption technology and extended verification function, and providing security guarantee for online transactions;

(ii) improve the technical level protection and the monitoring mechanism for data use, and for the data modules related to user information

in the e-commerce platform system, use MD5 irreversible encryption for storage and display of information security sensitive fields;

(iii) develop a complete personal information operation process and system, and designate responsible personnel system for information

security work;

(iv) develop a user information collection, storage and user rules and privacy agreement, following the “inform

+ express consent” model, informing users of the purpose, method and scope of information collection and use, as well as the channels

for inquiring and correcting inaccuracies in information and data;

(v) conduct assessments on technology, operational risks and system

common issues, and data security governance;

(vi) voluntarily engage a data security service organization to conduct an annual data security

assessment and fulfil reporting obligations if required by applicable rules and regulations;

(vii) establish an emergency plan for personal

information security incidents, which includes, among other things, an emergency response mechanism for security incidents, incident

impact assessment and mitigation measures, and emergency response training and drills;

(viii) provide training to employees;

promote consumer data protection awareness and education engagement.

We have implemented most of above measures and plan to put in place

the remaining measures by mid-2022.

We are committed to taking the necessary actions to satisfy the effective personal information protection

and internet data security regulatory requirements in accordance with the applicable laws.

Relating to Intellectual Property Rights

in the PRC are principally protected under the Patent Law of the PRC.

The duration of a patent right is either 10 years or 15 year

or 20 years from the date of application, depending on the type of patent right.

The Patent Law of the PRC and its implementation

rules provide for three types of patents, namely, “invention”, “utility model” and “design”.

Invention patents are valid for twenty years, utility model patents are valid for fifteen years, while design patents are valid for

ten years, from the date of application.

The Chinese patent system adopts a “first-to-file” principle, which means that

where more than one person files a patent application for the same invention, a patent will be granted to the person who files the

application first.

The duration of a patent right is either 10 years or 15 year or

20 years from the date of application, depending on the type of patent right.

The Patent Law of the PRC and its implementation rules

provide for three types of patents, namely, “invention”, “utility model” and “design”.

patents are valid for twenty years, utility model patents are valid for fifteen years, while design patents are valid for ten years,

from the date of application.

The Chinese patent system adopts a “first-to-file” principle, which means that where more than

one person files a patent application for the same invention, a patent will be granted to the person who files the application first.

To be patentable, invention or utility models must meet three criteria:

novelty, inventiveness and

practicability.

A third party must obtain consent or a proper license from the patent owner to use the patent.

Otherwise, the use

constitutes an infringement of the patent rights.

novelty, inventiveness and practicability.

A third party must

obtain consent or a proper license from the patent owner to use the patent.

Otherwise, the use constitutes an infringement of the patent

in the PRC, including copyrighted software, is principally protected under the Copyright Law of the PRC and related rules and regulations.

53 unchanged sentences

amended on August 5, 2008.

Under PRC foreign exchange regulations, payments of current account items, such as profit distributions,

interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval

from the State Administration of Foreign Exchange, or SAFE, by complying with certain procedural requirements.

By contrast, approval

from or registration with appropriate government authorities is required where RMB is to be converted into foreign currency and remitted

out of China to pay capital account items, such as direct investments, repayment of foreign currency-denominated loans, repatriation

of investments and investments in securities outside of China.

November 19, 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on

Foreign Direct Investment, or Circular 59, which substantially amends and simplifies the current foreign exchange procedure.

Pursuant to Circular 59, the opening of various special purpose foreign exchange accounts, such as pre-establishment expenses

accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment of RMB proceeds derived by foreign investors in

the PRC, and remittance of foreign exchange profits and dividends by a foreign-invested enterprise to its foreign shareholders no

longer require the approval or verification of SAFE, and multiple capital accounts for the same entity may be opened in different

provinces, which was not possible previously.

In 2013, SAFE specified that the administration by SAFE or its local branches over

direct investment by foreign investors in the PRC must be conducted by way of registration and banks must process foreign exchange

business relating to the direct investment in the PRC based on the registration information provided by SAFE and its branches.

February 2015, SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange

Concerning Direct Investment, or SAFE Notice 13.

Instead of applying for approvals regarding foreign exchange registrations of

foreign direct investment and overseas direct investment from SAFE, entities and individuals may apply for such foreign exchange

registrations from qualified banks.

The qualified banks, under the supervision of SAFE, may directly review the applications and

conduct the registration.

Under PRC foreign exchange regulations, payments of current account items, such as profit distributions, interest

payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from the

State Administration of Foreign Exchange, or SAFE, by complying with certain procedural requirements.

By contrast, approval from or registration

with appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay

capital account items, such as direct investments, repayment of foreign currency-denominated loans, repatriation of investments and investments

in securities outside of China.

November 19, 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign

Direct Investment, or Circular 59, which substantially amends and simplifies the current foreign exchange procedure.

Pursuant to Circular

59, the opening of various special purpose foreign exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital

accounts and guarantee accounts, the reinvestment of RMB proceeds derived by foreign investors in the PRC, and remittance of foreign

exchange profits and dividends by a foreign-invested enterprise to its foreign shareholders no longer require the approval or verification

of SAFE, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible previously.

2013, SAFE specified that the administration by SAFE or its local branches over direct investment by foreign investors in the PRC must

be conducted by way of registration and banks must process foreign exchange business relating to the direct investment in the PRC based

on the registration information provided by SAFE and its branches.

In February 2015, SAFE promulgated the Notice on Further Simplifying

and Improving the Administration of the Foreign Exchange Concerning Direct Investment, or SAFE Notice 13.

Instead of applying for approvals

regarding foreign exchange registrations of foreign direct investment and overseas direct investment from SAFE, entities and individuals

may apply for such foreign exchange registrations from qualified banks.

The qualified banks, under the supervision of SAFE, may directly

review the applications and conduct the registration.

March 2015, SAFE promulgated the Circular of the SAFE on Reforming the Management Approach regarding the Settlement of Foreign Capital

169 unchanged sentences

the “beneficial owner” and agents and designated wire beneficiaries are specifically excluded from being recognized as “beneficial

January 17, 2019, the State Taxation Administration issued the notice on the scope of small-scale and low-profit corporate income tax

preferential policies of the Ministry of Finance and the State Administration of Taxation (“MOF and SAT”), [2019] No.

for small-scale and low-profit enterprises whose annual taxable income is less than RMB1,000,000 (including RMB1,000,000), approximately

$142,209, their income is reduced by 25% to the taxable income, and enterprise income tax is paid at 20% tax rate, which is essentially

resulting in a favorable income tax rate of 5%.

While for the portion of annual taxable income exceeding RMB1,000,000, approximately

$142,209, but not more than RMB3,000,000, approximately $426,627, the income is reduced by 50% to the taxable income, and enterprise

income tax is paid at 20% tax rate, which is essentially resulting in a favorable income tax rate of 10%.

MOF and SAT [2021] No.12 provides

an enterprise income tax rate of 2.5% on a small-scale and low-profit enterprises whose annual taxable income less than RMB1,000,000,

approximately $142,209, from January 1, 2021 to December 31, 2022.

MOF and SAT [2022] No.13 also provides an enterprise income tax rate

of 5% on a small-scale and low-profit enterprises whose annual taxable income more than RMB1,000,000, approximately $142,209, but not

more than RMB3,000,000, approximately $426,627, from January 1, 2022 to December 31, 2024.

The qualifications of small-scale and low-profit

enterprises were examined annually by the Tax Bureau.

All of the Company’s PRC subsidiaries, except for Xixingdao, FVT Supply

Chain and FLTT, met the criteria of small-scale and low-profit enterprises.

to applicable PRC tax regulations, any entity or individual conducting business in the service industry used to be generally required

17 unchanged sentences

the qualified input VAT paid on taxable purchases against the output VAT chargeable on the modern services provided.

April 4, 2018, the Ministry of Finance and the State Administration of Taxation issued the Notice on Adjustment of VAT Rates, which

came into effect on May 1, 2018.

According to the abovementioned notice, the taxable goods previously subject to VAT rates of 17%

and 11%, respectively, become subject to lower VAT rates of 16% and 10%, respectively, starting from May 1, 2018.

according to the Announcement on Relevant Policies for Deepening Value-added Tax Reform jointly promulgated by the Ministry of

Finance, the State Administration of Taxation and the General Administration of Customs, which became effective on April 1, 2019,

the taxable goods previously subject to VAT rates of 16% and 10%, respectively, become subject to lower VAT rates of 13% and 9%,

respectively, starting from April 1, 2019.

Under Provisional Regulations of the People’s Republic of China on Value-added Tax,

amended and effective on November 19, 2017, for entities that are VAT small taxpayers, VAT is levied at a levy rate of 3%.

February 29, 2020, the State Administration of Taxation issued the Announcement on Taxation Matters to Support Individual Businesses

in Resumption of Business, during the COVID-19, the small taxpayers are allowed to enjoy the preferred tax policy, tax rate from 3%

to 1% for the period from March 1, 2020 to December 31, 2021.

April 4, 2018, the Ministry of Finance and the State Administration of Taxation issued the Notice on Adjustment of VAT Rates, which came

into effect on May 1, 2018.

According to the abovementioned notice, the taxable goods previously subject to VAT rates of 17% and 11%,

respectively, become subject to lower VAT rates of 16% and 10%, respectively, starting from May 1, 2018.

Furthermore, according to the

Announcement on Relevant Policies for Deepening Value-added Tax Reform jointly promulgated by the Ministry of Finance, the State Administration

of Taxation and the General Administration of Customs, which became effective on April 1, 2019, the taxable goods previously subject

to VAT rates of 16% and 10%, respectively, become subject to lower VAT rates of 13% and 9%, respectively, starting from April 1, 2019.

Under Provisional Regulations of the People’s Republic of China on Value-added Tax, amended and effective on November 19, 2017,

for entities that are VAT small taxpayers, VAT is levied at a levy rate of 3%.

On February 29, 2020, the State Administration of Taxation

issued the Announcement on Taxation Matters to Support Individual Businesses in Resumption of Business, during the COVID-19, the small

taxpayers are allowed to enjoy the preferred tax policy, tax rate from 3% to 1% for the period from March 1, 2020 to December 31, 2021.

related to Business Operations in Hong Kong

Data (Privacy) Ordinance

Personal Data (Privacy) Ordinance (Cap.

486, Laws of Hong Kong) (the “PDPO”) passed in 1995 and took effect from December

1996 (except certain provisions).

The PDPO underwent major amendments in 2012, the most significant of which being the introduction of

direct marketing provisions and other additional protection to cope with new privacy challenges and address public concerns.

the PDPO underwent another major amendments.

The amendments aim to combat doxxing acts that are intrusive to personal data privacy, through

the criminalisation of doxxing acts, and conferring on the Privacy Commissioner for Personal Data statutory powers to issue cessation

notices demanding the cessation or restriction of disclosure of doxxing content.

The amendments also confer on the Privacy Commissioner

power to conduct criminal investigation and institute prosecution for doxxing cases, so as to strengthen enforcement against doxxing

PDPO is applicable to both the private and the public sectors.

It is technology-neutral and principle-based.

The Data Protection Principles

(“DPPs” or “DPP”), which are contained in Schedule 1 to the PDPO, outline how data users should collect, handle

and use personal data, complemented by other provisions imposing further compliance requirements.

The collective objective of DPPs is

to ensure that personal data is collected on a fully-informed basis and in a fair manner, with due consideration towards minimising the

amount of personal data collected.

Once collected, the personal data should be processed in a secure manner and should only be kept for

as long as necessary for the fulfillment of the purposes of using the data.

Use of the data should be limited to or related to the original

collection purpose.

Data subjects are given the right to access and make correction to their data.

Purpose and Manner of Collection.

provides that personal data shall only be collected for a lawful purpose directly related to a function or activity of the data user.

The data collected should be necessary and adequate but not excessive for such purpose.

The means of collection should be lawful and

If we collect personal data from data subjects directly, we should inform the data subjects whether it is obligatory or voluntary

to supply the data, the purpose of using their data and the classes of person to whom their data may be transferred.

We should also inform

them of the right and means to request access to and correction of their data.

Accuracy and Duration of Retention.

requires data users to take all practicable steps to ensure that personal data is accurate and is not kept longer than is necessary for

the fulfillment of the purpose for which the data is used.

If we engage a data processor for handling personal data of other persons,

we should adopt contractual or other means to ensure that the data processor comply with the mentioned retention requirement.

26 of PDPO requires data users to take all practicable steps to erase personal data that is no longer required for the purpose for which

the data is used, unless erasure is prohibited by law or is not in the public interest.

Section 26 could be engaged when a data user

fails to respond to a complaint or request from a data subject for erasure of personal data.

This situation attracts a heavier criminal

gravity than just keeping the data longer than is necessary under DPP2.

Contravention of the requirement under section 26 is an offence,

punishable by a fine of up to HK$10,000.

prohibits the use of personal data for any new purpose which is not or is unrelated to the original purpose when collecting the data,

unless with the data subject’s express and voluntary consent.

A data subject can withdraw his/her consent previously given by written

Regarding restrictions on use of personal data, Part 6A of the PDPO further requires that data users must obtain informed consent

before using a data subject’s personal data for direct marketing or transferring the data to a third party for direct marketing.

The consent must be an explicit indication by the data subject and broadly covers an indication of no objection.

In other words, silence

cannot constitute consent.

Besides, the consent must be an informed one.

The data user must inform the data subject of the intention

to use his/her personal data for direct marketing, the fact that the data user cannot so use the data unless with consent of the data

subject, the kinds of personal data to be used, the classes of marketing subjects to be involved.

The data user must also notify the

data subject of the right to opt out.

If the data user intends to transfer the data to a third party for direct marketing, he/she should

inform the data subject of such intention, the classes of transferees, the classes of marketing subjects to be involved and the fact

that the transfer is for a gain, etc.

Data Security.

requires that data users take all practicable steps to protect the personal data they hold against unauthorised or accidental access,

processing, erasure, loss or use.

Data users should have particular regard to the nature of the data, the potential harm if those events

happen, measures taken for ensuring the integrity, prudence and competence of persons having access to the data, etc.

If we engage a

data processor to process the personal data held, we must adopt contractual or other means to ensure that the data processor comply with

the mentioned data security requirement.

Openness and Transparency .

obliges data users to take all practicable steps to ensure openness of their personal data policies and practices, the kind of personal

data held and the main purposes for holding it.

6 Access and Correction .

provides data subjects with the right to request access to and correction of their own personal data.

A data user should give reasons

when refusing a data subject’s request to access to or correction of his/her personal data.

DPP6 is supplemented by detailed provisions

in Part 5 of the PDPO which cover the manner and timeframe for compliance with data access requests and data correction requests, the

circumstances in which a data user may refuse such requests, etc.

Data users are also required to maintain a log book to record all refusals

Enforcement .

Office of the Privacy Commissioner for Personal Data (“the Commissioner”) was established under PDPO as the dedicated data

privacy regulator.

When the Commissioner receives a complaint or has reasonable grounds to believe there may be a contravention of PDPO,

the Commissioner may conduct an investigation of the suspected contravention and publish a report setting out the investigation results

and recommendations if it is in the public interest to do so.

If, upon completion of an investigation, it is found that the relevant

data user is contravening or has contravened PDPO, the Commissioner may issue an enforcement notice to the data user directing remedial

and/or preventive steps to be taken.

Contravention

of a DPP is not an offence.

However, contravention of certain provisions of PDPO is an offence.

The Commissioner may carry out criminal

investigation and institute prosecution for offences under section 64 of the PDPO regarding doxxing-related offences and the direct marketing

provisions etc, as well as certain relevant offences.

Depending on the severity of the cases, the Commissioner will decide whether to

exercise the prosecution power in his or her own name, or refer cases involving suspected commission of other offences to the Police

or the Department of Justice for following up.

subjects may also seek compensation by civil action from data users for damage caused by a contravention of the PDPO.

The Commissioner

may provide legal assistance to the aggrieved data subjects if the Commissioner thinks fit to do so.

In addition, the Commissioner may

proactively carry out an inspection of a personal data system of a data user or a class of data users for the purpose of making recommendations

on how compliance may be enhanced by the data user(s).

The Commissioner is also empowered to issue codes of practices to provide practical

guidance on how to comply with the requirements under PDPO.

Non-compliance with a code of practice itself is not an offence but can be

a proof of contravention of the relevant requirement under PDPO.

provides a number of exemptions from some compliance requirements under particular circumstances.

Examples include crime prevention or

prosecution, security and defence, statistics and research, news activity, protecting a data subject’s health etc.

There is also

an exemption if the use of personal data is required or authorised by law or court order or is required for exercising or defending legal

rights in Hong Kong.

An exemption is a defence for a data user to avoid liability when he/she fails to comply with certain compliance

requirements under PDPO.

Laws/regulations

in Hong Kong that may result in oversight over data security

Organized and Serious Crime Ordinance (“OSCO”) is one of the major statutory exceptions to the duty of confidentiality over

data security.

A person is required under OSCO to make a disclosure to authorised officers (eg, police officers) where that person knows

or suspects that any property, among others, in whole or in part directly or indirectly represents the proceeds of an indictable offence.

In the context of the Company’s business and the offering, this may require the disclosure to an authorised officer of information

subject to the duty of confidentiality.

who come into possession of official information relating to security or intelligence services, defence, international relations or criminal

investigations are, under certain circumstances, prohibited under the Official Secrets Ordinance from disclosing such information.

Official Secrets Ordinance is unlikely to be relevant to an investigation unless the person being investigated has a relationship with

a government that would put that person in a position such that it is likely to receive such information.

the Hong Kong National Security Law, it is an offence to unlawfully provide state secrets or intelligence concerning national security

to a foreign country or an institution, organisation or individual outside the mainland, Hong Kong and Macao of the People’s Republic

For this purpose, state secrets and intelligence concerning national security are to be defined and determined under PRC law.

Competition Ordinance (Cap.

619, Laws of Hong Kong) (“Competition Ordinance”) is to prohibit conduct that prevents, restricts

or distorts competition in Hong Kong.

It also aims to prohibit mergers that substantially lessen competition in Hong Kong and to provide

for incidental and connected matters.

Competition Ordinance includes:

The First Conduct Rule, which prohibits undertakings from making or giving effect to agreements or engaging in a concerted practice,

or, as a member of an association of undertakings, make or give effect to a decision of the association, if the object or effect of

the agreement, concerted practice or decision is to prevent, restrict or distort competition in Hong Kong;

The Second Conduct rule, which prohibits undertakings which have a substantial degree of market power in a market to abuse that

power by engaging in conduct that has as its object or effect the prevention, restriction or distortion of competition in Hong Kong;

The Merger Rule, which prohibits undertakings to directly or indirectly carry out a merger that has, or is likely to have, the

effect of substantially lessening competition in Hong Kong.

breach, the Competition Tribunal may impose pecuniary penalty, director disqualifications, and prohibition, damage and other orders on

For pecuniary penalty, section 93 of the Competition Ordinance enables the Competition Tribunal to award a penalty up to 10%

of the turnover of the undertakings involved for up to three years in which the contravention occurs.

of our intellectual property is a strategic priority for our business.

We rely primarily on a combination of trademark and trade secret

laws to establish and protect our proprietary rights.

currently have seven registered trademarks in China as follows:

of our products and services bear the registered trademarks of “ ” (“水宜家”) or “Shui

Yi Jia.” These trademarks are owned by Yuwen Li, one of our shareholders.

Yuwen Li has signed a license agreement with Xixingdao

to authorize Xixingdao to use those trademarks at no cost to us.

Pursuant to the agreement with Mr.

Li, titles to those trademarks will

be transferred to Xixingdao upon the completion of the registration transfer.

currently have the following three registered works copyrights in China:

We rely primarily on a combination of trademark, patent,

currently have twenty one registered trademarks in China as follows:

Trademark Number

Expiration Date

August 21, 2012

August 20, 2032

August 21, 2012

August 20, 2032

August 14, 2012

August 13, 2032

August 14, 2012

August 13, 2032

December 21, 2019

December 20, 2029

December 21, 2019

December 20, 2029

November 28, 2021

November 27, 2031

January 28, 2022

January 27, 2032

October 7, 2021

October 6, 2031

October 7, 2021

October 6, 2031

February 28, 2022

February 27, 2032

March 7, 2022

March 6, 2032

March 7, 2022

March 6, 2032

March 7, 2022

March 6, 2032

March 28, 2022

March 27, 2032

March 28, 2022

March 27, 2032

March 28, 2022

March 27, 2032

March 28, 2022

March 27, 2032

March 28, 2022

March 27, 2032

March 28, 2022

March 27, 2032

of our products and services bear the registered trademarks of “ ”

(“水宜家”) or “Shui Yi Jia.” These trademarks are owned by Yuwen Li, one of our shareholders.

Yuwen Li has signed a license agreement with Xixingdao to authorize Xixingdao and its subsidiaries to use those trademarks at

no cost to us during the period from October 2019 to October 2029.

currently have the following one registered patent in China:

Authorization

CN201811179554.7

logistics container that is easy to place and prevent damage to fragile items

currently have the following four registered works copyrights in China:

国作登字-2020-F-01147904

1 unchanged sentence

国作登字-2020-F-00001391

currently have the following eighteen registered software copyrights in China

国作登字-2021-F-00297018

currently have the following twenty registered software copyrights in China:

2021SR0833407

20 unchanged sentences

2021SR1675516

trading internet platform system

Wine trading internet platform system

2021SR1675492

trading customer software

Wine trading customer software

2021SR1675466

supermarket trading system

Food supermarket trading system

2021SR1684106

tracking label identification system software

Origin tracking label identification system

2021SR1684107

safety data tracking system

Food safety data tracking system

2021SR1671192

e-commerce portal management platform

Wine e-commerce portal management platform

2021SR1671159

distributor management system

Wine distributor management system

2021SR1671739

product online sales promotion exchange platform

Wine product online sales promotion exchange

2022SR0044569

FVTI online Food Trading Information Checking

2022SR0044643

FVTI Store Order Data Statistical Analysis System

currently have the following registered Internet domain names in China:

18 unchanged sentences

Training and Talent Development

Training and self-development programs are provided

to employees periodically which include customer service training, financial controller training, delivery procedures training, compliance

training on industry related government rules and regulations, as well as informal training.

Employees are encouraged to participate

in different training programs to enhance their problem-solving skills, advancement and continuous self-development.

and self-development programs are provided to employees periodically which include customer service training, financial controller training,

delivery procedures training, compliance training on industry related government rules and regulations, as well as informal training.

Employees are encouraged to participate in different training programs to enhance their problem-solving skills, advancement and continuous

self-development.

support employee involvement and personal and professional development in our Company.

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are committed to gender equality by providing fair recruitment, training and promotion opportunities for all employees.

year-end of 2021, female employees represented approximately 40% of the total workforce.

We aim to invest in developing

talented leaders across all management levels including increased women members of management at our company and subsidiaries.

addition to gender equality, we also seek to hire employees from different educational background, profession, demographics and

At the year-end

of 2021, female employees represented approximately 40% of the total workforce.

We aim to invest in developing talented leaders across

all management levels including increased women members of management at our company and subsidiaries.

addition to gender equality, we also seek to hire employees from different educational background, profession, demographics and regions.

We have hired employees from different ethnicities, backgrounds and regions all across mainland China.

In order to retain

the best available candidates, we evaluate the qualifications and experience of the employees through interviews and professional

references to recruit the right persons from a wide range of sources.

We aim to create an inclusive workplace, further promote a diverse workforce, and bring in new cultures and energy.

In order to retain the best available

candidates, we evaluate the qualifications and experience of the employees through interviews and professional references to recruit

the right persons from a wide range of sources.

We aim to create an inclusive workplace, further promote a diverse workforce, and bring

in new cultures and energy.

required by PRC regulations, we participate in various government statutory employee benefit plans, including social insurance funds,

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What changed 10-K

Item 1. Business