What changed in this filing

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Item 1A. Risk Factors

2021-03-23 compared with 2020-03-23 · 365 added, 176 removed, 556 unchanged (49% of the section changed)

Risks Relating to our Business

In order to comply with PRC regulatory

requirements, we operate our businesses through companies with which we have contractual relationships but in which we do not have

controlling ownership.

Our business, financial condition

and results of operations may be materially adversely affected by global health epidemics, including the COVID-19 outbreak.

of epidemic, pandemic, or contagious diseases such as COVID-19, could have an adverse effect on our business, financial condition,

and results of operations.

The spread of COVID-19 has resulted in the World Health Organization declaring the outbreak of

COVID-19 as a global pandemic.

Substantially all of our revenues and workforce are concentrated in China.

In response to the

intensifying efforts to contain the spread of COVID-19, the Chinese government took a number of actions, which included extending

the Chinese New Year holiday, quarantining individuals suspected of having COVID-19, asking residents in China to stay at home

and to avoid public gathering, among other things.

During the early part of 2020, COVID-19 caused temporary closure of our

CMP production, and as a result, our revenue of CMP decreased by 49.89%.in the first quarter of 2020.

It is, however, still unclear

how the pandemic will evolve going forward, and we cannot assure you whether the COVID-19 pandemic will again bring about

significant negative impact on our business operations, financial condition and operating results, including but not limited to

negative impact to our total revenues.

While we have

resumed business operations, there remain significant uncertainties surrounding the COVID-19 outbreak and its further development

as a global pandemic.

Hence, the extent of the business disruption and the related impact on our financial results and outlook

for 2021 cannot be reasonably estimated at this time.

The extent to which the COVID-19 impacts our results will depend on future

developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity

of the coronavirus and the actions taken globally to contain the coronavirus or treat its impact, among others.

Existing insurance

coverage may not provide protection for all costs that may arise from all such possible events.

We are still assessing our business

operations and the total impact COVID-19 may have on our results and financial condition, but there can be no assurance that this

analysis will enable us to avoid part or all of any impact from the spread of COVID-19 or its consequences, including downturns

in business sentiment generally.

In order to comply with PRC

regulatory requirements, we operate our businesses through companies with which we have contractual relationships but in which

we do not have controlling ownership.

We do not have direct

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could be materially adversely affected.

The shareholders of Dongfang Paper

may have potential conflicts of interests with us, which may adversely affect our business.

The shareholders of Dongfang Paper may have potential

conflicts of interests with us, which may adversely affect our business.

We operate most of

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a standardized opinion imposing the approval and appraisal requirement.

If we are not able to purchase the equity of Dongfang

Paper, then we will lose a substantial portion of our ability to control Dongfang Paper and our ability to ensure that Dongfang

Paper will act in our interests.

Our operating history may not serve

as an adequate basis to judge our future prospects and results of operations.

If we are not able to purchase the equity of Dongfang Paper,

then we will lose a substantial portion of our ability to control Dongfang Paper and our ability to ensure that Dongfang Paper

will act in our interests.

Our operating history may not serve as an adequate basis

to judge our future prospects and results of operations.

Dongfang Paper commenced

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our competitors, technological developments and other significant competitive and market dynamics.

If we are not successful

in addressing any or all of these risks, our business may be materially and adversely affected.

Dongfang Paper and Baoding Shengde’s

failure to compete effectively may adversely affect our ability to generate revenue.

If we are not successful in addressing any or all of

these risks, our business may be materially and adversely affected.

Dongfang Paper and Baoding Shengde’s failure to

compete effectively may adversely affect our ability to generate revenue.

Through Dongfang Paper

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our business.

If Dongfang Paper fails to comply

with covenants in its loan agreements, its lenders may allege a breach of a covenant and seek to accelerate the loan or exercise

other remedies, which could strain our cash flow and harm our business, liquidity and financial condition.

Dongfang Paper received

loans from commercial banks to fund its operations.

Typically, these loans are made pursuant to customary loan agreements which

contain representations and warranties about its business, financial covenants to which Dongfang Paper must adhere and other negative

covenants in respect of its operations.

Under some of these agreements, Dongfang Paper may be required to obtain the consent of

its lenders prior to entering into its contractual arrangement with us but Dongfang Paper did not receive such prior consent.

date, our lenders have not given us any notice of default or otherwise objected to our contractual arrangements with Dongfang Paper.

If any lender raises any concern in this regard, we intend to secure a waiver from our lenders, but cannot assure you that we will

successfully do so.

If we cannot obtain such a wavier and Dongfang Paper’s lenders declare it to be in default under the

loan agreements, they may accelerate Dongfang Paper’s indebtedness to them which would negatively affect our cash flows and

business operations.

We may not be able to effectively control and manage our

We may not be able to effectively control

and manage our growth.

If our business and

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and financial condition.

We are responsible for the indemnification

of our officers and directors.

We are responsible for the indemnification of our officers

and directors.

Our Articles of Incorporation

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Wang, Lusha Niu, and Fuzeng Liu, our directors, are key personnel with rights to indemnification under our Articles of Incorporation.

We are dependent on certain key personnel

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

We are dependent on certain

key personnel and loss of these key personnel could have a material adverse effect on our business, financial condition and results

of operations.

Our success is, to

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This failure could materially and adversely affect our future growth and financial condition.

Our operating results may fluctuate

as a result of factors beyond our control.

Our operating results may fluctuate as a result of factors

beyond our control.

Our operating results

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● other general economic and seasonal factors.

We face risks related to product

liability claims.

We face risks related to product liability claims.

We presently do not

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effect on our business, financial condition and prospects.

Our operating results also depend

on the availability and pricing of energy and raw materials.

Our operating results also depend on the availability

and pricing of energy and raw materials.

In addition to our

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● other operational problems.

If any of the abovementioned

events were to occur, we may be unable to meet customer demand, which may adversely affect our sales and net income.

the abovementioned events were to occur, we may be unable to meet customer demand, which may adversely affect our sales and

Our certificates, permits, and licenses

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all or part of our operations to be terminated.

In 1988, the National

Environmental Protection Bureau issued Interim Measures on the Administration of Water Pollutants Discharge Permits, requiring

all companies discharging pollution into the water as a direct or indirect byproduct of production to adhere to certain caps on

pollution discharge.

Additionally, such companies were required to obtain and annually renew a Pollution Discharge Permit in order

to conduct their operations.

The PRC government has the authority to shut down a company’s operations for its failure to

maintain a valid permit.

the National Environmental Protection Bureau issued Interim Measures on the Administration of Water Pollutants Discharge

Permits, requiring all companies discharging pollution into the water as a direct or indirect byproduct of production to

adhere to certain caps on pollution discharge.

Additionally, such companies were required to obtain and annually renew a

Pollution Discharge Permit in order to conduct their operations.

The PRC government has the authority to shut down a

company’s operations for its failure to maintain a valid permit.

We renewed our Pollution Discharge Permit in June

Our latest permit is effective from June 28, 2017

through June 27, 2020.

An application to renew will be filed by us with the local environment protection agency before the expiration.

The failure by us

to obtain any certificate, permit, and license necessary for our operations or the failure by us to obtain the renewal of any such

certificate, permit or license may materially and adversely affect our business, prospects, financial condition and results of

Our latest permit is effective from June 28, 2020 through June 27, 2025.

Pollution discharge Permit for Hebei Tengsheng

was effective from January 7, 2019 through January 6, 2022.

An application to renew will be filed by us with the local

environment protection agency before the expiration.

by us to obtain any certificate, permit, and license necessary for our operations or the failure by us to obtain the renewal of

any such certificate, permit or license may materially and adversely affect our business, prospects, financial condition and results

of operation.

Compliance with environmental regulations

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with their requirements.

If we are unable to respond to pricing

pressures, our business may be harmed.

If we are unable to respond to pricing pressures, our

business may be harmed.

In order to remain

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to our existing products or to develop new products, our business and results of operations could be adversely affected.

We believe that our

future success depends in part on our ability to enhance our existing products and develop new products in order to continue to

meet customer demand.

that our future success depends in part on our ability to enhance our existing products and develop new products in order to continue

to meet customer demand.

Our failure to introduce new or enhanced products on a timely and cost-competitive basis, or the development

of processes that make our existing products obsolete, could harm our business and results of operations.

Our auditor, like other independent

registered public accounting firms operating in China, is not permitted to be subject to inspection by the Public Company Accounting

Oversight Board, and as such, investors may be deprived of the benefits of such inspection.

The independent registered

public accounting firm that issues the audit reports included in our annual reports filed with the SEC, as an auditor of companies

that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board (United

States), or PCAOB, is required by the laws of the United States to undergo regular inspections by PCAOB to assess its compliance

with the laws of the United States and professional standards.

On May 24, 2013, the PCAOB announced that it had signed a Memorandum

of Understanding (“MOU”) with Chinese securities regulators that would enable the PCAOB under certain circumstances

to obtain audit work papers of China-based audit firms.

The MOU establishes a framework under which the PCAOB can request and obtain

audit papers and permits the PCAOB to share the work papers it obtains with the SEC, subject to certain requirements.

which is non-binding, is also limited by its own terms.

For instance, Chinese regulators may refuse to produce documents in specified

circumstances, including where production would violate Chinese law or run contrary to the public interest.

Moreover, the MOU does

not provide the PCAOB with the ability to conduct on-the-ground inspections of auditors in China, an important part of the Board’s

oversight function.

As a result, our auditor, like other independent registered public accounting firms operating in China, is

currently not inspected by PCAOB in the same way that PCAOB requests independent registered public accounting firms operating outside

Inspections of other firms that PCAOB has conducted outside of China have identified deficiencies in those firms’

audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit

The inability of PCAOB to conduct regular inspections of independent registered public accounting firms operating in China

makes it more difficult to evaluate the effectiveness of our auditor’s audit procedures or quality control procedures.

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

We have limited insurance coverage

and may incur losses resulting from product liability claims or business interruptions.

We have limited insurance coverage and may incur losses

resulting from product liability claims or business interruptions.

As the insurance industry

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of operations.

Risks Related To Doing Business in the

Changes in the policies of the PRC

government could have a significant impact upon the business we may be able to conduct in the PRC and the profitability of such

Our failure to protect our

intellectual property rights may undermine our competitive position, and external infringements of our intellectual property rights

may adversely affect our business.

and ability to compete depends in part on our intellectual property.

We primarily rely on a combination of trademark, trade secret,

and copyright laws, as well as confidentiality procedures and contractual restrictions with our employees, contractors and others

to establish and protect our intellectual property rights.

However, confidentiality and license arrangements may be breached by

counterparties, and there may not be adequate remedies available to us for any such breach.

Accordingly, we may not be able to

effectively protect our intellectual property rights or to enforce our contractual rights.

In addition, our trade secrets may

be leaked or otherwise become available to, or be independently discovered by, our competitors.

The steps we take to protect our

intellectual property rights may be inadequate or we may be unable to secure intellectual property protection for some of our

Infringement of intellectual property rights continues to pose a serious risk of doing business.

the future file, patent applications on certain of our innovations.

It is possible, however, that these innovations may not be

In addition, given the cost, effort and risks associated with patent application, we may choose not to seek patent

protection for some innovations.

Furthermore, our patent applications may not lead to granted patents, the scope of the protection

gained may be insufficient or an issued patent may be deemed invalid or unenforceable.

We also cannot guarantee that any of our

present or future patents or other intellectual property rights will not lapse or be invalidated, circumvented, challenged, or

unable to protect our intellectual property, our competitors could use our intellectual property to market offerings similar to

ours and our ability to compete effectively would be impaired.

Moreover, others may independently develop technologies that are

competitive to ours or infringe on our intellectual property.

The enforcement of our intellectual property rights depends on our

legal actions against these infringers being successful, but we cannot be sure these actions will be successful, even when our

rights have been infringed.

In addition, defending our intellectual property rights might entail significant expense and diversion

of management resources.

Any of our intellectual property rights may be challenged by others or invalidated through administrative

processes or litigations.

We can provide no assurance that we will prevail in such litigations, and, even if we do prevail, we

may not obtain a meaningful relief.

Accordingly, despite our efforts, we may be unable to prevent external parties from infringing

or misappropriating our intellectual property.

Any intellectual property that we own may not provide us with competitive advantages

or may be successfully challenged by external parties.

We may be subject to intellectual

property infringement claims or other allegations, which may materially and adversely affect our business, financial condition

and prospects.

be certain that we do not or will not infringe patents, copyrights, trademarks or other intellectual property rights held by external

From time to time, we may be subject to legal proceedings and claims alleging infringement of patents, trademarks, copyrights

or other intellectual property rights, or misappropriation of creative ideas or formats, or other infringement of proprietary,

which may materially and adversely affect our business, financial condition and prospects.

Risks Related To Doing Business in the PRC

Changes in the policies of

the PRC government could have a significant impact upon the business we may be able to conduct in the PRC and the profitability

of such business.

Our business operations

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● levying fines;

● revoking Dongfang Paper’s business and other licenses;

● revoking Dongfang Paper’s business and other

● requiring that we restructure our ownership or operations;

● requiring that we discontinue any portion or all of our business.

Among the material

laws that we are subject to are the Price Law of The People’s Republic of China, Measurement Law of The People’s Republic

of China, Tax Law, Environmental Protection Law, Contract Law, Patent Law, Accounting Laws and Labor Law.

A slowdown, inflation or other adverse

developments in the PRC economy may harm our customers and the demand for our services and products.

● requiring that we discontinue any portion or all of

our business.

Among the material laws that we are subject to are the Price

Law of The People’s Republic of China, Measurement Law of The People’s Republic of China, Tax Law, Environmental Protection

Law, Contract Law, Patent Law, Accounting Laws and Labor Law.

A slowdown, inflation or other adverse developments in the PRC

economy may harm our customers and the demand for our services and products.

All of our operations

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adverse economic developments in the PRC could significantly reduce the demand for our products and harm our business.

the slowdown of China’s GDP growth rate, sales revenue for our CMP and offset printing paper in 2019 increased by approximately

11.31% and 297.83%, respectively, as compared to 2018.

Additionally, while

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Such an austere policy can lead to a slowing of economic growth.

Governmental control of currency

conversion may affect the value of your investment.

Governmental control of currency conversion may affect

the value of your investment.

The PRC government

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of our expenses as they come due.

The fluctuation of the Renminbi may

harm your investment.

The value of the Renminbi

against the U.S.

dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political

and economic conditions.

According to the Bureau of the Fiscal Service, as of December 31, 2019, $1 is converted into 6.9762 Yuan

As we rely entirely on revenues earned in the PRC, any significant revaluation of the Renminbi may materially and adversely

affect our cash flows, revenues and financial condition.

For example, to the extent that we need to convert U.S.

dollars we receive

from an offering of our securities into Renminbi for Dongfang Paper’s operations, appreciation of the Renminbi against the

dollar would diminish the value of the proceeds of the offering and this could harm our business, financial condition and

results of operations because it would reduce the proceeds available to us for capital investment in proportion to the appreciation

of the Renminbi.

The fluctuation of the Renminbi may harm your investment.

of the Renminbi against the U.S.

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

the PRC’s political and economic conditions.

According to the Bureau of the Fiscal Service, as of December 31, 2020, $1

is converted into 6.5249 Yuan (RMB).

As we rely entirely on revenues earned in the PRC, any significant revaluation of the

Renminbi may materially and adversely affect our cash flows, revenues and financial condition.

For example, to the extent

that we need to convert U.S.

dollars we receive from an offering of our securities into Renminbi for Dongfang Paper’s

operations, appreciation of the Renminbi against the U.S.

dollar would diminish the value of the proceeds of the offering and

this could harm our business, financial condition and results of operations because it would reduce the proceeds available to

us for capital investment in proportion to the appreciation of the Renminbi.

Thus, if we raise 1,000,000 U.S.

dollars and the Renminbi appreciates against the U.S.

dollar by 15%, then the

proceeds will be worth only RMB5,929,770 as opposed to RMB 6,976,200 prior to the appreciation.

Conversely, if we decide to convert

our Renminbi into U.S.

dollars for the purpose of making payments for dividends on our common shares or for other business purposes

dollar appreciates against the Renminbi, the U.S.

dollar equivalent of the Renminbi we convert would be reduced in

proportion to the amount the U.S.

dollar appreciates.

In addition, the depreciation of significant RMB denominated assets could

result in a charge to our income statement and a reduction in the dollar value of these assets.

Thus, if Dongfang Paper has RMB1,000,000

in assets and Renminbi is depreciated against the U.S.

dollars and the

Renminbi appreciates against the U.S.

dollar by 15%, then the proceeds will be worth only RMB5,673,826 as opposed to RMB

6,524,900 prior to the appreciation.

Conversely, if we decide to convert our Renminbi into U.S.

dollars for the purpose of

making payments for dividends on our common shares or for other business purposes and the U.S.

dollar appreciates against the

Renminbi, the U.S.

dollar equivalent of the Renminbi we convert would be reduced in proportion to the amount the U.S.

In addition, the depreciation of significant RMB denominated assets could result in a charge to our income

statement and a reduction in the dollar value of these assets.

Thus, if Dongfang Paper has RMB1,000,000 in assets and

Renminbi is depreciated against the U.S.

dollar by 15%, then the assets will be valued at $133,269 as opposed to $153,259

prior to the depreciation.

On July 21, 2005,

the PRC government changed its decade-old policy of pegging the value of the Renminbi to the U.S.

Under the new policy,

the Renminbi is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies.

in policy has resulted in an approximately 1.65% depreciation of the Renminbi against the U.S.

dollar as of December 31, 2019.

While the international reaction to the Renminbi revaluation has generally been positive, there remains significant international

pressure on the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant

depreciation of the Renminbi against the U.S.

Failure to comply with PRC regulations

relating to the establishment of offshore special purpose companies by PRC residents may materially adversely affect us.

July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the Renminbi to the U.S.

Under the new policy, the Renminbi is permitted to fluctuate within a narrow and managed band against a basket of certain foreign

This change in policy resulted in an approximately 1.65% depreciation of the Renminbi against the U.S.

December 31, 2019.

While the international reaction to the Renminbi revaluation has generally been positive, there remains

significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in

a further and more significant depreciation of the Renminbi against the U.S.

Failure to comply with PRC

regulations relating to the establishment of offshore special purpose companies by PRC residents may materially adversely affect

The PRC State Administration

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dividends or affect our ownership structure, which could adversely affect our business and prospects.

The PRC’s legal and judicial

system may not adequately protect our business and operations and the rights of foreign investors.

The PRC’s legal and judicial system may not adequately

protect our business and operations and the rights of foreign investors.

The PRC legal and

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of foreign invested enterprises.

Because our principal assets are

located outside of the United States and most of our directors and officers reside outside of the United States, it may be difficult

for you to enforce your rights based on U.S.

federal securities laws against us and our officers or to enforce U.S.

court judgment

against us or them in the PRC.

Because our principal assets

are located outside of the United States and most of our directors and officers reside outside of the United States, it may be

difficult for you to effect service of legal process, enforce your rights based on U.S.

federal securities laws against us and

our officers or to enforce U.S.

court judgment against us or them in the PRC.

All of our directors

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Federal securities laws or otherwise.

We may be required to broaden the

coverage of the mandatory social security insurance programs under the Labor Law of the PRC.

may be difficult for overseas regulators to conduct investigation or collect evidence within China.

claims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law

or practicality in China.

For example, in China, there are significant legal and other obstacles to providing information needed

for regulatory investigations or litigations initiated outside China.

Although the authorities in China may establish a regulatory

cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision

and administration, such cooperation with the securities regulatory authorities in the Unities States may not be efficient in the

absence of mutual and practical cooperation mechanism.

Furthermore, according to Article 177 of the PRC Securities Law, or Article

177, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or

evidence collection activities within the territory of the PRC.

While detailed interpretation of or implementation rules under

Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or

evidence collection activities within China may further increase difficulties faced by you in protecting your interests.

We may be required to broaden the coverage of the mandatory

social security insurance programs under the Labor Law of the PRC.

The PRC Labor Law,

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to those who have specifically waived their rights.

The current tensions in

international trade and rising political tensions, particularly between U.S.

and China, may adversely impact our business, financial

condition, and results of operations.

Although cross-border business

may not be an area of our focus, if we plan to expand our business internationally in the future, any unfavorable government policies

on international trade, such as capital controls or tariffs, may affect the demand for our products and services, impact our competitive

position, or prevent us from being able to conduct business in certain countries.

If any new tariffs, legislation, or regulations

are implemented, or if existing trade agreements are renegotiated, such changes could adversely affect our business, financial

condition, and results of operations.

Recently, there have been heightened tensions in international economic relations, such

as the one between the United States and China.

government has recently imposed, and has recently proposed to impose

additional, new, or higher tariffs on certain products imported from China to penalize China for what it characterizes as unfair

trade practices.

China has responded by imposing, and proposing to impose additional, new, or higher tariffs on certain products

imported from the United States.

Following mutual retaliatory actions for months, on January 15, 2020, the United States

and China entered into the Economic and Trade Agreement Between the United States of America and the People’s Republic

of China as a phase one trade deal, effective on February 14, 2020.

political tensions between the United States and China have escalated due to, among other things, trade disputes, the COVID-19 outbreak,

sanctions imposed by the U.S.

Department of Treasury on certain officials of the Hong Kong Special Administrative Region

and the PRC central government and the executive orders issued by U.S.

President Donald J.

Trump in August 2020 that prohibit

certain transactions with certain Chinese companies and their applications.

Rising political tensions could reduce levels of trades,

investments, technological exchanges and other economic activities between the two major economies, which would have a material

adverse effect on global economic conditions and the stability of global financial markets.

Any of these factors could have a

material adverse effect on our business, prospects, financial condition and results of operations.

direct impact of the current international trade tensions and political tensions between the United States and China, and

any escalation of such tensions, on the paper making industry in China is uncertain, the negative impact on general, economic,

political and social conditions may adversely impact our business, financial condition and results of operations.

Risks Related to Our Corporate

Our current corporate structure

and business operations may be affected by the newly enacted Foreign Investment Law.

2019, the National People’s Congress, China’s national legislative body (the “NPC”) approved the Foreign

Investment Law, which became effective on January 1, 2020.

Since it is relatively new, uncertainties exist in relation to

its interpretation and its implementation rules that are yet to be issued.

The Foreign Investment Law does not explicitly classify

whether variable interest entities that are controlled through contractual arrangements would be deemed as foreign-invested enterprises

if they are ultimately “controlled”

by foreign investors.

However, it has a catch-all provision under the definition

of “foreign investment”

that includes investments made by foreign investors in China through other means as provided

by laws, administrative regulations or the State Council.

Therefore, it still leaves leeway for future laws, administrative regulations

or provisions of the State Council to provide for contractual arrangements as a form of foreign investment.

There can be no assurance

that our control over our consolidated VIEs through contractual arrangements will not be deemed as a foreign investment in the

Investment Law grants national treatment to foreign-invested entities, except for those foreign-invested entities that

operate in industries specified as either “restricted”

or “prohibited”

from foreign investment in the

Special Administrative Measures for Market Access of Foreign Investment (Negative List), which was approved by the CPC Central

Committee and the State Council and issued by the State Development and Reform Commission and the Ministry of Commerce with an

effective date of July 30, 2019.

The Foreign Investment Law provides that foreign-invested entities operating in “restricted”

or “prohibited”

industries will require market entry clearance and other approvals from relevant PRC government authorities.

If our control over our consolidated VIEs through contractual arrangements are deemed as foreign investment in the future, and

any business of our consolidated VIEs is considered “restricted”

or “prohibited”

from foreign investment

under the “negative list”

effective at the time, we may be deemed to be in violation of the Foreign Investment Law,

the contractual arrangements that allow us to have control over our consolidated VIEs may be deemed as invalid and illegal, and

we may be required to unwind such contractual arrangements and/or restructure our business operations, any of which may have a

material adverse effect on our business operation.

if future laws, administrative regulations or provisions mandate further actions to be taken by companies with respect to existing

contractual arrangements, we may face substantial uncertainties as to whether we can complete such actions in a timely manner,

Failure to take timely and appropriate measures to cope with any of these or similar regulatory compliance challenges

could materially and adversely affect our current corporate structure and business operations.

Any failure by our consolidated

VIEs or their shareholders to perform their obligations under our contractual arrangements with them would have a material adverse

effect on our business.

our wholly foreign-owned enterprise in the PRC, have entered into a series of contractual arrangements with our consolidated

VIEs and their shareholders.

For a description of these contractual arrangements, see “Overview and Corporation History.”

If our consolidated VIEs or their shareholders fail to perform their respective obligations under these contractual arrangements,

we may incur substantial costs and expend additional resources to enforce such arrangements.

We may also have to rely on legal

remedies under PRC laws, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure

you will be effective under PRC laws.

For example, if the shareholders of our consolidated VIEs were to refuse to transfer their

equity interests in the consolidated VIEs to us or our designee when we exercise the purchase option pursuant to these contractual

arrangements, or if they were otherwise to act in bad faith toward us, then we may have to take legal actions to compel them to

perform their contractual obligations.

In addition, if there are any disputes or governmental proceedings involving any interest

in such shareholders’

equity interests in our VIEs, our ability to exercise shareholders’

rights or foreclose the

equity interest pledges according to the contractual arrangements may be impaired.

If these disputes or proceedings were to impair

our control over our VIEs, we may not be able to maintain effective control over our business operations in the PRC and thus would

not be able to continue to consolidate our VIEs’

financial results, which would in turn result in a material adverse effect

on our business, operations and financial condition.

We may lose the ability

to use and enjoy assets held by our consolidated VIEs that are material to the operation of our business if the entity goes bankrupt

or becomes subject to a dissolution or liquidation proceeding.

Our consolidated

VIEs hold substantially all of our assets.

Under the contractual arrangements, our consolidated VIEs may not and their shareholders

may not cause it to, in any manner, sell, transfer, mortgage or dispose of their assets or their legal or beneficial interests

in the business without our prior consent.

However, in the event that the shareholders of our consolidated VIEs breach these contractual

arrangements and voluntarily liquidate our consolidated VIEs, or our consolidated VIEs declare bankruptcy and all or part of their

assets become subject to liens or rights of third-party creditors, or are otherwise disposed of without our consent, we may

be unable to continue some or all of our business activities, which could materially and adversely affect our business, financial

condition and results of operations.

If our consolidated VIEs undergo a voluntary or involuntary liquidation proceeding, independent

third-party creditors may claim rights to some or all of their assets, thereby hindering our ability to operate our business,

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

Risks Related to Our Common Stock

Our officers and directors control

us through their positions and stock ownership and their interests may differ from other stockholders.

As of December 31,

If we fail to comply with

Section 404 of the Sarbanes-Oxley Act of 2002 in a timely manner, our business could be harmed and our stock price could

Rules adopted

by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 require annual assessment of U.S.

public companies’

internal control over financial reporting.

The standards that must be met for management to assess the internal control over financial

reporting as effective are complex, and require significant documentation, testing and possible remediation to meet the detailed

While we have not detected any significant deficiency or material weakness in our internal control and with respect

to the assessment of the internal control for the year ended December 31, 2020, we cannot guarantee the implementation of

controls and procedures in future years to be without any significant deficiency or material weakness.

If we become directly subject

to the scrutiny involving U.S.

listed Chinese companies, we may have to expend significant resources to investigate and/or defend

the matter, which could harm our business operations, stock price and reputation.

companies that have substantially all of their operations in China have been the subject of intense scrutiny by investors, financial

commentators and regulatory agencies.

Much of the scrutiny has centered around financial and accounting irregularities and mistakes,

a lack of effective internal controls over financial reporting and, in many cases, allegations of fraud.

As a result of the scrutiny,

the publicly traded stock of many U.S.

listed China-based companies that have been the subject of such scrutiny has sharply

decreased in value.

Many of these companies are now subject to shareholder lawsuits and/or SEC enforcement actions that are conducting

internal and/or external investigations into the allegations.

If we become the subject of any such scrutiny, whether any allegations

are true or not, we may have to expend significant resources to investigate such allegations and/or defend our company.

Such investigations

or allegations will be costly and time-consuming and distract our management from our business plan and could result in our

reputation being harmed and our stock price could decline as a result of such allegations, regardless of the truthfulness of the

Our officers and directors control us through their positions

and stock ownership and their interests may differ from other stockholders.

As of March 1, 2021,

there were 96,968,400 shares of our common stock issued and outstanding.

1 unchanged sentence

owns approximately 4.7% of our common stock.

As a result, he is able to influence the outcome of stockholder votes on various

matters, including the election of directors and extraordinary corporate transactions including business combinations.

Liu’s interests may differ from those of other stockholders.

As a result, he is able to influence the outcome of stockholder votes on various matters,

including the election of directors and extraordinary corporate transactions including business combinations.

interests may differ from those of other stockholders.

Furthermore, ownership of 4.7% of our common stock by Mr.

Liu reduces the public float and liquidity, and may affect the market price, of our common stock as traded on the NYSE MKT.

Liu reduces the

public float and liquidity, and may affect the market price, of our common stock as traded on the NYSE MKT.

We may not continue to pay cash dividends and any return

11 unchanged sentences

dollars or other hard currency and other regulatory restrictions.

If we fail to comply with Section

404 of the Sarbanes-Oxley Act of 2002 in a timely manner, our business could be harmed and our stock price could decline.

Rules adopted by the

SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 require annual assessment of U.S.

public companies’

control over financial reporting.

The standards that must be met for management to assess the internal control over financial reporting

as effective are complex, and require significant documentation, testing and possible remediation to meet the detailed standards.

While we have not detected any significant deficiency or material weakness in our internal control and with respect to the assessment

of the internal control for the year ended December 31, 2019, we cannot guarantee the implementation of controls and procedures

in future years to be without any significant deficiency or material weakness.

Our common stock may be affected

by limited trading volume and may fluctuate significantly.

Our common stock may be affected by limited trading volume

and may fluctuate significantly.

Our common stock is

7 unchanged sentences

experience in the future, significant price and volume fluctuations, which could adversely affect the market price of our common

Future financings may dilute stockholders

or impair our financial condition.

Future financings may dilute stockholders or impair our

financial condition.

In the future, we

7 unchanged sentences

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

What changed 10-K

Item 1A. Risk Factors