UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.DC 20549

FORM 10-K

CANG BAO TIAN XIA INTERNATIONAL ART TRADE CENTER, INC.

Some discussions in this Annual Report on Form 10-K contain forward-looking statements withinthat have been made pursuant to the meaning of Section 21Eprovisions of the Private Securities ExchangeLitigation Reform Act of 1934, and Section 27A of the Securities Act of 1933. Any statements contained in this report that are not statements of historical fact may be forward-looking statements. When we use the words “anticipates,” “plans,” “expects,” “believes,” “should,” “could,” “may,” “will” and similar expressions, we are identifying forward-looking statements. Forward-looking1995. These statements involve risks and uncertainties and relate to future events or future financial performance. A number of important factors could cause our actual results to differ materially from those expressed in any forward-looking statements made by us in this Form 10-K. Forward-looking statements are often identified by words such as “believe,” “expect,” “estimate,” “anticipate,” “intend,” “project,” “plans,” “seek” and similar expressions or words which, by their nature, refer to future events. In some cases, you can also identify forward-looking statements by terminology such as “may,” “will,” “should,” “plans,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology.

These forward-looking statements are only predictions and involve known and unknown risks, uncertainties and other factors, which may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from thoseany future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. TheseIn addition, you are directed to factors include our current dependence on a limited number of sources of products and customers, continuing demand for our products, pricing pressures on our products caused by demand and competition, delivery deadlines, customer satisfaction, our ability to generate sales and expand our customer base, warranty obligations and claims, integrating any enterprises acquired, operating a portion of our businessdiscussed in the People’s Republic“Management’s Discussion and Analysis of China, currency controlsFinancial Condition and exchange rate exposure andResults of Operations” section as well as those discussed elsewhere in this Form 10-K.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future need for capital to expand our business.

As used in this Form 10-K, “we,” “us,” and “our” refer to Cang Bao Tian Xia International Art Trade Center, Inc., which is also sometimes referred to as the “Company.”

YOU SHOULD NOT PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS

The forward-looking statements made in this report on Form 10-K relate only to events or information as of the date on which the statements are made in this report on Form 10-K. Except as required by law, we undertake or intendno obligation to update or revise our forward-looking statements, and we assume no obligation to updatepublicly any forward-looking statements, contained in this reportwhether as a result of new information, or future events, or developments. Thus, you should not assume that our silence over time means that actual eventsotherwise, after the date on which the statements are bearing out as expressedmade or implied in such forward-looking statements.to reflect the occurrence of unanticipated events. You should carefully reviewread this report and consider the various disclosuresdocuments that we makereference in this report, including documents referenced by incorporation, completely and with the understanding that our other reportsactual future results may be materially different from what we expect or hope.

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PART I

ITEM 1. BUSINESS.

On July 27, 2020 (the “Closing Date”), we entered into a Share Exchange Agreement (the “Exchange Agreement”) by and among (i) the Company, (ii) Zhi Yuan Limited, a Cayman Islands company (“Cayman Company”), and (iii) the three beneficial shareholders of Cayman Company (each, a “Cayman Company Shareholder” and collectively, the “Cayman Company Shareholders”).

Pursuant to the terms of the Exchange Agreement, the Cayman Company Shareholders agreed to sell to Cang Bao, and Cang Bao agreed to purchase, all shares of Cayman Company held by them, which shares represent 100% of the issued and outstanding shares of Cayman Company. In exchange, Cang Bao agreed to issue to the Cayman Company Shareholders an aggregate of 75,000,000 shares of Cang Bao common stock, representing approximately 67.98% of Cang Bao’s total issued and outstanding common stock (the “Share Exchange”).

Our directors approved the Exchange Agreement and the transactions contemplated thereby. Simultaneously, the directors of Cayman Company also approved the Exchange Agreement and the transactions contemplated thereby. The Share Exchange closed on July 27, 2020. Both Yaqin Fu, who is the wife of one of our directors, and Mr. Xingtao Zhou, our President, Chief Executive Officer, Chief Financial Officer, Chairman of the Board and principal shareholder, were Cayman Company Shareholders who exchanged their Cayman Company shares for shares of the Company. After giving effect to the Share Exchange, Mr. Zhou owns 59,839,271 shares of our common stock, which represents 54.24% of our outstanding common stock, and 100% of our issued and outstanding preferred shares.

As a result of the Share Exchange, Cayman Company became our wholly owned subsidiary and we are its public holding company. After giving effect to the Share Exchange, the Company acquired 100% of the assets and operations of Cayman Company and its subsidiaries, the business and operations of which now constitutes our primary business and operations. After giving effect to the Share Exchange, we own 100% of the issued and outstanding shares of capital stock of Cayman Company. Cayman Company is a holding company that owns Cangyun (Hong Kong) Limited (“Hong Kong Company”), which in turn owns and controls Shanghai Cangyun Management Consulting Co., Ltd. (“Management Consulting”), which has entered into contractual agreements to control Hainan Cangbao Tianxia Cultural Relic Co., Ltd. (“Hainan”) and Cangbao Tianxia (Shanghai) Cultural Relic Co., Ltd. (“Tianxia Cultural Relic,” and together with Hainan, the “Target Companies” or “VIEs”).

The Exchange Agreement contains customary representations, warranties, covenants and conditions for a transaction of this type for the benefit of the parties.

For federal income tax purposes, it is intended that the Share Exchange qualify as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). However, we did not obtain any tax opinion and there can be no assurance that our intent that the Share Exchange qualify as a reorganization under the provisions of Section 368(a) of the Code is correct.  Cayman Company is considered the acquirer for accounting and financial reporting purposes. The assets and liabilities of Cayman Company have been brought forward at their book value and no goodwill has been recognized. As a result of the acquisition of all the issued and outstanding shares of Cayman Company, we have now assumed Cayman Company’s business operations as our own.

The description of the Exchange Agreement and the transactions contemplated by the Exchange Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Exchange Agreement filed as Exhibit 2.1 to our Form 8-K filed with the SEC that attemptSecurities and Exchange Commission on July 27, 2020, and incorporated herein by reference.

Immediately prior to advise interested partiesthe closing of the risks, uncertainties and other factorsShare Exchange described above pursuant to which Cayman Company became a wholly owned subsidiary of the Company, the Company was a “shell company,” as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Item 2.01(f) of Form 8-K states that may affect our business.

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The Share Exchange was accounted as a business combination under “Part I, Item 1A - Risk Factors.”

Corporate History

Cang Bao

Cang Bao was incorporated in the State of Nevada on March 13, 2002, as Equicap, Inc. (“Equicap”), for the purpose of entering into a merger with and re-domiciling its predecessor, Equicap, Inc., a California corporation ("Equicap California"). Effective January 25, 2005, Equicap California was merged with and into Equicap in a statutory merger based on management's belief that Nevada law is more advantageous to a corporation than California law. Equicap was considered a blank check company until its March 2007 acquisition of Usunco Automotive Limited, a British Virgin Islands company (“Usunco”). Equicap, Inc. changed its name to Zhongchai Machinery, Inc. (“Zhongchai” or the “Company”) on May 21, 2010.

On March 7, 2007, the Company and Usunco Automotive, Ltd. (“Usunco”), a British Virgin Islands company, entered a Share Exchange Agreement on March 7, 2007,into an  agreement (the “Usunco Agreement”) which was consummated on March 9, 2007. Under the Exchangeterms of the Usunco Agreement, Equicapthe Company acquired all of the outstanding equity securities of Usunco in exchange for 18,323,944 shares of the Company’s common stock of Equicap, and thereby Equicap acquiredstock.

Because the Company had been a public shell company prior to the Usunco as a wholly owned subsidiary. Usunco was deemed to have been the acquiring company in the Share Exchange, and for accounting purposes, the Share Exchange transactionAgreement, that share exchange was treated as a reverse acquisition withrecapitalization of the Company. As such, the historical financial information prior to that share exchange was that of Usunco and its subsidiaries. Historical share amounts were restated to reflect the effect of that share exchange.

On June 18, 2006, Usunco acquired 100% of IBC Automotive Products Inc (“IBC”), a California Corporation as of May 14, 2004 (date of inception), through the issuance of 28% of Usunco’s shares. IBC was considered a “predecessor” business to Usunco as its operations constituted the acquirerbusiness activities of Usunco formed to consummate the acquisition of IBC. The consolidated financial statements reflected all predecessor statements of income and Equicap ascash flow activities from the acquired party.

On June 15, 2009, IBC was sold to certain management persons of IBC in exchange for the Share Exchange, Equicap conducted a private placement offeringfollowing: (i) the cancellation of its common stock to accredited and institutional investors in which it raised gross proceeds of $12 million (“Offering”).  After commissions and expenses related to the Offering and the $450,000 advisory fee payable to Fountainhead, Equicap received net proceeds of approximately $10 million in the Offering.  The investors were issued an aggregate of 8,450,704555,994 shares of common stock then representing approximately 30% of the issuedCompany which those individuals owned, and outstanding common stock(ii) the payment of Equicap.$60,000 in installments pursuant to the terms of an unsecured promissory note, the final payment of which was made on November 15, 2010. As part of the transaction, the Company cancelled $428,261 through the closing date, of inter-company debt which funds had been used in the business of IBC prior to the transaction.

On September 22, 2009, Xinchang Xian Lisheng Machinery Co., Ltd. (“Lisheng”) was incorporated by Zhejiang Zhongchai and two individual investors. The price per sharetotal registered capital of common stockLisheng was $1.42. vFinance was the exclusive placement agentRMB 5 million, of which Zhejiang Zhongchai accounted for the Offering.

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On December 16, 2009, Equicap, Inc., its wholly owned subsidiary, Usunco,Zhongchai Machinery and its wholly owned subsidiarysubsidiaries, Usunco and Zhongchai Holding (Hong Kong) Limited, a Hong Kong company (Zhongchai(“Zhongchai Holding”), took action to approve a transfer of the shares of Zhejiang Zhongchai Machinery Co., from Usunco to Zhongchai Holding. The transfer was completed on December 23, 2009. The purpose of the transfer was to take advantage of the tax treaty between the People’s Republic of ChinaPRC and the Special Administrative Region of Hong Kong which reduces the withholding tax rate of the PRC on payments to entities outside of China. Usunco, then discontinuedwhich no longer had any assets after transferring all its business activities

On April 24, 2006. Until December 23, 2009, Usunco26, 2010, Zhongchai Holding (Hong Kong) Limited. (“Zhongchai Holding”), which owned 75% of the equity interest of Zhejiang ZhongChai Machinery Co., Ltd. (“ZhongChai China”), which in turn owns all of Zhejiang Shengte Transmission Co., Ltd., that makes gears and gearboxes (transmissions) in China.  Until June 15, 2009, Usunco also owned 100% of the equity interest of IBC Automotive Products, Inc. (“IBC”), which distributed automotive parts in North America.  Until June 2009 Usunco operated with two business segments of the Company, represented by the China/Gear Segment of ZhongChai China and its subsidiary, which focuses on manufacturing and distribution of gears and gearboxes in China and by the North America/Auto Parts Segment of IBC, which focused on sourcing automotive parts and products from China and distributing them in North America and other regions. Pursuant to the share transfer described above, Unsunco discontinued all of its business activities.

On July 6, 2007, ZhongChai China completed26, 2011, the acquisitionCompany held a Special Meeting of Shareholders. At the Special Meeting, the Company’s shareholders approved the termination the Company’s periodic reporting obligations under the Exchange Act, thereby foregoing many of the expenses associates with operating as a public company subject to SEC reporting obligations. Three days later, the Company terminated its registration with the Securities and Exchange Commission. Following such termination, the Company became dormant.

On July 27, 2011, the Company approved a 1-for-120 reverse stock split of its then outstanding shares of the Company’s Common Stock.

On May 11, 2018, the Eighth Judicial District Court of Nevada appointed Custodian Ventures, LLC as custodian for Zhongchai Machinery, Inc., proper notice having been given to the officers and directors of Zhongchai Machinery, Inc. There was no opposition.

On May 16, 2018, the Company filed a Certificate of Revival with the State of Nevada, appointing David Lazar as President, Secretary, Treasurer and sole Director.  On June 19, 2018, the Company issued 3,096,200 shares of common stock to David Lazar, at par value of $0.001, for services valued at $3,096.20, and issued 10,000,000 shares of Series A Preferred Stock to David Lazar, at par value of $0.001, for services valued at $4,000,000.

On December 28, 2018, a change of control of the Company took place. Mr. Xingtao Zhou acquired all 10,000,000 shares of Series A Preferred Stock previously owned by Mr. Lazar; and Mr. Zhou and Yaqin Fu acquired, respectively, 2,432,351 and 663,849 common shares previously owned by Mr. Lazar, who resigned as an officer and director and appointed Mr. Zhou as a director, CEO and CFO, and appointed Ms. Fu’s husband, Liang Tan, as a director.

On January 8, 2019, by majority consent of its principal shareholders, the Company changed its corporate name in Nevada from Zhongchai Machinery, Inc. to Cang Bao Tian Xia International Art Trade Center, Inc., its current name; and shortly thereafter, the Company’s trading symbol was changed to TXCB.

At the closing of the Share Exchange on July 27, 2020, Cayman Company became our wholly owned subsidiary and we are its public holding company. Prior to the Share Exchange, we were a “shell,” as defined in Rule 12b-2 under the Securities Exchange Act of 1934. We had no active business, and virtually no assets.

After giving effect to the Share Exchange, the Company acquired 100% of the assets and operations of Cayman Company and its subsidiaries, the business and operations of which now constitute our primary business and operations. After giving effect to the Share Exchange, we own 100% of the issued and outstanding equityshares of Zhejiang Shengte Transmission Co., Ltd. (“Shengte”).  Shengtecapital stock of Cayman Company. Cayman Company is a holding company organizedthat owns Hong Kong Company, which in turn owns and controls Management Consulting, which has entered into contractual agreements to control the Target Companies.

Cayman Company

Cayman Company was incorporated under the laws of Cayman Islands on April 15, 2019 to serve as an investment holding company, and Hong Kong was incorporated under the PRC.  laws of Hong Kong by Cayman Company on May 22, 2019.

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Overview of Cayman Company Business

Any references to the “Company,” “we,” “us,” “our” or words of similar import in this “Overview of Cayman Company Business” section refer to Cayman Company.

The Cang Bao Tian Xia International Art Trade Center (the “Center”) is a cultural service platform dedicated to creating industry standards for art investment and creating a model of online art exchanges and transactions, which allows collectors, artists, art dealers and owners to access a much larger art trading market, allowing them to engage with a wide range of collectibles or artwork investors. The online platform enables our customers to buy, sell, store and invest in various artworks, mostly antiques and some modern paintings. The words “Cang Bao Tian Xia” in our corporate name mean “Treasure World” in English.

We currently facilitate trading by individual customers of all kinds of collectibles, artworks and commodities on our online platforms, which are owned by the Center. We commenced our operations in March 2019, and our customer trading volume was growing rapidly until the advent of COVID-19.  We currently have approximately 1000 customers who regularly visit our website. Currently, Shanghai and Hainan are the Center’s operating branches.

According to the report of “E-commerce in China 2018” released by Ministry of Commerce of PRC on May 29, 2019, China’s e-commerce continues to grow in 2018 and has ranked the first in global online retail market. Data of National Bureau of Statistics of China indicates that in 2018, the national e-commerce transaction volume reached RMB 31.63 trillion yuan (approximately $4.62 trillion), an increase of 8.5% year-over-year.

China’s e-commerce transaction volume 2011-2018

Source: National Bureau of Statistics of China

According to the statistics of the Ministry of Commerce of the PRC, in 2017, e-commerce realized sales growth of 26.8% in China. On many mainstream e-commerce platforms, cultural products such as arts and crafts flourished and developed rapidly, and art e-commerce continues to grow gradually. Online trading has become a major trend of the global collectible and art trade. We provide online and offline supporting services for domestic and international art e-commerce platforms.

We provide customers of our online platform with comprehensive services, including account opening, art investment education, market information, research, real-time customer support, and artwork warehousing services. Most services are delivered online through our proprietary client software and call center. Our client software, which has an app version available for both IOS and Android, provides not only market information and analysis, but also interactive functions including live auction house, live discussion boards, live video conference room, blogs to post and share artwork and instant messaging with other art collectors and customer service representatives, which we believe enhances our customers’ engagement.

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Corporate Structure

Our current corporate structure is set forth below:

Our Strategy

We strive to continue building a collectible and artwork trading platform that is highly trusted by individual customers. To achieve this objective, we are implementing the following strategies:

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Variable Interest Entity Arrangements

In establishing our business, we have used a variable interest entity (“VIE”) structure. In the PRC, investment activities by foreign investors are principally governed by the Guidance Catalog of Industries for Foreign Investment, which was promulgated and is amended from time to time by the PRC Ministry of Commerce (“MOC”), and the PRC National Development and Reform Commission (the “NDRC”). In June 2018, the Guidance Catalog of Industries for Foreign Investment was replaced by the Special Administrative Measures (Negative List) for Foreign Investment Access (2018 Version) (the “Negative List”). The Negative List divides industries into two categories: restricted and prohibited. Industries not listed in the Negative List are generally open to foreign investment unless specifically restricted by other PRC regulations. Our Company and Management Consulting are considered as foreign investors or foreign invested enterprises under PRC law.

Although the business we conduct or will conduct through each VIE is not within the category in which foreign investment is currently restricted under the Negative List or other PRC Laws, we expect that in the future, the Target Companies will engage in marketing survey services for online marketplaces. Marketing survey services are within the category in which foreign investment is restricted pursuant to the Negative List. In addition, we intend to centralize our management and operation in the PRC to avoid being restricted in conducting certain business activities which are important for our current or future business but are currently restricted or might be restricted in the future. As such, we believe the agreements between Management Consulting and each VIE are necessary and essential for our business operation. These contractual arrangements with each VIE and its shareholders enable us to exercise effective control over the VIEs and hence consolidate their financial results as our VIE.

In our case, Management Consulting effectively assumed management of the business activities of each our VIEs through a series of agreements which are referred to as the VIE Agreements. The VIE Agreements are comprised of a series of agreements, including the Management Consultation Service Agreement, dated August 8, 2019, by and among Management Consulting, the VIEs and the three Cayman Company Shareholders,  (the “Management Agreement”), the Equity Pledge Agreement, dated August 8, 2019,  by and among Management Consulting, the Target Companies and the three Cayman Company Shareholders (the “Pledge Agreement”), the Call Option Agreement, dated August 8, 2019,  by and among Management Consulting, the Target Companies and the three Cayman Company Shareholders  (the “Option Agreement”) and the Proxy Agreement , dated August 8, 2019,  by and among Management Company, the Target Companies and the three Cayman Company Shareholders, (the “Proxy Agreement”). Through the VIE Agreements, Management Consulting has the right to advise, consult, manage and operate the VIEs for an annual consulting service fee in the amount of 100% of the VIEs’ net profit. The shareholders of the VIEs have pledged all of their right, title and equity interest in the VIEs as security for Management Consulting to collect consulting services fees provided to the VIEs through the Pledge Agreement. In order to further reinforce Management Consulting’s right to control and operate the VIEs, the VIEs’ shareholders have granted Management Consulting an exclusive right and option to acquire all of their equity interests in the VIE through the Pledge Agreement.

Management Consulting has entered into a series of VIE agreements with the Target Companies’ shareholders, upon the same material terms as described above. The material terms of the VIE Agreements with the Target Companies are as follows:

Management Consultation Service Agreement. Pursuant to the Management Consultation Service Agreement between (a) Management Consulting, and (b) Hainan Cangbao Tianxia Cultural Relic Co., Ltd. and Cangbao Tianxia (Shanghai) Cultural Relic Co. (the “Target Companies” or “VIEs”), dated August 8, 2019, Management Consulting has the exclusive right to provide consultation and services to the Target Companies in the areas of funding, human resources, technology and intellectual property rights. For such services, the Target Companies have agreed to pay service fees in the amount of 100% of their net income, and also have the obligation to absorb 100% of their own losses. Management Consulting exclusively owns any intellectual property rights arising from the performance of this Management Consultation Service Agreement. The Management Consultation Service Agreement terminates at the same time as the Equity Pledge Agreement, described in the next paragraph.

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Equity Pledge Agreement. Pursuant to the Equity Pledge Agreement dated August 8, 2019, among Management Consulting, the Target Companies, the Target Companies’ shareholders, who are our CEO Mr. Zhou, Yaqin Fu (the wife of Liang Tan, a director of the Company), and Wei Wang (also, the “Pledgors”), each of three persons pledged all of their equity interests in the Target Companies to Management Consulting to guarantee the Target Companies’ performance of relevant obligations and indebtedness under the Management Consultation Service Agreement and the other control agreements (collectively, the “Control Agreements”). If the Pledgors breach their obligations under the Control Agreements, Management Consulting, as pledgee, will be entitled to certain rights, including the right to dispose of the pledged equity interests in order to recover the damages associated with such breaches. The Pledgors’ obligations shall be continuously valid until all of the Pledgors are no longer shareholders of the Target Companies, or until the satisfaction of all of the Pledgors’ obligations under the Control Agreements.

Call Option Agreement. Pursuant to the Call Option Agreement among Management Consulting, the Target Companies and the Pledgors, dated August 8, 2019, Management Consulting has the exclusive right to require that the Pledgors fulfill and complete all approval and registration procedures required under PRC laws for Management Consulting to purchase, or designate one or more persons to purchase, such shareholders’ equity interests in the Target Companies , in one or multiple transactions, at any time or from time to time, at Management Consulting’s sole and absolute discretion. The purchase price shall be the lowest price allowed by PRC laws. The Equity Option Agreements shall remain effective until all the equity interests in the Target Companies owned by the Pledgors have been legally transferred to Management Consulting or its designee(s).

Proxy Agreement. Pursuant to the Proxy Agreement among Management Consulting, the Pledgors and the Target Companies, dated August 8, 2019, the Pledgors irrevocably appointed Management Consulting or Management Consulting’s designee to exercise all of their rights as a shareholder of the Target Companies, including but not limited to the power to exercise all such shareholder’s voting rights with respect to all matters to be discussed and voted in shareholder meetings of the Target Companies. The Proxy Agreement remains effective until all equity interests in the Target Companies owned by the Pledgors have been legally transferred to Management Consulting or its designee(s).

Business Model

Operation Description

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The operation team defined the unique operation mode of "3+1" of Cangbao Tian Xia as the core orientation of the project. The closed loop of project operation was acquiredachieved through interlocking organic logic, and the revenue generation prospect of the project is being realized through the close combination of financial means and member ports. Since its inception, Cang Bao Tian Xia has developed from a single offline product line to rapidly growing product diversification in multiple regions in mainland China. The Treasure World-created online App is geared to the needs of the market, as a new window to be multiplied by the rapid development of Internet and the Internet of things change, to the developing trend of our brand platform, thus effectively expanding the flow ports and enhancing the capacity of solid flow, i.e., the flow "member", "collection flow" and "capital flow." At the same time, with the help of cooperative insurance guarantee social credibility behind the brand influence, our professional appraisal team identifies trading opportunities, eventually to form an "objects, people, gold" ideal situation of the inner loop.

We believe that the characteristics and style of the Chinese consumer market will directly determine the “treasure” of the Treasure World, and will create the financial services needed to get the full extent of the consumer market acceptance and highest market sense of affinity, loan products and financial services within the Chinese consumer market demand in the global consumer market.

Becoming a member of the Treasure World is a very low threshold for approximately $3,700,000consumer groups in cash. Shengte manufacturesthe market to access the Treasure Circle. We believe that the lowering of entry standards will not have an impact on industry or brand endorsements, and distributes gearsinstead, it will introduce our Company as the most professional collection appraisal agency providing appraisal services for collections on the platform and gearboxes mainlyworld-class insurance companies providing high-quality assessment guarantees for collections and transactions on the platform. Therefore, with the people-friendly standards of the Treasure World, stronger brand endorsements and market recognition and satisfaction will grow. And at the same time, with our appraisals, transactions and other links performed inside our brand platform, our membership will continue to grow and reflect the significance of the Treasure World.

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We believe that the advantages of membership creation are reflected in several aspects:

·

First, the new online app and offline access port makes it easier for unfamiliar persons in the market to become members, and the simple and convenient operation process enhances the members' experience and identity multiples.

·

Second, with the credibility of world-class insurance brands behind the Treasure World, the pure collection appraisal trading platform service will become a world-class professional collection comprehensive ecosystem. Through professional guarantees, any member, any collection and any transaction can be carried out in a safe, just and strong environment, increase membership, collections and capital market behavior from hierarchy to another level, to enhance the experience and guarantee protection.

·

Third, members can make financial investments in any collection in the platform built by the brand, avoiding the situation of collection value-added income that can only be achieved by owning a collection independently. Membership broadens the traditional restrictions of the industry, and allow any member to effectively invest in any collection in which the member is interested, and receive the corresponding benefits brought by the increase in the value of the collection in the market;

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Fourth, transactions of all collections in which all members of the brand platform to which they belong will be conducted under the effective supervision of the platform, which enhances the protection of member transactions, and at the same time, carries out effective regular flow of capital within the platform. The effective flow of collections under the platform can bring non-member consumer groups in the market organically into the platform, and thus become effective registered members of the platform. At the same time, members in the platform display their collections to the platform, thereby forming the mutual promotional effect of "members pulling new collections, collections carrying new members" positively guiding the organic cycle.

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Fifth, the effective expansion of new members will be guided by the platform's active policy during the operation of the platform, encouraging new members to actively join, thus rapidly growing and changing the platform as currently established. The platform's evaluation of the number of final members is unpredictable, because the openness of the platform will determine that the port to enter the platform is infinite, because the professionalism of the platform will determine that the endorsement of the platform will occupy the mainstream position in the market, and because the circulation of the platform will determine that the amount of resources lost by the platform will be minimal. Therefore, in terms of the acquisition of new members and the reciprocating operation of various links within the platform, we believe that the operation mechanism of Booty World will make it a leading brand in the global consumer market.

Professional Appraisal

Behind the brand, there are national and internationally recognized professional appraisal experts to ensure that each piece of collection is well-documented and real, after passing the treasure appraisal, and are responsible for each piece of art collection.

Professional Team

Treasure World has what it believes is a very professional appraisal team. We have retained domestic and international talents in the process of forming the team, so that Treasure World is filled with world-class talents in all fields and positions. In terms of warehousing and storage, financial services, operation planning, cross-industry cooperation, etc., high-quality talents have formed an outstanding team. In 2018, the “Treasure World” section of the treasure track recorded by Treasure World began broadcasting on 9 Chinese TV stations across the country, premiering on Saturdays throughout the year and rebroadcasting on Sundays,

In 2019, Treasure World launched this section on television stations in various provinces across the country to better serve global collectors.

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The industry's first to adopt VR 2.0 technology, "3 60 ° + 720 °" display collections, global collections online "touch" collection textures, effectively captures the eyes of global collection experts, collection enthusiasts and outsiders, through offline promotion. This unique model for the industry has effectively reduced the industry threshold for the collection industry. At the same time, we use VR 2.0 technology to achieve part of the transparency of the collection information. The most professional technology products of the society at this stage are used in or together with diesel enginesthe Treasure World industry. Psychology collects a large number of new treasure enthusiasts and effectively increases market share.

Profit Model

Our member system is an exclusive online service system created by Treasure World, which responds to the original intention of Treasure World: standardizing the transactions of the collection industry and providing professional art consulting services for industrial and agricultural machinery.  Shengte was founded in 2006.

A.

Profit model: service package

Including the business of appraisal of treasures, consignment of APPs, etc., the situation of packaging services with different types of services, civilianization of profit points, allowing more people outside the industry to understand and internal demand,use treasures through the Company gradually increases its gear production capacitynew service model;

B.

Profit model: collection and upgrades the production facilitiesstorage

The Company’s professional storage and custody service allows those who have treasures in their homes, but are limited by venues and conditions, to improve the overall qualityaccept their collections into one of the productionworld's most professional collection management systems, lowering the threshold and product.

C.

Profit model: Treasure consignment

Our Professional appraisal team, professional output resources, etc., enables each piece of collection to be commissioned on the safest, most professional and authoritative platform for agency storage and evaluation transactions;

D.

Profit model: financial loan.

Our authoritative guarantee group and professional financial team can maximize the commercial value of the user's collections within a reasonable range, but also connect users with high-quality financial solutions, thus generating the highest quality services will generate maximum commercial value;

E.

Profit model: underwriting agreement

We provide an integrated service, from the examination of a person’s collection to the docking transaction, and a transaction guarantee after the transaction is completed, to achieve an excellent service experience without worry;

F.

Profit model: All-in-one advertising

Our market resources organically and effectively dock the most cutting-edge market promotion platforms, to maximize market promotion and the most innovative publicity ports. We believe that consumers in the hunting market find us to be an excellent publicity and promotional resource.

G.

Profit model: VR Museum

Our offline VR (virtual reality) museum uses high-tech cutting-edge technology to lead consumer groups outside the industry to understand the collection industry in depth and expand the channels for consumer sources.

Employees

We currently employ 33 employees, consisting of 22 who are employed by Hainan and 11 of whom are employed by Shanghai Cangbao. Eight of the 33 employees at the two locations are management personnel; 11 are employed by the Company’s marketing department, who are responsible for developing new customers and maintaining existing customers; and 14 are support and administrative staff.

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Competition

The art e-commerce market is highly competitive and many traditional art galleries and auction houses may provide a platform for artwork owners to sell their collections. However, we believe that their trading model is substantially different from ours. As of August 31, 2020, we believe that there were at least five active art e-commerce platforms operating nationwide in China. These trading service providers compete with each other for customers and trading volume based on factors including brand, technology, research and customer services.

Although some of our competitors have greater financial resources or larger customer bases than we do, we believe that our proprietary technology platform, our comprehensive customer services and strong brand recognition in the industry will enable us to compete effectively in the fast evolving art e-commerce trading industry in the PRC.

Government Regulation

All of our operations are located in China. Accordingly, our business, prospects, financial condition and results of operations are influenced to a significant degree by political, economic and social conditions in China generally and by continued economic growth in China as a whole, as to which there can be no assurance.

Intellectual Property

The Company startedowns the intellectual property of an APP and a customized tablet, which enable our customers to producecommunicate and deliver transmission gearboxes in 2008. Since then it has sold 92 sets, 1767 sets,list artworks to trade, as well as to facilitate membership enrollment and 9,924 sets of transmission gearboxes during the fiscal years in 2008, 2009, and 2010 respectively.artworks trade. The Company expectsalso owns the salesdomain name of the transmission gearboxes will continue to grow inwww.txcb.com.

Research and Development

In the fiscal year of 2011. Zhongchai China produces two series of transmission gearboxes, JDS for mechanical shift controlended September 30, 2019, we spent $-0- on research and YQX for hydraulic shift control with three classes for 1 ton, 2 ton, and 3 ton internal combusting forklift trucks. Zhongchai has finished the development of our APP and tablet. Our APP was launched on January 3, 2020, and was purchased from a 1-ton class transmission gearbox for electrical forklift trucksthird party, after research and will startdevelopment had been completed. The third party also provides ongoing technical support and maintenance services.

Marketing Strategy

Our ability to deliverestablish effective marketing campaigns is the key to customers before the endour success. Our advertisements promote our corporate image and our services.  We believe that effectively developing and maintaining awareness of 2010.

It is likely that our future marketing efforts will require us to incur significant additional expenses as we expand our business.

Corporate Information

Our principal executive offices are located at Unit 609, Shengda Plaza, No. 61, Guoxing Ave. Meilan District, Hainan Province, China 570203.

Our telephone number at this address is (86) 898 66186181. Our registered office in the Cayman Islands is located at Sertus Chambers, Governors Square, Suite# 5-204,23 Lime Tree Bay Avenue, P.O. Box 2547, Grand Cayman, KY1-1104, Cayman Island. Investors should contact us for any inquiries through the address and telephone number of our principal executive offices.

Our website is www.txcb.com. The information contained on, or that can be accessed through, our website is not a part of, and shall not be deemed incorporated into, this Annual Report on Form 10-K.

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Reports to Security Holders

We intend to furnish our shareholders annual reports containing financial statements audited by our independent registered public accounting firm and to make available quarterly reports containing unaudited financial statements for each of the Chinese economyfirst three quarters of each year. We file Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and various government initiatives,Current Reports on Form 8-K with the Company believes its best opportunitySEC in order to meet our timely and continuous disclosure requirements. We may also file additional documents with the SEC if they become necessary in the course of our Company’s operations.

The public may read and copy any materials that we file with the SEC at this time is to concentrate its commercial efforts in that market.the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The domestic market in China for drivetrain products has grown in recent years becausepublic may obtain information on the operation of the increase in domestic demand drivenPublic Reference Room by countrywide economic growthcalling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and urban expansion. In addition, beginning in 2005, because of the favorable government policies towards farmers, the Chinese agricultural equipment market has experienced growth for the kinds of productsinformation statements, and other information regarding issuers that the Company produces and sells. As a result, the Company has seen growth of the gear and gearbox business in recent years, and it expects it to continue.

We are a high degree of risk and uncertainty. You should carefully consider the risks described below, together with the other information contained in this Annual Report on Form 10-K, including the consolidated financial statements and notes thereto, when evaluating our Company and our business before deciding to invest in our common stock. The risks described below are not the only ones facing us. Additional risks not presently known to us or that we presently consider immaterial may also harm us. If anysmaller reporting company as defined by Rule 12b-2 of the following risks occur, our business, financial condition and resultsSecurities Exchange Act of operations and the value of our common stock could be materially harmed.

None.

Prior to the Share Exchange, the Company’s headquarters were located at 5-1-1206 Hefeng Jiangan, Nianqing Rd. Meilan District, Hainan Province, China 570203. Since the Share Exchange, the Company hasno longer uses the foregoing property.

Effective as of the closing of the Share Exchange, the Company’s principal office is located at Unit 609, Shengda Plaza, No. 61, Guoxing Ave. Meilan District, Hainan Province, China 570203. We rent 2,100 square feet of office space at that location from an unaffiliated landlord. Our lease expires on December 31, 2021; annual rent is $40,000. We also rent an office, which is approximately 1,700 square feet, in ChinaShanghai from an unaffiliated landlord; the annual rent is $34,600 and one operating facilitythe lease expires on July 15, 2021.

In addition, we rent space in China.

Our common stock pricetrading symbol on OTC Markets is quoted on the OTC Bulletin Board, or OTCBB, under the symbol “EQPI.OB”. ThereTXCB.  However, there is a very limitedno established public trading market for our stock. There cansecurities and a regular trading market may not develop, or if developed, may not be no assurancesustained. A stockholder in all likelihood, therefore, will not be able to resell his or her securities should he or he desire to do so when eligible for public resale. Furthermore, it is unlikely that a liquid market forlending institution will accept our securities as pledged collateral for loans unless a regular trading market develops. We have no plans, proposals, arrangements, or understandings with any person with regard to the development of a trading market in any of our securities.

Penny Stock Considerations

Our shares likely will ever develop. The following table sets forth for the periods indicated the high and low prices per share traded for our common stockbe “penny stocks” as reported on the OTCBB.

Under the penny stock the compensation of theregulations, a broker-dealer and its salesperson in the transaction, monthly account statements showing the market value of eachselling a penny stock held in the customer’s account, to anyone other than an established customer or accredited investor must make a special writtensuitability determination that the penny stock is a suitable investment forregarding the purchaser and must receive the purchaser’s written agreementconsent to the transaction. These disclosure requirementstransaction prior to the sale. Generally, an individual with a net worth in excess of $1,000,000 (not including the principal residence) or annual income exceeding $200,000 individually or $300,000 together with his or her spouse is considered an accredited investor. In addition, under the penny stock regulations the broker-dealer is required to:

Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our Common Stock, which may affect the ability of  stockholders to sell their shares in the secondary market and have the effect of reducing the level of trading activity if any, in the secondary marketmarket. These additional sales practice and disclosure requirements could impede the sale of our securities.. In addition, the liquidity for our securities may be decreased, with a stock that iscorresponding decrease in the price of our securities. Our shares in all probability will be subject to the penny stock rules. Since our common shares are subject to thesuch penny stock rules persons holding or receiving such shares mayand our stockholders will, in all likelihood, find it more difficult to sell their shares. The market liquidity for the shares could be severely and adversely affected by limiting the ability of broker-dealers to sell the shares and the ability of stockholders to sell their stock in any secondary market.

Stockholders

As of the trading market can create the potential for significant changes in the trading price for the common stock as a resultdate of relatively minor changes in the supply and demand for our common stock and perhaps without regard to our business activities.

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Dividends

We have approximately 426 record holders ofnot declared any cash dividends on our common stock. In addition to the record ownership, there are additional beneficial owners who hold their shares in street name or through other nominees, but we have not ascertained the number of such persons.

We are a smaller reporting company as defined by Rule 12b-2 of the four years ended June 30Securities Exchange Act of 1934 and are derived fromnot required to provide the audited consolidated financial statements of Zhongchai Machinery, Inc. after the Share Exchange between Equicap and Usunco in March 2007. Prior to the Share Exchange, Equicap was a shell company with nominal assets and operations and with a different fiscal year end. The data should be read in conjunction with the consolidated financial statements, related notes, and other financial information.  

This discussion summarizes the significant factors affecting the operating results, financial condition, liquidity and cash flows of the Company for the fiscal years ended June 30, 2020 and 2019. The following is management’s discussion and analysis of certain significant factors that have affected our financial position and operating results during the periods included in the accompanying consolidated financial statements, as well as information relating to the plans of our current management.  This report includes forward-looking statements.  Generally, the words “believes,” “anticipates,” “may,” “will,” “should,” “expect,” “intend,” “estimate,” “continue,” and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements.  Such statements are subject to certain risks and uncertainties, including, but not limited to, those described in the “Risk Factors” set forth in Item 1A – Risk Factors and the matters set forth in other reports or documents we file with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected.  Undue reliance should not be placed on these forward-looking statements that speak only as of the date hereof.  We undertake no obligation to update these forward-looking statements.

Business Development

On July 27, 2020 (the “Closing Date”), we entered into a Share Exchange Agreement (the “Exchange Agreement”) by and among (i) the Company, does business through its(ii) Zhi Yuan Limited, a Cayman Islands company (“Cayman Company”), and (iii) the three beneficial shareholders of Cayman Company (each, a “Cayman Company Shareholder” and collectively, the “Cayman Company Shareholders”).  Pursuant to the Exchange Agreement, we issued to the Cayman Company Shareholders an aggregate of 75,000,000 shares of Cang Bao common stock, representing approximately 67.98% of Cang Bao’s total issued and outstanding common stock (the “Share Exchange”).

As a result of the Share Exchange, Cayman Company became our wholly owned subsidiary Zhongchai China, a Wholly Foreign Owned Enterprise established underand we are its public holding company. After giving effect to the lawsShare Exchange, the Company acquired 100% of the People’s Republicassets and operations of ChinaCayman Company and Zhejiang Shengte Transmissionits subsidiaries, the business and operations of which now constitutes our primary business and operations. After giving effect to the Share Exchange, we own 100% of the issued and outstanding shares of capital stock of Cayman Company. Cayman Company is a holding company that owns Cangyun (Hong Kong) Limited (“Hong Kong Company”), which in turn owns and controls Shanghai Cangyun Management Consulting Co., Ltd. (“Shengte”Management Consulting”), which has entered into contractual agreements to control Hainan Cangbao Tianxia Cultural Relic Co., Ltd. (“Hainan”) and Cangbao Tianxia (Shanghai) Cultural Relic Co., Ltd. (“Tianxia Cultural Relic,” and together with Hainan, the “Target Companies” or “VIEs”).

The Company now operates an online and offline cultural exchange service platform, through which we are dedicated to create industry standards for art investment and to create a company established undermodel of online art exchanges and transactions, which allows collectors, artists, art dealers and owners to access a much larger art trading market, allowing them to engage with a wide range of collectibles or artwork investors.

Prior to the laws of the PRC and wholly owned by Zhongchai China. Through its operating subsidiaries,Share Exchange, the Company was a shell, and its business objective was to seek a business combination with an operating company. We accomplished the business combination by completing the Share Exchange, and we are no longer a shell. Please refer to the unaudited Pro Forma Financial Information for the business combination.

Cang Bao Tian Xia International Art Trade Center, Inc. has administrative offices located at 5-1-1206 Hefeng Jiangan, Nianqing Rd. Meilan District, Haikou, Hainan Province, China 570203.

The Company’s fiscal year end is currently engaged in manufacturing and sale of drivetrain products, mainly gears, transmission gearboxes, and transaxles in China.

Our condensed consolidated financial statements and related disclosure must be estimated, whichare prepared in accordance with GAAP. The preparation of these financial statements requires us to make assumptions with respect to values or conditions which cannot be known with certainty at the time the financial statements are prepared.  Actual results may differ from these estimates under different assumptions or conditions.  The selection of critical accounting policies, the judgments and other uncertainties affecting the application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors to be considered when reviewing our consolidated financial statements.

Revenue

For the year ended June 30, 2010 compared with $4,923,918 for2020, the Company generated $0 in revenues. For the year ended June 30, 2009. Revenue2019, the Company generated $0 in revenues.

Expenses

For the years ended June 30, 2020 and 2019, we incurred operating expenses of $84,539 and $48,856 respectively, representing an increase of $35,683, or 73%. The increase in operating expenses is mainly attributable to the increase of $34,750 in legal expense.

Net Loss

For the years ended June 30, 2020 and 2019, we incurred a net loss of $84,539 and $48,856 respectively, representing an increase of $35,683, or 73%. The increase in net loss is mainly attributable to the increase of $34,750 in legal expense.

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Liquidity and Capital Resources

As of June 30, 2020, the Company has no business operations and $0 cash resources other than that provided by Management. We are dependent upon interim funding provided by Management or an affiliated party to pay professional fees and expenses.  Management and an affiliated party have provided funding as may be required to pay for accounting fees and other administrative expenses of the Company until the Company enters into a business combination. The Company would be unable to continue as a going concern without interim financing provided by Management. As of June 30, 2020, we had $0 in cash. As of June 30, 2019, we had $0 in cash.

If we require additional financing, we cannot predict whether equity or debt financing will become available at terms acceptable to us, if at all. The Company depends upon services provided by Management and an affiliated party to fulfill its filing obligations under the Exchange Act. At present, the Company has no financial resources to pay for such services.

The Company does not currently engage in any business activities that provide cash flow. The costs of investigating and analyzing business combinations, maintaining the filing of Exchange Act reports, the investigation, analyzing, and consummation of an acquisition for an unlimited period of time will be paid from additional money contributed by Xingtao Zhou, our Chief Executive Officer and Director, or an affiliated party.

During the next 12 months we anticipate incurring costs related to:

Cash Flows:

On June 30, 2020 and 2019, we had $0 in current assets. As of June 30, 2020, we had $111,045 in liabilities and negative $111,045 in stockholders’ deficit. As of June 30, 2019, we had $25,506 in liabilities and negative $25,506 in stockholders’ deficit.

We had zero cash flow from investing activities during the year ended June 30,2020.

We had a negative cash flow from operations of $79,189 during the year ended June 30, 2010 consists2020, which was mainly resulted from our net loss of sales$84,539. We had a positive cash flow of gears and transmission gearboxes in China, for $5,061,608 and $5,922,192, respectively. The increase in gears and gearboxes sales in fiscal 2010 compared to last year was attributed to the Company’s expansion in production capacity and continuous marketing efforts, and taking advantage of the recovery of the domestic market in China for gear and gearbox products as a result of Chinese government’s economic stimulus plan.

The Company currently plans to satisfy its cash requirements for the year ended June 30, 2009.next 12 months through earning from its acquired subsidiaries and borrowings from its CEO or companies affiliated with its CEO and believes it can satisfy its cash requirements so long as it is able to obtain financing from these affiliated parties. The increased cost of sales was a reflection ofCompany expects that money earned and borrowed will be used during the increased sales. The gross margin was approximately 24%next 12 months to satisfy the Company's operating costs, professional fees and for the year ended June 30, 2010 compared to approximately 22% for the year ended June 30, 2009. The 2% increase in gross margingeneral corporate purposes. There is mainly attributed to the Company’s achievement of a larger economy of scale, despite the introduction of new gearbox products which bear a relatively low margin.

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Off-Balance Sheet Arrangements

As of June 30, 2010, Zhongchai China had assets equal to $19,896,194 that primarily was comprised2020 and 2019, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of cashRegulation S-K promulgated under the Securities Act of 1934.

Contractual Obligations and cash equivalents and restricted cash of $1,586,407, net account receivables, note receivable and other receivables of $4,191,626, inventory of $2,680,666, and an advance payment of $4,993,607.  The advance payment represented an advance payment made by the Zhongchai China to Zhejiang Xinchai Holdings Co., Ltd. ("Xinchai Holdings"), for purchase of the land use right and plant building for Zhongchai China’s future production expansion. Zhongchai’s current liabilities asCommitments

As of June 30, 2010 were $9,003,684, which primarily were comprised of trade accounts payable2020 and accrued expenses,2019, we did not have any contractual obligations.

Critical Accounting Policies

Our significant accounting policies are described in the notes payable, short-term loan and other payable. At June 30, 2010, Zhongchai had working capital of $4,448,622. ,Zhongchai believes that it has sufficient operating capital for its current operations.

ITEM 7A. QUANTATIVEQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. FINANCIAL STATEMENTS

The information required by this Item is incorporated herein by reference to the financial statements beginningannexed to this Form 10-K for the years ended June 30, 2020 and June 30, 2019 begin on page F-1.

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, Xingtao Zhou, who is our Chairman, Founder, Chief Executive Officerexecutive officer and acting Chief Financial Officer (“Certifying Officers”), has evaluated the effectivenessfinancial officer, as of June 30, 2020, we conducted an evaluation of our disclosure controls and procedures, (asas such term is defined in Rulesunder Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act)Act of 1934, as of the end of the fiscal period covered byamended. Based on this Annual Report on Form 10-K. Based upon such evaluation, the Certifying Officers haveour Chief Executive Officer has concluded that, as ofbased on the end of such period, June 30, 2010, the Company’smaterial weaknesses discussed below, our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed by us in reports filed or submitted under the Securities Exchange Act were recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Act Commission's rules and forms and that our disclosure controls are not effectively designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is made knownaccumulated and communicated to management, including our Certifying Officers, and that such information is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Management's Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting. OurAs defined in Rules 13a-15(f) under the Securities Exchange Act of 1934, internal control system wasover financial reporting is a process designed by, or under the supervision of, Xingtao Zhou, the Company's Chief Executive Officer, and effected by the Company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

The Company's internal control over financial reporting includes those policies and procedures that (1) pertain to the Company’smaintenance of records, that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company's assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company's management and board of directors regarding the preparationdirectors; and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can(3) provide only reasonable assurance with respect toregarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statement preparation and presentation.statements.

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 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. ProjectionsAlso, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management, including our principal executive officer and principal financial officer, assessed the effectiveness of the Company’sour internal control over financial reporting as ofat June 30, 2010.2020. In making this assessment, itmanagement used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”)(COSO) in Internal Control—Integrated Framework.Framework (2013). Based on ourthat assessment we believeunder those criteria, management has determined that, as of June 30, 2010, the Company’s2020, our internal control over financial reporting was not effective.

Our internal controls are not effective for the following reasons: (i) there is an inadequate segregation of duties consistent with control objectives as management is comprised of only two persons, one of which is the Company's principal executive officer and principal financial officer and, (ii) the Company does not have an audit committee with a financial expert, and thus the Company lacks the board oversight role within the financial reporting process.

In order to mitigate the foregoing material weakness, we have engaged an outside accounting consultant with significant experience in the preparation of financial statements in conformity with GAAP to assist us in the preparation of our financial statements to ensure that these financial statements are prepared in conformity with GAAP. We will continue to monitor the effectiveness of this action and make any changes that our management deems appropriate.

We would need to hire additional staff to provide greater segregation of duties. Currently, it is not feasible to hire additional staff to obtain optimal segregation of duties. Management will continue to reassess this matter to determine whether improvement in segregation of duty is feasible. In addition, we would need to expand our board to include independent members.

Going forward, we intend to evaluate our processes and procedures and, where practicable and resources permit, implement changes in order to have more effective based on those criteria.

This annual reportAnnual Report does not include an attestation report of the Company’sour registered public accounting firm regarding internal control over financial reporting. Management’sManagement's report was not subject to attestation by the Company’sCompany's registered public accounting firm pursuant to the rules ofexemption provided to issuers that are not "large accelerated filers" nor "accelerated filers" under the SecuritiesDodd-Frank Wall Street Reform and Exchange CommissionConsumer Protection Act.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that permit the Companyoccurred during our fourth fiscal quarter that have materially affected, or are reasonably likely to provide only management’s report in this annual report.