The following table sets forth the computation of basic and diluted loss per common share for the three ~~and nine~~ months ended ~~September 30, 2019 and 2018,~~March 31, 2020, respectively:

On January 11, 2019, the Company amended the certificate of incorporation to effect a one-for-five reverse stock split of our issued and outstanding shares of common stock. All references to numbers of common shares and per-share data in the accompanying unaudited condensed consolidated financial statements have been adjusted to reflect such issuance of shares on a retrospective basis. As such, the weighted average shares outstanding – basic and diluted of~~24,595,612~~ shares issued and outstanding as for the three months ended September 30, 2018 decreased to 4,919,122 shares, and the weighted average shares outstanding – basic and diluted of 22,290,464 shares issued and outstanding as for the nine months ended September 30, 2018 decreased to 4,458,093 shares issued and outstanding.

Basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share is the same as basic loss per share due to the lack of dilutive items in the Company for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018.~~2019. The number of warrants is excluded from the computation as the anti-dilutive effect.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law, which has made significant changes to the Internal Revenue Code. Those changes include, but are not limited to, a U.S. corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the deemed repatriation of cumulative foreign earnings as of December 31, 2017. Accordingly, the Company reevaluated its deferred tax assets on net operating loss carryforward in the U.S and concluded there was no effect on the Company’s income tax expenses as the Company has no deferred tax assets generated since inception.

Effective January 1, 2008, the New Taxation Law of PRC stipulates that domestic enterprises and foreign invested enterprises (the “FIEs”) are subject to a uniform tax rate of 25%. Under the PRC tax law, companies are required to make quarterly estimate payments based on 25% tax rate; companies that received preferential tax rates are also required to use a 25% tax rate for their installment tax payments. The overpayment, however, will not be refunded and can only be used to offset future tax liabilities.

The Company evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. For the three ~~and nine~~ months ended ~~September 30, 2019 and 2018,~~March 31, 2020, the Company had no unrecognized tax benefits. Due to uncertainties surrounding future utilization, the Company estimates there will not be sufficient future income to realize the deferred tax ~~assets.~~assets for certain subsidiaries and a VIE. As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the Company had deferred tax assets of ~~$2,462,039~~$3,635,446 and ~~$1,714,344,~~$3,574,333, respectively. The Company maintains a full valuation allowance on its net deferred tax assets as of ~~September 30, 2019.~~March 31, 2020.

The Company does not anticipate any significant increase to its liability for unrecognized tax benefit within the next 12 months. The Company will classify interest and penalties related to income tax matters, if any, in income tax expense.

~~The~~For the three months ended March 31, 2020 and 2019, the Company ~~does not have any~~had current income tax expenses of $48,380 generated by a profitable VIE and $nil, respectively, and deferred income tax expenses ~~for the three~~of $nil and ~~nine months ended September 30, 2019 and 2018.~~$nil, respectively.

The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. Interest and penalties related to uncertain tax positions are recognized and recorded as necessary in the provision for income taxes. The Company is subject to income taxes in the PRC. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitations is extended to five years under special circumstances, where the underpayment of taxes is more than RMB 100,000. In the case of transfer pricing issues, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion. There were no uncertain tax positions as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 and the Company does not believe that its unrecognized tax benefits will change over the next twelve months.

As of March 31, 2020 and December 31, 2019, the balances with related parties were as follows:

As of December 31, 2019, the balance due from Chengdu Jianluo consisted of receivables for transfers of two used luxurious cars at consideration aggregating $461,513, netting off against car-related fees due to the related party of $17,006.

~~BAT GROUP, INC.~~
~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~The balances due to both related parties represent the operating expenses paid by the related parties on behalf of the Company. The balances are payable on demand. The balances are interest free.~~

The balance of related party loan was payable in September 2022, with an interest rate of ~~7.5%.~~9.5% per annum.

~~3) Transactions with~~For the above mentioned related ~~parties~~party borrowings, interest expense amounted to $36,260 and $nil for the three months ended March 31, 2020 and 2019, respectively.

For the three months ended March ~~8, 2019,~~31, 2020, the Company ~~issued 133,333 restricted shares to~~purchased aluminum ingots of $1,055,143 from Qianhai Baiyu, which was controlled by Mr. ~~Shun Li for his management consulting services provided during January 15, 2019 and~~Zhiping Chen, the legal representative of Huamucheng. For the three months ended March 31, ~~2019. The restricted shares are fully vested while~~2020, the ~~transferability is restricted until September 5, 2019. The fair value~~Company sold all aluminum ingots to customers and recorded cost of revenue of $1,055,143 associated with commodity product sales.

For the three months ended March 31, 2020, the Company lent loans aggregating $1,593,260 to Qianhai Baiyu, which was controlled by Mr. Zhiping Chen, the legal representative of the ~~services provided was in in~~Company. The Company charged the ~~total amount~~related party interest rates 10% per annum. For the three months ended March 31, 2020, the Company recognized interest income of ~~$234,666, at~~$54,193.

For the three months ended March 31, 2020, the Company borrowed loans aggregating $36,617 form Mr. Lu Zhao, a ~~per share price at the market price~~senior management of the ~~grant date.~~

~~In July 2019, the Company transferred two used luxurious cars to Chendu Jianluo in exchange for consideration of $459,381.~~Company. The ~~original amount of the car aggregated $470,420, and the accumulated depreciation expenses aggregated $11,039. The Company did not has any gain or loss from the transfer.~~

~~On September 2, 2019, the Company entered into a~~ loan ~~agreement with Mr. Tao Sun to borrow $148,495 for a period from September 16, 2019 through September 15, 2022.~~will expire on December 24, 2020. The interest rate charged on the borrowing was ~~7.5%~~10%. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020, the Company accrued interest expenses of $1,574.

For the three months ended March 31, 2020, the Company borrowed a loan of $948,863. The Loan has an annual interest rate of 8% and a maturity date of December 4, 2020. For the three months ended March 31, 2020, the Company accrued interest expenses of $32,270.

In accordance with ASC 280, Segment Reporting, operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision making group, in deciding how to allocate resources and in assessing performance. The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the chief operating decision maker, reviews operation results by the revenue of different services. For the three months ended March 31, 2020, the Company has two operating business lines, including business with metal products trading and supply chain management services business conducted by Huamucheng (“Commodity Trading and Supply Chain Management Services” or “Huamucheng Business”) and used luxurious car leasing business conducted by Beijing Tianxing (“Used Car Leasing” or “Tianxing Business”). Based on management’s assessment, the Company has determined that the two operating business lines are two operating segments as defined by ASC 280. For the three months ended March 31, 2019, the Company ~~was charged interest expenses of $933.~~had one operating business line and one reporting unit.

The following table presents summary information by segment for the three months ended March 31, 2020 and 2019:

~~During~~The Company’s VIEs lease their offices which are classified as operating leases in accordance with Topic 842. Under Topic 842, lessees are required to recognize the ~~three~~following for all leases (with the exception of short-term leases) on the commencement date: (i) lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and ~~nine months ended September 30, 2019, we entered into~~(ii) right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

The Company leases offices space with terms ranging from one to two years. The Company considers those renewal or termination options that are reasonably certain to be exercised in the determination of the lease term and ~~three additional~~initial measurement of right of use assets and lease ~~contracts, all of which~~liabilities. Lease expense for lease payment is recognized on a straight-line basis over the lease term. Leases with ~~a lease~~initial term of 12 ~~months. As~~months or less are not recorded on the balance sheet.

The Company determines whether a contract is or contains a lease at inception of ~~September 30, 2019, we had four office~~the contract and whether that lease ~~agreements with fixed monthly rental fee with third parties which expires through September 2020. None~~meets the classification criteria of ~~these lease agreements provided either~~a finance or operating lease. When available, the Company oruses the ~~lessor with an option to extend or terminate~~rate implicit in the lease ~~agreements, nor agreed any residual value guarantee or restrictions or covenants.~~to discount lease payments to present value; however, most of the Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company discount lease payments based on an estimate of its incremental borrowing rate.

As ~~permitted by ASC 842, leases with expected durations~~ of less than 12 months from inception (i.e. short-term leases) were excluded from the Company’s calculation of its lease liability and right-of-use lease asset. Furthermore, as permitted by ASC 842, the Company elected to apply the package of practical expedients, which allows companies not to reassess: (a) whether its expired or existing contracts are or contain leases, (b) the lease classification for any expired or existing leases, and (c) initial direct costs for any existing leases. As of September 30, 2019,March 31, 2020, the Company had ~~one~~two lease ~~agreement~~contracts with alease expiration in June 2021 and September 2020, respectively. The lease contract does not contain any material residual value guarantees or material restrictive covenants. The table below presents the operating lease related assets and liabilities recorded on the balance sheet.

As of March 31, 2020 and December 31, 2019, the weighted average remaining lease term was 1.09 years and 0.71 years, respectively, and discount rates were 4.75% for all of 24the operating leases.

Lease expenses for the three months ~~from its inception, with prepayments~~ended March 31, 2020 and 2019 were $95,124 and $16,624, respectively.

The following is a schedule, by years, of ~~remaining lease liabilities. Consequently, ROU assets and~~maturities of lease liabilities ~~shall be recognized on adoption~~as of ~~ASC 842. As of September 30, 2019, the Company recognized ROU assets of $55,283 and operating lease liabilities of $nil, respectively.~~March 31, 2020:

~~BAT GROUP, INC.~~
~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~The following table sets forth the Company’s contractual obligations as of September 30, 2019 in future periods:~~

Rent expense for the three months ended September 30, 2019 and 2018 was $14,321 and $16,234, respectively. Rent expense for the nine months ended September 30, 2019 and 2018 was $59,070 and $42,623, respectively.

~~On August 6, 2014,~~ a purported shareholder Andrew Dennison filed a putative class action complaint in the United States District Court District of New Jersey (the “N.J. district court”) relating to a July 25, 2014 press release about the Company’s progress in recovering a significant portion of the $5.4 million the Company paid in the first quarter of 2014 on behalf of loan guarantee customers. The action, Andrew Dennison v. Bat Group, Inc., et al., Case No. 2:2014-cv-04956, alleges that the Company and its current and former officers and directors Huichun Qin, Long Yi, Jianming Yin, Jinggen Ling, Xiangdong Xiao, and John F. Levy violated the federal securities laws by misrepresenting in prior public filings certain material facts about the risks associated with its loan guarantee business. On October 2, 2014, purported shareholders Zhang Yun and Sanjiv Mehrotra (the “Yun Group”) asserted substantially similar claims against the same defendants in a putative class action captioned Zhang Yun v. Bat Group, Inc., et al., Case No. 2:14-cv-06136 (D. N.J.). Neither complaint states the amount of damages sought.

On or about October 6, 2014, Dennison, the Yun Group and another purported shareholder, Jason Stark, filed motions to consolidate the cases, be appointed as lead plaintiff and to have their respective counsel appointed as lead counsel.

On October 31, 2014, the N.J. district court entered an order consolidating the cases under the caption “In re China Commercial Credit Inc. Securities Litigation” and appointing the Yun Group as lead plaintiff (“Class Plaintiff”) and the Yun Group’s counsel as lead counsel. On November 18, 2014, the Yun Group and the Company, which at that point was the only defendant served, entered into a stipulation to transfer of the case to the Southern District of New York. On December 18, 2014, Mr. Levy, who had by then been served, joined in the stipulation.

On December 29, 2014, the N.J. district court entered an order transferring the action. The transfer was effected on January 22, 2015, and assigned docket number 1:15-cv-00557-ALC (S.D.N.Y.) (the “Securities Class Action”). Under the schedule stipulated by the parties, the Yun Group was to file an amended complaint within 60 days of the date that the transfer was effected, and the defendants’ date to answer or move was within 60 days of that filing.

On April 7, 2015, the Class Plaintiff filed a Second Amended Class Action Complaint (the “CAC”). The CAC also asserts securities law claims against defendants Axiom Capital Management, Inc., Burnham Securities Inc. and ViewTrade Securities, Inc. (collectively, the “Underwriter Defendants”). The CAC alleges that the Company engaged in a fraudulent scheme by engaging in undisclosed and improper lending practices and made misleading representations regarding its underwriting policies, the loan portfolio quality, the loan loss allowance, compliance with U.S. GAAP and its internal control systems. In accordance with the Court’s procedures, the Company and Mr. Levy and the Underwriter Defendants requested a Pre-Motion Conference in anticipation of filing a motion to dismiss the CAC, which was held on June 25, 2015. At the conference, the Court adjourned the date to answer or move in order to provide the Class Plaintiff with time to serve certain overseas defendants. After the conference, the Class Plaintiff voluntarily dismissed Jianming Yin, Jinggen Ling and Xiangdong Xiao from the action, and Long Yi agreed to waive service, which left Huichun Qin as the sole remaining defendant to serve.

On November 22, 2016, the Company entered into a Stipulation and Agreement of Settlement (the “Stipulation”) to settle the Securities Class Action. The Stipulation resolved the claims asserted against the Company and certain of its current and former officers and directors in the Securities Class Action without any admission or concession of wrongdoing or liability by the Company or the other defendants. The Stipulation also provides, among other things, a settlement payment by the Company of $245,000 in cash and the issuance of 950,000 shares of its common stock (the “Settlement Shares”) to the plaintiff’s counsel and class members. The terms of the Stipulation were subject to approval by the Court following notice to all class members. The issuance of the Settlement Shares are exempt from registration pursuant to Section 3(a)(10) of the Securities Act of 1933, as amended. A fairness hearing was held on May 30, 2017, and the Court approved the settlement.

On December 22, 2017, the Court entered a distribution order approving the distribution of the Settlement Stock to the class plaintiffs. The $245,000 cash portion of the settlement has been paid in full. The 712,500 Class Settlement Shares were issued on or about January 19, 2018. The settlement has been finalized, and that thereafter there are no remaining claims outstanding as against the Company with respect to this litigation. On April 10, 2018, the 237,500 of plaintiff attorney fee shares were issued to plaintiff’s attorney’s broker account.

Two of the Underwriter Defendants, Axiom Capital Management, Inc., and ViewTrade Securities, Inc., have asserted their respective rights to indemnification under the Underwriting Agreements entered into in connection with the Company’s initial public offering and secondary offering. On or about March 16, 2016, CCCR entered into an Advance Funding and Escrow Agreement (“Advance Funding Agreement”), under which the CCCR agreed to deposit shares into escrow to fund the advancement obligation, with the initial deposit to be 637,592 shares which was valued at Two Hundred Thousand Dollars ($200,000), based upon 80% of the 30 day volume weighted average trading price for each of the 30 consecutive trading days prior to the date of the agreement. As of the completion of the settlement, an aggregate of 527,078 shares are unused in the escrow account and the Underwriter Defendants acknowledged there is no additional payment of fees and expenses owed to the Underwriter Defendants and the Advance Funding Agreement shall be terminated. The Company has instructed the transfer agent to cancel the 527,078 shares and return them to authorized shares. As of the date of this Form 10-Q, the Company is working with its counsel and the escrow agent to complete such cancelation.

On February 3, 2015, a purported shareholder Kiran Kodali filed a putative shareholder derivative complaint inagainst the ~~United States District Court for the Southern District of New York, captioned Kiran Kodali v. Huichun Qin, et al., Case No. 15-cv-806. The action alleges~~Company, alleging that the Company and its ~~current and~~ former officers and directors ~~Huichun Qin, Long Yi, Jianming Yin, Jinggen Ling, Chunfang Shen, John F. Levy, Xiaofang Shen and Chunjiang Yu~~ violated their fiduciary duties, grossly mismanaged the Company and were unjustly enriched based upon the transfer that was the subject of the Internal Review and other grounds substantially similar to those asserted in the class action complaints. Kodali did not serve a demand upon the Company and alleges that demand is excused. The Company and Mr. Levy are the only defendants who have been served. An amended derivative complaint was filed on April 20, 2015.

On May 29, 2015, the Court “so ordered” a stipulation among Kodali, the Company, and Mr. Levy staying all proceedings in the derivative case, except for service of process on individual defendants, until the earlier of thirty days of termination of the stipulation, dismissal of the class action with prejudice or the date any of the defendants in the class action file an answer to the CAC.

The Company intends to vigorously defend against it. At this stage of the proceedings, the Company is not able to estimate the probability of success or loss. The Court ordered GLG to answer or otherwise move with respect to this action on or before November 13, 2017. Thereafter, GLG and Mr. Levy submitted a pre-motion letter to the Court requesting permission to move to dismiss the derivative complaint; submission of this letter stayed the proceedings pending the Court’s review thereof. The Court held a hearing on this pre-motion letter on January 22, 2018, denying permission to file a motion to dismiss the complaint without prejudice and setting forth a schedule under which Kodali must serve the remaining defendants in the derivative litigation. On or about August 22, 2018, our new litigation counsel noticed their appearance in the Action. The parties filed a Joint Status Report on August 22, 2018, advising the Court that the parties continued to have discussions regarding a potential resolution of the matter. The parties have come to a potential agreement regarding a monetary settlement. However, the parties continued to discuss the non-monetary aspects of a potential resolution. On January 18, 2019, the parties to the derivative action entered into a Stipulation of Settlement and Plaintiff filed an Unopposed Motion for Preliminary Approval of Proposed Derivative Settlement (“Motion”). On April 4, 2019, the Court preliminarily approved the Stipulation and settlement set forth therein, including the terms and conditions for settlement and dismissal with prejudice of the Derivative Action, subject to further consideration at the Settlement Hearing to be held on July 11, 2019 at the United States District Court for the Southern District of New York.

On July 16, 2019, the Company received a copy of the final order and judgment that the Court entered on July 11, 2019, approving the settlement set forth in the Stipulation. The Stipulation provides for dismissal of the Derivative Action as to the Company and the Individual Defendants, and the Company agrees to adopt or maintain certain corporate governance reforms for at least three years. The Stipulation also provides for attorneys’ fees and expenses to be paid by the Individual Defendants’ insurance carriers to plaintiffs’ counsel.

The Company and its directors were party to a lawsuit filed on September 1, 2017, by certain a stockholder of the Company on behalf of himself and similarly situated stockholders of the Company GLG in the Chancery Court of the State of Delaware (the “Delaware Chancery Court”) (Case No. 2017-0633-JTL) (the “Action”), Plaintiff stockholders which sought injunctive relief, costs, and attorney’s fees. Plaintiff’s Verified Class Action Complaint (“Complaint”) alleged that the Company’s directors breached their fiduciary duties to the Company’s stockholders by failing to disclose all necessary material information relating to the Company’s entry into an Exchange Agreement (“Exchange Agreement”) with Sorghum Investment Holdings Limited (“Sorghum”) on August 9, 2017, and preventing the Company’s stockholders from casting a fully informed vote on the Company’s acquisition of Sorghum, and other proposals contained in the Company’s preliminary proxy statement, dated August 14, 2017 (“Preliminary Proxy Statement”).

On October 10, 2017, the Company filed Amendment No. 1 to its Preliminary Proxy Statement (the “Amended Preliminary Proxy”) with the U.S. Securities and Exchange Commission (the “Commission”) in response to the Commission’s September 8, 2017 comment letter (“Comment Letter”). After reviewing the Amended Preliminary Proxy, Plaintiff determined that the Company’s Amended Preliminary Proxy rendered the claims asserted in Plaintiff’s Complaint moot and/or otherwise unsuitable for further pursuit. On October 19, 2017, the Company and Plaintiff entered into a stipulation (“Stipulation”) wherein Plaintiff agreed to voluntarily dismiss his claims against the Company, and its directors, with prejudice. The Delaware Chancery Court granted the Stipulation on October 20, 2017, and entered an Order dismissing the Action with prejudice. In accordance with the Order, the Company will advise the Delaware Chancery Court within fifteen (15) days of the earlier of (a) the stockholder vote on the Exchange Agreement relating to the proposals, or (b) the termination of the Exchange Agreement, and whether the parties to the Action have reached an agreement with respect to Plaintiff’s anticipated request for fees and expenses. Currently, no compensation in any form has passed from the Company, or its directors, to Plaintiff or Plaintiff’s attorneys in the Action, and the Company has not made a promise to give any such compensation. On or about November 6, 2017, the Company filed Amendment No. 2 to its Preliminary Proxy Statement with the Commission in further response to the Comment Letter. On December 29, 2017, the Company received notice from Sorghum notifying the Company that the Exchange Agreement is terminated. The Company advised Plaintiff of the termination of the Exchange Agreement on January 9, 2018.

On December 21, 2017, the Company delivered notice (“Notice”) to Sorghum notifying Sorghum that certain recent actions of Sorghum constituted breaches of Sorghum’s covenants under the Exchange Agreement. Specifically, we believe that Sorghum is in breach of Section 6.9 ~~(a)~~(a and Section 6.11 ~~(b)~~(b of the Exchange Agreement which required Sorghum to use commercially reasonable efforts and to cooperate fully with the other parties to consummate the transactions contemplated by the Exchange Agreement and to make its directors, officers and employees available in connection with responding in a timely manner to SEC comments. According to the terms of the Exchange Agreement, the Company is entitled to terminate the Exchange Agreement if the breach is not cured within twenty ~~(20)~~(20 days after the Notice is provided to Sorghum.

On January 25, 2018, the Company filed an arbitration demand (“Arbitration Demand”) with the American Arbitration Association (“AAA”) against Sorghum in connection with Sorghum’s breach of the Exchange Agreement. The AAA has forwarded the Company’s Arbitration Demand to Sorghum, and Sorghum’s response to the Arbitration Demand was due on or before February 14, 2018. Sorghum has not provided a written response to the Company’s Arbitration Demand. In accordance with the Commercial Arbitration Rules of the AAA (“Rules”), Sorghum’s failure to respond is deemed as a general denial of the Company’s claims. On April 10, 2018, the AAA initially appointed Barbara Mentz, Esq. (“Arbitrator Mentz”) as arbitrator in accordance with the arbitration clause contained in the Exchange Agreement. On March 28, 2018, the AAA conducted an initial telephonic conference with Arbitrator Barbara Mentz, but neither Sorghum nor its counsel appeared for the call. On March 28, 2018, after the Company’s counsel appeared for the initial telephonic conference, Sorghum and its counsel contacted the AAA claiming that it was not in receipt of the AAA’s correspondence although the AAA forwarded its correspondence to Sorghum’s Chief Executive Officer’s active email. In response, the AAA scheduled another telephonic conference for April 9, 2018. All parties appeared at the April 9, 2018 conference, and approved Arbitrator Mentz’s appointment. On April 11, 2018, pursuant to the Rules, Sorghum filed its answer and counterclaim. The Company filed a written denial to Sorghum’s counterclaim on April 26, 2018. On May 2, 2018, the parties jointly requested an extension of time to file their respective proposals for resolution with the AAA, and Arbitrator Mentz granted the extension. On May 17, 2018, Sorghum requested another extension and Arbitrator Mentz granted the extension. In accordance with Arbitrator Mentz’s Order, the parties’ proposals was due May 31, 2018. On May 30, 2018, due to a delay in receiving additional evidence from a relevant third party, the Company requested an extension of time to file its proposal for resolution, which Arbitrator Mentz granted extending the deadline to June 7, 2018. To provide additional time to allow certain relevant documents to be translated due to the unavailability of the parties’ mutually accepted translator, the Company requested a final extension of time to June 14, 2018, to submit the parties’ proposal for resolution. Arbitrator Mentz granted the Company’s request. On June 14, 2018, the Company submitted its proposal for resolution to the AAA.

On July 30, 2018, Arbitrator ~~Mentz~~ entered a reasoned award, accepting the Company’s proposal for resolution, awarding the Company damages of ~~$1,436,521.50~~$1,436,522 against Sorghum and denying Sorghum’s Counterclaim against the Company in its entirety with prejudice. Sorghum has sought to vacate the arbitration award by filing a petition to vacate the arbitration award in the Supreme Court for the State of New York, New York County. The Court heard the Company and Sorghum’s arguments on May 1, 2019, and entered an order vacating the arbitration award. The Company vigorously opposed and moved to confirm the arbitration award on May 6, 2019. On June 5, 2019, the Company filed a notice of appeal with the New York Supreme Court Appellate Division First Department. The appeal ~~is currently~~was scheduled to be mediated on November 20, 2019. On November 15, 2019, the Company withdrew its appeal filed June 5, 2019, upon the stipulation of the parties and accordingly, the arbitration award is deemed to be vacated.

On August 2, 2018, the Company became party to an action filed by Shanghai Nonobank Financial Information Service Co. Ltd. (“Plaintiff”) in the Supreme Court for the State of New York, New York County (“NY Supreme Court”) (Index No. 653834/~~2018)~~2018 (the “Action”). Plaintiff’s complaint seeks to recover approximately $3.5 million of Plaintiff’s funds that were allegedly required to be held in escrow in New York pursuant to an agreement by and between Plaintiff, Yang Jie and Yi Lin ~~��(the~~(the “Complaint”). Plaintiff has alleged that the funds were required to be held in escrow in a New York attorney trust account pending the alleged consummation of a merger between Plaintiff’s parent company and the Company. Plaintiff alleged two causes of action against the Company for fraud/fraudulent inducement and conversion. On August 30, 2018, the Company filed a motion to dismiss Plaintiff’s causes of action against the Company. The Court has scheduled oral arguments on the Company’s motion to dismiss for May 1, 2019.

On July 15, 2019, the Company received a copy of the decision and order the Court entered on July 12, 2019, granting the Company’s motion to dismiss the Complaint in its entirety as against the Company without prejudice, with costs and disbursements to the Company as taxed by the Clerk of the Court, and the Clerk is directed to enter judgment accordingly in favor of the Company.

On ~~June 19, 2018,~~April 6, 2020, the Company ~~HK Xu Ding Co., Limited,~~filed a ~~private limited company duly organized under the laws of Hong Kong (the “Purchaser”~~law suit against Harrison Fund, LLC (“Harrison Fund”) ~~and CCCR International Investment Ltd., a business company incorporated~~ in the ~~British Virgin Islands with limited liability (“GLG BVI”~~United States District Court for the Northern District of California (the “District Court”) ~~entered into certain Share Purchase Agreement (the “Purchase Agreement”)~~(Case No. 3:20-cv-2307). ~~Pursuant~~The Company had invested $1,000,000 in Harrison Fund around May 2019. However, Harrison Fund had been reluctant to disclose related investment information to the ~~Purchase Agreement,~~Company and it was discovered that certain information presented on Harrison Fund’s brochure appeared to be problematic. The Company demanded a return of its investment from Harrison Fund. When the ~~Purchaser agreed~~Company failed to ~~purchase GLG BVI in exchange of cash purchase price of $500,000. The consideration was paid as of September 30, 2018.~~obtain a response from Harrison Fund, it filed the complaint against Harrison Fund seeking to recover the $1,000,000 investment.

~~GLG BVI is the sole shareholder of GLG International Investment Ltd. (“GLG HK”), a company incorporated under the laws of the Hong Kong S.A.R. of thePeople’s Republic of China (“PRC”), which is the sole shareholder of WFOE. WFOE, via a series of contractual arrangements, controls Wujiang Luxiang. GLG HK is the sole shareholder of PFL.~~

On July 10, 2018, the parties completed all the share transfer registration procedure as required by the laws of British Virgin Islands and all the other closing conditions have been satisfied, as a result, the Disposition contemplated by the Purchase Agreement is completed. Upon completion of the Disposition, the Purchaser became the sole shareholder of GLG BVI and as a result, assumed all assets and obligations of all the subsidiaries and VIE entities owned or controlled by GLG BVI. Upon the closing of the transaction, the Company does not bear any contractual commitment or obligationDue to the ~~microcredit business or~~uncertainty arising from this pending legal proceeding, a full impairment has been applied against the ~~employees of GLG BVI and its subsidiaries and VIEs, nor to the Purchaser.~~

On June 17, 2018, management was authorized to approve and commit to a plan to sell GLG BVI, therefore the major assets and liabilities relevant to the disposal are reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations, less applicable income taxes, are reported as components of net income (loss) separate from the net loss of continuing operationsCompany’s investment in accordance with ASC 205-20-45. The assets relevant to the sale of GLG BVI with a carrying value of $6.2 million were classified as assets held for sale as of June 19, 2018. The liabilities relevant to the sale of GLG BVI with a carrying value of $10.5 million were classified as liabilities held for sale as of June 19, 2018. A net gain of $9.7 million was recognized as the net gain from disposal of discontinued operation in 2018.

In accordance with ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meets the criteria in paragraph 205-20-45-1E to be classified as held for sale. When all of the criteria to be classified as held for sale are met, including management, having the authority to approve the action, commits to a plan to sell the entity, the major current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations, less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuing operations in accordance with ASC 205-20-45.

As the transaction was closed on June 17, 2018, the Company had no assets and liabilities held for sale in the in the condensed consolidated balance sheet as of September 30, 2019 and December 31, 2018.

The following is a reconciliation of the amounts of major classes of income from operations classified as discontinued operations in the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2019 and 2018:

Total operating cash flows provided by discontinued operations for the nine months ended September 30, 2019 and 2018 were $nil and $1,769,566, respectively. For the nine months ended September 30, 2018, the operating cash flows provided by discontinued operations was mainly caused by net loss incurred by discontinued operations of $277,756 and increased receivables due from the Company of $1.2 million.

Total investing cash flows used in discontinued operations for the nine months ended September 30, 2019 and 2018 were $nil and $1,270,070. The cash provided by investing activities for the nine months ended September 30, 2018 was net effects of disbursement of loans to third parties of $3,391,907 against collection of $1,943,958 from third party customers of direct loan services.

~~On June 12, 2019, theCompanyreceived a notification letter (the “Notification”) from the Nasdaq Listing Qualifications Staff of The NASDAQ Stock Market LLC (“Nasdaq~~”) notifying the Company that did not meet the following requirements: (i) because the exercise price for the warrants issued on April 11, 2019 had been reduced from $2.20 to $1.32 on May 20, 2019, below the minimum price requirements set forth in Nasdaq Listing Rule 5635(d)(1), the Company was required to obtain shareholder approval as set forth in Nasdaq Listing Rule 5635(d)(2); (ii) Staff has determined to aggregate the offering pursuant to the Securities Purchase Agreement dated April 11, 2019 and the offering pursuant to the Securities Purchase Agreement dated May 20, 2019 for purposes of the Nasdaq’s shareholder approval rules; and (iii) the Company was also required to submit a Listing of Additional Shares Notification Form as set forth in Nasdaq Listing Rule 5250(e)(2)(D) 15 days prior to issuing any common stock, or any security convertible into common stock in a transaction that may result in the potential issuance of common stock (or securities convertible into common stock) greater than 10% of either the total shares outstanding or the voting power outstanding on a pre-transaction basis.

~~On August 30, 2019, the Company and the Purchasers entered into an amendment and exchange agreement (the “Exchange Agreement”), pursuant to which the Company shall issue to the Purchasers exchange warrants (the “Exchange Warrants”) to purchase up to 1,680,000 shares of Common Stock with an exercise price of $2.20 in exchange for the cancellation and termination of the Replacement Warrants.~~

~~On September 16, 2019, theCompanyreceived a written notification from the NASDAQ Stock Market Listing Qualifications Staff (the “Staff~~”) indicating that the Company has regained compliance with the shareholder approval requirements set forth in Listing Rule 5635(d) and the Listing of Additional Shares notification requirements under Listing Rule 5250(e)(2)(D) for continued listing on the NASDAQ Capital Market based on the Staff’s review of the Company’s submitted materials.

~~In addition, on July 3, 2019, t~~heCompany received a notification letter from the Nasdaq notifying the Company that the minimum bid price per share for its common shares has been below $1.00 for a period of 30 consecutive business days and the Company therefore no longer meets the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2).The notification received has no immediate effect on the listing of the Company’s common stock on Nasdaq. Under the Nasdaq Listing Rules, the Company has until December 30, 2019 to regain compliance. If at any time during such 180-day period the closing bid price of the Company’s common shares is at least $1 for a minimum of 10 consecutive business days, Nasdaq will provide the Company written confirmation of compliance.

If the Company does not regain compliance during such 180-day period, the Company may be eligible for an additional 180 calendar days, provided that the Company meets the continued listing requirement for market value of publicly held shares and all other initial listing standards for Nasdaq except for Nasdaq Listing Rule 5550(a)(2), and provide a written notice of its intention to cure this deficiency during the second compliance period, by effecting a reverse stock split, if necessary.

~~On October~~Please see “Note 8 ~~2019, the Company entered into certain securities purchase agreements (“~~~~Reg. S SPAs~~~~”) with certain non-U.S. Persons (“~~~~Reg. S Investors~~~~”) as defined in Regulation S of the Securities Act of 1933 (the “~~~~Securities Act~~”), as amended pursuant to which the Company agreed to sell an aggregate of 1,685,000 shares of its common stock, par value $0.001 per share, at a per share purchase price of $0.35. The net proceeds to the Company from such Offering is approximately $588,000, which has been collected in September 2019 in advance.

~~On November 13, 2019, the Company issued 1,685,000 shares of Common Stock to the Reg. S Investors pursuant to the Reg. S SPAs, since~~– Capital Transactions” for all ~~the closing conditions have been satisfied.~~

~~The issuance and sale are exempted from the registration requirements of the Securities Act pursuant to Regulation S promulgated thereunder.~~

~~On October 14, 2019, theCompanyentered into certain share purchase agreements (the “SPA”) with Zhuji Xingmai Network Technology Co., Ltd. (the “Seller”),PRC, and Hangzhou Yihe Network Technology Co., Ltd. (the “Target”), both of which are limited liability companies in PRC. The Seller is the record holder and beneficial owner of all issued and outstanding~~subsequent capital stock of the Target. Pursuant to the SPA, the Company agreed to transfer to the Seller an aggregate of 1,253,814 shares of its common stock, par value $0.001 per share, and the Seller agreed to transfer to the Company such number of shares which represents 20% of the capital stock of the Target (the “~~Target’s Shares”, and the transaction contemplated therein, the “Acquisition”).~~

The closing of the Acquisition is subject to various conditions to closing, including, among other things, (a) Nasdaq’s approval of the listing of the Company’s Shares; (b) accuracy of the parties’ representations and warranties at the time of closing.

~~Effective October 17, 2019, the Company’s board of directors (the “Board”) increased the number of directors serving on the Board to 7, appointed Ms. Renmei Ouyang as the Chairwoman of the Board and the Chief Operating Officer (the “COO”) of the Company, and appointedMr. Weicheng Pan as a director of the Company to fill the two vacancies on the Board.~~

As of ~~September 30,~~March 31, 2020, the Company had two business lines, used luxury car leasing business and commodities trading business.

Currently the Company has eleven used luxurious cars with net book value of approximately US$2.43 million. In addition, the Company also leased used luxurious cars from peer companies and individuals to provide more varieties of luxurious cars to our customers. To determine the model of vehicles to be purchased, we collect data related to customers’ demands and preferences through sales and online promotions. Our professional procurement personnel will then compare models of vehicles offered by different sellers. The decision to purchase a specific vehicle is based on a number of considerations including time of delivery, vehicle condition, vehicle safety features, mileage, repair and maintenance history, accident history, market scarcity, etc. Due to the effects of COVID-19, we had closed our luxury car rental facilities from the end of January 2020 and have resumed our operations since April 2020. For the three months ended March 31, 2020 and 2019, the Company ~~had~~earned income from operating lease of $14,051 and $399,999, respectively.

We rent our luxurious cars to our customers from our offices in Beijing, Shanghai, Zhejiang and Chengdu. We market our cars to targeted potential customers via phone calls or messages. The rental price varies based on the rental term which ranges from one ~~business line, which~~day to one month. The longer the rental term, the cheaper the price. The daily rental price is the ~~used luxurious~~highest, while the average weekly rental price and average monthly rental price are 10% to 20% cheaper and 20% to 30% cheaper, respectively, than that of the daily rental price.

We conduct a comprehensive credit check against customers who place orders. We work with credit rating platforms such as JD Wanxiang and TYi Online to evaluate the customer’s credit. We may reject an order for any reason including unacceptable credit ratings. Once an order is accepted, we will require a deposit ranging from US$7,500 to US$15,000 based on the vehicle being ordered and the customer’s credit score. The deposit covers vehicle deposit and traffic violation deposit. Customer can confirm the time and place for vehicle delivery and rental term via SMS messages, phone calls or face-to-face communication with our sales personnel. After that, our sales personnel will deliver the vehicle to the customers at their designated location. The customer, before signing the car ~~leasing~~rental agreement, will inspect the vehicle in person and pay the lease fee along with the deposit via credit card, Wechat Pay or Alipay. The customer is responsible for the gas, toll fee, fees incurred to return the car, and any other expenses related to the use of the vehicle during the rental term.

We install five GPS trackers on each vehicle to track the location of the vehicles. Once the rental period is over, the vehicle needs to be returned to our designated location. In the event the vehicle is returned with no damage other than normal wear and tear, we will process the refund of the vehicle deposit on the next business day. The traffic deposit will be refunded after we confirm that there are no traffic violation records associated with the vehicle from the local police (approximately a month after the return).

We compete with car rental companies, many of which ~~began~~are more established and have more resources than us. Currently we compete primarily with Benson, V-FLY Travel and Wagons.

In order to diversify the Company’s business and generate additional revenue, on November 22, 2019, the Company’s wholly-owned subsidiary, Hao Limo Technology (Beijing) Co., Ltd. (“Hao Limo”), entered into a series of contractual agreements (the “Huamucheng VIE Agreements”) with Shenzhen Huamucheng Trading Co., Ltd. (“Huamucheng”) and certain shareholders of Huamucheng (“Huamucheng Shareholders”), who collectively hold 100% of Huamucheng. The Huamucheng VIE Agreements are designed to provide Hao Limo with the power, rights and obligations equivalent, in all material respects, to those it would possess as the sole equity holder of Huamucheng, including absolute control rights and the rights to the management, operations, assets, property and revenue of Huamucheng. The purpose of the VIE Agreements is solely to give Hao Limo the exclusive control over Huamucheng’s management. Through Huamucheng VIE structure, the Company is able to consolidate operations of Huamucheng effective November 22, 2019 and now operates a separate commodity trading business.

The commodity trading business primarily involves purchasing non-ferrous metal product, such as aluminium ingots, copper, silver, and gold, from upstream metal and mineral suppliers and then selling to downstream customers. In connection with the Company’s commodity sales, in ~~May 2018.~~order to help customers to obtain sufficient funds to purchase various metal products and also help upstream metal and mineral suppliers to sell their metal products, the Company launched its supply chain management service in December 2019. The Company primarily generates revenues from bulk non-ferrous commodity products, and from providing related supply chain management services in the PRC.

For the three months ended March 31, 2020, the Company recorded revenue of $1,053,632 from commodities trading business and $415,377 from supply chain management services (all from loan recommendation services), respectively, from Huamucheng’s operations.

Through Huamucheng’s business, the Company sources bulk commodity products from non-ferrous metal and mines or its designated distributors and then sells to manufactures who need these metals in large quantity. The Company works with upstream suppliers in the sourcing of commodities. Major suppliers include various metal and mineral suppliers such as Kunsteel Group, Baosteel Group, Aluminum Corporate of China Limited, Yunnan Benyuan, Yunnan Tin, and Shanghai Copper. Potential customers include large infrastructure companies such as China National Electricity, Datang Power, China Aluminum Foshan International Trade, Tooke Investment (China), CSSC International Trade Co., Ltd., Shenye Group, and Keliyuan.

The Company mainly competes against other large domestic commodity metal product trading service providers such as Xiamen International Trade and Yijian Shares. Currently, the principal competitive factors in the non-ferrous metals commodities trading business are price, product availability, quantity, service, and financing terms for purchases and sales of commodities.

Huamucheng has obtained all material approvals, permits, licenses and certificates required for our metal product trading operations, including registrations from the local business and administrative department authorizing the purchase of raw materials.

The car rental and car service industry in China is competitive and fragmented. The commodities trading industry is also experiencing decreasing demand as a result of China’s overall economic slowdown. We expect competition in both China’s car ~~rental~~leasing industry and ~~car service industry~~commodities trading business to persist and intensify.

We have a limited operating history having just launched the car leasing business in May ~~2018.~~2018 and started our commodities trading business in late November 2019. We believe our future success depends on our ability to significantly increase ~~revenues~~sales as well as maintain profitability from our operations. Our limited operating history makes it difficult to evaluate our business and future prospects. You should consider our future prospects in light of the risks and challenges encountered by a company with a limited operating history in an emerging and rapidly evolving industry. These risks and challenges include, among other things,

Our business requires a significant amount of capital in large part due to needing to continuously grow our fleet, to purchase bulk volume of commodities, and expand our business in existing markets and to additional markets where we currently do not have operations.

Results of Operations

Three Months Ended ~~September 30, 2019~~March 31, 2020 as Compared to Three Months Ended ~~September 30, 2018~~March 31, 2019

For the
Three Months Ended
September 30,
Change
2019 2018 Amount %

Income from operating lease $ 564,614 $ 140,856 $ 423,758 301 %

Operating expenses
Operating lease expenses 344,310 - 344,310 100 %
Depreciation expenses on operating lease assets 83,806 35,336 48,470 137 %
Total lease expense 428,116 35,336 392,780 1,112 %

Selling, general, and administrative expenses 556,430 741,762 (185,332 ) -25 %
Total operating expenses 984,546 777,098 207,448 27 %

Other income, net
Interest income 27,089 2,216 24,873 1,122 %

Total other income, net 27,089 2,216 24,873 1,122 %

Net loss from before income taxes (392,843 ) (634,026 ) 241,183 -38 %

Income tax expenses - (991 ) 991 -100 %
Net loss $ (392,843 ) $ (635,017 ) $ 242,174 $ -38 %

	For the Three Months Ended March 31,						Change
	2020			2019			Amount			%
Revenues
Revenue from sales of commodity products	$	1,053,632		$	-		$	1,053,632			100	%
Revenue from supply chain management services		415,377			-			415,377			100	%
Income from operating leases		14,051			399,999			(385,948	)		(96	)%
Total Revenue		1,483,060			399,999			1,083,061			271	%

Cost of revenue
Cost of revenue - commodity product sales - related party		(1,055,143	)		-			(1,055,143	)		100	%
Cost of revenue - supply chain management services		(717	)		-			(717	)		100	%
Cost of operating lease		(99,314	)		(237,651	)		138,337			(58	)%
Total cost of revenue		(1,155,174	)		(237,651	)		(917,523	)		386	%

Gross profit		327,886			162,348			165,538			102	%

Operating expenses
Selling, general, and administrative expenses		(425,115	)		(1,906,319	)		1,481,204			(78	)%
Impairment on leasing business assets		-			(96,318	)		96,318			(100	)%
Total operating cost and expenses		(425,115	)		(2,002,637	)		1,577,522			(79	)%

Other income, net
Interest income, net		5,637			10,463			(4,826	)		(46	)%
Total other income, net		5,637			10,463			(4,826	)		(46	)%

Loss Before Income Taxes		(91,592	)		(1,829,826	)		1,738,234			(95	)%

Income tax expenses		(48,380	)		-			(48,380	)		100	%

Net Loss	$	(139,972	)	$	(1,829,826	)	$	1,689,854			(92	)%

~~Income from operating lease~~

Revenue

We generate revenue from the following three sources, including (1) revenue from sales of commodity products, (2) revenue from supply chain management services, and (3) income from operating lease. Both revenue from sales of commodity and revenue from supply chain management services were newly incorporated into our operations as a result of the consolidation of Huamucheng through VIE contractual agreements in November 2019. Total revenue increased by $1,083,061 or 271%, from $399,99 for the three months ended March 31, 2019 to $1,483,060 for the three months ended March 31, 2020, among which revenue from commodity trading, supply chain management and car leasing accounted for 71.1%, 28.0% and 0.9%, respectively, of our total revenue for the three months ended March 31, 2020. For the three months ended March 31, 2019, 100% of our revenue was generated from the used luxurious car leasing business.

(1)

Revenue from sales of commodity products

For the three months ended March 31, 2020, the Company sold non-ferrous metals to two customers at fixed prices, and earned revenues when the product ownership was transferred to its customers. The Company earned revenues of $1,053,632 from sales of commodity products. There was no such revenue for the three months ended March 31, 2019.

(2)

Revenue from supply chain management services

In connection with the Company’s commodity sales, in order to help customers to obtain sufficient funds to purchase various metal products and also help upstream metal and mineral suppliers sell their metal products, the Company launched its supply chain management service business in December 2019, which primarily consisted of loan recommendation services and distribution services. For the three months ended March 31, 2020, the Company provided loan recommendation services to customers.

Loan recommendation service fees

The Company refers customers who have financing needs for metal product trading to various financial institutions and assists these customers in obtain loans from the financial institutions. The Company receives a referral fee from the customers if funding is secured. Such revenue is recognized at the point when referral services are performed and the related funds are drawdown by the customer. The referral service fee is set at 2.5% of the amount of loans obtained by the customers from the financial institutions. The Company earned $415,377 from loan recommendation services from the facilitation of a loan volume of approximately $17.6 million (RMB 123.0 million) with six customers.

(3)

Income from operating lease

The Company commenced its ~~new~~ business of lease services of used luxurious cars in May 2018. From the inception of the business through September 30, 2019, the Company purchased fifteen used luxurious cars for the purpose of operating lease and disposed four of the used luxurious cars. The lease term is generally within one month. The operating lease income is recognized on a straight-line basis over the scheduled lease term.

Currently the Company generates operating lease income from used luxurious cars which is either owned by the Company or leased from third party vendors. The Company generated operating lease income of $564,614 for the three months ended September 30, 2019, as compared with operating lease income of $140,856 for the three months ended September 30, 2018. The increase was mainly attributable to increased number of owned used luxurious cars, and diversified lease income generated from both owned cars and leased cars.

~~Lease expenses~~

~~Operating lease expenses~~

The operating lease expense was comprised of car related expenses arising from lease of cars. With diversified lease income generated from leased cars which was launched in January 2019, the Company recorded car related expenses of $344,310.

~~Depreciation expenses on operating lease assets~~

The depreciation expenses on operating lease assets increased from $35,336 for the three months ended September 30, 2018 to $83,806 for the three months ended September 30, 2019, representing an increase of $48,470, or 137%. The increase was mainly caused by the Company’s continuous investments in used luxurious cars. As of ~~September 30,~~March 31, 2020 and 2019, the Company had eleven and eight used luxurious cars, ~~as compared with six cars as of September 30, 2018.~~

~~Selling, general, and administrative expenses~~

Selling, general, and administrative expenses decreased from $741,762 for the three months ended September 30, 2018 to $556,430 for the three months ended September 30, 2019, representing a decrease of $185,332, or 25%. Operating expenses primarily consisted of salary and employee surcharge, office rental expense, business tax and surcharge, changes in fair value of other noncurrent liabilities, professional service fees, and other office supplies. The decrease was mainly attributable to a decrease of legal and consulting expenses of $188,137, as the Company incurred less financing and investing transactions during the period.

~~Net loss~~

As a result of the foregoing, net loss for the three months ended September 30, 2019 was $392,843 representing a decrease of $242,174 from net loss of $635,017 for the three months ended September 30, 2018.

~~Nine Months Ended September 30, 2019 as Compared to Nine Months Ended September 30, 2018~~

For the
Nine Months Ended
September 30, Change
2019 2018 Amount %

Income from operating lease $ 1,505,508 $ 237,577 $ 1,267,931 534 %

Operating expenses
Operating lease expenses 877,320 - 877,320 100 %
Depreciation expenses on operating lease assets 185,985 47,794 138,191 289 %
Total lease expense 1,063,305 47,794 1,015,511 2,125 %

Selling, general, and administrative expenses 3,596,706 1,615,039 1,981,667 123 %
Changes in fair value of noncurrent liabilities - 166,540 (166,540 ) -100 %
Impairment on an operating lease asset 96,318 - 96,318 100 %
Total operating expenses 4,756,329 1,829,373 2,926,956 160 %

Other income (expenses), net
Interest income (expenses) (12,173 ) 2,531 (14,704 ) -581 %

Total other (expenses) income, net (12,173 ) 2,531 (14,704 ) -581 %

Net loss from continuing operations before income taxes (3,262,994 ) (1,589,265 ) (1,673,729 ) 105 %

Income tax expenses - (1,011 ) 1,011 -100 %
Net loss from continuing operations $ (3,262,994 ) $ (1,590,276 ) $ (1,672,718 ) $ 105 %

Net income from discontinued operations - 10,072,629 (10,072,629 ) -100 %

Net (loss) income $ (3,262,994 ) $ 8,482,353 $ (11,745,347 ) $ -138 %

~~Income from operating lease~~

The Company commenced its new business of lease services of used luxurious cars in May 2018. From the inception of business through September 30, 2019, the Company purchased fifteen used luxurious cars for the purpose of operating lease and disposed four of the used luxurious cars.respectively. The lease term is generally within one month. The operating lease income is recognized on a straight-line basis over the scheduled lease term.

~~Currently~~As affected by COVID-19, we closed our car rental facilities from the end of January to March 2020, and gradually resumed business in April 2020. As a result, we generated minimal operating lease income for the three months ended March 31, 2020. The extent to which COVID-19 impacts our income from operating lease for the fiscal year 2020 will depend on certain future developments, including the duration and spread of the outbreak, emerging information concerning the severity of COVID-19 and the actions taken by governments and private businesses in attempting to contain the spread of COVID-19, all of which is uncertain at this point.

For the three months ended March 31, 2019, the Company ~~generates~~generated operating lease income from used luxurious cars which isare either owned by the Company or leased from third party vendors. The Company generated operating lease income of ~~$1,505,508~~$399,999 for the ~~nine~~three months ended ~~September~~ March 31, 2019.

Cost of revenue

Our cost of revenue primarily include cost of revenue associated with commodity product sales, cost of revenue associated with management services of supply chain and cost of operating lease. Total cost of revenue increased by $917,523 or 386% from $237,651 for the three months ended March 31, 2019 ~~as compared~~to $1,155,174 for the three months ended March 31, 2020, primarily due to an increase of $1,055,143 in cost of revenue associated with commodity product sales which was just launched in December 2019, against a decrease of $138,337 in cost of operating lease income of $237,577 for the nine months ended September 30, 2018. The increase was mainly attributable to increased number of owned used luxurious cars, and diversified lease income generated from both owned cars and leased cars.

~~Lease expenses~~as affected by COVID-19.

Cost of revenue associated with commodity trading

Cost of revenue primarily consists of purchase costs of non-ferrous metal products. For the three months ended March 31, 2020, the Company purchased non-ferrous metal products of $1,055,143 from Shenzhen Qianhai Baiyu Supply Chain Co., Ltd. (“Shenzhen Baiyu”), a related party controlled by the legal representative of Huamucheng, and sold non-ferrous metal products to two customers. The Company recorded cost of revenue of $1,055,143. There was no such cost for the three months ended March 31, 2019 because this was a new business launched in December 2019.

Costs associated with Operating lease ~~expenses~~

The operating lease expense ~~was comprised~~mainly consisted of depreciation expenses on leasing business assets and car related expenses arising from lease of cars. ~~With diversified lease income generated from leased cars which was launched in January 2019, the Company recorded car related expenses of $877,320 for the nine months ended September 30, 2019.~~

~~Depreciation expenses on operating lease assets~~

The depreciation expenses on ~~operating lease~~leasing business assets increased from ~~$47,794~~$46,858 for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 to ~~$185,985~~$79,578 for the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, representing an increase of ~~$138,191,~~$32,720, or ~~289%~~70%. The increase was mainly caused by the Company’s continuous investments in used luxurious cars. As of ~~September 30, 2019,~~March 31, 2020, the Company had eleven used luxurious cars, as compared with ~~six~~eight cars as of ~~September 30, 2018.~~March 31, 2019.

In the three months ended March 31, 2019, the Company officially launched sub-lease of luxurious car business through leasing cars from both third party peer companies and individuals. The Company recorded car leasing expenses of $19,736 and $190,793 for the three months ended March 31, 2020 and 2019, respectively. The decrease was mainly caused by the Company’s closure of car rental facilities from the end of January 2020 to March 2020, as affected by COVID-19.

Selling, general, and administrative expenses

Selling, general and administrative expenses ~~increased~~decreased from ~~$1,615,039~~$1,906,319 for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 to ~~$3,596,706~~$425,115 for the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, representing ~~an increase~~a decrease of ~~$1,981,667,~~$1,481,204, or ~~123%~~78%. ~~Operating~~Selling, general and administrative expenses primarily consisted of salary and employee ~~surcharge,~~benefits, office rental expense, business tax and surcharge, ~~changes in fair value of other noncurrent liabilities,~~ professional service fees, ~~and other~~ office supplies. The ~~increase~~decrease was mainly attributable to combined effects of ~~an increase~~a decrease of ~~promotion~~other operating expenses of ~~$144,594, an increase~~$358,518 as a result of ~~car-related expenses~~closures of ~~$110,113, an increase~~our car rental facilities for the three months ended March 31, 2020, and a decrease of legal and consulting expenses of ~~$211,756~~$1,220,923 as a result of 1) issuance of 502,391 restricted shares as compensation of $884,208 to certain service providers for the three months ended March 31, 2019, while no such issuance for the three months ended March 31, 2020, and ~~increase~~2) a decrease in expenses incurred for the registered direct offerings in April and May 2019, ~~consisting of~~including an increase of audit related fees of ~~$180,785,~~$156,659, an increase of commission of $100,000 to a third party vendor for referral of ~~underwriters, and other expenses of $337,917.~~

underwriters.

Net ~~income from discontinued operations~~

During the nine months ended September 30, 2018, the net income was comprised of a net income of $277,756 from discontinued operations of microcredit service and a gain of $9,794,873 from disposal of the discontinued operations of microcredit service.

~~Net (loss) income~~loss

As a result of the foregoing, net loss for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 was ~~$3,262,994~~$139,972, representing a ~~change~~decrease of ~~$11,745,347~~$1,689,854 from net ~~income~~loss of ~~$8,482,353~~$1,829,826 for the ~~nine~~three months ended ~~September 30, 2018.~~

March 31, 2019.

Cash Flows and Capital Resources

We have financed our operations primarily through shareholder contributions, cash flow from operations, borrowings from third parties and related parties, and equity financing through public offerings of our securities. On

For the three months ended March 31, 2020, the Company issued an aggregate of 17,000,000 shares of its common stock, and unsecured senior convertible promissory notes (“Notes”) in the aggregate principal amount of $30,000,000 accompanied by warrants to purchase 20,000,000 shares of Common Stock issuable upon conversion of the Notes at an exercise price of $1.80. In April ~~11,~~2020, the Holders elected to convert the Notes at a conversion price of $1.50 per share and also exercise the Warrants at an exercise price of $1.80 per share. The Company raised an aggregation of $81.1 million from these equity financing transactions, among which $1.6 million was advanced from investors in November 2019, and the remaining $79.5 million was collected in April and May ~~20, 2019,~~2020.

Liquidity

During the three months ended March 31, 2020, the Company ~~raised capital of approximately $3.7 million~~entered into additional private placement agreements with certain private investors and ~~$1.5 million through issuance of 1,680,000 and 1,440,000~~issued 15,000,000 shares of common stock ~~respectively. In September 2019,~~at $0.90 per share and also soldunsecured senior convertible promissory notes (“Notes”) in the aggregate principal amount of $30,000,000 accompanied by warrants to purchase 20,000,000 shares of Common Stock issuable upon conversion of the Notes at an exercise price of $1.80.On April 14 and 15, 2020, the holders of Notes exercised warrants and paid cash consideration of $36,000,000 to the Company.Total equity financing from this transaction was $79.5 million. The Company received ~~an advance of subscription fees of $588,000~~$79.5 million proceeds by April 15, 2020. The Company expects to use the proceeds from ~~private placement investors~~this equity financing as working capital to ~~whom the Company would issue 1,685,000 shares of common stock.~~

expand its commodity trading business.

~~Liquidity~~

In assessing the Company’s liquidity and its ability to continue as a going concern, the Company monitors and analyzes its cash and its ability to generate sufficient cash flow in the future to support its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements and operating expenses obligations.

As of September 30, 2019, the Company had cash balance of $1,496,797 and a positive working capital of $471,970. Management estimated the operating expenses obligation for the next twelve months after issuance of the financial statements to be $4.1 million, which will be partially covered by the cash flows of $2.8 million generated from our luxurious car leasing business with our increased investments in luxurious used cars, the collection of $1 million from our investments in financial products, and the collection of $0.5 million from related parties. The Company plans to fund its operations through revenue generated from its operating lease income, private placements, and financial support commitments from the Company’s Chief Executive Officer and shareholders. The Company’s ability to fund these needs will depend on its future performance, which will be subject in part to general economic, competitive and other factors beyond its control. Based on above financing activities, the ~~current operating plan,~~ management believes that the Company will continue as a going concern in the following 12 months.

Statement of Cash Flows

The following table sets forth a summary of our cash flows. For the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively:

For the
Nine Months Ended
September 30,

2019 2018

Net Cash Used in Operating Activities (1,983,862 ) (626,558 )
Net Cash Used in by Investing Activities (5,387,993 ) (4,508,964 )
Net Cash Provided by Financing Activities 7,399,262 4,892,313
Effect of Exchange Rate Changes on Cash (14,726 ) (277,787 )
Net Increase (Decrease) in Cash $ 12,681 (520,996 )

	For the Three Months Ended March 31,
	2020			2019
Net Cash Used in Operating Activities		(156,559	)		(758,633	)
Net Cash Used in Investing Activities		(3,424,968	)		(999,481	)
Net Cash Provided by Financing Activities		1,063,773			592,724
Effect of exchange rate changes on cash and cash equivalents		98,172			21,969
Net decrease in cash and cash equivalents		(2,419,582	)		(1,143,421	)

Net Cash Used in Operating Activities

During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we had a cash outflow from operating activities of ~~$1,983,862, an increase~~$156,559, a decrease of ~~$1,357,304~~$602,074 from a cash outflow of ~~$626,558~~$758,633 for the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019. We incurred a net loss for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 of ~~$3,262,994,~~$139,972, a ~~change~~decrease of ~~$11,745,347~~$1,689,854 from the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, during which we ~~generated~~recorded a net ~~income~~loss of ~~$8,482,353.~~$1,829,826. In addition to the change in profitability, the decrease in net cash used in operating activities was the result of several factors, including:

●

~~A gain on disposal~~An increase of ~~discontinued operations~~$132,271 in changes of ~~$9,794,873 and net cash provided by operating activities from discontinued operations of $1,769,566~~other current assets for the ~~nine~~three months ended ~~September 30, 2018;~~

●

~~An increase~~March 31, 2020 because the Company recognized but yet collected interest income of $85,275, and deferred NASDAQ service fees of $33,750, as compared with a decrease of $29,320 in ~~impairment losses on operating lease~~changes of other current assets ~~totaling $96,318 relating to~~for the ~~used luxurious car leasing business launched in May 2018;~~three months ended March 31, 2019 as a result of timely collection of petty cash from staff; and

●

502,391 restricted shares were issued to service providers as compensation for past services, at a fair value of ~~$884,208; and~~$884,208

●

~~A decrease in changes of noncurrent liabilities of $1,311,000 as a result of the settlement using shares against legal proceedings.~~

Net Cash Used in Investing Activities

Net cash used in investing activities for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 was ~~$5,387,993~~$3,424,968 as compared to net cash used in investing activities of ~~$4,508,964~~$999,481 for the ~~nine~~three months ended ~~September 30, 2018.~~ March 31, 2019.

The cash used in investing activities for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 was for the ~~purchases of used luxurious cars of $2,079,115, investments in investment security and equity investees of $1,084,225, investments in financial products of $1,000,000 and~~ loans disbursed to third parties and related parties of ~~$1,540,758.~~$1,831,708 and $1,593,260, respectively.

Net cash used in investing activities for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 was ~~mainly for net cash~~combined effects of ~~$1,270,070 used in investing activities from discontinued operation,~~ purchase of two used luxurious cars of ~~$1,882,476,~~$406,757 and loans disbursed to two third parties of ~~$1,473,458.~~$592,724.

Net Cash Provided by Financing Activities

During the ~~nine~~three months ended ~~September 30,~~March 31, 2020, the cash provided by financing activities was mainly attributable to borrowings from related parties of $1,063,773. During the three months ended March 31, 2019, the cash provided by financing activities was mainly attributable to borrowings from third parties of ~~$2,294,781, cash raised in registered direct offerings of $4,653,440, and advance of subscription fees from shareholders.~~

During the nine months ended September 30, 2018, the cash provided by financing activities was mainly attributable to cash raised in a private placement of common stock of $3,265,370, and borrowings from third parties of $1,473,458.

$592,724.

Off-balance Sheet Arrangements

We do not have any off-balance sheet arrangements as of ~~September 30, 2019.~~March 31, 2020.

Contractual Obligations

As of ~~September 30, 2019,~~March 31, 2020, the annual amounts of future minimum payments under certain of our contractual obligations were:

											Less than
	Total		Three Months Ending December 31, 2019		Year Ending December 31, 2020		Year Ending December 31, 2021 and thereafter		Total		1 year		1-2 years		Thereafter
Contractual obligations:
Operating lease (1) (2)	$	11,683	$	11,683	$	-		-
Operating lease (1)									$	365,076	$	312,413	$	52,663		-
Total	$	11,683	$	11,683	$	-	$	-	$	365,076	$	312,413	$	52,663	$	-

(1)

During the ~~six~~three months ended ~~June 30, 2019, we~~March 31, 2020, the Company entered into ~~three~~one additional lease ~~contracts.~~contract. As of ~~September 30, 2019,~~March 31, 2020, we had one rental free office lease agreement with a third party and four office lease agreement with a third parties which expire ~~in September 2020.~~through June 30, 2021, among which two lease agreements have leases term over 12 months.

(2)

~~As permitted by ASC 842,~~The Company classifies these lease agreements as operating leases in accordance with expected durations of less than 12 months from inception (i.e. short-term leases) were excluded from the Company’s calculation of its lease liability and right-of-use lease asset. Furthermore, as permitted by ASC 842, the Company elected to apply the package of practical expedients, which allows companies not to reassess: (a) whether its expired or existing contracts are or contain leases, (b) the lease classification for any expired or existing leases, and (c) initial direct costs for any existing leases. As of September 30, 2019, the Company had one lease agreement with a lease term of 24 months from its inception, with lease prepayment of $58,838 and remaining balance due in October 2019. Consequently, ROU assets and lease liabilities shall be recognized on adoption of ASCTopic 842. ~~As of September 30, 2019, the Company recognized ROU assets of $55,283 and operating lease liabilities of nil, respectively.~~

Critical Accounting Policies

Please refer to Note 2 of the Consolidated Financial Statements included in this Form 10-Q for details of our critical accounting policies.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~Recent Accounting Pronouncements~~

Not applicable.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

~~Please~~Based on an evaluation under the supervision and with the participation of the Company’s management, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act were not effective as of March 31, 2020 (please refer to ~~Note 2(p)~~Item 9A. Controls and Procedures enclosed in Form 10-K filed on May 29, 2020).

Limitations on the Effectiveness of Disclosure Controls. Readers are cautioned that our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the ~~Consolidated~~control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any control design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Control over Financial ~~Statements included~~Reporting

There were no changes in ~~Form 10-Q for details of~~ our ~~recently issued accounting standards.~~internal control over financial reporting during the quarter ended March 31, 2020 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II. OTHER INFORMATION

~~ITEM 1. LEGAL PROCEEDINGS~~

ITEM 1.

LEGAL PROCEEDINGS

The Company is involved in various legal actions arising in the ordinary course of its business.

a)	~~2014 Class Action litigation~~

On August 6, 2014, a purported shareholder Andrew Dennison filed a putative class action complaint in the United States District Court District of New Jersey (the “N.J. district court”) relating to a July 25, 2014 press release about the Company’s progress in recovering a significant portion of the $5.4 million the Company paid in the first quarter of 2014 on behalf of loan guarantee customers. The action, Andrew Dennison v. Bat Group, Inc., et al., Case No. 2:2014-cv-04956, alleges that the Company and its current and former officers and directors Huichun Qin, Long Yi, Jianming Yin, Jinggen Ling, Xiangdong Xiao, and John F. Levy violated the federal securities laws by misrepresenting in prior public filings certain material facts about the risks associated with its loan guarantee business. On October 2, 2014, purported shareholders Zhang Yun and Sanjiv Mehrotra (the “Yun Group”) asserted substantially similar claims against the same defendants in a putative class action captioned Zhang Yun v. China Bat Group, Inc., et al., Case No. 2:14-cv-06136 (D. N.J.). Neither complaint states the amount of damages sought.

On December 29, 2014, the N.J. district court entered an order transferring the action. The transfer was effected on January 22, 2015, and assigned docket number 1:15-cv-00557-ALC (S.D.N.Y.) (the “Securities Class Action”). Under the schedule stipulated by the parties, the Yun Group was to file an amended com plaint within 60 days of the date that the transfer was effected, and the defendants’ date to answer or move was within 60 days of that filing.

b)a)	2015 Derivative ~~action~~Action

c)	~~2017 Class Action~~

The Company and its directors were party to a lawsuit filed on September 1, 2017, by certain a stockholder of the Company on behalf of himself and similarly situated stockholders of the Company GLG in the Chancery Court of the State of Delaware (the “Delaware Chancery Court”) (Case No. 2017-0633-JTL) (the “Action”), Plaintiff stockholders which sought injunctive relief, costs, and attorney’s fees. Plaintiff’s Verified Class Action Complaint (“Complaint”) alleged that the Company’s directors breached their fiduciary duties to the Company’s stockholders by failing to disclose all necessary material information relating to the Company’s entry into an the Exchange Agreement (“Exchange Agreement”) with Sorghum Investment Holdings Limited (“Sorghum”) on August 9, 2017, and preventing the Company’s stockholders from casting a fully informed vote on the Company’s acquisition of Sorghum, and other proposals contained in the Company’s preliminary proxy statement, dated August 14, 2017 (“Preliminary Proxy Statement”).

d)b)	2017 Arbitration with Sorghum

2018 Court Matter with Shanghai Nonobank Financial Information Service Co. Ltd.

On August 2, 2018, the Company became party to an action filed by Shanghai Nonobank Financial Information Service Co. Ltd. (“Plaintiff”) in the Supreme Court for the State of New York, New York County (“NY Supreme Court”) (Index No. 653834/~~2018)~~2018 (the “Action”). Plaintiff’s ~~Complaint~~complaint seeks to recover approximately $3.5 million of Plaintiff’s funds that were allegedly required to be held in escrow in New York pursuant to an agreement by and between Plaintiff, Yang Jie and Yi Lin (the “Complaint”). Plaintiff has alleged that the funds were required to be held in escrow in a New York attorney trust account pending the alleged consummation of a merger between Plaintiff’s parent company and the Company. Plaintiff alleged two causes of action against the Company for fraud/fraudulent inducement and conversion. On August 30, 2018, the Company filed a motion to dismiss Plaintiff’s causes of action against the Company. The Court has scheduled oral arguments on the Company’s motion to dismiss for May 1, 2019.

2020 Court Matter with Harrison Fund

On April 6, 2020, the Company filed a law suit against Harrison Fund, LLC (“Harrison Fund”) in the United States District Court for the Northern District of California (the “District Court”) (Case No. 3:20-cv-2307). The Company had invested $1,000,000 in Harrison Fund around May 2019. However, Harrison Fund had been reluctant to disclose related investment information to the Company and it was discovered that certain information presented on Harrison Fund’s brochure appeared to be problematic. The Company demanded a return of its investment from Harrison Fund. When the Company failed to obtain a response from Harrison Fund, it filed the complaint against Harrison Fund seeking to recover the $1,000,000 investment.

~~ITEM 1A. RISK FACTORS~~

ITEM 1A.

RISK FACTORS

As of the date of this Report, ~~and except as set forth below,~~ there have been no material changes to the risk factors disclosed in our annual report on Form 10-K filed with the SEC on ~~April 05, 2019.~~May 29, 2020.

~~Risks Related to Our Common Stock~~

~~We can provide no assurance that our Common Stock will continue to meet Nasdaq listing requirements.~~

On June 12, 2019, the Company received a notification letter (the “Notification”) from the Nasdaq Listing Qualifications Staff of The NASDAQ Stock Market LLC (“Nasdaq”) notifying the Company that did not meet the following requirements: (i) because the exercise price for the warrants issued on April 11, 2019 had been reduced from $2.20 to $1.32 on May 20, 2019 (the “Replacement Warrants”), below the minimum price requirements set forth in Nasdaq Listing Rule 5635(d)(1), the Company was required to obtain shareholder approval as set forth in Nasdaq Listing Rule 5635(d)(2); (ii) Staff has determined to aggregate the offering pursuant to the Securities Purchase Agreement dated April 11, 2019 and the offering pursuant to the Securities Purchase Agreement dated May 20, 2019 for purposes of the Nasdaq’s shareholder approval rules; and (iii) the Company was also required to submit a Listing of Additional Shares Notification Form as set forth in Nasdaq Listing Rule 5250(e)(2)(D) 15 days prior to issuing any common stock, or any security convertible into common stock in a transaction that may result in the potential issuance of common stock (or securities convertible into common stock) greater than 10% of either the total shares outstanding or the voting power outstanding on a pre-transaction basis.

~~On August 30, 2019, the Company and the Purchasers entered into an amendment and exchange agreement (the “Exchange Agreement”), pursuant to which the Company issued to the Purchasers exchange warrants (the “Exchange Warrants”) to purchase up to 1,680,000 shares of Common Stock with an exercise price of $2.20 in exchange for the cancellation and termination of the Replacement Warrants.~~

In addition, on July 3, 2019, the Company received a notification letter from Nasdaq notifying the Company that the minimum bid price per share for its common shares has been below $1.00 for a period of 30 consecutive business days and the Company therefore no longer meets the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2).

The notification received has no immediate effect on the listing of the Company’s common stock on Nasdaq. Under the Nasdaq Listing Rules, the Company has until December 30, 2019 to regain compliance. If at any time during such 180-day period the closing bid price of the Company’s common shares is at least $1 for a minimum of 10 consecutive business days, Nasdaq will provide the Company written confirmation of compliance.

If we are unable to meet these requirements, our Common Stock could be delisted from Nasdaq. If our Common Stock were to be delisted from Nasdaq, our Common Stock could continue to trade on the OTCQB or similar marketplace following any delisting from Nasdaq. Any such delisting of our Common Stock could have an adverse effect on the market price of, and the efficiency of the trading market for, our Common Stock, not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactions and less coverage of us by securities analysts, if any. Also, if in the future we were to determine that we need to seek additional equity capital, it could have an adverse effect on our ability to raise capital in the public or private equity markets. Any of these changes could cause the value of our shareholders’ investments to decline.

~~ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On ~~April 11, 2019,~~January 22, 2020, the Company ~~and certain institutional investors (the “Purchasers”) entered into a securities purchase agreement (the “April Purchase Agreement”), pursuant to which the Company~~also agreed to sell ~~to such investors an aggregate of 1,680,000 shares of common stock (the “Common Stock”~~unsecured senior convertible promissory notes (“Notes”) in ~~a registered direct offering and~~the aggregate principal amount of $30,000,000 accompanied by warrants to purchase up to approximately 1,680,000 shares of the Company’s Common Stock in a concurrent private placement, for gross proceeds of approximately $3.7 million (the “April Financing”). The offering of the warrants were made pursuant to an exemption from the registration requirements of Section 5 of the Securities Act contained in Section 4(a)(2) thereof and/or Regulation D promulgated thereunder. The warrants will be exercisable immediately following the date of issuance and have an exercise price of $2.20. The warrants will expire 5 years from the earlier of the date on which the20,000,000 shares of Common Stock issuable upon ~~exercise~~conversion of the ~~warrants~~Notes at an exercise price of $1.80. On March 23, 2020, the Company issued the Notes and Warrants to the investors. In April 2020, the Company received the proceeds of $30,000,000 from the issuance of Notes and Warrants.

The Notes have a maturity date of 12 months with an interest rate of 7.5% per annum. Holders have the right to convert all or any part of the Notes into shares of Common Stock at a conversion price of $1.50 per share 30 days after its date of issuance. The Company retains the right to prepay the Note at any time prior to conversion with an amount in cash equal to 107.5% of the principal that the Company elects to prepay.

The Warrants will be exercisable immediately upon the date of issuance at the exercise price of $1.80 for cash (the “Warrant Shares”. The Warrants may also be ~~sold pursuant to an~~exercised cashless if at any time after the six-month anniversary of the issuance date, there is no effective registration statement registering, or ~~may be~~no current prospectus available for, the resale of the Warrant Shares, exercised, ~~on a cashless basis and be immediately sold pursuant to Rule 144.~~ The ~~purchase price for each share~~Warrants will expire five years from its date of ~~Common Stock and the corresponding warrant is $2.20. Each warrant is~~issuance. The Warrants are subject to anti-dilution provisions to reflect stock dividends and splits or other similar ~~transactions, but not as a result of future securities offerings at lower prices.~~transactions. The ~~warrants~~Warrants contain a mandatory exercise right for the Company to force exercise of the ~~warrants~~Warrants if the Company’s common stock trades at or above ~~$6.60~~$3.00 for 20 consecutive trading days, provided, among other things, that the shares issuable upon exercise of the ~~warrants~~ are registered or ~~could~~may be sold pursuant to Rule 144 and the daily trading volume exceeds ~~200,000~~300,000 shares of Common stock per trading day on each trading day in a period of 20 consecutive trading days prior to the applicable date.

~~The Company entered into~~In April 2020, the Holders elected to convert the Notes at a ~~letter agreement dated February 25, 2019 with Maxim Group LLC, as exclusive placement agent (the “Placement Agent”), pursuant to which~~conversion price of $1.50 per share and also exercise the ~~Placement Agent agreed to act as~~Warrants at an exercise price of $1.80 per share, and paid a cash consideration of $36,000,000 for the ~~sole lead/exclusive placement agent in connection with the April Financing. The Company agreed to pay the Placement Agent an aggregate fee equal to 7%~~exercise of the gross proceeds raised in the April Financing. The Company also agreed to reimburse the Placement Agent for certain expenses, including for fees and expenses related to legal expenses limited to $90,000.

~~The Company intends to use the net proceeds from the April Financing for working capital and general corporate purposes. The April Financing closed on~~Warrants by April 15, ~~2019, subject to satisfaction of customary closing conditions.~~

~~On May 20, 2019, the Company and the Purchasers entered into~~2020. As a ~~second securities purchase agreement (the “May Purchase Agreement”), pursuant to which the Company agreed to sell to such investors~~result, an aggregate of ~~1,440,000 shares of Common Stock in a registered direct offering and warrants to purchase up to approximately 1,080,000~~40,000,000 shares of the Company’s Common Stock ~~in a concurrent private placement, for gross proceeds of approximately $1.5 million (the “May Financing”). The offering of the warrants~~ were made pursuant to an exemption from the registration requirements of Section 5 of the Securities Act contained in Section 4(a)(2) thereof and/or Regulation D promulgated thereunder. The warrants will be exercisable after 6 months of the date of issuance and have an exercise price of $1.32. The warrants will expire 5.5 years from the date of issuance. The purchase price for each share of Common Stock and the corresponding warrant is $1.05. Each warrant is subject to anti-dilution provisions to reflect stock dividends and splits or other similar transactions, but not as a result of future securities offerings at lower prices. The warrants contain a mandatory exercise right for the Company to force exercise of the warrants if the Company’s common stock trades at or above $3.96 for 20 consecutive trading days provided, among other things, that the shares issuable upon exercise of the warrants are registered or could be sold pursuant to Rule 144 and the daily trading volume exceeds 200,000 shares per trading day on each trading day in a period of 20 consecutive trading days prior to the applicable date. In addition, the Company agreed to reduce the exercise of the warrants issued on ~~April 15, 2019 from $2.20 to $1.32.~~May 18, 2020.

The Company entered into another letter agreement dated May 17, 2019 with the Placement Agent, pursuant to which the Placement Agent agreed to act as the sole lead/exclusive placement agent in connection with the May Financing. The Company agreed to pay the Placement Agent an aggregate fee equal to 7% of the gross proceeds raised in the May Financing. The Company also agreed to reimburse the Placement Agent for certain expenses, including for fees and expenses related to legal expenses limited to $20,000.

The Company intends to use the net proceeds from the May Financing for working capital and general corporate purposes. The May Financing closed on May 22, 2019, subject to satisfaction of customary closing conditions.

~~On August 30, 2019, the Company and the Purchasers entered into theExchange Agreement, pursuant to which the Company issued to the Purchasers theExchange Warrantsto purchase up to 1,680,000 shares of Common Stock with an exercise price of $2.20 in exchange for the cancellation and termination of the Replacement Warrants.~~

~~ITEM 3. DEFAULTS UPON SENIOR SECURITIES~~

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

~~ITEM 4. MINE SAFETY DISCLOSURES~~

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

~~ITEM 5. OTHER INFORMATION~~

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS

Exhibit No.		Description

3.1*		Certificate of Incorporation of Registrant (incorporated by reference to Exhibit 3.1 of the draft registration statement on Form DRS filed on February 14, 2013)
3.2*		Bylaws of Registrant (incorporated by reference to Exhibit 3.2 of the draft registration statement on Form DRS filed on February 14, 2013)
3.3*		Articles of Association of Wujiang Luxiang Rural Microcredit Co. Ltd. (incorporated by reference to Exhibit 3.3 of the registration statement on Form S-1/A filed on June 27, 2013)
3.4*		Certificate of Approval of Wujiang Luxiang Rural Microcredit Co. Ltd. (incorporated by reference to Exhibit 3.4 of the registration statement on Form S-1 filed on June 7, 2013)
3.5*		Certificate of Amendment of the Certificate of Incorporation of Registrant (incorporated by reference to Exhibit 3.5 of the registration statement on Form S-1/A filed on July 16, 2013)
3.43.6		Certificate of Amendment to the Certificate of Incorporation of Registrant (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on January 16, 2019)
3.7*		Certificate of Amendment to the Certificate of Incorporation of Registrant, incorporated herein by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on June 7, 2019
3.8*		Certificate of Amendment to the Certificate of Incorporation of Registrant, incorporated herein by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on March 12, 2020
4.1*		Form of ~~Exchange~~Common Stock Purchase Warrant, ~~(incorporated~~incorporated herein by reference to Exhibit 4.1 of the Current Report on Form 8-K filed on April 12, 2019
4.2*		Form of Common Stock Purchase Warrant, incorporated herein by reference to Exhibit 4.1 of the Current Report on Form 8-K filed on May 22, 2019

4.3*		Form of Amended & Restated Common Stock Purchase Warrant, incorporated herein by reference to Exhibit 4.2 of the Current Report on Form 8-K filed on May 22, 2019
4.4*		Form of Exchange Warrant, incorporated herein by reference to Exhibit 4.1 of the Current Report on Form 8-K filed on September 3, ~~2019)~~2019
10.1*		Form of ~~Exchange~~Securities Purchase Agreement, ~~dated August 30, 2019, among Bat Group, Inc. and certain institutional investors (incorporated~~incorporated by reference to Exhibit 10.1 toof the Current Report on Form 8-K filed on ~~September 3, 2019)~~January 22, 2020
10.2*		Form of Note Securities Purchase Agreement, incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed on January 22, 2020
10.3*		Unofficial Translation of Warehousing Agreement dated January 22, 2020, by and between Huamucheng and Foshan Nanchu Storage Management Co., Ltd., incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K filed on January 22, 2020
10.4*		Unofficial Translation of Purchase Agreement dated January 22, 2020, by and between Huamucheng and Shenzhen Qianhai Baiyu Supply Chain Co., Ltd., incorporated by reference to Exhibit 10.4 of the Current Report on Form 8-K filed on January 22, 2020
10.5*		Unofficial Translation of Sales Agreement dated January 22, 2020, by and between Huamucheng and Yunfeihu Cross-border E-Commerce Co., Ltd., incorporated by reference to Exhibit 10.5 of the Current Report on Form 8-K filed on January 22, 2020
10.6*		Amended and Restated Employment Agreement dated January 9, 2020 by and between Registrant and Renmei Ouyang, incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on January 10, 2020
10.7*		Employment Agreement dated January 9, 2020 by and between Registrant and Qun Xie, incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed on January 10, 2020
10.8*		Director Offer Letter dated January 9, 2020 by and between Registrant and Qun Xie, incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K filed on January 10, 2020
31.1**		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
31.2**		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
32.1**		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*	Previously filed

**	Filed herewith

4536

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TD HOLDINGS, INC.

	~~BAT GROUP, INC.~~

Date: ~~November 14, 2019~~June 26, 2020	By:	/s/ ~~Jiaxi Gao~~Renmei Ouyang
	Name:	~~Jiaxi Gao~~Renmei Ouyang
	Title:	Chief Executive Officer (Principal Executive Officer)

	By:	/s/ Yang An
	Name:	Yang An
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)

4637

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001		GLG		Nasdaq Capital Market

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

	September 30,			December 31,
	2019			2018
	(Unaudited)
ASSETS
Cash	$	1,496,797		$	1,484,116
Loans receivable from third parties		1,451,608			-
Due from related parties		476,975			-
Other current assets		177,345			87,922
Total current assets		3,602,725			1,572,038

Investment security		200,000			-
Investments in equity investees		840,536
Investments in financial products		1,000,000			-
Loan receivable from a third party, noncurrent		49,031
Property and equipment, net		4,320			5,524
Right-of-use lease assets, net		55,283			-
Operating lease assets, net		2,529,976			1,634,018
Total noncurrent assets		4,679,146			1,639,542

Total Assets	$	8,281,871		$	3,211,580

LIABILITIES AND EQUITY
Advances from customers	$	101,640		$	6,208
Third parties loans		2,136,363			218,100
Due to related parties		16,345			-
Advance of subscription from shareholders		588,000			-
Other current liabilities		288,407			185,049
Total current liabilities		3,130,755			409,357

Related party loan, noncurrent		148,495			-
Total noncurrent liabilities		148,495			-

Total Liabilities		3,279,250			409,357

Commitments and Contingencies

Shareholders’ Equity
Series A Preferred Stock (par value $0.001 per share, 1,000,000 shares authorized at September 30, 2019 and December 31, 2018, respectively; nil shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively)		-			-
Series B Preferred Stock (par value $0.001 per share, 5,000,000 shares authorized at September 30, 2019 and December 31, 2018, respectively; nil shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively)		-			-
Common stock (par value $0.001 per share, 100,000,000 shares authorized; 8,646,297 and 5,023,906 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively)*		8,646			5,024
Additional paid-in capital		34,299,372			28,765,346
Accumulated deficit		(28,719,598	)		(25,457,090	)
Accumulated other comprehensive loss		(585,313	)		(511,057	)
Total BAT Group, Inc.’s Shareholders’ Equity		5,003,107			2,802,223

Non-controlling loss		(486	)		-
Total Equity		5,002,621			2,802,223
Total Liabilities and Equity	$	8,281,871		$	3,211,580

	March 31, 2020			December 31, 2019
ASSETS
Current Assets
Cash	$	27,101		$	2,446,683
Loans receivable from third parties		3,735,799			1,955,697
Due from related parties		4,823,038			3,310,883
Other current assets		291,063			166,617
Total current assets		8,877,001			7,879,880

Investments in equity investees		963,154			972,807
Deposit in investment in equity investee		14,105			14,351
Loan receivable from a third party, noncurrent		49,368			50,230
Property and equipment, net		3,386			3,835
Right-of-use lease assets, net		401,034			41,188
Leasing business assets, net		2,306,133			2,426,109
Total noncurrent assets		3,737,180			3,508,520

Total Assets	$	12,614,181		$	11,388,400

LIABILITIES AND EQUITY
Current Liabilities
Advances from customers	$	14,987		$	15,249
Third party loans payable		2,369,669			2,367,967
Due to related parties		2,005,891			1,017,362
Stock subscription advance		-			1,600,000
Income tax payable		62,124			14,735
Lease liabilities, current		302,028			-
Other current liabilities		402,301			420,101
Total Current Liabilities		5,157,000			5,435,414

Non-current Liabilities
Related party loan, noncurrent		149,515			152,124
Lease liabilities, noncurrent		52,352			-
Total Non-current Liabilities		201,867			152,124

Total Liabilities		5,358,867			5,587,538

Commitments and Contingencies (Note 13)

Equity
Common stock (par value $0.001 per share, 100,000,000 shares authorized; 28,585,111 and 11,585,111 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively)		28,585			11,585
Stock subscription receivable		(13,500,000	)		-
Additional paid-in capital		53,606,170			38,523,170
Accumulated deficit		(32,526,743	)		(32,391,040	)
Accumulated other comprehensive loss		(339,857	)		(334,281	)
Total Shareholders’ Equity		7,268,155			5,809,434

Non-controlling interests		(12,841	)		(8,572	)
Total Equity		7,255,314			5,800,862

Total Liabilities and Equity	$	12,614,181		$	11,388,400

	For the Nine Months Ended September 30, 2019
	Ordinary shares				Additional paid-in		Accumulated			Other Accumulated other comprehensive			Non- controlling			Total
	Shares*		Amount		capital		deficit			loss			interests			Equity

Balance as at December 31, 2018		5,023,906	$	5,024	$	28,765,346	$	(25,457,090	)	$	(511,057	)	$	-		$	2,802,223
Issuance of common stocks to service providers		502,391		502		883,706		-			-			-			884,208
Issuance of common stocks pursuant to registered direct offering, net of transaction cost		3,120,000		3,120		4,650,320		-			-			-			4,653,440
Net loss		-		-		-		(3,262,508	)		-			(486	)		(3,262,994	)
Foreign currency translation adjustments		-		-		-		-			(74,256	)		-			(74,256	)
Balance as at September 30, 2019		8,646,297	$	8,646	$	34,299,372	$	(28,719,598	)	$	(585,313	)	$	(486	)	$	5,002,621

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018

Income from operating leases	$	564,614		$	140,856		$	1,505,508		$	237,577

Operating expenses
Operating lease expenses		344,310			-			877,320			-
Depreciation expenses on operating lease assets		83,806			35,336			185,985			47,794
Total lease expenses		428,116			35,336			1,063,305			47,794

Selling, general, and administrative expenses		556,430			741,762			3,596,706			1,615,039
Changes in fair value of noncurrent liabilities		-			-			-			166,540
Impairment on operating lease assets		-			-			96,318			-
Total operating expenses		984,546			777,098			4,756,329			1,829,373

Other income (expenses), net
Interest income (expenses)		27,089			2,216			(12,173	)		2,531
Total other income (expenses), net		27,089			2,216			(12,173	)		2,531

Net loss from continuing operations before income taxes		(392,843	)		(634,026	)		(3,262,994	)		(1,589,265	)

Income tax expenses		-			(991	)		-			(1,011	)
Net loss from continuing operations		(392,843	)		(635,017	)		(3,262,994	)		(1,590,276	)

Net income from discontinued operations		-			-			-			10,072,629

Net (loss) income		(392,843	)		(635,017	)		(3,262,994	)		8,482,353

Less: Net income (loss) attributable to non-controlling interests		5			-			(486	)		-

Net (loss) income attributable to BAT Group, Inc.’s Shareholders	$	(392,848	)	$	(635,017	)	$	(3,262,508	)	$	8,482,353

Comprehensive (loss) income
Net (loss) income	$	(392,843	)	$	(635,017	)	$	(3,262,994	)	$	8,482,353
Foreign currency translation adjustment		(57,232	)		211,638			(74,256	)		94,553
Reclassified to net income from discontinued operations		-			-			-			(125,220	)
Total comprehensive (loss) income		(450,075	)		(423,379	)		(3,337,250	)		8,451,686
Less: Total comprehensive loss attributable to non-controlling interests		5			-			(486	)		-
Comprehensive (loss) income attributable to BAT Group, Inc.	$	(450,080	)	$	(423,379	)	$	(3,336,764	)	$	8,451,686
(Loss) income per share - basic and diluted	$	(0.05	)	$	(0.13	)	$	(0.46	)	$	1.90
Net loss per share from continuing operations – basic and diluted	$	(0.05	)	$	(0.13	)	$	(0.46	)	$	(0.36	)
Net income per share from discontinued operations – basic and diluted	$	-		$	-		$	-		$	2.26

Weighted Average Shares Outstanding-Basic and Diluted		8,646,297			4,919,122			7,122,560			4,458,093

	For the Nine Months Ended September 30, 2018
	Ordinary shares				Additional paid-in			Accumulated			Subscription advanced from a			Other Accumulated other comprehensive			Non-controlling		Total (Deficit)
	Shares*		Amount		capital			deficit			shareholder			income (loss)			interests		Equity

Balance as at December 31, 2017		3,850,183	$	3,850	$	71,439,432		$	(81,534,396	)	$	699,974		$	4,818,653		$	-	$	(4,572,487	)
Issuance of common stocks and warrants to two managements		40,000		40		699,934			-			(699,974	)		-			-		-
Issuance of common stocks in connection with class action settlement		190,000		190		1,477,351			-			-			-			-		1,477,541
Issuance of common stocks in connection with private placements		838,939		839		3,264,531			-			-			-			-		3,265,370
Disposition of CCC BVI						(48,430,149	)		48,430,149			-			(4,912,716	)				(4,912,716	)
Net income		-		-		-			8,482,353			-			-			-		8,482,353
Foreign currency translation adjustments		-		-		-			-			-			(30,667	)		-		(30,667	)
Balance as at September 30, 2018		4,919,122	$	4,919	$	28,451,099		$	(24,621,894	)	$	-		$	(124,730	)	$	-	$	3,709,394

	Common Stock				Additional paid-in		Accumulated			Subscription advanced from a			Accumulated other comprehensive			Non-controlling			Total (Deficit)
	Shares		Amount		capital		Deficit			shareholder			income (loss)			interests			Equity

Balance as at December 31, 2018		5,023,906	$	5,024	$	28,765,346	$	(25,457,090	)	$	-		$	(511,057	)	$	-		$	2,802,223
Issuance of common stock to service providers		502,391		502		883,706		-			-			-			-			884,208
Net loss		-		-		-		(1,829,826	)		-			-			-			(1,829,826	)
Foreign currency translation adjustments		-		-		-		-			-			57,743			-			57,743
Balance as at March 31, 2019		5,526,297	$	5,526	$	29,649,052	$	(27,286,916	)	$	-		$	(453,314	)	$	-		$	1,914,348

Balance as at December 31, 2019		11,585,111	$	11,585	$	38,523,170	$	(32,391,040	)	$	-		$	(334,281	)	$	(8,572	)	$	5,800,862
Issuance of common stocks in connection with private placements		17,000,000		17,000		15,083,000		-			(13,500,000	)		-			-			1,600,000
Net loss		-		-		-		(135,703	)		-			-			(4,269	)		(139,972	)
Foreign currency translation adjustments		-		-		-		-			-			(5,576	)		-			(5,576	)
Balance as at March 31, 2020		28,585,111	$	28,585	$	53,606,170	$	(32,526,743	)	$	-		$	(339,857	)	$	(12,841	)	$	7,255,314

	For the Three Months Ended September 30, 2019
	Ordinary shares				paid-in Additional		Accumulated			Other Accumulated other comprehensive			Non- controlling			Total
	Shares*		Amount		capital		deficit			loss			interests			Equity

Balance as at June 30, 2019		8,646,297	$	8,646	$	34,299,372	$	(28,326,750	)	$	(528,081	)	$	(491	)	$	5,452,696
Net (loss) income		-		-		-		(392,848	)		-			5			(392,843	)
Foreign currency translation adjustments		-		-		-		-			(57,232	)		-			(57,232	)
Balance as at September 30, 2019		8,646,297	$	8,646	$	34,299,372	$	(28,719,598	)	$	(585,313	)	$	(486	)	$	5,002,621

Name	●	Background	Ownership
HC High Summit Holding Limited (“HC High BVI”)		● A BVI company ● Incorporated on March 22, 2018 ● A holding company	100% owned by the Company
HC High Summit Limited (“HC High HK”)		● A Hong Kong company ● Incorporated on April 16, 2018 ● A holding company	100% owned by HC High BVI
Hao Limo Technology (Beijing) Co. Ltd. (“Hao Limo”)		● A PRC company and deemed a wholly foreign owned enterprise (“WOFE”) ● Incorporated on May 10, 2018 ● Registered capital of $15 million ● A holding company	WOFE, 100% owned by HC High HK
Beijing Tianxing Kunlun Technology Co. Ltd. (“Beijing Tianxing”)*		● A PRC limited liability company ● Incorporated on April 17, 2018 ● Registered capital of $31,839 (RMB 200,000) ● Engaged in operating leasing business of used luxurious cars	VIE of Hao Limo
Shenzhen Huamucheng Trading Co., Ltd. (“Huamucheng”)		● A PRC limited liability company ● Incorporated on December 30, 2013 ● Registered capital of $1,417,736 (RMB 10 million) with registered capital fully paid-up ● Engaged in commodity trading business and providing supply chain management services to customers	VIE of Hao Limo

	September 30,		December 31,		As of March 31, 2020						As of December 31, 2019
	2019		2018		Beijing Tianxing		Huamucheng		Total		Beijing Tianxing		Huamucheng		Total
					(unaudited)		(unaudited)		(unaudited)
ASSETS
Cash	$	1,121,326	$	991,385	$	5,780	$	2,184	$	7,964	$	94,380	$	1,730,793	$	1,825,173
Loans receivable from third parties		952,608		-		1,374,581		738,829		2,113,410		1,364,125		-		1,364,125
Due from GLG and Hao Limo*		372,470		-
Due from TD and Hao Limo*						990,195		-		990,195		966,882		-		966,882
Due from related parties		476,975		-		292,828		4,360,949		4,653,777		470,154		2,840,729		3,310,883
Other current assets		219,629		87,922		148,404		28,330		176,734		164,922		2,848		167,770
Investment in equity investees		840,536		-		553,154		-		553,154		562,807		-		562,807
Operating lease assets, net		2,529,976		1,634,018
Leasing business assets, net						2,306,133		-		2,306,133		2,426,109		-		2,426,109
Other noncurrent assets		53,351		5,524		43,162		375,363		418,525		18,186		-		18,186
Total Assets	$	6,566,871	$	2,718,849	$	5,714,237	$	5,505,654	$	11,219,891	$	6,067,565	$	4,574,370	$	10,641,935

LIABILITIES
Advances from customers	$	101,640	$	6,209	$	14,987	$	-	$	14,987	$	15,249	$	-	$	15,249
Other current liabilities		215,329		102,549		317,481		496,252		813,733		218,688		207,834		426,522
Third parties loans		2,255,439		218,100		2,045,250		141,052		2,186,302		2,080,941		315,729		2,396,670
Due to GLG and Hao Limo **		5,073,533		2,937,927
Due to related parties						234,329		1,062,965		1,297,294		197,733		166,332		364,065
Due to TD and Hao Limo **						5,120,488		2,036,116		7,156,604		5,197,531		2,577,356		7,774,887
Total Liabilities	$	7,645,941	$	3,264,785	$	7,732,535	$	3,736,385	$	11,468,920	$	7,710,142	$	3,267,251	$	10,977,393

	For the Three Months Ended March 31, 2020									For the Three Months Ended March 31, 2019
	Beijing Tianxing			Huamucheng			Total			Beijing Tianxing			Huamucheng		Total
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)		(unaudited)
Revenue	$	14,051		$	1,469,009		$	1,483,060		$	399,999		$	-	$	399,999
Cost of revenue	$	(99,314	)	$	(1,055,860	)	$	(1,155,174	)	$	(237,651	)	$	-	$	(237,651	)
Operating expenses	$	(70,613	)	$	(264,900	)	$	(335,513	)	$	(702,041	)	$	-	$	(702,041	)
Net (loss) income	$	(213,444	)	$	143,930		$	(69,514	)	$	(529,230	)	$	-	$	(529,230	)

	For the Three Months Ended March 31, 2020									For the Three Months Ended March 31, 2019
	Beijing Tianxing			Huamucheng			Total			Beijing Tianxing			Huamucheng		Total
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)		(unaudited)
Net Cash Used in Operating Activities	$	(94,559	)	$	(295,142	)	$	(389,701	)	$	(342,335	)	$	-	$	(342,335	)
Net Cash Used in by Investing Activities		(34,377	)		(2,343,539	)		(2,377,916	)		(999,481	)		-		(999,481	)
Net Cash Provided by Financing Activities		40,607			913,427			954,034			592,724			-		592,724
Effect of Exchange Rate Changes on Cash		(271	)		(3,355	)		(3,627	)		20,390			-		20,390
Net Decrease in Cash		(88,600	)		(1,728,609	)		(1,817,209	)		(728,702	)		-		(728,702	)
Cash at Beginning of Period		94,380			1,730,793			1,825,173			991,385			-		991,385
Cash at End of Period	$	5,780		$	2,184		$	7,964		$	262,683		$	-	$	262,683

	March 31, 2020		December 31, 2019

Balance sheet items, except for equity accounts		7.0896		6.9680

~~Level 1~~	–	~~Quoted prices in active markets for identical assets or liabilities.~~
~~Level 2~~	–	Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
~~Level 3~~	–	~~Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.~~

	September 30, 2019
	Balance		% of ownership
	(Unaudited)

Chengdu Jianluo Technology Co., Ltd.	$	280,179		40	%
Shanghai Huxin Technology Co., Ltd.		280,179		40	%
Shanghai Yaoku Technology Co., Ltd.		280,178		40	%

	$	840,536

	Investment			% of ownership			Investment dates

Chengdu Jianluo Technology Co., Ltd. (“Chengdu Jianluo”) (a)	$	282,103			40	%	June 28, 2019
Shanghai Huxin Technology Co., Ltd. (“Shanghai Huxin”) (a)		282,103			40	%	July 4, 2019
Hangzhou Yihe Network Technology Co., Ltd. (“Hangzhou Yihe”) (b)		410,000			20	%	December 17, 2019
		974,206
Less: Share of results of equity investees		(11,052	)
	$	963,154

	March 31, 2020		December 31, 2019

Third parties loans payable	$	2,369,669	$	2,367,967

	Number of Shares			Weighted-Average Grant Date Fair Value
Balance of RSUs outstanding at December 31, 2018		-			-
Grants of RSUs		502,391			1.76
Vested RSUs		(502,391	)		1.76
Forfeited RSUs		-			-
Balance of unvested RSUs at September 30, 2019	$	-		$	-

	Number of shares		Weighted average life	Expiration dates

Balance of warrants outstanding as of December 31, ~~2018~~		~~273,370~~	~~3.94 years~~
~~Grants of Warrants on April 11, 2019~~		~~1,680,000~~	~~5 years~~	~~April 15, 2024~~
~~Grants of Warrants on May 20 2019~~		~~1,080,000~~	~~5.5 years~~	~~November 23, 2024~~
~~Balance of warrants outstanding as of September 30,~~ 2019		3,033,370	~~4.63~~4.38 years
Grant of warrants during the three months ended March 31, 2020		-
Exercise of warrants during the three months ended March 31, 2020		-
Forfeiture of warrants during the three months ended March 31, 2020		-
Balance of warrants outstanding as of March 31, 2020		3,033,370	3.78 years

	April 11,			August 30,			May 20,
	2019			2019			2019
				(Replacement Warrants)

Terms of warrants		60 months			55.3 months			66 months
Exercise price		1.32			2.20			1.32
Risk free rate of interest		2.77	%		2.77	%		2.77	%
Dividend yield		0.00	%		0.00	%		0.00	%
Annualized volatility of underlying stock		55.6	%		63.45	%		57.04	%

Name		Relationship with the Company
Chengdu Jianluo Technology Co., Ltd. (“Chengdu Jianluo”)		An associate of the Company, over which the Company has 40% equity interest and exercises significant influence
Shanghai Huxin Technology Co., Ltd. (“Shanghai ~~Huxin��~~Huxin”)		An associate of the Company, over which the Company has 40% equity interest and exercises significant influence
Shenzhen Qianhai Baiyu Supply Chain Co., Ltd. (“Qianhai Baiyu”)		Controlled by Mr. Zhiping Chen, the legal representative of Huamucheng
Guangzhou Chengji Investment Development Co., Ltd. (“Guangzhou Chengji”)		Controlled by Mr. Weicheng Pan, who is an independent director of the Company.
Jiaxi Gao		Chief Executive Office of the Company prior to January 9, 2020
Guotao Deng		Legal representative of an entity over which the Company exercised significant influence
Tao Sun		Senior Management of the Company
Shun Li		Legal representative of Beijing Tianxing
Lu Zhao		Senior Management of the Company

	March 31, 2020		December 31, 2019

Qianhai Baiyu (i)	$	4,360,948	$	2,840,728
Chengdu Jianluo (ii)		444,587		452,346
Shanghai Huxin (iii)		17,503		17,809
Total Due from related parties	$	4,823,038	$	3,310,883

	March 31, 2020		December 31, 2019

Guangzhou Chengji (1)	$	1,920,589	$	970,318
Lu Zhao (2)		70,306		33,269
Jiaxi Gao (3)		7,994		8,134
Tao Sun (3)		6,515		4,206
Guotao Deng (3)		487		1,435
Total	$	2,005,891	$	1,017,362

	For the Three Months Ended March 31, 2020
	Tianxing Business			Huamucheng Business			Unallocated			Total
Revenue	$	14,051		$	1,469,009		$	-		$	1,483,060
Cost of revenue and related tax		(99,314	)		(1,055,860	)		-			(1,155,174	)
Gross profit	$	(85,263	)	$	413,149		$	-		$	327,886
Interest (expense) income, net	$	(57,425	)	$	44,061		$	19,001		$	5,637
Income tax expense	$	-		$	(48,380	)	$	-		$	(48,380	)
Segment (loss) profit	$	(213,444	)	$	143,930		$	(70,458	)	$	(139,972	)
Segment assets as of March 31, 2020	$	4,724,042		$	5,505,654		$	2,384,485		$	12,614,181

	March 31, 2020		December 31, 2019

Rights of use lease assets	$	401,034	$	41,188

Operating lease liabilities, current	$	302,028	$	-
Operating lease liabilities, noncurrent		52,352		-
Total operating lease liabilities	$	354,380	$	-

Twelve months ended March 31, 2021	$	312,413
Twelve months ended March 31, 2022		52,663
Total lease payments		365,076
Less: imputed interest		(10,696	)
Present value of lease liabilities	$	354,380

	Rental payments

Three months ended December 31, 2019	$	11,683
Year ending December 31, 2020		-
Total	$	11,683