UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~June 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission file number: 001-36055

TD Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware

45-4077653

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

25th Floor, Block C, Tairan Building

No. 31 Tairan 8th Road, Futian District

Shenzhen, Guangdong, PRC

518000

(Address of principal executive offices)

(Zip Code)

+86 (0755) 88898711

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~May 13,~~August 9, 2022, ~~213,001,894~~276,237,565 shares of the Company’s Common Stock, $0.001 par value per share, were issued and outstanding.

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TD HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

As of ~~March 31,~~June 30, 2022 and December 31, 2021

(Expressed in U.S. dollars, except for the number of shares)

	March 31,			December 31,			June 30,			December 31,
	2022			2021			2022			2021
ASSETS
Current Assets
Cash and cash equivalents	$	3,574,342		$	4,311,068		$	3,925,416		$	4,311,068
Loans receivable from third parties		175,999,505			115,301,319			177,575,850			115,301,319
Accounts receivable		55,004			-			2,997			-
Prepayments		1,892,498			-			218			-
Due from related parties		-			11,358,373			-			11,358,373
Other current assets		4,950,447			3,288,003			5,148,250			3,288,003
Inventories		133,857			-			1,505,869			-
Total current assets		186,605,653			134,258,763			188,158,600			134,258,763

Non-Current Assets
Plant and equipment, net		4,704			2,872			3,809			2,872
Goodwill		71,335,973			71,028,283			67,475,493			71,028,283
Intangible assets, net		20,319,879			21,257,337			18,246,404			21,257,337
Right-of-use assets, net		864,671			888,978			737,385			888,978
Total non-current assets		92,525,227			93,177,470			86,463,091			93,177,470

Total Assets	$	279,130,880		$	227,436,233		$	274,621,691		$	227,436,233

LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	3,236,098		$	3,337,758		$	3,058,260		$	3,337,758
Bank borrowings		1,134,180			1,129,288			1,072,802			1,129,288
Third party loans payable		485,370			476,779			465,344			476,779
Contract liabilities		7,145,609			5,221,874			5,184			5,221,874
Due to related parties		-			21,174			-			21,174
Income tax payable		9,564,169			8,441,531			10,068,891			8,441,531
Lease liabilities		337,372			310,665			316,978			310,665
Other current liabilities		4,809,745			4,297,793			4,864,492			4,297,793
Convertible promissory notes		2,244,675			3,562,158			4,397,325			3,562,158
Total current liabilities		28,957,218			26,799,020			24,249,276			26,799,020

Non-Current Liabilities
Deferred tax liabilities		3,986,521			4,178,238			3,572,320			4,178,238
Lease liabilities		534,913			586,620			435,842			586,620
Total non-current liabilities		4,521,434			4,764,858			4,008,162			4,764,858

Total liabilities		33,478,652			31,563,878			28,257,438			31,563,878

Commitments and Contingencies (Note 16)

Equity
Common stock (par value $0.001 per share, 600,000,000 shares authorized; 213,001,894 and 138,174,150 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively)		213,002			138,174
Common stock (par value $0.001 per share, 600,000,000 shares authorized; 273,680,088 and 138,174,150 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively)								273,680			138,174
Additional paid-in capital		272,020,401			224,790,409			284,805,054			224,790,409
Statutory surplus reserve		1,477,768			1,477,768			1,477,768			1,477,768
Accumulated deficit		(40,606,746	)		(42,200,603	)		(39,181,475	)		(42,200,603	)
Accumulated other comprehensive income		12,547,803			11,666,607
Accumulated other comprehensive (loss)/income								(1,010,774	)		11,666,607
Total Equity		245,652,228			195,872,355			246,364,253			195,872,355

Total Liabilities and Equity	$	279,130,880		$	227,436,233		$	274,621,691		$	227,436,233

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

TD HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS)

~~For the Three Months Ended March 31, 2022 and 2021~~

(Expressed in U.S. dollars, except for the number of shares)

	For the Three Months Ended March 31,						For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2022			2021			2022			2021			2022			2021

Revenues
- Sales of commodity products – third parties	$	47,583,965		$	9,033,467		$	53,108,294		$	57,989,381		$	100,692,259		$	67,022,848
- Sales of commodity products – related parties		-			20,403,015			-			1,523,616			-			21,926,631
- Supply chain management services – third parties		575,151			145,775			575,101			326,650			1,150,252			472,425
Total revenue		48,159,116			29,582,257
Total Revenue								53,683,395			59,839,647			101,842,511			89,421,904

Cost of revenues
Cost of revenue
- Commodity product sales-third parties		(47,590,576	)		(9,032,412	)		(53,250,178	)		(57,932,603	)		(100,840,754	)		(66,965,015	)
- Commodity product sales-related parties		-			(20,386,181	)		-			(1,531,336	)		-			(21,917,517	)
- Supply chain management services-third parties		(11,602	)		(1,050	)
Total operating costs		(47,602,178	)		(29,419,643	)
- Supply chain management services – third parties								5,912			(2,592	)		(5,690	)		(3,642	)
Total cost of revenue								(53,244,266	)		(59,466,531	)		(100,846,444	)		(88,886,174	)

Gross profit		556,938			162,614			439,129			373,116			996,067			535,730

Operating expenses
Selling, general, and administrative expenses		(2,247,707	)		(1,570,379	)		(1,875,779	)		(2,054,354	)		(4,123,486	)		(3,624,733	)
Share-based payment for service		-			(1,695,042	)		-			-			-			(1,695,042	)
Total operating expenses		(2,247,707	)		(3,265,421	)		(1,875,779	)		(2,054,354	)		(4,123,486	)		(5,319,775	)

Net Operating Loss		(1,690,769	)		(3,102,807	)

Other income(expenses), net
Other income (expenses), net
Interest income		4,390,341			2,098,857			4,366,318			2,946,236			8,756,659			5,045,093
Interest expenses		(110,326	)		(127,423	)		(129,116	)		(155,825	)		(239,442	)		(283,248	)
Amortization of beneficial conversion feature relating to issuance of convertible promissory notes		(213,367	)		-			(320,291	)		-			(533,658	)		-
Other income (expenses), net		95,709			(6,434	)		(221,953	)		(379,924	)		(126,244	)		(386,358	)
Total other income, net		4,162,357			1,965,000			3,694,958			2,410,487			7,857,315			4,375,487

Net income (loss) before income taxes		2,471,588			(1,137,807	)		2,258,308			729,249			4,729,896			(408,558	)

Income tax expenses		(877,731	)		(400,469	)		(833,037	)		(371,393	)		(1,710,768	)		(771,862	)

Net income (loss)		1,593,857			(1,538,276	)	$	1,425,271		$	357,856		$	3,019,128		$	(1,180,420	)

Comprehensive Income (loss)
Comprehensive Income (Loss)
Net income (loss)		1,593,857			(1,538,276	)	$	1,425,271		$	357,856		$	3,019,128		$	(1,180,420	)
Foreign currency translation adjustments		881,196			(643,578	)		(13,558,577	)		2,706,148			(12,677,381	)		2,062,570
Comprehensive Income (loss)	$	2,475,053		$	(2,181,854	)
Comprehensive income (loss)							$	(12,133,306	)	$	3,064,004		$	(9,658,253	)	$	882,150

Earnings (loss) per share - basic and diluted

Continuing Operation- Earnings (loss) per share – basic	$	0.01		$	(0.02	)
Continuing Operation- Earnings (loss) per share –diluted	$	0.01		$	(0.02	)
Income (Loss) per share - basic and diluted
Income (loss) per share – Basic							$	0.01		$	0.00		$	0.01		$	(0.01	)
Income (loss) per share – Diluted							$	0.01		$	0.00		$	0.01		$	(0.01	)

Weighted Average Shares Outstanding-Basic		198,441,160			93,209,034			213,595,841			96,821,039			206,060,364			95,025,014

Weighted Average Shares Outstanding- Diluted		213,552,950			95,764,295			242,849,487			102,312,155			235,314,010			100,516,130

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

TD HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in U.S. dollars, except for the number of shares)

	Common Stock				Additional paid-in		Accumulated			Surplus		Accumulated other comprehensive			Total (Deficit)
	Shares		Amount		capital		Deficit			Reserve		loss			Equity

Balance as of December 31, 2021		138,174,150	$	138,174	$	224,790,409	$	(42,200,603	)	$	1,477,768	$	11,666,607		$	195,872,355
Issuance of common stocks in connection with private placements		122,100,000		122,100		56,797,900		-			-		-			56,920,000
Issuance of common stocks pursuant to exercise of convertible promissory notes		13,405,938		13,406		2,303,745		-			-		-			2,317,151
Beneficial conversion feature relating to issuance of convertible promissory notes		-		-		913,000		-			-		-			913,000
Net income		-		-		-		3,019,128			-		-			3,019,128
Foreign currency translation adjustments		-		-		-		-			-		(12,677,381	)		(12,677,381	)
Balance as of June 30, 2022		273,680,088	$	273,680	$	284,805,054	$	(39,181,475	)	$	1,477,768	$	(1,010,774	)	$	246,364,253

Balance as of December 31, 2020		79,131,207	$	79,131	$	151,407,253	$	(39,255,945	)	$	913,292	$	6,885,495		$	120,029,226
Issuance of common stocks in connection with private placements		15,000,000		15,000		24,435,000		-			-		-			24,450,000
Issuance of common stocks pursuant to registered direct offering		1,353,468		1,354		2,191,634		-			-		-			2,192,988
Issuance of common stocks pursuant to exercise of warrants		1,558,891		1,559		1,445,767		(1,439,826	)		-		-			7,500
Share-based payment for service		-		-		1,695,042		-			-		-			1,695,042
Net loss		-		-		-		(1,180,420	)		-		-			(1,180,420	)
Foreign currency translation adjustments		-		-		-		-			-		2,062,570			2,062,570
Balance as of June 30, 2021		97,043,566	$	97,044	$	181,174,696	$	(41,876,191	)	$	913,292	$	8,948,065		$	149,256,906

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

TD HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in U.S. dollars, except for the number of shares)

	Common Stock				Additional paid-in		Accumulated			Surplus		Accumulated other comprehensive			Total (Deficit)
	Shares		Amount		capital		Deficit			Reserve		income (loss)			Equity

Balance as of March 31, 2022		213,001,894	$	213,002	$	272,020,401	$	(40,606,746	)	$	1,477,768	$	12,547,803		$	245,652,228
Issuance of common stocks in connection with private placements		57,100,000		57,100		11,362,900		-			-		-			11,420,000
Issuance of common stocks pursuant to exercise of convertible promissory notes		3,578,194		3,578		508,753		-			-		-			512,331
Beneficial conversion feature relating to issuance of convertible promissory notes		-		-		913,000					-		-			913,000
Net income		-		-		-		1,425,271			-		-			1,425,271
Foreign currency translation adjustments		-		-		-		-			-		(13,558,577	)		(13,558,577	)
Balance as of June 30, 2022		273,680,088	$	273,680	$	284,805,054	$	(39,181,475	)	$	1,477,768	$	(1,010,774	)	$	246,364,253

Balance as of March 31, 2021 (Restated, See Note 2)		96,293,566	$	96,294	$	181,167,946	$	(42,234,047	)	$	913,292	$	6,241,917		$	146,185,402
Issuance of common stocks in connection with exercise of warrants		750,000		750		6,750		-			-		-			7,500
Net Income		-		-		-		357,856			-		-			357,856
Foreign currency translation adjustments		-		-		-		-			-		2,706,148			2,706,148
Balance as of June 30, 2021		97,043,566	$	97,044	$	181,174,696	$	(41,876,191	)		913,292	$	8,948,065		$	149,256,906

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

TD HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in U.S. dollar)

	For the Six Months Ended June 30,
	2022			2021
Cash Flows from Operating Activities:
Net income(loss)	$	3,019,128		$	(1,180,420	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Amortization of intangible assets		2,016,116			1,895,871
Depreciation of plant and equipment		3,851			130
Amortization of discount on convertible promissory notes		219,333			163,333
Amortization of right of use assets		170,084			-
Amortization of beneficial conversion feature relating to issuance of convertible promissory notes		533,658			-
Monitoring fee relating to convertible promissory notes		105,760			-
Share-based payment for service		-			1,695,042
Standstill fee relating to convertible promissory notes		-			356,934
Interest expense for convertible promissory notes		206,567			199,093
Deferred tax liabilities		(410,877	)		(411,736	)
Changes in operating assets and liabilities:
Other current assets		37,371			601,683
Escrow account receivable		(3,103	)		(2,520	)
Inventories		(1,558,802	)		(882,764	)
Prepayments		(226	)		(5,108,162	)
Contract liabilities		(5,129,684	)		1,677,349
Accounts payable		(116,501	)		2,297,940
Due to related parties		(20,822	)		(5,518,273	)
Due from third parties		(1,022,489	)		-
Due from related parties		(331,761	)		(457,032	)
Income tax payable		2,121,985			1,175,327
Other current liabilities		721,712			(291,177	)
Lease liabilities		(104,310	)		-
Due to third party loans payable		12,849			-
Net cash provided by (used in) operating activities		469,839			(3,789,382	)
Cash Flows from Investing Activities:
Purchases of intangible assets		-			(5,100,490	)
Purchases of plant and equipment		(4,936	)		(2,332	)
Purchases of operating lease assets		(58,617	)		-
Final payment of acquisition of a subsidiary		-			(15,533,312	)
Payment made on loan to related parties		-			(7,174,955	)
Payment made on loans to third parties		(80,502,961	)		(45,057,871	)
Collection of loans from related parties		10,839,631			43,687,593
Collection of loans from third parties		10,069,408			13,370,395
Investments in other investing activities		(444,871	)		-
Net cash used in investing activities		(60,102,346	)		(15,810,972	)
Cash Flows from Financing Activities:						��
Proceeds from issuance of common stock under ATM transaction		-			2,192,989
Proceeds from issuance of common stock under private placement transactions		56,920,000			24,450,000
Proceeds from exercise of warrants		-			7,500
Proceeds from issuance of convertible promissory notes		3,000,000			4,500,000
Proceeds from borrowings from third parties		-			1,993,828
Repayments made on loans to related parties		-			(550,930	)
Payments made on loans to third parties		-			(9,496,586	)
Net cash provided by financing activities		59,920,000			23,096,801
Effect of exchange rate changes on cash and cash equivalents		(673,145	)		700,055
Net increase/(decrease) in cash and cash equivalents		(385,652	)		4,196,502
Cash at beginning of period		4,311,068			2,700,013
Cash at end of period	$	3,925,416		$	6,896,515
Supplemental Cash Flow Information
Cash paid for interest expense	$	43,310		$	-
Cash paid for income tax	$	1,744		$	75,416
Supplemental disclosure of Non-cash investing and financing activities
Right-of-use assets obtained in exchange for operating lease obligations	$	58,617		$	-
Issuance of common stocks in connection with conversion of convertible promissory notes	$	3,230,150		$	-
Issuance of common stocks in connection with warrant cashless exercise in March 2021	$	-		$	1,439,826

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

TD HOLDINGS, INC.

~~UNAUDITED CONDENSED~~NOTES TO CONSOLIDATED ~~STATEMENTS OF CHANGES IN EQUITY~~

~~For the Three Months Ended March 31, 2022 and 2021~~

~~(Expressed in U.S. dollars, except for the number of shares)~~

Common Stock Additional
paid-in Accumulated Surplus Accumulated
other
comprehensive
Total
(Deficit)

Shares Amount capital Deficit Reserve income(loss) Equity
Balance as of December 31, 2020 79,131,207 $ 79,131 $ 151,407,253 $ (39,255,945 ) 913,292 $ 6,885,495 $ 120,029,226
Issuance of common stocks in connection with private placements 15,000,000 15,000 24,435,000 - - - 24,450,000
Issuance of common stocks pursuant to registered direct offering 1,353,468 1,354 2,191,634 - - - 2,192,988
Issuance of common stocks pursuant to exercise of warrants 808,891 809 1,439,017 (1,439,826 ) - - -
Net loss - - - (1,538,276 ) - - (1,538,276 )
Foreign currency translation adjustments - - - - - (643,578 ) (643,578 )
Balance as of March 31, 2021 96,293,566 $ 96,294 $ 179,472,904 $ (42,234,047 ) 913,292 $ 6,241,917 $ 144,490,360

Balance as of December 31, 2021 138,174,150 $ 138,174 $ 224,790,409 $ (42,200,603 ) 1,477,768 $ 11,666,607 $ 195,872,355
Issuance of common stocks in connection with private placements 65,000,000 65,000 45,435,000 - - - 45,500,000
Issuance of common stocks pursuant to exercise of convertible promissory notes 9,827,744 9,828 1,794,992 - - - 1,804,820
Net income - - - 1,593,857 - - 1,593,857
Foreign currency translation adjustments - - - - - 881,196 881,196
Balance as of March 31, 2022 213,001,894 $ 213,002 $ 272,020,401 $ (40,606,746 ) 1,477,768 $ 12,547,803 $ 245,652,228

FINANCIAL STATEMENTS(UNAUDITED)

~~The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.~~

~~TD HOLDINGS, INC.~~

~~UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~For the Three Months Ended March 31, 2022 and 2021~~

~~(Expressed in U.S. dollar)~~

For the Three Months
Ended March 31,
2022 2021

Cash Flows from Operating Activities:
Net income (loss) $ 1,593,857 (1,538,276 )
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation of plant and equipment 3,217 -
Amortization of intangible assets 1,029,186 883,938
Amortization of right of use assets 76,983 -
Amortization of discount on convertible promissory notes 111,000 40,833
Interest expense for convertible promissory notes 93,285 69,417
Amortization of beneficial conversion feature of convertible promissory notes 213,367 -
Monitoring fee relating to convertible promissory notes 69,685 -
Deferred tax liabilities (209,744 ) (205,458 )
Share-based payment for service - 1,695,042
Changes in operating assets and liabilities:
Escrow account receivable (54,985 ) -
Inventories (133,810 ) -
Other current assets (29,775 ) (696,357 )
Prepayments (1,891,842 ) (8,170,226 )
Contract liabilities 1,900,456 5,501,254
Due to related parties (21,259 ) 641,386
Due from third parties (481,816 )
Due from related parties 28,897 (2,943,162 )
Accounts payable (116,078 ) -
Income tax payable 1,085,694 530,511
Other current liabilities 499,661 (24,417 )
Lease liabilities (19,734 ) -
Due to third party loans payable 6,523 -
Net cash provided by (used in) operating activities 3,752,768 (4,215,515 )
Cash Flows from Investing Activities:
Purchases of plant and equipment (5,039 ) -
Purchases of operating lease assets (58,617 ) -
Purchases of intangible assets - (5,090,323 )
Loans made to related parties - (18,662,034 )
Loans made to third parties (60,177,853 ) (1,307,835 )
Collection of loans from related parties 11,066,822 -
Investments in other investing activities (828,601 ) -
Net cash used in investing activities (50,003,288 ) (25,060,192 )

Cash Flows from Financing Activities:
Proceeds from issuance of common stock under ATM transaction - 2,192,988
Proceeds from issuance of common stock under private placement transactions 45,500,000 24,450,000
Proceeds from convertible promissory notes - 4,500,000
Proceeds from borrowings from related parties - 1,196,697
Repayment made on loans from third parties - (185,103 )
Net cash provided by financing activities 45,500,000 32,154,582

Effect of exchange rate changes on cash and cash equivalents 13,794 57,113

Net (decrease)/increase in cash and cash equivalents (736,726 ) 2,935,988
Cash and cash equivalents at beginning of period 4,311,068 2,700,013
Cash and cash equivalents at end of period $ 3,574,342 $ 5,636,001

Supplemental Cash Flow Information
Cash paid for interest expenses $ 22,109 $ -
Cash paid for income taxes $ 1,781 $ 75,416

Supplemental disclosure of Non-cash investing and financing activities
Right-of-use assets obtained in exchange for operating lease obligations $ 58,617 $ -
Issuance of common stocks in connection with conversion of convertible promissory notes $ 1,804,820 $ -
Issuance of common stocks in connection with warrant cashless exercise in March 2021 $ - $ 1,439,826

~~The accompanying notes are an integral part of the unaudited condensed consolidated financial statements~~.

~~1. ORGANIZATION AND BUSINESS DESCRIPTION~~

ORGANIZATION AND BUSINESS DESCRIPTION

The Company conducts business through Shanghai Jianchi Supply chain Co., Ltd (“Shanghai Jianchi”), a subsidiary of the Company, which is engaged in the commodity trading business and providing supply chain management services to customers in the PRC. Supply chain management services consist of loan recommendation services and commodity product distribution services. The Company incorporated Hainan Jianchi Import and Export Co., Ltd, a subsidiary of Shanghai Jianchi, Hainan Baiyu Cross-border e-commerce Limited, a subsidiary of Tongdow HK, and Yangzhou Baiyu Cross-border e-commerce Limited, a subsidiary of Yangzhou Baiyu Venture Capital Co., Ltd during the ~~three~~six months ended ~~March 31,~~June 30, 2022.

Name	Background		Ownership
HC High Summit Holding Limited (“HC High BVI”)	●	A BVI company		100% owned by the Company
	●	Incorporated on March 22, 2018
	●	A holding company

Tongdow Block Chain Information Technology Company Limited (“Tongdow Block Chain”)	●	A Hong Kong company		100% owned by HC High BVI
	●	Incorporated on April 2, 2020
	●	A holding company

Zhong Hui Dao Ming Investment Management Limited (“ZHDM HK”)	●	A Hong Kong company		100% owned by HC High BVI
	●	Incorporated on March 28, 2007
	●	A holding company

Tongdow E-trading Limited (“Tongdow HK”)	●	A Hong Kong company		100% owned by HC High BVI
	●	Incorporated on November 25, 2010
	●	A holding company

Shanghai Jianchi Supply Chain Company Limited (“Shanghai Jianchi”)	●	A PRC company and deemed a wholly foreign owned enterprise (“WFOE”)		WFOE, 100% owned by Tongdow Block Chain
	●	Incorporated on April 2, 2020
	●	Registered capital of $10 million
	●	A holding company

Tongdow Hainan Digital Technology Co., Ltd. (“Tondow Hainan”)	●	A PRC limited liability company		A wholly owned subsidiary of Shanghai Jianchi
	●	Incorporated on July 16, 2020
	●	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

Shenzhen Baiyu Jucheng Data Techonology Co.,Ltd (“Shenzhen Baiyu Jucheng”)	●	A PRC limited liability company		VIE of Hao Limo before June 25, 2020, and a wholly owned subsidiary of Shanghai Jianchi
	●	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

Shenzhen Qianhai Baiyu Supply Chain Co., Ltd. (“Qianhai Baiyu”)	●	A PRC limited liability company		A wholly owned subsidiary of Shenzhen Baiyu Jucheng
	●	Incorporated on August 17, 2016
	●	Registered capital of $4,523,857 (RMB 30 million) with registered capital of $736,506 (RMB 5 million) paid-up
	●	Engaged in commodity trading business and providing supply chain management services to customers

The following diagram illustrates our corporate structure as of ~~March 31,~~June 30, 2022.

~~2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~(a) Basis of presentation~~

(a)

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation.

The unaudited interim condensed consolidated financial information as of ~~March 31,~~June 30, 2022 and for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021 have been prepared, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures, which are normally included in annual condensed consolidated financial statements prepared in accordance with U.S. GAAP, have been omitted pursuant to those rules and regulations. The unaudited interim condensed consolidated financial information should be read in conjunction with the consolidated financial statements and the notes thereto, included in the Company’s Form 10-K for the fiscal year ended December 31, 2021 previously filed with the SEC on March 16, 2022.

In the opinion of management, all adjustments (which include normal recurring adjustments) are necessary to present a fair statement of the Company’s unaudited condensed consolidated financial position as of ~~March 31,~~June 30, 2022 and its unaudited condensed consolidated results of operations for the three months and six months ended ~~March 31,~~June 30, 2022 and 2021, and its unaudited condensed consolidated cash flows for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the fiscal year or any future periods.

Error Correction

On March 4, 2021, the Company issued 750,000 fully-vested warrants with an exercise price of $0.01, with a five-year life, to an engaged agent to complete the warrant waiver and exercise agreements.

The Company applied Black-Scholes model and determined the fair value of the warrants to be $1.7 million. Significant estimates and assumptions used included stock price on March 4, 2021 of $2.27 per share, risk-free interest rate of one year of 0.08%, life of 5 years, and volatility of 71.57%.

The Company’s quarterly financial statements ended March 31, 2021 contained an error related to above share-based payment for service. Management has determined such error was qualitatively immaterial and the correction was made during this quarter. No restatement to previously issued interim financial statements was deemed necessary.

The following table illustrates the correction of the error had it been shown in the statement of operations on March 31, 2021 in the interim financial statement in Form 10-Q filing on June ~~26,~~25, 2021:

	Three months ended March 31, 2021
Income from operations as reported	$	557,235
Effect on share-based payment for service		(1,695,042	)
Loss from operations as revised	$	(1,137,807	)

	Three months ended March 31, 2021
Net income as reported	$	156,766
Effect on share-based payment for service		(1,695,042	)
Net loss as revised	$	(1,538,276	)

	Three months ended March 31, 2021
EPS as reported	$	0.00
Effect on EPS		(0.02	)
EPS as revised	$	(0.02	)

●	~~Use of estimates~~

The Company included $1,695,042 as share-based payment for service on the condensed consolidated statement of operations for the six months ended June 30, 2021.

Use of estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews these estimates using the currently available information. Changes in facts and circumstances may cause the Company to revise its estimates. Significant accounting estimates reflected in the financial statements include: (i) useful lives and residual value of long-lived assets; (ii) the impairment of long-lived assets and investments; (iii) the valuation allowance of deferred tax assets; (iv) estimates of allowance for doubtful accounts, including loans receivable from third parties and related parties, (v) valuation of Inventory, and (vi) contingencies and litigation.

Foreign currency

●	~~Foreign currency~~

The Company’s financial information is presented in U.S. dollars (“USD”). The functional currency of the Company is the Chinese Yuan Renminbi (“RMB”), the currency of PRC. Any transactions which are denominated in currencies other than RMB are translated into RMB at the exchange rate quoted by the People’s Bank of China prevailing at the dates of the transactions, and exchange gains and losses are included in the statements of operations as foreign currency transaction gain or loss. The consolidated financial statements of the Company have been translated into U.S. dollars in accordance with ASC 830, Foreign Currency Matters. The financial information is first prepared in RMB and then translated into U.S. dollars at period-end exchange rates for assets and liabilities and average exchange rates for revenue and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred. The effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rate. As a result, amounts related to assets and liabilities reported on the statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets.

~~(b) Convertible promissory notes~~

(b)

Convertible promissory notes

Convertible promissory notes are recognized initially at fair value, net of upfront fees, debt discounts or premiums, debt issuance costs and other incidental fees. Upfront fees, debt discounts or premiums, debt issuance costs and other incidental fees are recorded as a reduction of the proceeds received and the related accretion is recorded as interest expense in the consolidated income statements over the estimated term of the facilities using the effective interest method.

(c)

Beneficial conversion feature

~~(c) Beneficial conversion feature~~

The Company evaluates the conversion feature to determine whether it was beneficial as described in ASC 470-20. The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible promissory notes payable and may not be settled in cash upon conversion, is treated as a discount to the convertible promissory notes payable. This discount is amortized over the period from the date of issuance to the date the notes are due using the effective interest method. If the notes payable are retired prior to the end of their contractual term, the unamortized discount is expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the shares of common stock at the commitment date to be received upon conversion.

(d)

Inventory

Inventories of the Company are bulk commodities products, such as precious metals. Inventories are stated at the lower of cost or net realizable value. Costs of inventory are determined using the first-in first-out method. Adjustments to reduce the cost of inventories are made, if required, for decreases in sales prices, obsolescence or similar reductions in the estimated net realizable value.

We keep inventory for our direct sales model. Our inventory control policy requires us to monitor our inventory level and to manage obsolete inventory. Risk is passed to our customers (or to delivery service providers) upon the delivery of commodities to our customers. For a substantial majority of precious metal sold through our network, the whole transaction process takes from a few hours to a few days, thus our inventory risk is limited. For a small portion of our transactions under direct sales model, we hold inventories for repeating customers with relatively stable demands of large quantity based on our transaction data. We analyze historical sales data and days in inventory to establish inventory management plans. We monitor our real-time inventory volume and adjust our inventory management plans based on factors such as fluctuations in supply and prices, seasonality, and sales of a particular product.

(e)

Recent accounting pronouncement

~~(d) Recent accounting pronouncement~~

In June 2016, the FASB issued ASU No. 2016-13 (“ASU 2016-13”) “Financial Instruments - Credit Losses” (“ASC 326”): Measurement of Credit Losses on Financial Instruments” which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in earlier recognition of credit losses. In November 2019, the FASB issued ASU 2019-10 “Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)” which defers the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, for public entities which meet the definition of a smaller reporting company. The Company will adopt ASU 2016-13 effective January 1, 2023. Management is currently evaluating the effect of the adoption of ASU 2016-13 on the consolidated financial statements. The effect will largely depend on the composition and credit quality of our investment portfolio and the economic conditions at the time of adoption.

In January 2017, the FASB issued ASU 2017-04, “Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which simplifies how an entity is required to test goodwill for impairment by eliminating step two from the goodwill impairment test. Step two of the goodwill impairment test measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with its carrying amount. As amended by ASU 2019-10, annual or interim goodwill impairment tests are performed in fiscal years beginning after December 15, 2022. We do not expect that the adoption of this guidance will have a material impact on our financial position, results of operations and cash flows.

In August 2020, the FASB issued ASU No. 2020-06 (“ASU 2020-06”) “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. For public business entities, the amendments in ASU 2020-06 are effective for public entities which meet the definition of a smaller reporting company and are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023. The Company will adopt ASU 2020-06 effective January 1, 2024. Management is currently evaluating the effect of the adoption of ASU 2020-06 on the consolidated financial statements. The effect will largely depend on the composition and terms of the financial instruments at the time of adoption.

Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.

~~3. LOANS RECEIVABLE FROM THIRD PARTIES~~

LOANS RECEIVABLE FROM THIRD PARTIES

March 31,
2022
December 31,
2021

Loans receivable from third parties $ 175,999,505 $ 115,301,319

	June 30, 2022		December 31, 2021

Loans receivable from third parties	$	177,575,850	$	115,301,319

As of ~~March 31,~~June 30, 2022, the Company has ~~eleven~~13 loan agreements compared with ten loan agreements on December 31, 2021. The Company provided loans aggregating ~~$60,177,853~~$80,502,961 for the purpose of making use of idle cash and maintaining long-term customer ~~relationship~~relationships and ~~collected $nil~~paid back $10,069,408 during the ~~three~~six months ended ~~March 31,~~June 30, 2022. These loans will mature ~~in May~~from July 2022 through ~~September 2022,~~June 2023, and ~~charge an~~charges interest rate of 10.95% per annum on these customers. ~~The company has the right to pledge account receivable or inventory.~~

~~As of December 31, 2021, the Company had loans receivable balance of $115,301,319 due from ten customers.~~ Interest income of ~~$4,389,547~~$4,365,653 and ~~$532,730~~$916,010 was ~~accrued~~recognized for the three months ended ~~March 31,~~June 30, 2022 and 2021, respectively. Interest income of $8,755,200 and $1,400,678 was recognized for the six months ended June 30, 2022 and 2021, respectively. As of ~~March 31,~~June 30, 2022 and December 31, 2021, the Company recorded an interest receivable of ~~$3,893,736~~$4,562,726 and $3,090,353 as reflected under “other current assets” in the unaudited condensed consolidated balance sheets.

As of ~~March 31,~~June 30, 2022 and December ~~31,2021~~31, 2021 there was no allowance recorded as the Company considers all of the loans receivable fully collectible.

~~4. PLANT AND EQUIPMENT, NET~~

PLANT AND EQUIPMENT, NET

	March 31, 2022			December 31, 2021			June 30, 2022			December 31, 2021
Cost:
Office equipment	$	8,552		$	3,499		$	8,135		$	3,499
Accumulated depreciation:
Office equipment	$	(3,848	)	$	(627	)	$	(4,326	)	$	(627	)

Plant and equipment, net	$	4,704		$	2,872		$	3,809		$	2,872

Depreciation expense was ~~$3,217,~~$3,851, and currency translation difference was $4$152 for the ~~three~~six months ended ~~March 31,~~June 30, 2022. Purchase of office equipment was ~~$5,039,~~$4,936 and currency translation difference was ~~$14~~$300 for the ~~year~~six months ended ~~March 31,~~June 30, 2022.

~~5. INTANGIBLE ASSETS~~

INTANGIBLE ASSETS

	March 31, 2022			December 31, 2021			June 30, 2022			December 31, 2021
Customer relationships	$	20,701,931		$	20,612,639		$	19,581,607		$	20,612,639
Software copyright		5,198,324			5,175,902			4,917,007			5,175,902
Total		25,900,255			25,788,541			24,498,614			25,788,541

Less: accumulative amortization		(5,580,376	)		(4,531,204	)		(6,252,210	)		(4,531,204	)
Intangible assets, net	$	20,319,879		$	21,257,337		$	18,246,404		$	21,257,337

The Company’s intangible assets consist of customer relationships, which are recorded in connection with acquisitions at their fair value, and software copyright which are purchased from the related party Yunfeihu. Intangible assets with estimable lives are amortized, generally on a straight-line basis, over their respective estimated useful lives of 6.2 years and 6.83 years respectively to their estimated residual values.

~~Amortization expense for~~For the ~~period~~six months ended ~~March 31,~~June 30, 2022, the Company amortized $2,016,116 and ~~year ended December 31, 2021 was $1,029,186 and $3,927,961, respectively. The~~ currency translation difference was ~~$19,986 for~~$295,110. For the ~~period~~six months ended ~~March 31, 2022~~June 30, 2021, the Company amortized $1,895,871 and $~~59,525~~ ~~for the year ended 31 December 2021 respectively.~~

currency translation difference was $8,580. No impairment loss was made against the intangible assets during the ~~three~~six months ended ~~March 31,~~June 30, 2022.

The estimated amortization expense for these intangible assets in the next five years and thereafter is as follows:

Period ending March 31, 2022:	Amount
Period ending June 30, 2022:			Amount
current year	$	3,088,629	$	1,947,655
2023		4,118,172		3,895,309
2024		4,118,172		3,895,309
2025		4,118,172		3,895,309
2026		4,118,172		3,895,309
Thereafter		758,562		717,513
Total:	$	20,319,879	$	18,246,404

~~6. DERIVATIVE FINANCIAL INSTRUMENTS~~

DERIVATIVE FINANCIAL INSTRUMENTS

Derivative Instruments Not Designated As Hedge Accounting Treatment

On April 23, 2021 and May 26, 2022, Hainan Jianchi Import and Export Co., Ltd, a subsidiary of the Company, entered into a contract with CITIC Futures Co., Ltd and Guoyuan Futures Co., Ltd to deal with futures business to hedging sales and purchase commodity products market price ~~risks.~~risks respectively. The two futures contracts are to trade non-ferrous metal products such as aluminum ingots, copper, silver, and gold. The contract is a derivative instrument for accounting purposes. The quantities of product in these agreements are offset and are priced at prevailing market prices. The contract does not qualify for hedge accounting treatment. The Company recognized other current assets on fair value of ~~$379,166,~~$68,539, and the notional amount is about ~~$2.7~~$1.77 million as of ~~March 31,~~June 30, 2022. The realized loss of $128,543 and unrealized gain of ~~$134,834~~$10,447 for the six months ended June 30, 2022, were recognized in other income in the unaudited condensed consolidated statement of operations and comprehensive income (loss). The realized loss of $263,377 and unrealized ~~loss~~gain of ~~$38,470~~$48,917 for the three months ended ~~March 31,~~June 30, 2022, were recognized in other income in the unaudited condensed consolidated statement of operations and comprehensive income (loss).

~~7. GOODWILL~~

GOODWILL

The goodwill associated with the Baiyu Acquisition was initially recognized at the acquisition closing date in October 2020.

Based on an assessment of the qualitative factors, management determined that it is more likely than not that the fair value of the reporting unit is in excess of its carrying amount. Therefore, management concluded that it was not necessary to proceed with the two-step goodwill impairment test. At ~~March 31,~~June 30, 2022 and December 31, 2021, goodwill was ~~$71,335,973~~$67,475,493 and $71,028,283, respectively. No impairment loss or other changes were recorded, except for the influence of foreign currency translation for the three months ended ~~March 31,~~June 30, 2022 and 2021.

~~8. BANK BORROWINGS~~

BANK BORROWINGS

Bank borrowings represent the amounts due to Baosheng County Bank that are due within one year. As of ~~March 31,~~June 30, 2022 and December 31, 2021, bank loans consisted of the following:

	March 31, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Short-term bank loans:
Loan from Baosheng County Bank	$	1,134,180	$	1,129,288	$	1,072,802	$	1,129,288

On August 7, 2020, Qianhai Baiyu entered into three loan agreements with Baosheng County Bank to borrow a total amount of RMB12 million as working capital for one year, with the maturity date of August 7, 2021. The three loans bear a fixed interest rate of 6.5% per annum. The three loans are guaranteed by Shenzhen Herun Investment Co., Ltd, Li Hongbin and Wang Shuang. The loans were repaid in 2020 and 2021, and were finally repaid on August 7, 2021.

In August 2021, Qianhai Baiyu entered into another two loan agreements with Baosheng County Bank to borrow a total amount of RMB7.2 million as working capital for one year, with the maturity date of August 2022. The two loans bear a fixed interest rate of 7.8% per annum. The two loans are guaranteed by Shenzhen Herun Investment Co., Ltd, Li Hongbin and Wang Shuang.

~~9. LEASES~~

LEASES

The Company leases three offices under non-cancelable operating leases, two leases with terms of 38 months and the remaining lease term of 24 months. The Company considers those renewal or termination options that are reasonably certain to be exercised in the determination of the lease term and initial measurement of right-of-use assets and lease liabilities. The amortization of right-of-use assets for lease payment is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet.

The Company determines whether a contract is or contains a lease at the inception of the contract and whether that lease meets the classification criteria of finance or operating lease. When available, the Company uses the rate implicit in the lease 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 discounts lease payments based on an estimate of its incremental borrowing rate.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Supplemental consolidated balance sheet information related to the operating lease was as follows:

	March 31, 2022		December 31, 2021		June 30, 2022		December 31, 2021

Right-of-use lease assets, net	$	864,671	$	888,978	$	737,385	$	888,978

Lease Liabilities-current	$	337,372	$	310,665	$	316,978	$	310,665
Lease liabilities-non current		534,913		586,620		435,842		586,620
Total	$	872,285	$	897,285	$	752,820	$	897,285

The weighted average remaining lease terms and discount rates for the operating lease were as follows as of ~~March 31,~~June 30, 2022:

Remaining lease term and discount rate:
Weighted average remaining lease term (years)	1.42-2.75
Weighted average discount rate	4.75%-5.00	%

For the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021, ~~and 2022,~~ the Company charged total amortization of right-of-use assets of $170,084 and $nil respectively. For the three months ended June 30, 2022 and ~~$76,983~~2021, the Company charged total amortization of right-of-use assets of $93,101 and $nil respectively.

The following is a schedule, by fiscal quarter, of maturities of lease liabilities as of ~~March 31,~~June 30, 2022:

Period ending March 31, 2022:	Amount
Period ending June 30, 2022:			Amount
current year	$	264,752	$	167,783
2023		342,728		325,293
2024		322,178		304,743
Total lease payments		929,658		797,819
Less: imputed interest		57,373		44,999
Present value of lease liabilities		872,285	$	752,820

~~10. OTHER CURRENT LIABILITIES~~

10.

OTHER CURRENT LIABILITIES

	March 31, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Accrued payroll and benefit	$	1,432,695	$	1,265,106	$	1,576,214	$	1,265,106
Other tax payable		2,977,306		2,092,869		2,899,717		2,092,869
Others		399,744		939,818		388,561		939,818
	$	4,809,745	$	4,297,793
Total					$	4,864,492	$	4,297,793

~~11. CONVERTIBLE PROMISSORY NOTES~~

11.

CONVERTIBLE PROMISSORY NOTES

March 31,
2022 December 31,
2021
Convertible notes – principal $ 2,545,988 $ 3,976,240
Convertible notes – discount (415,000 ) (739,367 )
Convertible notes – interest 113,687 325,285
Convertible notes, net $ 2,244,675 $ 3,562,158

On January 6, 2021, the Company entered into a securities purchase agreement with Streeterville Capital, LLC, a Utah limited liability company, pursuant to which the Company issued an unsecured promissory note in the original principal amount of $1,670,000, convertible into shares of common stock, for proceeds of $1,500,000. The Company recorded a debt discount of $170,000, which is being amortized over 12 months. On July 7, 2021, The Company settled the convertible promissory note of the principal amount of $200,000 and issued 260,254 shares of the Company’s common stock on July 8, 2021. On July 16, 2021, the Company settled convertible promissory notes of principal amount of $1,590,694 and amortized interests of $92,499, and issued 1,980,227 shares of the Company’s common stock on July 19, 2021.

	June 30, 2022			December 31, 2021
Convertible promissory notes – principal	$	5,395,760		$	3,976,240
Convertible promissory notes – discount		(1,219,375	)		(739,367	)
Convertible promissory notes – interest		220,940			325,285
Convertible promissory notes, net	$	4,397,325		$	3,562,158

On March 4, 2021, the Company entered into a securities purchase agreement with Streeterville Capital, LLC, pursuant to which the Company issued an unsecured promissory note in the original principal amount of $3,320,000, convertible into shares of common stock, for proceeds of $3,000,000. The Company recorded a debt discount of $320,000, which is being amortized over 12 months. The Company settled convertible promissory notes of $300,000 On September 8, $250,000 on October 15, 2021, $400,000 on October 26, 2021, $100,000 on October 29, 2021, $350,000 on November 1, 2021 and $400,000 on November 9, 2021, and issued 488,982, 525,652, 875,350, 218,838, 765,931, and 875,350 shares of the Company’s common stock on September 15, October 18, 2021, October 28, 2021, November 2, 2021, November 3, 2021, and November 10, 2021, respectively during 2021. The Company settled convertible promissory notesnote of $200,000 on January 5, 2022, $175,000 on January 26, 2022, $175,000 on February 8, 2022, $200,000 on February 25, 2022, $375,000 on March 17, 2022, $500,000 on March 17, 2022, ~~and~~ $179,819 on March 18, 2022 and $262,331.48 on June 8, 2022, respectively, and issued 644,662, 882,412, 943,701, 1,376,652, 2,581,222, 2,500,000, 899,095 and ~~899,095~~1,933,457 shares of the Company’s ~~common stock~~Common Stock on January 10, 2022, January 27, 2022, February 9, 2022, March 2, 2022, March 17, 2022, March 21, 2022, ~~and~~ March 22, 2022 and June 14, 2022, respectively for the ~~three~~six months ended June 30, 2022. As of June 30, 2022, the convertible promissory note issued on March ~~31, 2022.~~4, 2021 has been fully settled.

On October 4, 2021, the Company entered into a securities purchase agreement with Atlas Sciences, LLC, a Utah limited liability company, pursuant to which the Company issued the investor an unsecured promissory note on October 4, 2021 in the original principal amount of $2,220,000, convertible into shares of the Company’s common stock, for $2,000,000 in gross proceeds. The convertible promissory note includes an original issue discount of $200,000 along with $20,000 for the investor’s fees, costs and other transaction expenses incurred in connection with the purchase and sale of the Note. The Company settled convertible promissory note of $250,000 on June 23, 2022 and issued 1,644,737 shares of the Company’s Common Stock on June 27, 2022 for the six months ended June 30, 2022.

On May 6, 2022, the Company entered into a securities purchase agreement with Streeterville Capital, LLC, pursuant to which the Company issued an unsecured promissory note in the original principal amount of $3,320,000, convertible into shares of common stock, for proceeds of $3,000,000. The Company recorded a debt discount of $320,000, which is being amortized over 12 months.

The above ~~three Notes have~~two unsettled convertible promissory notes, issued on October 4, 2021 and May 6, 2022, has a maturity date of 12 months with an interest rate of 10% per annum. The Company retains the right to prepay the ~~Note~~note at any time prior to conversion with an amount in cash equal to 125% of the principal that the Company elects to prepay at any time ~~three~~six months after the issue date, subject to a maximum monthly redemption amount of ~~$187,500,~~$250,000 and $375,000, ~~$250,000~~ respectively. On or before the close of business on the third trading day of redemption, the Company should deliver conversion shares via “DWAC” (DTC’s Deposit/Withdrawal at Custodian system). The Company will be required to pay the redemption amount in cash, or chooses to satisfy a redemption in registered stock or unregistered stock, such stock shall be issued at 80% of the average of the lowest “VWAP” (the volume-weighted average price of the Common Stock on the principal market for a particular Trading Day or set of Trading Days) during the fifteen trading days immediately preceding the redemption notice is delivered.

~~During~~For the period that these Notes are outstanding, the Company will reserve from its authorized and unissued shares of common stock more than 5,000,000 shares, free from preemptive rights, to provide for the issuance of the common stockabove two unsettled convertible promissory notes, upon the full conversion of the Notes. The earlier of (i) 45 days after filing the PRE14C with SEC, or (ii) May 31, 2021 under the assumption of no comments from PRE14C. In the event that the SEC has any comments on the Company’s PRE14C, the Company agrees to grant an additional 30 days to meet the requirement no later than June 30, 2021. On May 3, the first two notes’ outstanding principal amount was increased to $1,790,694 and $3,556,240 or by 7%, respectively, due to a standstill fee application from the borrower. A modification loss of $356,934 was recognized in the condensed consolidated statement of operations in relation to this non-substantial notes modification.

~~Upon~~ evaluation, the Company determined that the Agreements contained embedded beneficial conversion features which met the definition of Debt with Conversion and Other Options covered under the Accounting Standards Codification topic 470 (“ASC 470”). According to ASC 470, an embedded beneficial conversion feature present in a convertible instrument shall be recognized separately at issuance by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital. Pursuant to the ~~agreement,~~agreements, the Company shall recognize embedded beneficial conversion features three months after commitment date of ~~$459,250,~~$610,000 and $913,000 ~~and $610,000~~ respectively. ~~The Company will not recognize embedded beneficial conversion features until July 2021 due to the effective of standstill agreement for the first two notes.~~ Beneficial conversion features have been recognized into discount on convertible promissory notes and additional paid-in capital and such discount will be amortized in ~~twelve~~12 months until the notes will be settled. For the ~~year ended December 31, 2021, the Company has recognized the amortization of beneficial conversion feature $459,250, $ 852,133, and $152,500 to profit. For the~~ three months ended ~~March 31,~~June 30, 2022, the Company has recognized the amortization of beneficial conversion feature ~~$nil, $60,867,~~$168,125, and ~~$152,500~~$152,167 to profit. For the six months ended June 30, 2022, the Company has recognized the amortization of beneficial conversion feature $320,625, and $152,166 to profit. For the settled convertible promissory notes issued on March 4, 2021, the Company has recognized embedded beneficial conversion features $60,867 to profit for the six months ended June 30, 2022, and $nil for the three months ended June 30, 2022.

~~12. CAPITAL TRANSACTIONS~~

12.

CAPITAL TRANSACTIONS

Common stock issued in private placements

On ~~August 26, 2021,~~May 27, 2022, the Company entered into athat certain securities purchase agreement with ~~eight investors,~~ Mr. ~~Shuxiang Zhang~~Xiangjun Wang and ~~Ms. Huiwen Hu,~~Mr. Heung Ming (Henry) Wong, affiliates of the Company, and certain other ~~six~~ non-affiliate purchasers who are “non-U.S. Persons” pursuant to which the Company agreed to sell an aggregate of ~~65,000,000~~57,100,000 shares of Common Stock, par value $0.001 per share, at a per share ~~market~~purchase price of ~~$0.7.~~$0.20. The transaction was consummated on ~~January 11,~~June 24, 2022 by the issuance of ~~65,000,000~~57,100,000 shares of Common Stock. The Company received proceeds of ~~$45,500,000~~$11,420,000 in ~~January~~June 2022.

Common stock issued pursuant to the conversion of convertible promissory notes

The Company settled convertible promissory ~~notes~~note of ~~$200,000~~$262,331.48 on ~~January 5, 2022, $175,000 on January 26, 2022, $175,000 on February~~June 8, 2022 ~~$200,000~~and $250,000 on ~~February 25, 2022, $375,000 on March 17, 2022, $500,000 on March 17, 2022 and $179,819 on March 18,~~June 23, 2022, respectively, and issued ~~644,662, 882,412, 943,701, 1,376,652, 2,581,222, 2,500,000~~1,933,457 and ~~899,095~~1,644,737 shares of the Company’s ~~common stock~~Common Stock on ~~January 10,~~June 14, 2022 ~~January~~and June 27, 2022, ~~February 9, 2022, March 2, 2022, March 17, 2022, March 21, 2022, and March 22, 2022, respectively for the three months ended March 31, 2022.~~respectively.

Warrants

A summary of warrants activity for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was as follows:

	Number of shares		Weighted average life		Weighted average exercise price		Intrinsic Value		Number of shares		Weighted average life		Weighted average exercise price		Intrinsic Value

Balance of warrants outstanding as of December 31, 2021		19,273,370		4.70 years	$	1.43		-
Balance of warrants outstanding and exercisable as of December 31, 2021										19,273,370		4.70 years	$	1.43		-
Granted		-		-		-		-		-		-		-		-
Exercised		-		-	$	-		-		-		-		-		-
Balance of warrants outstanding as of March 31, 2022		19,273,370		4.45 years	$	1.43		-
Balance of warrants outstanding and exercisable as of June 30, 2022										19,273,370		4.20 years	$	1.43		-

As of December 31, 2021, the Company had 19,273,370 shares of warrants, among which 273,370 shares of warrants were issued to two individuals in private placements, and 19,000,000 shares of warrants were issued in three private placements closed on September 22, 2021.

In connection with 19,000,000 shares of warrants, the Company issued warrants to investors to purchase a total of 19,000,000 ordinary shares with a warrant term of five (5) years. The warrants have an exercise price of $1.15 per share.

The Warrants ended on December 31, 2021 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. The warrants did not meet the definition of liabilities or derivatives, and as such they are classified as equity.

~~13. Earnings (LOSS) PER SHARE~~

13.

EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing the net profit or loss by the weighted average number of common shares outstanding during the period. As of ~~March 31,~~June 30, 2022, the principal amount and interest expense of convertible promissory notes are ~~$2,545,988~~$5,395,760 and ~~$113,687.~~$220,940. Total obligations of ~~$2,659,675~~$5,616,700 may be dilutive common shares in the future.

The number of warrants is excluded from the computation as the anti-dilutive effect.

The following table sets forth the computation of basic and diluted loss per common share for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021 respectively:

For the Three Months Ended March 31,
2022 2021

Net income (loss) $ 1,593,857 $ (1,538,276 )

Weighted Average Shares Outstanding-Basic 198,441,160 93,209,034
Weighted Average Shares Outstanding- Diluted 213,552,950 95,764,295
Net income/(loss) per share - basic and diluted
Net income/(loss) per share from continuing operations – basic $ 0.01 $ (0.02 )
Net income/(loss) per share from continuing operations – diluted $ 0.01 $ (0.02 )

	For the Six Months Ended June 30,
	2022		2021

Net income(loss)	$	3,019,128	$	(1,180,420	)

Weighted Average Shares Outstanding-Basic		206,060,364		95,025,014
Weighted Average Shares Outstanding- Diluted		235,314,010		100,516,130
Net loss per share - basic and diluted
Earnings (loss) per share - basic	$	0.01	$	(0.01	)
Earnings (loss) per share - diluted	$	0.01	$	(0.01	)

	For the Three Months Ended June 30,
	2022		2021

Net income	$	1,425,271	$	357,856

Weighted Average Shares Outstanding-Basic		213,595,841		96,821,039
Weighted Average Shares Outstanding-Diluted		242,849,487		102,312,155
Net loss per share - basic and diluted
Earnings (loss) per share - basic	$	0.01	$	0.00
Earnings (loss) per share - diluted	$	0.01	$	0.00

~~14. INCOME TAXES~~

14.

INCOME TAXES

The ~~New Taxation~~Enterprise Income Tax Law of the People’s Republic of China (“PRC tax law”), which was effective on January 1, 2008, stipulates those domestic enterprises and foreign-invested enterprises 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~~six months ended ~~March 31,~~June 30, 2022, 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 for certain subsidiaries and a VIE. As of ~~March 31,~~June 30, 2022 and December 31, 2021, the Company had deferred tax assets of ~~$6,622,947~~$6,983,885 and $4,878,864, respectively. The Company maintains a full valuation allowance on its net deferred tax assets as of ~~March 31,~~June 30, 2022.

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.

For the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021, the Company had current income tax expenses of ~~$1,087,475~~$2,121,645 and ~~$603,616,~~$1,183,596, respectively, and deferred income tax benefit of ~~$209,744~~$410,877 and ~~$203,147~~$411,734 in the connection of intangible assets generated from the Baiyu acquisition, 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 ~~to be~~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.~~RMB100,000. 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 ~~March 31,~~June 30, 2022 and December 31, 2021 and the Company does not believe that its unrecognized tax benefits will change over the next ~~twelve~~12 months.

~~15. RELATED PARTY TRANSACTIONS AND BALANCES~~

15.

RELATED PARTY TRANSACTIONS AND BALANCES

Nature of relationships with related parties

Name		Relationship with the Company
Shenzhen Qianhai Baiyu Supply Chain Co., Ltd. (“Qianhai Baiyu”)		Controlled by Mr. Zhiping Chen, the legal representative of Huamucheng, prior to March 31, 2020
Guangzhou Chengji Investment Development Co., Ltd. (“Guangzhou Chengji”)		Controlled by Mr. Weicheng Pan, who is an independent director of the ~~Company~~Company.
Yunfeihu International E-commerce Group Co., Ltd (“Yunfeihu”)		An affiliate of the Company, over which an immediate family member of Chief Executive Officer owns equity interest and plays a role of director and senior management
Shenzhen Tongdow International Trade Co., Ltd. (“TD International Trade”)		Controlled by an immediate family member of Chief Executive Officer of the Company
Beijing Tongdow E-commerce Co., Ltd. (“Beijing TD”)		Wholly owned by Tongdow E-commerce Group Co., Ltd. which is controlled by an immediate family member of Chief Executive Officer of the Company
Shanghai Tongdow Supply Chain Management Co., Ltd. (“Shanghai TD”)		Controlled by an immediate family member of Chief Executive Officer of the Company
Guangdong Tongdow Xinyi Cable New Material Co., Ltd. (“Guangdong TD”)		Controlled by an immediate family member of Chief Executive Officer of the Company
Yangzhou Tongdow E-commerce Co., Ltd. (“Yangzhou TD”)		Controlled by an immediate family member of Chief Executive Officer of the Company
Tongdow (Zhejiang) Supply Chain Management Co., Ltd. (“Zhejiang TD”)		Controlled by an immediate family member of Chief Executive Officer of the Company
Shenzhen Meifu Capital Co., Ltd. (“Shenzhen Meifu”)		Controlled by Chief Executive Officer of the Company
Shenzhen Tiantian Haodian Technology Co., Ltd. (“TTHD”)		Wholly owned by Shenzhen Meifu
Guotao Deng		Legal representative of ~~Shenzhen Baiyu Jucheng~~Huamucheng before December 31, 2019
Hainan Tongdow International Trade Co.,Ltd. (“(“Hainan TD”)		Controlled by ~~an immediate family member of Chief Executive Officer of~~ the ~~Company~~same ultimate parent company
Yunfeihu modern logistics Co.,Ltd (“Yunfeihu Logistics”)		Controlled by ~~an immediate family member of Chief Executive Officer of~~ the ~~Company~~same ultimate parent company
Shenzhen Tongdow Jingu Investment Holding Co.,Ltd (“Shenzhen ~~Jingu”~~Jingu“)		Controlled by an immediate family member of Chief Executive Officer of the Company
Tongdow E-commerce Group Co.,Ltd (“TD E-commerce”)		Controlled by an immediate family member of Chief Executive Officer of the Company
Fujian Pan		Shareholder of TD Holdings ~~Inc.~~Inc

Balances with related parties

Due from related parties

As of ~~March 31,~~June 30, 2022 and December 31, 2021, the balances with related parties were as follows:

	March 31, 2022		December 31, 2021		June 30, 2022		December 31, 2021

Yunfeihu (i)		-		11,358,373	$	-	$	11,358,373
Total due from related parties	$	-	$	11,358,373	$	-	$	11,358,373

(i)	The balance due from Yunfeihu represented loans provided to the related party is unsecured. The principal and interest of Yunfeihu ~~will~~has be due in May 2022, with an interest rate of 10.95% per annum.

Due to related parties

	March 31, 2022		December 31, 2021		June 30, 2022		December 31, 2021

Other related parties	$	-	$	21,174	$	-	$	21,174
Total due to related parties	$	-	$	21,174	$	-	$	21,174

Transactions with related parties

For the three and six months ended ~~March 31,~~June 30, 2022, ~~and 2021,~~ the Company generated revenues from below related party customers:

	For the Three Months Ended March 31,				For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021		2022		2021
Revenue from sales of commodity products
Yunfeihu	$	-	$	18,764,527	$	-	$	1,523,616	$	-	$	20,284,870
Yangzhou TD		-		1,638,488		-		-		-		1,641,761
Total revenues generated from related parties	$	-		20,403,015	$	-	$	1,523,616	$	-	$	21,926,631

-4)

Purchases from a related party

For the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021, the Company purchased commodity products from below related party vendors:

	For The Three Months Ended March 31,				For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021		2022		2021
Purchase of commodity products
Yunfeihu					$	-	$	-	$	-	$	1,641,373
Zhejiang TD						-		-		-		7,950,833
Hainan TD						-		-		-		3,689,844
TD International Trade						-		-		-		1,121,386
Yangzhou TD	$	-		6,788,055		-		-		-		6,801,614
TD International Trade		-		1,119,150
Hainan TD		-		3,682,488
Zhejiang TD		-		7,934,983
Yunfeihu		-		1,638,101
	$	-		21,162,777
Total purchase of commodity products					$	-	$	-	$	-	$	21,205,050

For the three months and six months ended ~~March 31,~~June 30, 2021, ~~and 2022,~~ the Company purchased copyright software of ~~$5,033,096~~$5,107,410 from ~~Yunfeihu and $nil, respectively.~~“Yunfeihu”.

~~16. COMMITMENTS AND CONTINGENCIES~~

16.

COMMITMENTS AND CONTINGENCIES

Commitments

a Non-cancellable operating leases

The following table sets forth our contractual obligations as of ~~March 31, 2022：~~June 30, 2022:

Payment due by March 31
Total 2023 2024 2025
Operating lease commitments for property management expenses under lease agreements $ 84,941 $ 30,888 $ 30,888 $ 23,165

	Payment due by June 30
	Total		2023		2024		2025
Operating lease commitments for property management expenses under lease agreement	$	73,040	$	29,216	$	29,216	$	14,608

Contingencies

~~a 2020 Court Matter with Harrison Fund~~

2020 Court Matter with Harrison Fund

On April 6, 2020, the Company filed a lawsuit 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 on its investment from Harrison Fund. When the Company failed to obtain a response from Harrison Fund, it filed ~~the~~a complaint against Harrison Fund seeking to recover the $1,000,000 investment.

Due to the uncertainty arising from this pending legal proceeding, a full impairment has been applied against the Company’s investment in financial products.

17.

Risks and uncertainties

(1)

Credit risk

~~b 2021 Convertible Promissory Notes Beneficial convertible features~~

On January 6, 2021, the Company entered into a securities purchase agreement with Streeterville Capital, LLC, a Utah limited liability company, in the original principal amount of $1,670,000 convertible into shares of common stock of $1,500,000 in gross proceeds. On March 4, 2021, the Company entered into an additional securities purchase agreement in the original principal amount of $3,320,000 convertible into shares of common stock of $3,000,000 in gross proceeds. On October 4, 2021, the Company entered into a securities purchase agreement with Atlas Sciences, LLC, a Utah limited liability company, in the original principal amount of $2,220,000 convertible into shares of common stock of $2,000,000 in gross proceeds.

The Company shall have the right to redeem all or any portion of the convertible promissory note dated as of January 6, 2021 and March 4, 2021 after three months of the issue date and the convertible promissory note dated as of October 4, 2021 after six months of the issue date. Upon evaluation, embedded beneficial conversion features shall be recognized at $459,250, $913,000 and $610,000, respectively.

~~17. Risks and uncertainties~~

~~(1) Credit risk~~

Assets that potentially subject the Company to a significant concentration of credit risk primarily consist of cash and cash equivalents and trade receivables with its customers. The maximum exposure of such assets to credit risk is their carrying amount as at the balance sheet dates. As of ~~March 31,~~June 30, 2022, approximately ~~$3.51~~$1.98 million was primarily deposited in financial institutions located in Mainland China, which were uninsured by the government authority. To limit exposure to credit risk relating to deposits, the Company primarily place cash deposits with large financial institutions in China, which management believes are of high credit quality. The Company considers the credit standing of customers when making sales to manage the credit risk. Considering the nature of the business at current, the Company believes that the credit risk is not material to its operations.

The Company’s operations are carried out in Mainland China. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC as well as by the general state of the PRC’s economy. In addition, the Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, rates and methods of taxation, and the extraction of mining resources, among other factors.

~~(2) Liquidity risk~~

(2)

Liquidity risk

The Company is also exposed to liquidity risk which is the risk that it is unable to provide sufficient capital resources and liquidity to meet its commitments and business needs. Liquidity risk is controlled by the application of financial position analysis and monitoring procedures. When necessary, the Company will turn to other financial institutions and the owners to obtain short-term funding to meet the liquidity shortage.

The Company is required to meet specified financial requirements to maintain its listing on the Nasdaq Capital Market. The minimum bid price per share of its common shares has been below $1.00 for a period of 30 consecutive business days and, therefore, no longer meets the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2). The Company hasn’t until February 28, 2022 to regain compliance, it must prove to be eligible for an additional 180 calendar days that the Company meets the continued listing requirement for the market value of publicly held shares and all other initial listing standards for Nasdaq except for Nasdaq Listing Rule 5550(a)(2). On March 1, 2022, the Company has received notice from Nasdaq indicating that, while it has not regained compliance with the minimum bid price requirement, the Staff of Nasdaq has determined that the Company is eligible for an additional 180 calendar day period, or until August 29, 2022, to regain compliance. If the Company doesn’t regain compliance until August 29, 2022, Nasdaq will provide notice that the common stock of the Company will be subject to delisting from trading.

(3)

Foreign currency risk

The Company’s financial information is presented in ~~U.S. dollars (“USD”).~~USD. The functional currency of the Company is ~~the Chinese Yuan, Renminbi (“RMB”),~~RMB, the currency of the PRC. Any transactions which are denominated in currencies other than RMB are translated into RMB at the exchange rate quoted by the People’s Bank of China prevailing at the dates of the transactions, and exchange gains and losses are included in the statements of operations as foreign currency transaction gain or loss. The consolidated financial statements of the Company have been translated into U.S. dollars in accordance with ASC 830, “Foreign Currency Matters”. The financial information is first prepared in RMB and then is translated into U.S. dollars at ~~period-end~~period- end exchange rates for assets and liabilities and average exchange rates for revenue and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred. The effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive income in stockholder’s equity. Cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rate. As a result, amounts related to assets and liabilities reported on the statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets. The value of RMB is subject to changes in central government policies and international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. Where there is a significant change in the value of RMB, the gains and losses resulting from the translation of financial statements of a foreign subsidiary will be significantly affected.

(4)

Economic and political risks

The Company’s operations are conducted in the PRC. Accordingly, the Company’s business, financial condition and results of operation may be influenced by the political, economic and legal environment in the PRC and the general state of the PRC economy. In light of the uncertain and rapidly evolving situation relating to the spread of COVID-19, we have taken temporary precautionary measures intended to help minimize the risk of the virus to our employees, our customers, and the communities in which we participate, which could negatively impact our business. To this end, we are evaluating alternative working arrangements, including requiring all employees to work remotely, and we have suspended all non-essential travel for our employees and limiting in-person work-related meetings.

In addition, with the extended Chinese business shutdowns that resulted from the outbreak of COVID-19, we may experience delays or the inability to service our customers on a timely basis in our commodities trading business. The disruptions to our supply chain and business operations, or to our suppliers’ or customers’ supply chains and business operations, could include disruptions from the interruptions in the supply of commodities, personnel absences or delivery and storage of commodities, any of which could have adverse ripple effects on our commodities trading business. If we need to close any of our facilities or a critical number of our employees become too ill to work, our ability to provide our products and services to our customers could be materially adversely affected ~~rapidly.~~in a rapid manner. Similarly, if our customers experience adverse business consequences due to COVID-19, or any other pandemic, demand for our products and services could also be materially adversely affected in a rapid manner. Global health concerns, such as COVID-19, could also result in social, economic, and labor instability in the localities in which we or our suppliers and customers operate within China.

While the potential economic impact brought by and the duration of COVID-19 may be difficult to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect our business and the value of our common stock. While it is too early to tell whether COVID-19 will ~~negatively affect~~have a material effect on our business over time, we continue to monitor the situation as it unfolds. The extent to which COVID-19 affects our results will depend on many factors and future developments, including new information about COVID-19 and any new government regulations ~~that~~which may emerge to contain the virus, among others.

(5)

Risks related to industry

The Company sells precious products to customers through our industrial relationship. Sales contracts are entered into with each individual customer. The Company is the principal under the precious metal direct sales model as the Company controls the products with the ability to direct the use of, and obtain substantially all the remaining benefits from the precious metal products ~~substantially~~ before they are sold to its customers. The Company has a single performance obligation to sell metal products to the buyers. The Company estimates the amount of variable consideration, including sales return using the expected value method and includes variable consideration in the transaction price to the extent that it is probable that a significant reversal will not occur. Revenue for precious metal trading under ~~the~~ direct sales model is recognized at a point in time when the single performance obligation is satisfied when the products are delivered to the customer. We are under the risk of ~~the~~ economic environment in general and specific to the precious metal industry and to China as well as changes to the existing governmental regulations.

Commodity trading in China is subject to seasonal fluctuations, which may cause our revenues to fluctuate from quarter to quarter. We generally experience less user traffic and purchase orders during national holidays in China, particularly during the Chinese New Year holiday season in the first quarter of each year. Consequently, the first quarter of each calendar year generally contributes the smallest portion of our annual revenues. Furthermore, as we are substantially dependent on sales of precious metals, our quarterly revenues and results of operations are likely to be affected by price fluctuation under macroeconomic circumstances these years.

As our revenues have grown rapidly in recent years, these factors are difficult to discern based on our historical results, which, therefore, should not be relied on to predict our future performance. Our financial condition and results of operations for future periods may continue to fluctuate. As a result, the trading price of our stock may fluctuate from time to time due to seasonality.

18.

SUBSEQUENT EVENTS

~~By written consent dated April 13,~~The Company settled convertible promissory notes of $125,000 on July 7, 2022, ~~as permitted by Section 228~~$125,000 on July 18, 2022, $125,000 on July 26, 2022 and $125,000 on August 4, 2022, respectively, and issued 678,463, 628,014, 625,500 and 625,500 shares of the ~~Delaware General Corporation Law~~Company’s common stock on July 7, 2022, July 19, 2022, July 26, 2022 and ~~Section~~August 5, 2022 respectively.

On July 22, the Company’s Board of Directors approved the holding of the 2022 Annual Meeting of Stockholders of the Company at 25^th Floor, Block C, Tairan Building, No. 31 Tairan 8^th Road, Futian District, Shenzhen, Guangdong, PRC 518000, on August 11, 2022, at 9:30 am EST, for stockholders to consider and vote on certain proposals, including, (i) electing Renmei Ouyang, Tianshi (Stanley) Yang, Xiangjun Wang, Heung Ming (Henry) Wong and Donghong Xiong to serve on the Company’s Board until the next annual stockholders meeting and until their successors are duly elected and qualified, (ii) ratifying the selection of ~~Article II~~Audit Alliance LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022, (iii) approving and adopting certain amendments to the Company’s Certificate of Incorporation (the “Charter Amendment”) to effect a reverse stock split of our ~~bylaws,~~issued and outstanding common stock (“Common Stock”) at a ratio of one-for-five to one-for-ten immediately following the reverse split (the “Reverse Split”) at any time prior to August 12, 2022, with the final decision of whether to proceed with Reverse Split and the exact ratio to be set at a whole number within this range, as determined by our Board in its sole discretion, and (iv) transacting such other business as may properly come before the meeting or any adjournment or postponement thereof.

The Reverse Stock Split is primarily intended to bring the Company into compliance with the minimum bid price requirement for maintaining its listing on the Nasdaq Capital Market. If the stockholders ~~who have~~approve the ~~authority~~Reverse Split, and the Board decides to ~~vote a majority~~implement it, the Reverse Split will become effective upon the filing of the ~~outstanding~~Charter Amendment with the Secretary of State of State of Delaware and will be realized simultaneously for all our Common Stock, which is expected to be August 11, 2022. The Reverse Split does not change the number of the Company’s authorized shares or the par value of the shares of our Common ~~Stock approved and ratified~~Stock. Immediately after the ~~following corporate actions: (i)(a) the entry into that certain securities purchase agreements dated as of January 6, 2021, March 4, 2021, and October 4, 2021, respectively, by and between~~Reverse Split, each stockholder’s percentage ownership interest in the Company and ~~two institutional purchasers (collectively,~~proportional voting power will remain virtually unchanged except for minor changes and adjustments that will result from rounding fractional shares into whole shares. The rights and privileges of the “~~2021 Investors~~~~”), pursuant to which the Company has issued that certain unsecured promissory notes (collectively, the “~~~~2021 Notes~~~~”) dated as of January 6, 2021, March 4, 2021, and October 4, 2021, respectively, to the 2021 Investors; and (b) the issuance~~holders of shares of Common Stock ~~in excess of 19.99% of~~will be substantially unaffected by the currently issued and outstanding shares of Common Stock of the Company upon the conversion of the 2021 Notes; and (ii)(a) the future sale and issuance of convertible promissory notes under similar terms and conditions with the 2021 Notes and the purchase agreements (the “~~Future Notes~~”) to the 2021 Investors for an aggregate purchase price of no more than $5 million within ninety (90) days following the conversion of the 2021 Notes; and (b) the future issuance of shares of Common Stock in excess of 19.99% of the then-current issued and outstanding shares of Common Stock of the Company upon the conversion of the Future Notes.

~~On May 6, 2022, the Company entered into a securities purchase agreement with Streeterville Capital, LLC, a Utah limited liability company (the “~~~~2022 Investor~~~~”), pursuant to which the Company issued the 2022 Investor a convertible promissory note on May 6, 2022 in the original principal amount of $3,320,000.00 (the “~~~~2022 Note~~”), convertible into shares of Common Stock, $0.001 par value per share, of the Company, for $3,000,000.00 in gross proceeds. By written consent dated May 10, 2022, as permitted by Section 228 of the Delaware General Corporation Law and Section 8 of Article II of our bylaws, the stockholders who have the authority to vote a majority of the outstanding shares of Common Stock approved the following corporate actions: (i) the entry into a purchase agreements dated as of May 6, 2022 by and between the Company and Investor, pursuant to which the Company issued the 2022 Note dated as of May 6, 2022 to the 2022 Investor; and (ii) the issuance of shares of Common Stock in excess of 19.99% of the currently issued and outstanding shares of Common Stock of the Company upon the conversion of the 2022 Note.Reverse Split. The expected Nasdaq marketplace effective date is August 17, 2022.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

As of ~~March 31,~~June 30, 2022, the Company had two business lines, which are the commodities trading business and supply chain management services.

Commodities trading business

The commodity trading business primarily involves purchasing non-ferrous metal products, such as aluminum ingots, copper, silver, and gold, from metal and mineral suppliers and then selling to customers. 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 to sell their metal products, the Company launched its supply chain management service in December 2019. The Company primarily generates revenues from selling bulk non-ferrous commodity products and providing related supply chain management services in the PRC.

For the ~~three~~six months ended ~~March 31,~~June 30, 2022, the Company recorded revenue of ~~$47,583,965~~$100,692,259 from ~~its~~ commodities trading business and ~~$575,151~~$1,150,252 from ~~its~~ commodity distribution services and other related services, respectively.

The Company sources bulk commodity products from non-ferrous metal and mines or its designated distributors and then sells to manufacturers that need these metals in large quantities. 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.

Supply Chain Management Services

We offer a distribution service to bulk suppliers of precious metals by acting as a sales intermediary, procuring small to medium-sized buyers through our own professional sales team and channels and distributing the bulk precious metals of the suppliers. Upon executing a purchase order from our sourced buyers, we charge the suppliers with a commission fee ranging from 1% to 2% of the distribution order, depending on the size of the order. We also offer some other supply chain management services business. For the ~~three~~six months ended ~~March 31,~~June 30, 2022, the Company earned other supply chain management services revenue of ~~$575,151~~$1,150,252 with ~~twelve third party~~16 third-party customers, compared with a commodity distribution services revenue of ~~$145,775~~$472,425 to ~~third party~~eight third-party customers for the same period ended ~~March 31,~~June 30, 2021.

Competition

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.

Applicable Government Regulations

Shenzhen Baiyu Jucheng 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.

Key Factors Affecting Our Results of Operation

The commodities trading industry has been experiencing decreasing demand as a result of China’s overall economic slowdown. We expect competition in the commodities trading business to persist and intensify.

We have a limited operating history, having just started our commodities trading business in late November 2019. We believe our future success depends on our ability to significantly increase 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 ability to continue our growth as well as maintain profitability;

●

preservation of our competitive position in the commodities trading industry in China;

●

our ability to implement our strategies and make timely and effective responses to competition and changes in customer preferences;

●

recruitment, training and retaining of qualified managerial and other personnel; and

●

The impact of strict governmental policies relating to coronavirus on our operations and the overall conditions of the markets we operate.

Our business requires a significant amount of capital in large part due to our need to purchase a 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

The Company included $1,695,042 as share-based payment for services on the condensed consolidated statement of operations for the six months ended June 30, 2021.

Three Months Ended ~~March 31,~~June 30, 2022 as Compared to Three Months Ended ~~March 31,~~June 30, 2021

For the Three Months Ended
March 31, Change
2022 2021 Amount %
Revenues
-   Sales of commodity products – third parties $ 47,583,965 $ 9,033,467 $ 38,550,498 427 %
-   Sales of commodity products – related parties - 20,403,015 (20,403,015 ) (100 )%
-   Supply chain management services 575,151 145,775 429,376 295 %
Total Revenues 48,159,116 29,582,257 18,576,859 63 %

Cost of revenues
-   Commodity product sales – third parties (47,590,576 ) (9,032,412 ) (38,558,164 ) 427 %
-   Commodity product sales – related parties - (20,386,181 ) 20,386,181 (100 )%
-   Supply chain management services (11,602 ) (1,050 ) (10,552 ) 1005 %
Total operating cost (47,602,178 ) (29,419,643 ) (18,182,535 ) 62 %

Gross profit 556,938 162,614 394,324 242 %

Operating expenses
Selling, general, and administrative expenses (2,247,707 ) (1,570,379 ) (677,328 ) 43 %
Share-based payment for service - (1,695,042 ) 1,695,042 100 %
Total operating expenses (2,247,707 ) (3,265,421 ) 1,017,714 (31 )%

Other income, net
Interest income 4,390,341 2,098,857 2,291,484 109 %
Interest expenses (110,326 ) (127,423 ) 17,097 (13 )%
Amortization of beneficial conversion feature relating to convertible promissory notes (213,367 ) - (213,367 ) 100 %
Other income(expenses), net 95,709 (6,434 ) 102,143 (1588 )%
Total other income, net 4,162,357 1,965,000 2,197,357 112 %

Net income (loss) before income taxes 2,471,588 (1,137,807 ) 3,609,395 (317 )%

Income tax expenses (877,731 ) (400,469 ) (477,262 ) 119 %
Net income (loss) $ 1,593,857 $ (1,538,276 ) $ 3,132,133 (204 )%

	For the Three Months Ended June 30,						Change
	2022			2021			Amount			%
Revenues
- Sales of commodity products – third parties	$	53,108,294		$	57,989,381		$	(4,881,087	)		(8	)%
- Sales of commodity products – related parties		-			1,523,616			(1,523,616	)		(100	)%
- Supply chain management services – third parties		575,101			326,650			248,451			76	%
Total Revenue		53,683,395			59,839,647			(6,156,252	)		(10	)%

Cost of revenue
- Commodity product sales – third parties		(53,250,178	)		(57,932,603	)		4,682,425			(8	)%
- Commodity product sales – related parties		-			(1,531,336	)		1,531,336			(100	)%
- Supply chain management services – third parties		5,912			(2,592	)		8,504			(328	)%
Total cost of revenue		(53,244,266	)		(59,466,531	)		6,222,265			(10	)%

Gross profit		439,129			373,116			66,013			18	%

Operating expenses
Selling, general, and administrative expenses		(1,875,779	)		(2,054,354	)		178,575			(9	)%
Total operating cost and expenses		(1,875,779	)		(2,054,354	)		178,575			(9	)%

Other income (expenses), net
Interest income		4,366,318			2,946,236			1,420,082			48	%
Interest expenses		(129,116	)		(155,825	)		26,709			17	%
Amortization of beneficial conversion feature relating to issuance of convertible promissory notes		(320,291	)		-			(320,291	)		100	%
Other expenses, net		(221,953	)		(379,924	)		157,971			42	%
Total other income, net		3,694,958			2,410,487			1,284,471			53	%

Net Income Before Income Taxes		2,258,308			729,249			1,529,059			210	%

Income tax expenses		(833,037	)		(371,393	)		(461,644	)		124	%

Net Income	$	1,425,271		$	357,856		$	1,067,415			298	%

Revenue

For the three months ended ~~March 31,~~June 30, 2022, we generate revenue from ~~the following~~ two sources, including (1) revenue from sales of commodity products,and (2) revenue from supply chain management services. Total revenue ~~increased~~decreased by ~~$18,576,859~~$6,156,252 or ~~63%~~10%, from ~~$29,582,257~~$59,839,647 for the three months ended ~~March 31,~~June 30, 2021 to ~~$48,159,116~~$53,683,395 for the three months ended ~~March 31,~~June 30, 2022, among which revenue from commodity trading and supply chain management accounted for ~~98.8%~~98.9% and ~~1.2%, respectively,~~1.1% of our total revenue for the three months ended ~~March 31,~~June 30, 2022. For the three months ended ~~March 31,~~June 30, 2021, revenue from commodity trading and supply chain management accounted for 99.5% and 0.5% of our total revenue ~~was generated~~for the three months ended June 30, 2021.

(1) Revenue from sales of commodity products ~~and 0.5% was from supply chain management services.~~

~~(1)~~

~~Revenue from sales of commodity products~~

For the three months ended ~~March 31,~~June 30, 2022 and 2021, the Company sold non-ferrous metals to ~~thirteen third party~~22 customers at fixed prices, ~~compared with four related party customers for the same period in 2021,~~ and earned revenues when the product ownership was transferred to its customers.

The Company earned revenues of ~~$47,583,965~~$53,108,294 from sales of commodity products for the three months ended ~~March 31,~~June 30, 2022 compared with ~~$29,436,482, with an increase~~$59,512,997 generated from sales of ~~$18,147,483 or 62%, which is mainly due to gradual success on business transfer and active~~ commodity ~~market influenced by~~products for the ~~macro-economy condition.~~same period in 2021.

(2) Revenue from supply chain management services

~~(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 commodity distribution services.

For the three months ended ~~March 31,~~June 30, 2022, the Company provided ~~$575,151 revenue from supply chain management~~$575,101 commodity distribution services to ~~third party~~third-party customers compared with ~~$145,775~~$326,650 to the ~~third party~~third-party customers for the same period ended ~~March 31~~June 30, 2021.

Cost of revenue

Our cost of revenue primarily includes ~~the~~ cost of revenue associated with commodity product sales and ~~the~~ cost of revenue associated with management services of supply chain. Total cost of revenue decreased by $6,222,265 or 10% from $59,466,531 for the three months ended June 30, 2021 to $53,244,266 for the three months ended June 30, 2022, primarily due to an decrease of $4,682,425 in cost of revenue associated with commodity product sales from the third-party. The decreased cost of revenue is in line with the decrease in revenue.

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 June 30, 2022, the Company purchased non-ferrous metal products of $53,250,178 from 15 third-party vendors compared with $57,932,603 from 15 third-party vendor and $1,531,336 from five related party vendor for the three months ended June 30, 2021.

Selling, general, and administrative expenses

Selling, general and administrative expenses decreased from $2,054,354 for the three months ended June 30, 2021 to $ 1,875,779 for the three months ended June 30, 2022, representing an decrease of $178,575 or 9%. Selling, general and administrative expenses primarily consisted of salary and employee benefits, office rental expense, amortizations of intangible assets and convertible promissory notes, professional service fees and finance offering related fees. There is no big decrease for the three months ended June 30, 2022 compared with the three months ended June 30, 2021.

Interest income

Interest income was primarily generated from loans made to third parties and related parties. For the three months ended June 30, 2022, interest income was $4,366,318, representing an increase of $1,420,082, or 48% from $2,946,236 for the three months ended June 30, 2021. The increase was full due to loans made to third-party vendors for the three months ended June 30, 2022.

Amortization of relative fair value of warrants relating to service provider

For the three months ended June 30, 2022, the item represented the amortization of beneficial conversion feature of $320,291 and relating to the convertible promissory notes.

For the three months ended June 30, 2021, no such expenses incurred.

Net income

As a result of the foregoing, net income for the three months ended June 30, 2022 was $1,425,271, representing an increase of $1,067,415 from net income of $357,856 for the three months ended June 30, 2021.

Six Months Ended June 30, 2022 as Compared to Six Months Ended June 30, 2021

	For the Six Months Ended June 30,						Change
	2022			2021			Amount			%
Revenues
- Sales of commodity products – third parties	$	100,692,259		$	67,022,848		$	33,669,411			50	%
- Sales of commodity products – related parties		-			21,926,631			(21,926,631	)		(100	)%
- Supply chain management services – third parties		1,150,252			472,425			677,827			143	%
Total Revenue		101,842,511			89,421,904			12,420,607			14	%

Cost of revenue
- Commodity product sales – third parties		(100,840,754	)		(66,965,015	)		(33,875,739	)		51	%
- Commodity product sales – related parties		-			(21,917,517	)		21,917,517			(100	)%
- Supply chain management services – third parties		(5,690	)		(3,642	)		(2,048	)		56	%
Total cost of revenue		(100,846,444	)		(88,886,174	)		(11,960,270	)		13	%

Gross profit		996,067			535,730			460,337			86	%

Operating expenses
Selling, general, and administrative expenses		(4,123,486	)		(3,624,733	)		(498,753	)		14	%
Share-based payment for service		-			(1,695,042	)		1,695,042			(100	)%
Total operating cost and expenses		(4,123,486	)		(5,319,775	)		1,196,289			(22	)%

Other income (expenses), net
Interest income		8,756,659			5,045,093			3,711,566			74	%
Interest expenses		(239,442	)		(283,248	)		43,806			(15	)%
Amortization of beneficial conversion feature relating to issuance of convertible promissory notes		(533,658	)		-			(533,658	)		100	%
Other income (expense), net		(126,244	)		(386,358	)		260,114			67	%
Total other income, net		7,857,315			4,375,487			3,481,828			80	%

Net Income(Loss) Before Income Taxes		4,729,896			(408,558	)		5,138,454			1258	%

Income tax expenses		(1,710,768	)		(771,862	)		(938,906	)		122	%
Net Income (Loss)	$	3,019,128		$	(1,180,420	)	$	4,199,548			356	%

Revenue

For the six months ended June 30, 2022, we generate revenue from the following two sources, including (1) revenue from sales of commodity products and (2) revenue from supply chain management services. Total revenue increased by $12,420,607 or 14%, from $89,421,904 for the six months ended June 30, 2021 to $101,842,511 for the six months ended June 30, 2022, among which revenue from commodity trading and supply chain management accounted for 98.9% and 1.1%, respectively, of our total revenue for the six months ended June 30, 2022. The increase is mainly due to the prosperous bulk market all over the world. An obvious increase in commodity price and growing demand drive more frequent transactions occurred during the first half of 2022. Since 2022, the Company put more emphasis on its business in Hainan which was able to obtain a competitive and supportive policy and generates more revenue from customers in the Hainan region. The Company made efforts to explore competitive upstream vendors in Hainan to meet the demands of lower transportation cost and time cost, meanwhile, our long-term positive image in the commodity products industry enhanced our comprehensive competitive support from local trade associates.

(1) Revenue from sales of commodity products

For the six months ended June 30, 2022, the Company sold non-ferrous metals to 22 third-party customers at fixed prices, and earned revenues when the product ownership was transferred to its customers. The Company earned revenues of $100,692,259 from sales of commodity products compared with $88,949,479 for the same period in 2021.

(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 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 commodity distribution services.

Commodity distribution service fees

The Company utilizes its strong sales and marketing expertise and customer network to introduce customers to large metal and mineral suppliers, and facilitate the metal product sales between the suppliers and the customers. The Company merely acts as an agent in this type of transaction and earns a commission fee based on the percentage of the volume of metal products that customers purchase. Commodity distribution service fees are recognized as revenue when the Company successfully facilitates the sales transactions between the suppliers and the customers. For the six months ended June 30, 2022, the Company earned commodity distribution commission fees of $1,150,252 from 16 third-party vendors compared with commission fees of 472,425 from third-party vendors for the six months ended June 30, 2021.

Cost of revenue

Our cost of revenue primarily includes cost of revenue associated with commodity product sales, cost of revenue associated with management services of supply chain. Total cost of revenue increased by ~~$18,182,535or 62%~~$11,960,270 or 13% from ~~$29,419,643~~$88,886,174 for the ~~three~~six months ended ~~March 31,~~June 30, 2021 to ~~$47,602,178~~$100,846,444 for the ~~three~~six months ended ~~March 31,~~June 30, 2022, primarily due to ~~the~~an increase of $11,958,222 in ~~the~~ cost of revenue associated with commodity product ~~sales~~sales. The cost of revenue increased in line with ~~our business growth and expansion. We expect~~ the ~~cost of revenue will fluctuated~~increase in ~~the next few months as affected by the COVID-19.~~sales volume.

Cost of revenue associated with commodity trading

~~The cost~~Cost of revenue primarily consists of purchase costs of non-ferrous metal products.

For the ~~three~~six months ended ~~March 31,~~June 30, 2022, the Company purchased non-ferrous metal products of ~~$47,590,576~~$100,840,754 from ~~twelve third party suppliers.~~15 third-party vendors.

For the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company purchased non-ferrous metal products of ~~$20,386,181~~$66,965,015 from 15 third-party vendors and $21,917,517 from five ~~related party suppliers and $9,032,412 from three third party suppliers.~~related-party vendors.

Selling, general, and administrative expenses

Selling, general and administrative expenses increased from ~~$1,570,379~~$3,624,733 for the ~~three~~six months ended ~~March 31,~~June 30, 2021 to ~~$2,247,707~~$4,123,486 for the ~~three~~six months ended ~~March 31,~~June 30, 2022, representing an increase of ~~$677,328,~~$498,753, or ~~43%~~14%. Selling, general and administrative expenses primarily consisted of salary and employee benefits, office rental ~~expenses,~~expense, amortizations of intangible assets and convertible promissory notes, professional service fees and finance offering related fees. The increase was mainly attributable ~~to: (i) amortization of intangible assets of $1,029,186;~~to 1) salary and ~~(ii)~~employee benefits increased by $0.62 million and, 2) amortization of convertible promissory notes increased by $0.22 million.

Interest income

Interest income was primarily generated from loans made to third parties and related parties. For the six months ended June 30, 2022, interest income was $8,756,659 representing an increase of ~~$111,000~~$3,711,566, or 74% from $5,045,903 for the ~~three~~six months ended ~~March 31, 2022, while there~~June 30, 2021. The increase was ~~no such issuance for the three months ended March 31, 2021.~~primarily due to loans made to third-party vendor customers, among which, $702,756 was attributed to related parties and $8,053,903 was generated from third-party vendors.

Share-based payment for service

~~For the three months ended March 31, 2021, the share-based payment for service was $1,695,042.~~

On March 4, 2021, the Company issued 750,000 fully-vested warrants with an exercise price of $0.01, with a five-year life, to an agent who was engaged ~~agent~~ to complete the warrant waiver and exercise agreements. The Company applied Black-Scholes model and determined the fair value of the warrants to be $1,695,042. Significant estimates and assumptions used included stock price on March 4, 2021 of $2.27 per share, risk-free interest rate of one year of 0.08%, life of 5 years, and volatility of 71.57%. for the six months ended June 30, 2021.

For the ~~three~~six months ended ~~March 31,~~June 30, 2022, no such expenses incurred.

~~Interest income~~

Interest income was primarily generated from loans made to third parties and related parties. For the three months ended March 31, 2022, interest income was $4,390,341 representing an increase of $2,291,484, or 109% from $2,098,857 for the three months ended March 31, 2021. The increase was primarily due to loans made to third party vendors for the three months ended March 31, 2022. The increase in interest income is in accordance with the increase in sales of commodity products. For the three months ended March 31, 2022, $717,485 was attributed to related party and $3,672,062 was generated from third party vendors.

Amortization of beneficial conversion feature and relative fair value of warrants relating to issuance of convertible promissory notes

For the ~~three~~six months ended ~~March 31,~~June 30, 2022, the item represented the amortization of ~~the~~ beneficial conversion feature of ~~$213,367 of~~$533,658 relating to the ~~three~~ convertible promissory ~~notes issued on January 6, 2021, March 4, 2021 and October 4, 2021.~~notes.

For the ~~three~~six months ended ~~March 31,~~June 30, 2021, no such expenses incurred.

Net income (loss)

As a result of the foregoing, net income for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was ~~$1,593,857,~~$3,019,128, representing an increase of ~~$3,132,133~~$4,199,548 from ~~the~~ net loss of ~~$1,538,276~~$1,180,420 for the ~~three~~six months ended ~~March 31,~~June 30, 2021.

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 private placement and public ~~offerings.~~offerings of our securities.

As reflected in the accompanying unaudited condensed consolidated financial statements, the Company incurred net income of $3,019,128 and cash inflow of $ 469,839 for the ~~three~~six months ended ~~March 31,~~June 30, 2022. As of June 30, 2022, the Company ~~reported cash inflows of $3,752,768 from operating activities. As of March 31, 2022, the Company has~~ positive working capital of ~~approximately $158~~$164 million.

During the ~~three~~six months ended ~~March 31,~~June 30, 2022, the Company entered into additional private placement agreements with certain private investors and issued 65,000,000 shares of common stock at $0.7 per share for ~~$45,500,000.~~ $45,500,000, and issued 57,100,000 shares of common stock at $0.2 per share for $11,420,000, sold unsecured senior convertible promissory notes (“Notes”) in the aggregate principal amount of $3,000,000.

The total gross proceeds from these transactions were $59.92 million. The Company expects to use the proceeds from the equity financing as working capital to expand its commodity trading business.

Based on the foregoing capital market activities, the 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 ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021, respectively:

	For the three months Ended March 31,						For the six months Ended June 30,
	2022			2021			2022			2021
Net Cash Provided by/(used in) Operating Activities	$	3,752,768		$	(4,215,515	)
Net Cash Provided by(Used in) Operating Activities							$	469,839		$	(3,789,382	)
Net Cash Used in Investing Activities		(50,003,288	)		(25,060,192	)		(60,102,346	)		(15,810,972	)
Net Cash Provided by Financing Activities		45,500,000			32,154,582			59,920,000			23,096,801
Effect of exchange rate changes on cash and cash equivalents		13,794			57,113			(673,145	)		700,055
Net (decrease)/increase in cash and cash equivalents		(736,726	)		2,935,988
Net increase (decrease) in cash and cash equivalents								(385,652	)		4,196,502
Cash at beginning of period		4,311,068			2,700,013			4,311,068			2,700,013
	$	3,574,342		$	5,636,001
Cash at end of period							$	3,925,416		$	6,896,515

Net Cash Provided ~~by/(Used~~by (Used in) Operating Activities

During the ~~three~~six months ended ~~March 31,~~June 30, 2022, we had a cash inflow from operating activities of ~~$3,752,768,~~$469,839, an increase of ~~$7,968,283~~$4,259,221 from a cash outflow of ~~$4,215,515~~$3,789,382 for the ~~three~~six months ended ~~March 31,~~June 30, 2021. We incurred a net ~~profit~~income for the ~~three~~six months ended ~~March 31,~~June 30, 2022 of ~~$1,593,857,~~$3,019,128, an increase of ~~$3,132,133~~$4,199,548 from the ~~three~~six months ended ~~March 31,~~June 30, 2021, during which we recorded a net loss of ~~$1,538,276.~~$1,180,420.

In addition to the change in profitability, the increase in net cash used in operating activities was the result of several factors, ~~including:~~including (1) non cash effects adjustments include amortization of intangible assets of $2,016,116 and amortization of discount on convertible promissory notes of $219,333, amortization of beneficial conversion feature of convertible promissory notes of $533,658 and interest expenses for convertible promissory notes of $206,567.

●

Non-cash effects adjustments include amortization of intangible assets of $1,029,186 and amortization of discount on convertible promissory notes of $111,000, amortization of beneficial conversion feature of convertible promissory notes of $213,367, accrual convertible interest expense of $93,285, and monitoring fee relating to convertible promissory notes of $69,685.

●

~~An increase of $1,900,456 of advances from customers due to a purchase payment in advance to store goods recent competitive market.~~

●

~~A decrease of $1,891,842 due from related parties due to a prepayment to third party for commodity purchase.~~

Net Cash Used in Investing Activities

Net cash used in investing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was ~~$50,003,288~~$60,102,346 as compared to net cash used in investing activities of ~~$25,060,192~~$15,810,972 from continuing operations for the ~~three~~six months ended ~~March 31,~~June 30, 2021.

The cash used in investing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was for the loans disbursed to third parties of ~~$60,177,853~~$80,502,961, collected loans from third partis of $10,069,408 and collected loans from related ~~parties~~partis of ~~$11,066,822.~~

The cash used in investing activities for the three months ended March 31, 2021 was for the loans disbursed to third parties and related parties of $1,307,835 and $18,662,034, respectively. During the three months ended March 31, 2021, the Company purchased software copyright for $5 million.$10,839,631.

Net Cash Provided by Financing Activities

During the ~~three~~six months ended ~~March 31,~~June 30, 2022, ~~the Company entered into additional private placement agreements with certain private investors and issued 65,000,000 shares of common stock at $0.7 per share for $45,500,000.~~

~~During the three months ended March 31, 2021,~~ the cash provided by financing activities was mainly attributable to ~~borrowings from related parties of $1,196,696,~~ cash raised of ~~$18,500,000~~$45,500,000 from certain private placements by ~~the~~ issuance of ~~24,450,000~~65,000,000 shares of common stocks, cash raised of ~~$2,192,989~~$11,420,000 from ~~a registered direct offering~~certain private placements by issuance of ~~1,353,468~~57,100,000 shares of common stocks and cash raised of ~~$4,500,000~~$3,000,000 from issuance of unsecured senior convertible promissory ~~notes in the aggregate principal amount of $4,990,000. The Company repaid borrowing to the third party of $185,103.~~notes.

Impact of COVID-19

~~An outbreak~~Since the beginning of ~~respiratory illness caused by a novel coronavirus, namely COVID-19, spread in early 2020. On March 11, 2020, the WHO declared COVID-19 outbreak a pandemic. The outbreak~~2022, another wave of COVID-19 ~~has endangered the health of many people~~variants broke out in China, ~~resulting~~which caused surging numbers of COVID-19 cases in numerous confirmed cases and deaths and significantly disrupted travels and local economies in and outside of China. The PRC Government has adopted a series of measures nationwide, including locking down certain cities, insuch as Shenzhen, Shanghai and Beijing, where relevant local governments have taken certain lock-down and other restrictive measures to prevent the PRC, restrictions prohibiting companies from resuming work, traffic control, travel bans, management and restrictions over activities at new and existing construction sites. In recent months, the PRC government implementedfurther spread of COVID-19. As a ~~widespread lockdown~~result, our operations in Shanghai ~~and other cities, which~~at the beginning of 2022 were temporarily ~~adversely~~ affected ~~our business operating~~ for about two weeks primarily attributable to the closure of our warehouse as local authorities in Shanghai imposed strict lock-down measures since March 2022. As of June 30, 2022, since the lock-down restrictions in Shanghai have been gradually lifted, our business operations have not experienced any material or adverse interruption due to ~~restrictive policies.~~the recent COVID-19 outbreak. To the best knowledge of our management, our business and financial conditions had not been materially adversely impacted by the resurgence of COVID-19 for the six months ended June 30, 2022.

The ~~occurrence~~economic effect of ~~any of~~a prolonged pandemic is difficult to predict and could result in a material financial impact on the ~~above events may adversely affect our operations and results of operations. Furthermore,~~Company’s future reporting periods. The actual impact caused by the COVID-19 ~~pandemic may severely affect and restrict~~outbreak will depend on its subsequent development. We will continue to assess the level of economic activity in China as the governments in various regions we operate may impose regulatory or administrative measures to lock down affected areas and control the outbreak of the infectious disease, which together with the disruption of business in major industries may adversely affect the overall business sentiment and environment in China, which in turn may lead to slower overall economic growth in China and the world. In response to the COVID-19 pandemic, governments worldwide have imposed travel restrictions and/or lockdown to contain its transmission. As the pandemic continues spread worldwide, more countries may impose similar or more severe containment measures. The full extent of the future impactimpacts of COVID-19 on the ~~Company’s plan~~business and financial performance of ~~operations is uncertain. A prolonged outbreak could have a material adverse effect on the Company’s ability to identify~~our Group and implement business opportunities or continue to effectuate its business plan. As of March 31, 2022, there has been no material impact on the Company’s financial position as a direct result of the pandemic. Management views this situation as transitory but cannot predict the length of time it may take for these disruptions to dissipate or if there will ~~be a significant economic effect on the Company’s operations.~~

~~We continue to~~closely monitor the ~~evolving effects of COVID-19 actively~~risks and uncertainties arising thereof, and may take further actions that alter our operations, or that we determine are in the best interests of our employees and third parties with which we do business. We do not know when it will become practical to relax or eliminate some or all these measures. The economic effect of a prolonged pandemic is difficult to predict and could result in a material financial impact on the Company’s future reporting periods.

Off-balance Sheet Arrangements

We do not have any off-balance sheet arrangements as of ~~March 31,~~June 30, 2022.

Contractual Obligations

As of ~~March 31,~~June 30, 2022, the Company had three lease ~~arrangements~~arrangement with two unrelated ~~third parties~~third-party with a monthly rental fee of approximately ~~$29,408.~~$29,409. Two lease ~~terms~~term were within 38 months, which will be due in December 2024. The remaining one was within 24 months, which will be due in August 2023. As of the date of this report, the Company cannot reasonably assess whether it will renew the lease term. The lease commitment was as following table:

			Less than								Less than
	Total		1 year		1-2 years		Thereafter		Total		1 year		1-2 years		Thereafter
Contractual obligations:
Operating lease ~~(1)~~	$	929,658	$	264,752	$	342,728	$	322,178	$	797,819	$	167,783	$	325,293	$	304,743
Total	$	929,658	$	264,752	$	342,728	$	322,178	$	797,819	$	167,783	$	325,293	$	304,743

Critical Accounting Policies

Please refer to Note 2 of the Condensed 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

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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,~~June 30, 2022.

Certain personnel primarily responsible for preparing our financial statements require additional requisite levels of knowledge, experience and training in the application of U.S. GAAP commensurate with our financial reporting requirements. The management thought that in light of the inexperience of our accounting staff with respect to the requirements of U.S. GAAP-based reporting and SEC rules and regulations, we did not maintain effective controls and did not implement adequate and proper supervisory review to ensure that significant internal control deficiencies can be detected or prevented.

Management’s assessment of the control deficiency over accounting and finance personnel as of ~~March 31,~~June 30, 2022 includes:

●

There is a lack of formal procedures for handling different types of revenue recognition.

●

Company management conducted extensive transactions with related parties without adequate control by the Audit Committee and the Board of Directors.

●

There is a lack of procedures and documentation for dealing with related parties.

●

There was no accountant with adequate U.S. GAAP knowledge working in the Company’s Accounting Department.

●

The Company has insufficient written policies and procedures for accounting and financial reporting, which led to an inadequate financial statement closing process.

Based on the above factors, management concluded that the control deficiency over accounting and finance personnel was the material weakness as of ~~March 31,~~June 30, 2022, as our accounting staff continues to lack sufficient U.S. GAAP experience and requires further substantial training.

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 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 is also based partly on 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 Reporting

There were no changes in ~~our~~the Company’s internal control over financial reporting during the quarter ended ~~March 31,~~June 30, 2022, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act 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

None.

ITEM 1A. RISK FACTORS

As of the date of this ~~report,~~Report, there have been no material changes to the risk factors disclosed in our annual report on Form 10-K filed with the SEC on March 16, 2022.

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

Common stock issued in private placements

On May 6, 2022, the Company entered into a securities purchase agreement with Streeterville Capital, LLC, a Utah limited liability company, pursuant to which the Company issued the investor an unsecured convertible promissory note on May 6, 2022 in the original principal amount of $3,320,000, convertible into shares of common stock, $0.001 par value per share, of the Company. The Company received proceeds of $3,000,000 in June 2022 after deducting the agent commission and other professional fee.

On May 27, 2022, the Company entered into that certain securities purchase agreement with Mr. Xiangjun Wang and Mr. Heung Ming (Henry) Wong, affiliates of the Company, and certain other non-affiliate purchasers who are “non-U.S. Persons” pursuant to which the Company agreed to sell an aggregate of 57,100,000 shares of Common Stock, par value $0.001 per share, at a per share purchase price of $0.20. The transaction was consummated on June 24, 2022 by the issuance of 57,100,000 shares of Common Stock. The Company received proceeds of $11,420,000 in June 2022.

Common stock issued pursuant to the conversion of convertible promissory notes

The Company settled convertible promissory notes of ~~$200,000~~$125,000 on ~~January 5,~~July 7, 2022, ~~$175,000~~$125,000 on ~~January~~July 18, 2022, $125,000 on July 26, 2022 ~~$175,000~~and $125,000 on ~~February 8, 2022, $200,000 on February 25, 2022, $375,000 on March 17, 2022, $500,000 on March 17, 2022 and $179,819 on March 18,~~August 4, 2022, respectively, and issued ~~644,662, 882,412, 943,701, 1,376,652, 2,581,222, 2,500,000~~678,463, 628,014, 625,500 and ~~899,095~~625,500 shares of the Company’s common stock on ~~January 10,~~July 7, 2022, ~~January 27,~~July 19, 2022, ~~February 9, 2022, March 2, 2022, March 17, 2022, March 21,~~July 26, 2022 and ~~March 22,~~August 5, 2022, ~~respectively for the three months ended March 31, 2022.~~respectively.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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)
3.6*		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
3.9*		Certificate of Amendment to Certificate of Incorporation of Registrant, incorporated herein by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on April 21, 2021
10.1*		Securities Purchase Agreement between the Company and Streeterville Capital, LLC, dated as of May 6, 2022, incorporated herein by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on May 10, 2022
10.2*		Convertible Promissory Note dated May 6, 2022, incorporated herein by reference to Exhibit 10.2 of the Current Report on Form 8-K filed on May 10, 2022
10.3*		Form of Common Stock Securities herein by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on May 31, 2022
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		Inline XBRL Instance ~~Document~~Document.
101.SCH		Inline XBRL Taxonomy Extension Schema ~~Document~~Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase ~~Document~~Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase ~~Document~~Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase ~~Document~~Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase ~~Document~~Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*	Previously filed

**	Filed herewith

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.~~

	TD HOLDINGS, INC.

Date: ~~May 13,~~August 9, 2022	By:	/s/ Renmei Ouyang
	Name:	Renmei Ouyang
	Title:	Chief Executive Officer (Principal Executive Officer)

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

3136

iso4217:USD xbrli:shares

	Common Stock				Additional paid-in		Accumulated			Surplus		Accumulated other comprehensive			Total (Deficit)
	Shares		Amount		capital		Deficit			Reserve		income(loss)			Equity
Balance as of December 31, 2020		79,131,207	$	79,131	$	151,407,253	$	(39,255,945	)		913,292	$	6,885,495		$	120,029,226
Issuance of common stocks in connection with private placements		15,000,000		15,000		24,435,000		-			-		-			24,450,000
Issuance of common stocks pursuant to registered direct offering		1,353,468		1,354		2,191,634		-			-		-			2,192,988
Issuance of common stocks pursuant to exercise of warrants		808,891		809		1,439,017		(1,439,826	)		-		-			-
Net loss		-		-		-		(1,538,276	)		-		-			(1,538,276	)
Foreign currency translation adjustments		-		-		-		-			-		(643,578	)		(643,578	)
Balance as of March 31, 2021		96,293,566	$	96,294	$	179,472,904	$	(42,234,047	)		913,292	$	6,241,917		$	144,490,360

Balance as of December 31, 2021		138,174,150	$	138,174	$	224,790,409	$	(42,200,603	)		1,477,768	$	11,666,607		$	195,872,355
Issuance of common stocks in connection with private placements		65,000,000		65,000		45,435,000		-			-		-			45,500,000
Issuance of common stocks pursuant to exercise of convertible promissory notes		9,827,744		9,828		1,794,992		-			-		-			1,804,820
Net income		-		-		-		1,593,857			-		-			1,593,857
Foreign currency translation adjustments		-		-		-		-			-		881,196			881,196
Balance as of March 31, 2022		213,001,894	$	213,002	$	272,020,401	$	(40,606,746	)		1,477,768	$	12,547,803		$	245,652,228

	For the Three Months Ended March 31,
	2022			2021

Cash Flows from Operating Activities:
Net income (loss)	$	1,593,857			(1,538,276	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation of plant and equipment		3,217			-
Amortization of intangible assets		1,029,186			883,938
Amortization of right of use assets		76,983			-
Amortization of discount on convertible promissory notes		111,000			40,833
Interest expense for convertible promissory notes		93,285			69,417
Amortization of beneficial conversion feature of convertible promissory notes		213,367			-
Monitoring fee relating to convertible promissory notes		69,685			-
Deferred tax liabilities		(209,744	)		(205,458	)
Share-based payment for service		-			1,695,042
Changes in operating assets and liabilities:
Escrow account receivable		(54,985	)		-
Inventories		(133,810	)		-
Other current assets		(29,775	)		(696,357	)
Prepayments		(1,891,842	)		(8,170,226	)
Contract liabilities		1,900,456			5,501,254
Due to related parties		(21,259	)		641,386
Due from third parties		(481,816	)
Due from related parties		28,897			(2,943,162	)
Accounts payable		(116,078	)		-
Income tax payable		1,085,694			530,511
Other current liabilities		499,661			(24,417	)
Lease liabilities		(19,734	)		-
Due to third party loans payable		6,523			-
Net cash provided by (used in) operating activities		3,752,768			(4,215,515	)
Cash Flows from Investing Activities:
Purchases of plant and equipment		(5,039	)		-
Purchases of operating lease assets		(58,617	)		-
Purchases of intangible assets		-			(5,090,323	)
Loans made to related parties		-			(18,662,034	)
Loans made to third parties		(60,177,853	)		(1,307,835	)
Collection of loans from related parties		11,066,822			-
Investments in other investing activities		(828,601	)		-
Net cash used in investing activities		(50,003,288	)		(25,060,192	)

Cash Flows from Financing Activities:
Proceeds from issuance of common stock under ATM transaction		-			2,192,988
Proceeds from issuance of common stock under private placement transactions		45,500,000			24,450,000
Proceeds from convertible promissory notes		-			4,500,000
Proceeds from borrowings from related parties		-			1,196,697
Repayment made on loans from third parties		-			(185,103	)
Net cash provided by financing activities		45,500,000			32,154,582

Effect of exchange rate changes on cash and cash equivalents		13,794			57,113

Net (decrease)/increase in cash and cash equivalents		(736,726	)		2,935,988
Cash and cash equivalents at beginning of period		4,311,068			2,700,013
Cash and cash equivalents at end of period	$	3,574,342		$	5,636,001

Supplemental Cash Flow Information
Cash paid for interest expenses	$	22,109		$	-
Cash paid for income taxes	$	1,781		$	75,416

Supplemental disclosure of Non-cash investing and financing activities
Right-of-use assets obtained in exchange for operating lease obligations	$	58,617		$	-
Issuance of common stocks in connection with conversion of convertible promissory notes	$	1,804,820		$	-
Issuance of common stocks in connection with warrant cashless exercise in March 2021	$	-		$	1,439,826

	March 31, 2022			December 31, 2021
Convertible notes – principal	$	2,545,988		$	3,976,240
Convertible notes – discount		(415,000	)		(739,367	)
Convertible notes – interest		113,687			325,285
Convertible notes, net	$	2,244,675		$	3,562,158

	For the Three Months Ended March 31,
	2022		2021

Net income (loss)	$	1,593,857	$	(1,538,276	)

Weighted Average Shares Outstanding-Basic		198,441,160		93,209,034
Weighted Average Shares Outstanding- Diluted		213,552,950		95,764,295
Net income/(loss) per share - basic and diluted
Net income/(loss) per share from continuing operations – basic	$	0.01	$	(0.02	)
Net income/(loss) per share from continuing operations – diluted	$	0.01	$	(0.02	)

	Payment due by March 31
	Total		2023		2024		2025
Operating lease commitments for property management expenses under lease agreements	$	84,941	$	30,888	$	30,888	$	23,165