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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark one)

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

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

For the fiscal year ended December 31, 2022.

OR

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

OR

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

for the transition period from ____________to ____________

Commission file number 001-34944

Antelope Enterprise Holdings Limited

(Exact name of the Registrant as specified in its charter)

British Virgin Islands

(Jurisdiction of incorporation or organization)

Room 1802, Block D, Zhonghai International Center,

Hi-Tech Zone, Chengdu,

Sichuan Province, PRC

Telephone: +86 (28) 8532 4355

(Address of principal executive offices)

Weilai (Will) Zhang

Room 1802, Block D, Zhonghai International Center,

Hi-Tech Zone, Chengdu,

Sichuan Province, PRC

Telephone: +86 (28) 8532 4355

(Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)

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

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Class A Ordinary Shares |  | AEHL |  | The Nasdaq Stock Market

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None.

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None.

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

An aggregate of 8,055,188 ordinary shares, par value $0.024 each were issued and outstanding as of December 31, 2022. (On February 21, 2023, the Company amended its authorized share capital, as result, the ordinary share, par value $0.024 each, of the company were re-designated into Class A ordinary shares, no par value, and Class B ordinary shares, no par value.)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ☐ No ☒

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

Yes ☒ No ☐

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

☐ Large Accelerated filer | ☐ Accelerated filer | ☒ Non-accelerated filer
Emerging growth company ☐ |  |

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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 which basis of accounting the registrant has used to prepare the financial statements included in this filing:

☐ US GAAP |  | ☒ International Financial Reporting Standards as issued by the International Accounting Standards Board |  | ☐ Other

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

☐Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

TABLE OF CONTENTS

|  | Page
| PART I | 5
ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS | 5
ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE | 5
ITEM 3. | KEY INFORMATION | 5
ITEM 4. | INFORMATION ON THE COMPANY | 23
| ITEM 4A. UNRESOLVED STAFF COMMENTS | 35
ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS | 36
ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES | 60
ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS | 66
ITEM 8. | FINANCIAL INFORMATION | 67
ITEM 9. | THE OFFER AND LISTING | 68
ITEM 10. | ADDITIONAL INFORMATION | 68
ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK | 79
ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES | 79
| PART II | 80
ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES | 80
ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 80
ITEM 15. | CONTROLS AND PROCEDURES | 80
ITEM 16. | RESERVED | 81
| ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT | 81
| ITEM 16B. CODE OF ETHICS | 81
| ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES | 81
| ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES. | 81
| ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS | 81
| ITEM 16F. CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT | 82
| ITEM 16G. CORPORATE GOVERNANCE | 82
| ITEM 16H. MINE SAFETY DISCLOSURE | 82
| ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION | 82
| PART III | 83
ITEM 17. | FINANCIAL STATEMENTS | 83
ITEM 18. | FINANCIAL STATEMENTS | 83
ITEM 19. | EXHIBITS | 83

2

CERTAIN INFORMATION

In this Annual Report on Form 20-F (the “Annual Report”), unless otherwise indicated, “we,” “us,” “our,” and “Antelope Enterprises” refers to Antelope Enterprise Holdings Limited (formerly China Ceramics Co., Ltd.), a British Virgin Islands company, and its subsidiaries, including Success Winner Limited (“Success Winner”), a British Virgin Islands company and wholly owned subsidiary of Antelope Enterprises, Stand Best Creation Limited (“Stand Best”), a Hong Kong company and wholly owned subsidiary of Success Winner and the entity that wholly owns Jinjiang Hengda Ceramics Co., Ltd. (“Hengda”), a PRC operating company that in turn wholly owns Jiangxi Hengdali Ceramic Materials Co., Ltd. (“Hengdali”), a PRC operating company, Vast Elite Limited (“Vast Elite”), a Hong Kong company and wholly owned Subsidiary of Success Winner and the entity that wholly owns Chengdu Future Talented Management and Consulting Co., Ltd, (“Chengdu Future”) a PRC operating company, Antelope Enterprise (HK) Holdings Limited (“Antelope HK”), a Hong Kong company and wholly owned subsidiary of Success Winner and the entity that wholly owns Antelope Holdings (Chengdu) Co., Ltd (“Antelope Chengdu”), a PRC operating company, and the entity that wholly owns Antelope Future (Yangpu) Investment Co., Ltd (“Antelope Yangpu”), a PRC operating company that in turn wholly owns Antelope Ruicheng Investment (Hainan) Co., Ltd (“Antelope Ruicheng”) that in turn owns 51% of Hainan Kylin Cloud Services Technology Co., Ltd (“Hainan Kylin”), and the entity that wholly owns Hainan Antelope Holdings Co., Ltd (“Hainan Antelope”), a PRC operating company that in turn wholly owns Antelope Investment (Hainan) Co., Ltd (“Antelope Investment”), Hainan Kylin Cloud Services Technology Co., Ltd (“Hainan Kylin”) that in turrn owns 100% of Hangzhou Kylin Cloud Services Technology Co., Ltd (“Hangzhou Kylin”) and Anhui Kylin Cloud Services Technology Co., Ltd (“Anhui Kylin”) .

On November 20, 2009, China Holdings Acquisition Corp. (“CHAC”), our predecessor, merged with and into Antelope Enterprise Holdings Limited, its wholly owned British Virgin Islands subsidiary, resulting in the redomestication of CHAC to the British Virgin Islands as “Antelope Enterprise Holdings Limited”. Immediately following the merger and redomestication (the “Redomestication”), and as part of the same integrated transaction, Antelope Enterprises acquired all of the outstanding securities of Success Winner (the “Business Combination”). Unless the context indicates otherwise, the “Company” refers to CHAC prior to the Business Combination and Antelope Enterprises following the Business Combination.

Unless the context indicates otherwise, all references to “China” or “PRC” refer to the People’s Republic of China. All references to “provincial-level regions” or “regions” include provinces as well as autonomous regions and directly controlled municipalities in China, which have an administrative status equal to provinces, including Beijing.

All references to “Renminbi,” “RMB” or “yuan” are to the legal currency of the People’s Republic of China, and all references to “U.S. dollars,” “dollars,” “$” are to the legal currency of the United States. This Report contains translations of Renminbi amounts into U.S. dollars at specified rates solely for the convenience of the reader. We make no representation that the Renminbi or U.S. dollar amounts referred to in this Report could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. Changes in the exchange rate will affect the amount of our obligations and the value of our assets in terms of U.S. dollars which may result in an increase or decrease in the amount of our obligations (expressed in dollars) and the value of our assets, including accounts receivable (expressed in dollars).

3

FORWARD-LOOKING STATEMENTS

This Report contains “forward-looking statements” that represent our beliefs, projections and predictions about future events. All statements other than statements of historical fact are “forward-looking statements” including any projections of earnings, revenue or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements concerning proposed new projects or other developments, any statements regarding future economic conditions or performance, any statements of management’s beliefs, goals, strategies, intentions and objectives, and any statements of assumptions underlying any of the foregoing. Words such as “may”, “will”, “should”, “could”, “would”, “predicts”, “potential”, “continue”, “expects”, “anticipates”, “future”, “intends”, “plans”, “believes”, “estimates” and similar expressions, as well as statements in the future tense, identify forward-looking statements.

These statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any future results, performance or achievements described in or implied by such statements. Actual results may differ materially from expected results described in our forward-looking statements, including with respect to correct measurement and identification of factors affecting our business or the extent of their likely impact, the accuracy and completeness of the publicly available information with respect to the factors upon which our business strategy is based on the success of our business.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of whether, or the times by which, our performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and management’s belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to, those factors discussed under the headings “Risk Factors”, “Operating and Financial Review and Prospects,” “Information on the Company” and elsewhere in this Annual Report.

This Annual Report should be read in conjunction with our audited financial statements and the accompanying notes thereto, which are included in Item 18 of this Annual Report.

4

PART I

ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not required.

ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE

Not required.

ITEM 3. | KEY INFORMATION

Our Corporate Structure

We are an offshore holding company incorporated in the British Virgin Islands. As a holding company with no material operations, our operations were conducted by our subsidiaries in China.

The following diagram illustrates our corporate structure as of the date of this annual report:

We are subject to certain legal and operational risks associated with our operation in China. PRC laws and regulations governing our current business operations are sometimes vague and uncertain, and therefore, these risks may result in a material change in our subsidiaries’ operations, significant depreciation of the value of our Class A ordinary shares, or a complete hindrance of our ability to offer our securities to investors in the future. Recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement.

Pursuant to the PRC Cybersecurity Law, which was promulgated by the Standing Committee of the National People’s Congress on November 7, 2016 and took effect on June 1, 2017, personal information and important data collected and generated by a critical information infrastructure operator in the course of its operations in China must be stored in China, and if a critical information infrastructure operator purchases internet products and services that affects or may affect national security, it should be subject to cybersecurity review by the Cyberspace Administration of China (“CAC”). Due to the lack of further interpretations, the exact scope of “critical information infrastructure operator” remains unclear. On December 28, 2021, the CAC and other relevant PRC governmental authorities jointly promulgated the Cybersecurity Review Measures (the “CAC Revised Measures”) to replace the original Cybersecurity Review Measures. The CAC Revised Measures took effect on February 15, 2022. Pursuant to the CAC Revised Measures, if critical information infrastructure operators purchase network products and services, or network platform operators conduct data processing activities that affect or may affect national security, they will be subject to cybersecurity review. On November 14, 2021, CAC published the Administration Measures for Cyber Data Security (Draft for Public Comments), or the “Cyber Data Security Measure (Draft)”, which requires cyberspace operators with personal information of more than one million users who want to list abroad to file a cybersecurity review with the Office of Cybersecurity Review. The cybersecurity review will evaluate, among others, the risk of critical information infrastructure, core data, important data, or a large amount of personal information being influenced, controlled or maliciously used by foreign governments and risk of network data security after going public overseas. As advised by our PRC counsel, Allbright Law Offices, we are not subject to cybersecurity review with the CAC in accordance with the CAC Revised Measures, because (i) we are not in possession of or otherwise holding personal information of over one million users and it is also very unlikely that it will reach such threshold in the near future; (ii) as of the date of this annual report, our data processing activities (including the collection, storage, usage, transmission and publicity of data) do not damage national security; and (iii) as of the date of this annual report, we have not received any notice or determination from applicable PRC governmental authorities identifying it as a critical information infrastructure operator. However, since these statements and regulatory actions are new, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our daily business operation, the ability to accept foreign investments and list on an U.S. exchange.

5

On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, and five supporting guidelines, which came into effect on March 31, 2023. Pursuant to the Trial Measures, domestic companies that seek to offer or list securities overseas, both directly and indirectly, shall complete filing procedures with the CSRC pursuant to the requirements of the Trial Measures within three working days following its submission of initial public offerings or listing application. If a PRC company fails to complete required filing procedures or conceals any material fact or falsifies any major content in its filing documents, such PRC company may be subject to administrative penalties, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines. In addition, on February 24, 2023, the CSRC, together with Ministry of Finance of the PRC, National Administration of State Secrets Protection and National Archives Administration of China, revised the Provisions on Strengthening Confidentiality and Archives Administration for Overseas Securities Offering and Listing which was issued by the CSRC, National Administration of State Secrets Protection and National Archives Administration of China in 2009, or the Provisions. The revised Provisions is issued under the title the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, and came into effect on March 31, 2023 together with the Trial Measures. One of the major revisions to the revised Provisions is expanding its application to cover indirect overseas offering and listing, as is consistent with the Trial Measures. The revised Provisions require that, including but not limited to (a) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (b) domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. As advised by Allbright Law Offices, our PRC counsel, we have not received any formal inquiry, notice, warning, sanction, or objection from the CSRC with respect our listing on the Nasdaq Capital Market. However, there remains significant uncertainty as to the enactment, interpretation and implementation of regulatory requirements related to overseas securities offerings and other capital markets activities. Any failure or perceived failure of us to fully comply with such new regulatory requirements could significantly limit or completely hinder our ability to continue to offer securities to investors, cause significant disruption to our business operations, and severely damage our reputation, which could materially and adversely affect our financial condition and results of operations and could cause the value of our securities to significantly decline or be worthless.

Furthermore, the audit report included in this Form 20-F for the year ended December 31, 2022, was issued by our auditors, Centurion ZD CPA & Co. (“CZD CPA”), an audit firm headquartered in Hong Kong. CZD CPA are among those audit firms listed by the PCAOB Hong Kong Determination, a determination announced by the PCAOB on December 16, 2021, that the it was unable to inspect or investigate completely registered public accounting firms headquartered in Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong. The PCAOB made this determination pursuant to PCAOB Rule 6100, which provides a framework for how the PCAOB fulfills its responsibilities under the Holding Foreign Companies Accountable Act (“HFCA Act”). On August 26, 2022, the China Securities Regulatory Commission (“CSRC”), the Ministry of Finance of the PRC (the “MOF”), and the PCAOB signed a Statement of Protocol (the “Protocol”), governing inspections and investigations of audit firms based in mainland China and Hong Kong, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the U.S. Securities and Exchange Commission (the “SEC”), the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB Board will consider the need to issue a new determination. On December 29, 2022, a legislation entitled “Consolidated Appropriations Act, 2023” (the “Consolidated Appropriations Act”), was signed into law by President Biden, which amended the HFCA Act by reducing the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two. In the event it is later determined that the PCAOB is unable to inspect or investigate completely our auditor, then such lack of inspection could cause trading in our securities to be prohibited under the HFCA Act, as amended, and ultimately result in a determination by the Nasdaq Capital Market to delist our securities.

Our management monitors the cash position of each entity within our organization regularly and prepare budgets on a monthly basis to ensure each entity has the necessary funds to fulfill its obligation for the foreseeable future and to ensure adequate liquidity. As a holding company, we may rely on dividends and other distributions on equity paid by our subsidiary in Hong Kong, and the subsidiaries in China, for our cash and financing requirements. The payment of dividends to Antelope Enterprises by our Chinese subsidiaries is affected by means of dividends by those entities to their Hong Kong direct parent and a redividend by that Hong Kong entity to Antelope Enterprises. Such dividends are effected by resolution of the board of directors of each such entity (after provision for applicable tax obligations). China is a foreign exchange administration country. Capital injections, cross-border trade and services transactions settled in foreign exchange, overseas financing and profit repatriations are subject to the foreign exchange administration regulations. A Chinese subsidiary owned by foreign company must apply for registration of foreign exchange with the SAFE after the issuance of a business license and obtain a foreign exchange registration certificate. When the Chinese subsidiaries apply for repatriating dividends to foreign shareholders, it must submit the application form to SAFE with the proof that such dividends have been subjected to all applicable tax withholding. A Chinese subsidiary can only distribute dividends out of its accumulated profits, which means that any accumulated losses must be more than offset by its profits in other years, including the current year. Please refer to “Item 4 Information on the Company – History and Development of the Company - Cash Transfers Within Our Organization” for more information.

6

Permission or Approval Required from the PRC Authorities for Our PRC Subsidiaries’ Operation

To operate the general business activities currently conducted in China, each of our subsidiaries in China is required to obtain a business license from the State Administration for Market Regulation (“SAMR”). All of our PRC subsidiaries have obtained their valid business licenses from the SAMR, and no application for any such license has been denied.

We are aware, however, recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement.

On July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the Opinions. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters. The Opinions and any related implementing rules to be enacted may subject us to compliance requirement in the future. Given the current regulatory environment in the PRC, we are still subject to the uncertainty of different interpretation and enforcement of the rules and regulations in the PRC adverse to us, which may take place quickly with little advance notice.

On December 28, 2021, the CAC published the CAC Revised Measures, which further restates and expands the applicable scope of the cybersecurity review. The CAC Revised Measures took effect on February 15, 2022. Pursuant to the CAC Revised Measures, if a network platform operator holding personal information of over one million users seeks for “foreign” listing, it must apply for the cybersecurity review. In addition, operators of critical information infrastructure purchasing network products and services are also obligated to apply for the cybersecurity review for such purchasing activities. Although the CAC Revised Measures provides no further explanation on the extent of “network platform operator” and “foreign” listing, we do not believe we are obligated to apply for a cybersecurity review pursuant to the CAC Revised Measures, considering that (i) we are not in possession of or otherwise holding personal information of over one million users and it is also very unlikely that we will reach such threshold in the near future; (ii) as of the date of this this annual report, we have not received any notice or determination from applicable PRC governmental authorities identifying it as a critical information infrastructure operator.

That being said, the CAC Revised Measures empowers the cybersecurity review office to initiate cybersecurity review when they believe any particular data processing activities “affect or may affect national security”. In addition, on November 14, 2021, the CAC promulgated the Regulations on the Administration of Cyber Data Security (Draft for Comments) (the “Draft CAC Regulations”), and according to the Draft CAC Regulations, any data processors shall, in accordance with relevant state provisions, apply for a cybersecurity review when carrying out, among other things, “other data processing activities that affect or may affect national security”. However, neither the CAC Revised Measures nor the Draft CAC Regulations provides for any further explanation or interpretation over what constitutes activities that “affect or may affect national security”. Therefore, if any competent government authorities deem that our PRC subsidiaries’ data processing activities may affect national security, we may be subject cybersecurity review, and in that scenario, failure to pass such cybersecurity review and/or to comply with the data privacy and data security requirements raised during such cybersecurity review could subject our PRC subsidiaries to penalties, damage its reputation and brand, and harm its business and results of operations.

In summary, we and our PRC subsidiaries are not required to obtain permission or approval from the PRC authorities including CSRC or CAC for our PRC subsidiaries, nor have we or our PRC subsidiaries, received any denial for our PRC subsidiaries’ operation. We are subject to the risks of uncertainty of any future actions of the PRC government in this regard including the risk that we inadvertently conclude that the permission or approvals discussed here are not required, that applicable laws, regulations or interpretations change such that we or any of our PRC subsidiaries are required to obtain approvals in the future, or that the PRC government could disallow our holding company structure, which would likely result in a material change in our operations, including our ability to continue our existing holding company structure, carry on our current business, accept foreign investments, and continue to offer securities to our investors. These adverse actions could cause the value of our Class A ordinary shares to significantly decline or become worthless. We may also be subject to penalties and sanctions imposed by the PRC regulatory agencies, including the CSRC, if we fail to comply with such rules and regulations, which would likely adversely affect the ability of our securities to be listed on the U.S. exchange, which would likely cause the value of our Class A ordinary shares to significantly decline or become worthless.

7

| A. | [Reserved]

| B. | Capitalization and Indebtedness

Not required.

| C. | Reasons for the Offer and Use of Proceeds

Not required.

| D. | Risk factors

You should carefully consider the following risk factors, together with all of the other information included in this Annual Report.

Risk Factors Relating to Our Livestreaming Ecommerce Business

We have a limited operating history in a highly competitive technology segment.

We started operating our livestreaming ecommerce business through our indirect subsidiary, Hainan Kylin, in September 2021. Therefore, we have a limited operating history in the livestreaming ecommerce sector, which is competitive and subject to transformation. We may have limited information into trends that could affect the demand for our services. Our financial results and growth to date may not be indicative of our future performance. We may not be able to effectively manage our growth and experience operational, financial and human resource constraints. Our current procedures and controls may not be adequate to support our future operations, and if we are not able to manage our growth effectively, our business may be materially and adversely affected.

If certain consumer behavior trends do not continue develop as anticipated, our operating results will be adversely affected.

Our future financial performance is dependent on certain consumer and social trends and we may have overestimated factors attributable to its growth as well as our successful positioning in such markets. We are subject to both business and consumer activities in the livestreaming ecommerce industry as well as trends in specific demographics which are often difficult to ascertain and which can change quickly.

We have entered a potentially competitive market segment.

The livestreaming ecommerce industry in which we are participating may attract highly seasoned and better capitalized competitors, which could inhibit our success. The relatively low entry threshold and the rapid growth of livestreaming ecommerce in China could make this market become crowded which would decrease our existing and potential market share. We will need to promote and develop brand awareness as a competitive advantage and there can be no assurance that such branding will be successful or sustainable. We expect to continue to expend financial resources on the expansion of our livestreaming ecommerce business, and there can be assurance that we will be able to compete with larger, better capitalized firms. This may also affect our ability to scale our operations and successful execute our strategic growth plan.

We are subject to rapid technology change and certain of our livestreaming ecommerce business could have significant barriers to entry.

Some of our businesses will depend on the growth and evolution of the livestreaming ecommerce and technologies associated with the Internet, and we cannot be certain how Internet access or trends for our services will evolve over time. Also, the barriers to entry to our livestreaming ecommerce sector could erode due to strong competitors, low entry costs, competitive pricing, geographical advantages, and other parties’ affiliations and partnerships.

Our business depends on our ability to maintain and grow our network of high-quality suppliers of hosts and influencers. If we are unable to do so, our future growth would be limited and our business, financial condition and results of operations would be harmed.

Our success is dependent upon our continued ability to maintain and grow our credentialed network of high-quality suppliers of hosts and influencers. We have entered into contracts with different suppliers, usually staffing agencies, which have a growing and diverse pool of hosts and influencers. In addition, the perceived value of our solutions and our reputation may be negatively impacted if the services provided by the hosts or influencers from our suppliers are not satisfactory to customers and their members. The failure to maintain or grow our selective network of suppliers or the failure of those suppliers to meet and exceed our customers’ expectations, may result in a loss of or inability to grow or maintain our customer base, which could adversely affect our business, financial condition and results of operations.

We rely on existing technology systems, networks and platforms that are outside of our control.

Our livestreaming ecommerce business relies on existing technology systems, networks and platforms that we do not control, and changes to any of these technology formats could cause us our change our business model and operations. We may not be successful in developing relationships with industry participants that advance our business efforts or to engage customers to buy or use our services. A large or sudden increase in the cost of the technologies that we utilize may cause us to risk operational viability. Further, changes in technology can occur quickly and unpredictably, and our ability to adapt to such changes could be constrained by our limited experience in our new livestreaming social ecommerce business segment.

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We are dependent on our management team and any loss of our key management personnel without timely and suitable replacements may reduce our revenues and profits.

Our business is also dependent on our executive officers who are responsible for implementing our business plans and driving growth. Please refer to “Directors, Senior Management and Employees” herein for more information about our directors and officers. The demand for such experienced personnel is intense and the search for personnel with the relevant skills set can be time consuming. The loss of our key management personnel without timely and suitable replacements may reduce our revenues and profits.

Risk Factors Relating to Our Ceramic Tile Business

We have entered into a share purchase agreement with a buyer to purchase the ceramic tile business. We expect the divestiture of this business segment to occur but it is possible that this will not happen. If the sale of this business is not consummated, this operating segment could continue to experience challenging market conditions attributable to the slowdown in China’s real estate sector.

In December 2022 the Company’s Board of Directors unanimously agreed to divest of its legacy ceramic tile building materials business. A special meeting of the Company’s shareholders was held on February 21, 2023, and the shareholders approved the divestiture of this business, which is expected to close pending satisfaction of customary closing conditions. However, if the sale of this business is not consummated, this operating segment could continue to experience challenging market conditions attributable to the slowdown in China’s real estate sector. Further, the following risk factors should continue to be considered should this divestiture not be consummated.

The Company may incur significant delays and/or expenses relating to the COVID-19 (coronavirus) pandemic in China and beyond.

Beginning in late 2019, a novel strain of coronavirus (COVID-19) was reported and the World Health Organization has declared the outbreak to constitute a “Public Health Emergency of International Concern.” This has prompted government-imposed quarantines, closures of certain travel and businesses. In March 2022, the Company temporarily shut down its operations in Jinjiang City, Fujian Province, as mandated by the local authorities. In April 2022, the Company gradually resumed its operations in these cities and continues to operate such production facilities. For the year ended December 31, 2022, revenue generated by the ceramic tile business decreased by RMB107.1 million as compared to fiscal 2021 mainly due to the 5.6 million decrease in sales volume because our customers’ business were declining due to the COVID 19 pandemic. For the full fiscal year 2021, revenue generated by the ceramic tile business decreased by 20.9% as compared to fiscal 2020 mainly due to the 14.0% decrease in sales volume and a decrease in our average selling price of 8.0% resulting from a contraction in business from our customers which was primarily caused by the COVID 19 pandemic. In early December 2022, China announced a nationwide loosening of its zero-COVID policy. However, the extent of the impact of the COVID-19 pandemic on our business and financial results will depend largely on future developments, including the duration and extent of the spread of COVID-19 both globally and within our operating markets, the impact on our operating markets’ and global economies, and governmental or regulatory orders that impact our business, all of which are highly uncertain and cannot be predicted. To the extent that COVID-19 or any health epidemic harms our operating markets’ and global economies in general, our results of operations could be adversely affected.

If China’s inflation increases or the prices of energy or raw materials increase, we may not be able to pass the resulting increased costs to our customers and this may adversely affect our profitability or cause us to suffer operating losses.

Economic growth in China has, in the past, been accompanied by periods of high inflation. In the past, the Chinese government has implemented various policies from time to time to control inflation. For example, the Chinese government has periodically introduced measures in certain sectors to avoid overheating of the economy, including tighter bank lending policies, increases in bank interest rates, and measures to curb inflation, which has resulted in a decrease in the rate of inflation. An increase in inflation could cause our costs for energy, labor costs, raw materials and other operating costs to increase, which would adversely affect our financial condition and results of operations.

We are dependent on our management team and any loss of our key management personnel without timely and suitable replacements may reduce our revenues and profits.

Our business is also dependent on our executive officers who are responsible for implementing our business plans and driving growth. Please refer to “Directors, Senior Management and Employees” herein for more information about our directors and officers. The demand for such experienced personnel is intense and the search for personnel with the relevant skills set can be time consuming. The loss of our key management personnel without timely and suitable replacements may reduce our revenues and profits.

Failure to compete successfully with our competitors and new entrants to the ceramics industry in the PRC may result in Antelope Enterprises losing market share.

We operate in a competitive and fragmented industry of ceramic tile manufacturing. There is no assurance that we will not face competition from our existing competitors and new entrants. We compete with a variety of companies, some of which have advantages that include: longer operating history, larger clientele base, superior products, better access to capital, personnel and technology, or are better entrenched. Our competitors may be able to respond more quickly to new and emerging technologies and changes in customer requirements or succeed in developing products that are more effective or less costly than our products. Any increase in competition could have a negative impact on our pricing (thus eroding our profit margins) and reduce our market share. If we are unable to compete effectively with our existing and future competitors and do not adapt quickly to changing market conditions, we may lose market share.

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We have not purchased product liability insurance and any loss resulting from product liability claims must be paid by us.

Accidents may arise as a result of defects in our products. If there are any defects in the products designed and/or manufactured by us, we may face claims from our customers or third parties for the personal injury or property damage suffered as a result of such defects. We have not purchased insurance coverage for product liability or third party liability and are therefore not covered or compensated by insurance in respect of losses, damages, claims and liabilities arising from or in connection with product liability or third party liability.

Our production facilities may be affected by power shortages which could result in a loss of business.

Our production facilities consume substantial amounts of electrical power, which is the principal source of energy for our manufacturing operations. Although we have a back-up generator at both our production facilities, we may experience occasional temporary power shortages disrupting production due to power rationing activities conducted by the authorities, thunderstorms or other natural events beyond our control. Accordingly, these production disruptions could result in a loss of business.

Our research and development efforts may not result in marketable products.

Our research and development team develops products which we have identified as having good potential in the market. There is no assurance that we will not experience delays in future product developments. There is also no assurance that the products which we are currently developing or may develop in the future will be successful or that we will be able to market these new products to our customers successfully. If our new products are unable to gain the acceptance of our customers or potential customers, we will not be able to generate future sales from our investment in research and development.

We may not be able to ensure the successful implementation of our future plans and strategies, resulting in reduced financial performance.

We intend to expand our market presence and explore opportunities in strategic investments or alliances and acquisitions. These initiatives involve various risks including, but not limited to, the investment costs in setting up new offices and sales offices and working capital requirements. There is no assurance that any future plan can be successfully implemented as the successful execution could depend on several factors, some of which are not within our control. Failure to successfully implement our future plans or to effectively manage costs may lead to a material adverse change in our operating environment or affect our ability to respond to market or industry changes, resulting in reduced financial performance. Decelerating economic growth in China has caused challenging market conditions in the real estate and construction sectors resulting in a contraction in investment and new housing projects by property developers. The challenging market conditions has resulted in an expected contraction in demand for our products. Due to the reduced demand for our products, we have, from time to time, recorded an impairment of assets. As we are currently operating our Hengda facility at significantly less than our maximum capacity, this could reduce our profitability.

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We may lose revenue if our intellectual property rights are not protected and counterfeit HD, Hengda, brand products are sold in the market.

We believe our intellectual property rights are important to our success and competitive position. A portion of our products are manufactured and marketed under our “HD” or “Hengda,” labels. We have filed our labels as trademarks in the PRC. We cannot assure you that there will not be any unauthorized usage or misuse of our trademarks or that our intellectual property rights will be adequately protected as it may be difficult and costly to monitor any infringements of our intellectual property rights in the PRC. If we cannot adequately protect our intellectual property, we may lose revenue. In addition, we believe the branding of our products and the brand equity in our “HD” or “Hengda” trademarks is critical to our expansion effort and the continued success of our business. Our efforts to build our brand may be undermined by the sale of counterfeit goods. The counterfeiting of our products may increase if our products become more popular. In order to preserve and enforce our intellectual property rights, we may have to resort to litigation against the infringing or counterfeiting parties. Such litigation could result in substantial costs and diversion of management resources which may have an effect on our financial performance.

We may inadvertently infringe third-party intellectual property rights, which could negatively impact our business and financial results.

We are not aware of, nor have we received any claims from third parties for, any violations or infringements of intellectual property rights of third parties by us as of the date of this Annual Report. Nevertheless, there can be no assurance that as we develop new product designs and production methods, we would not inadvertently infringe the intellectual property rights of others or others would not assert infringement claims against us or claim that we have infringed their intellectual property rights. Claims against us, even if untrue or baseless, could result in significant costs, legal or otherwise, cause product shipment delays, require us to develop non-infringing products, enter into licensing agreements or may be a distraction to our management. Licensing agreements, if required, may not be available on terms acceptable to us or at all. In the event of a successful claim of intellectual property rights infringement against us and our failure or inability to develop non-infringing products or to license the infringed intellectual property rights in a timely or cost-effective basis, our business and/or financial results will be negatively impacted.

The PRC government has historically introduced certain policy and regulatory measures to control the rapid increase in housing prices and cool down the real estate construction market and has more recently adopted policies to stimulate the real estate sector, and the government in the future may refrain from supporting the sector or adopt measures in the future that may further adversely affect our business.

Our business depends on the level of business activity in the property development and construction industries that use our products in their operations in the PRC. Our products are sold to customers in the property development and construction industries. If the property and construction industries fall into a recession in the future, the demand for construction materials, such as ceramic tiles, may consequently decrease and have a significant adverse effect on our business. The PRC government has committed to taking steps to regulate real estate development, promote the healthy development of the real estate industry in China, and strengthen the supervision over land for real estate development purposes. The PRC government has also enacted measures to cool down the real estate construction market and imposed lending curbs, higher mortgage rates, higher down payments, a price cap on new developments and restrictions on the number of homes each family can buy. This offered less incentive for property developers to develop new residential housing due to continued uncertainty, resulting in the recent slowing construction sector. However, the PRC government has also adopted an array of policies to stimulate the real estate sector from time to time which includes cutting benchmark interest rates, a lowering of the reserve requirement ratio for banks, lower first home down payment ratios and a cut in the minimum capital ratio for fixed asset investments which would help property developers. Although the PRC government’s measures have helped to sustain the real estate sector from time to time, there has been a substantial slowdown in construction activity, and it is not clear if supportive monetary and regulatory policies will continue in the future. We also cannot be certain that the PRC government will not issue additional and more stringent regulations or measures or that agencies and banks will not adopt restrictive measures or practices in response to PRC governmental policies and regulations, which could negatively affect the industries we serve in the PRC, and thereby harm our sales.

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Our manufacturing activities are dependent upon availability of skilled and unskilled labor, a deficiency of which could result in a reduction in profits.

Our manufacturing activities are labor intensive and dependent on the availability of skilled and unskilled labor in large numbers. Large labor intensive operations call for good monitoring and maintenance of cordial relations. Non-availability of labor, poor labor management and/or any disputes between the labor and management may result in a reduction in profits. Further, we rely on contractors who engage on-site laborers for performance of many of our unskilled operations. The scarcity or unavailability of contract laborers may affect our operations and financial performance.

We face increasing labor costs and other costs of production in the PRC, which could limit our profitability.

The ceramic tile manufacturing industry is labor intensive. Labor costs in China have been increasing in recent years and our labor costs in the PRC could continue to increase in the future. If labor costs in the PRC continue to increase, our production costs will likely increase which may in turn affect the selling prices of our products. We may not be able to pass on these increased costs to consumers by increasing the selling prices of our products in light of competitive pressure in the markets where we operate. In such circumstances, our profit margin may decrease.

Risk Factors Relating to Our Operations in China

Violation of Foreign Corrupt Practices Act or China anti-corruption law could subject us to penalties and other adverse consequences.

We are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States public companies from bribing or making prohibited payments to foreign officials to obtain or retain business. PRC law also strictly prohibits bribery of government officials. While we take precautions to educate our employees about the Foreign Corrupt Practices Act and Chinese anti-corruption law, there can be no assurance that we or the employees or agents of our subsidiaries will not engage in such conduct, for which we may be held responsible. If that were to occur, we could suffer penalties that may have a material adverse effect on our business, financial condition and results of operations.

Our independent registered public accounting firm’s audit documentation related to their audit reports included in this annual report may be located in the People’s Republic of China. The Public Company Accounting Oversight Board currently cannot inspect audit documentation located in China and, as such, you may be deprived of the benefits of such inspection.

Auditors of companies whose shares are registered with the U.S. Securities and Exchange Commission and traded publicly in the United States, including our independent registered public accounting firm, must be registered with the U.S. PCAOB and are required by the laws of the United States to undergo regular inspections by the PCAOB to assess their compliance with the laws of the United States and professional standards applicable to auditors. Our financial statements contained in this annual report on Form 20-F for the year ended December 31, 2022 have been audited by CZD CPA, an independent registered public accounting firm that is headquartered in Hong Kong. CZD CPA were among those audit firms listed by the PCAOB Hong Kong Determination, a determination announced by the PCAOB on December 16, 2021, that it was unable to inspect or investigate completely registered public accounting firms headquartered in Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong. The PCAOB made this determination pursuant to PCAOB Rule 6100, which provides a framework for how the PCAOB fulfills its responsibilities under the HFCA Act. On August 26, 2022, the CSRC, the MOF, and the PCAOB signed the Protocol, governing inspections and investigations of audit firms based in mainland China and Hong Kong, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB Board will consider the need to issue a new determination. On December 29, 2022, the Consolidated Appropriations Act, was signed into law by President Biden, which amended the HFCA Act by reducing the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two. In the event it is later determined that the PCAOB is unable to inspect or investigate completely our auditor, it would make it more difficult to evaluate the effectiveness of our auditor’s audit procedures or quality control procedures as compared to auditors outside of China and Hong Kong that are subject to PCAOB inspections. Investors may lose confidence in our reported financial information and procedures and the quality of our financial statements. In addition, our securities may be prohibited from trading under the HFCA Act, as amended, and ultimately result in a determination by the Nasdaq Capital Market to delist our securities.

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Our shares may be delisted under the HFCA Act as the PCAOB is unable to inspect our auditor with presence in Hong Kong, and the delisting of our shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.

The HFCA Act was enacted on December 18, 2020. The HFCA Act states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our shares from being traded on a national securities exchange or in the over the counter trading market in the United States. Our financial statements contained in this annual report on Form 20-F for the year ended December 31, 2022 have been audited by CZD CPA, an independent registered public accounting firm that is headquartered in Hong Kong. CZD CPA were among those audit firms listed by the PCAOB Hong Kong Determination, a determination announced by the PCAOB on December 16, 2021, that it was unable to inspect or investigate completely registered public accounting firms headquartered in Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong. The PCAOB made this determination pursuant to PCAOB Rule 6100, which provides a framework for how the PCAOB fulfills its responsibilities under the HFCA Act. On August 26, 2022, the CSRC, the MOF, and the PCAOB signed the Protocol, governing inspections and investigations of audit firms based in mainland China and Hong Kong, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB Board will consider the need to issue a new determination. On December 29, 2022, the Consolidated Appropriations Act, was signed into law by President Biden, which amended the HFCA Act by reducing the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two.

The Company understands that in the event that the PCAOB is unable to inspect or investigate completely the Company’s independent auditor for consecutive two years, the SEC could prohibit trading of our Class A ordinary shares on the NASDAQ Capital Market, any other U.S. securities exchange, and in the over-the-counter market. Such a trading prohibition would substantially impair, if not preclude your ability to sell or purchase our securities, and the risks and uncertainties associated with a potential trading prohibition could have a negative impact on the price of our Class A ordinary shares.

We are dependent on political, economic, regulatory and social conditions in the PRC.

Approximately 100%, 100% and 100% of our revenue in each of the years ended December 31, 2022, 2021 and 2020, respectively, was derived from the PRC market and we anticipate that the PRC market will continue to be the major source of revenue for the foreseeable future. Accordingly, any significant slowdown in the PRC economy or decline in demand for our products from our customers in the PRC will have an adverse effect on our business and financial performance. Furthermore, as our operations and production facilities are located in the PRC, any unfavorable changes in the social and/or political conditions may also adversely affect our business and operations. While the current policy of the PRC government seems to be one of economic reform to encourage foreign investments and greater economic decentralization, there is no assurance that such a policy will continue to prevail in the future. There is no assurance that our operations will not be adversely affected should there be any policy changes.

In light of recent events indicating greater oversight by the Cyberspace Administration of China, or CAC, over data security, particularly for companies seeking to list or listed on a foreign exchange, we are subject to a variety of laws and other obligations regarding cybersecurity and data protection, and any failure to comply with applicable laws and obligations could have a material and adverse effect on our business, our listing on Nasdaq, financial condition, results of operations, and the offering.

We are subject to various risks and costs associated with to the collection, use, sharing, retention, security, and transfer of confidential and private information, such as personal information and other data. This data is wide ranging and relates to our investors, employees, contractors and other counterparties and third parties. Our compliance obligations include those relating to the relevant PRC laws in this regard. These PRC laws apply not only to third-party transactions, but also to transfers of information between us and our subsidiaries in China, and among us, our PRC subsidiaries, and other parties with which we have commercial relations. These laws continue to develop, and the PRC government may adopt other rules and restrictions in the future. Non-compliance could result in penalties or other significant legal liabilities.

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Pursuant to the PRC Cybersecurity Law, promulgated by the Standing Committee of the National People’s Congress on November 7, 2016 and took effect on June 1, 2017, personal information and important data collected and generated by a critical information infrastructure operator in the course of its operations in China must be stored in China, and if a critical information infrastructure operator purchases internet products and services that affects or may affect national security, it should be subject to cybersecurity review by the CAC. Due to the lack of further interpretations, the exact scope of “critical information infrastructure operator” remains unclear. On December 28, 2021, the CAC published the CAC Revised Measures which further restates and expands the applicable scope of the cybersecurity review. The CAC Revised Measures took effect on February 15, 2022. Pursuant to the CAC Revised Measures, if a network platform operator holding personal information of over one million users seeks for “foreign” listing, it must apply for the cybersecurity review. In addition, operators of critical information infrastructure purchasing network products and services are also obligated to apply for the cybersecurity review for such purchasing activities. Although the CAC Revised Measures provides no further explanation on the extent of “network platform operator” and “foreign” listing, as confirmed by our PRC counsel, Allbright Law Offices, we are not subject to cybersecurity review with the CAC , because (i) we are not in possession of or otherwise holding personal information of over one million users and it is also very unlikely that it will reach such threshold in the near future; (ii) as of the date of this annual report, our data processing activities (including the collection, storage, usage, transmission and publicity of data) do not damage national security; and (iii) as of the date of this annual report, we have not received any notice or determination from applicable PRC governmental authorities identifying it as a critical information infrastructure operator. However, we cannot guarantee that we will not be subject to cybersecurity review in the future. During such review, we may be required to suspend our operation experience other disruptions to our operations. Cybersecurity review could also result in negative publicity with respect to our company and diversion of our managerial and financial resources.

Furthermore, if we were found to be in violation of applicable laws and regulations in China during such review, we could be subject to administrative penalties, such as warnings, fines, or service suspension. Therefore, cybersecurity review could materially and adversely affect our business, financial condition, and results of operations.

In addition, the PRC Data Security Law, promulgated by the Standing Committee of the National People’s Congress on June 10, 2021 and took effect on September 1, 2021, requires data collection to be conducted in a legitimate and proper manner, and stipulates that, for the purpose of data protection, data processing activities must be conducted based on data classification and hierarchical protection system for data security. As the Data Security Law was recently promulgated, we may be required to make further adjustments to our business practices to comply with this law. If our data processing activities were found to be not in compliance with this law, we could be ordered to make corrections, and under certain serious circumstances, such as severe data divulgence, we could be subject to penalties, including the revocation of our business licenses or other permits. Furthermore, the recently issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law require (i) speeding up the revision of the provisions on strengthening the confidentiality and archives management relating to overseas issuance and listing of securities and (ii) improving the laws and regulations relating to data security, cross-border data flow, and management of confidential information. As there remain uncertainties regarding the further interpretation and implementation of those laws and regulations, we cannot assure you that we will be compliant such new regulations in all respects, and we may be ordered to rectify and terminate any actions that are deemed illegal by the regulatory authorities and become subject to fines and other sanctions. As a result, we may be required to suspend our relevant businesses, shut down our website, take down our operating applications, or face other penalties, which may materially and adversely affect our business, financial condition, and results of operations.

On August 20, 2021, the Standing Committee of the National People’s Congress of China promulgated the Personal Information Protection Law of the PRC, or the PIPL, which took effect in November 2021. As the first systematic and comprehensive law specifically for the protection of personal information in the PRC, the PIPL provides, among others, that (i) an individual’s consent shall be obtained to use sensitive personal information, such as biometric characteristics and individual location tracking, (ii) personal information operators using sensitive personal information shall notify individuals of the necessity of such use and impact on the individual’s rights, and (iii) where personal information operators reject an individual’s request to exercise his or her rights, the individual may file a lawsuit with a People’s Court. As uncertainties remain regarding the interpretation and implementation of the PIPL, we cannot assure you that we will comply with the PIPL in all respects, we may become subject to fines and/or other penalties which may have material adverse effect on our business, operations and financial condition.

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While we take measures to comply with all applicable data privacy and protection laws and regulations, we cannot guarantee the effectiveness of the measures undertaken by us and our business partners. However, compliance with any additional laws could be expensive, and may place restrictions on our business operations and the manner in which we interact with our users. In addition, any failure to comply with applicable cybersecurity, privacy, and data protection laws and regulations could result in proceedings against us by government authorities or others, including notification for rectification, confiscation of illegal earnings, fines, or other penalties and legal liabilities against us, which could materially and adversely affect our business, financial condition, results of operations and the value of our Ordinary Shares. In addition, any negative publicity on our website or platform’s safety or privacy protection mechanism and policy could harm our public image and reputation and materially and adversely affect our business, financial condition, and results of operations.

We are subject to risks related to the laws and regulations of the PRC and the interpretation and implementation thereof.

Our business and operations, as well as those of our customers and suppliers in the PRC, are subject to the laws and regulations promulgated by relevant PRC governmental authorities. The PRC government is still in the process of developing a comprehensive set of laws and regulations in the course of the PRC’s transformation from a centrally planned economy to a market-oriented economy. As the legal system in the PRC is still in flux, laws and regulations or their interpretation may be subject to change. Furthermore, any change in the political and economic policy of the PRC government may also result in similar changes in the laws and regulations or the interpretation thereof. Such changes may adversely affect our operations and business in the PRC. The PRC legal system is a codified legal system comprising written laws, regulations, circulars, administrative directives, and internal guidelines as well as judicial interpretations. Decided cases do not form part of the legal structure of the PRC and thus have no binding effect. As such, the administration of PRC laws and regulations may be subject to a certain degree of discretion by the authorities. This has resulted in the outcome of dispute resolutions not having the level of consistency or predictability as in other countries with more developed legal systems. Due to such inconsistency and unpredictability, if we should be involved in any legal dispute in the PRC, we may experience difficulties in obtaining legal redress or in enforcing our legal rights. From time to time, changes in law, registration requirements, and regulations or the implementation thereof may also require us to obtain additional approvals and licenses from the PRC authorities for carrying out our operations in the PRC which would require us to incur additional expenses in order to comply with such requirements and in turn affect our financial performance with the increase in our business costs. Furthermore, there can be no assurance that approvals, registrations, or licenses will be granted to us promptly or at all. If we experience delays in obtaining or are unable to obtain such required approvals, registrations, or licenses, our operations and business in the PRC, and hence our overall financial performance will be adversely affected.

Our business activities are subject to certain PRC laws and regulations.

As our production and operations are carried out in the PRC, we are subject to certain PRC laws and regulations. In addition, being wholly foreign-owned enterprises, we are required to comply with certain additional laws and regulations. Pursuant to PRC laws and regulations, the breach or non-compliance with such laws and regulations may result in the PRC authorities suspending, withdrawing or terminating our business license, causing us to cease production of all or certain of our products, and this would materially and adversely affect our business and financial performance. Our corporate affairs in the PRC are governed by our articles of association and the corporate and foreign investment laws and regulations of the PRC. The principles of the PRC laws relating to matters such as the fiduciary duties of directors and other corporate governance matters and foreign investment laws in the PRC are relatively new. Hence, the enforcement of investors or shareholders’ rights under the articles of association of a PRC company and the interpretation of the relevant laws relating to corporate governance matters remain largely untested in the PRC.

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PRC foreign exchange control may limit our ability to utilize our profits effectively and affect our ability to receive dividends and other payments from our PRC subsidiaries.

Hengda, Chengdu Future, Antelope Yangpu, Hainan Antelope, Antelope Chengdu are foreign investment enterprise, or “FIE,” and are subject to the rules and regulations in the PRC on currency conversion. In the PRC, State Administration of Foreign Exchange, or SAFE, regulates the conversion of the RMB into foreign currencies. Currently, FIEs are required to apply to SAFE for “Foreign Exchange Registration Certificates for Foreign Investment Enterprise”. With such registration certifications (which need to be renewed annually), FIEs are allowed to open foreign currency accounts including the “current account” and “capital account”. Currently, conversion of currency within the scope of the “current account” (e.g. remittance of foreign currencies for payment of dividends, etc.) can be effected without requiring the approval of SAFE. However, conversion of currency in the “capital account” (e.g. for capital items such as direct investments, loans, securities, etc.) still requires the approval of SAFE. On October 21, 2005, SAFE promulgated the “Notice on Issues concerning Foreign Exchange Management in Financing by PRC Residents by Overseas Special Purpose Vehicle and Return Investments” (the “No. 75 Notice”). The No. 75 Notice came into effect on November 1, 2005 and requires the following matters, among others, to be complied with: every PRC domestic resident who establishes or controls an overseas special purpose vehicle, or “SPV,” must apply to the local bureau of SAFE for an “overseas investment foreign exchange registration.” Every PRC domestic resident of an SPV who has completed the “overseas investment foreign exchange registration”, or “Registrant,” must make an application to the local bureau of SAFE to amend their registration particulars upon (i) the injection of any PRC domestic assets or the equity interests of any PRC domestic company owned by the PRC domestic resident into the SPV, and (ii) the implementation of any overseas equity fund-raising by the SPV following an injection of PRC domestic assets or the equity interests of a PRC domestic company; every Registrant must apply to the local bureau of SAFE for change of registration particulars or recordation within 30 days after the occurrence of any capital increase or reduction, changes in shareholdings or share swap, merger, long-term investment in equities or debentures, guarantee of foreign indebtedness and other major capital changes not involving “return investment”, undertaken by an SPV; and every Registrant must repatriate, within 180 days, dividends or profits which he receives from an SPV and/or income derived from changes in the shareholding of an SPV. On July 14, 2014, China’s State Administration of Foreign Exchange (SAFE), the foreign exchange control authority, released the Notice of the State Administration of Foreign Exchange on Relevant Issues Concerning Foreign Exchange Administration for Overseas Investment, Financing and Round Trip Investment Undertaken by Domestic Residents via Special Purpose Vehicles (Notice 37). The regulation took effect July 4, 2014. At that time, the old regulation, “Notice on Issues concerning Foreign Exchange Management in Financing by PRC Residents by Overseas Special Purpose Vehicle and Return Investments” (the “No. 75 Notice”), which was issued in 2005, was repealed. Compared with Circular 75, Circular 37 reflects the trend of SAFE’s policy to gradually loosen the restrictions and simplify the procedures for overseas financing and investment by Chinese residents, so as to fully utilize the financial resources in domestic and overseas markets. However, as Circular 37 has only recently been issued, the actual interpretation and enforcement of the above changes by SAFE in practice remain to be seen. There can be no assurance that SAFE will not continue to issue new rules and regulations and/or further interpretations of the No. 37 Notice that will strengthen the foreign exchange control. As our operating entities are located in the PRC and all of our sales are denominated in RMB, our ability to pay dividends or make other distributions may be restricted by PRC foreign exchange control restrictions. There can be no assurance that the relevant regulations will not be amended to our detriment and that our ability to distribute dividends will not be adversely affected.

16

Introduction of new laws or changes to existing laws by the PRC government may adversely affect our business.

With the regulations concerning data privacy and cybersecurity are developing in China, we may be subject to new laws and regulations when we operate our business.

On June 10, 2021, the Standing Committee of the National People’s Congress promulgated the Data Security Law of the PRC, which took effect on September 1, 2021. The Data Security Law clarifies the scope of data to cover a wide range of information records generated from all aspects of production, operation and management of government affairs and enterprises in the process of the gradual transformation of digitalization and requires that data collection shall be conducted in a legitimate and proper manner, and theft or illegal collection of data is not permitted. Data processors shall establish and improve the whole-process data security management rules, organize and implement data security trainings as well as take appropriate technical measures and other necessary measures to protect data security. In addition, data processing activities shall be conducted on the basis of the graded protection system for cybersecurity.

On July 30, 2021, the State Council promulgated the Regulations on Protection of Security of Critical Information Infrastructure, effective on September 1, 2021, under which, a “critical information infrastructure” refers to critical network facilities and information systems involved in important industries and sectors, such as public communication and information services, energy, transportation, water conservancy, finance, public services, governmental digital services, science and technology related to national defense industry, as well as those which may seriously endanger national security, national economy and citizen’s livelihood or public interests if damaged or malfunctioned, or if any leakage of data in relation thereto occurs. The competent governmental departments and supervision and management departments of the aforementioned important industries will be responsible for (i) organizing the identification of critical information infrastructures in their respective industries in accordance with relevant identification rules, and (ii) promptly notifying the identified operators and the public security department of the State Council of the identification results. In the event of occurrence of any major cybersecurity incident or discovery of any major cybersecurity threat for the critical information infrastructure, the operator shall report to the protection authorities and the public security authorities as required.

On July 7, 2022, the CAC promulgated the Measures on Security Assessment of Cross-border Data Transfer which has become effective on September 1, 2022. Such data export measures requires that any data processor which processes or exports personal information exceeding certain volume threshold under such measures shall apply for security assessment by the CAC before transferring any personal information abroad, including the following circumstances: (i) important data will be provided overseas by any data processor; (ii) personal information will be provided overseas by any operator of critical information infrastructure or any data processor who processes the personal information of more than 1,000,000 individuals; (iii) personal information will be provided overseas by any data processor who has provided the personal information of more than 100,000 individuals in aggregate or has provided the sensitive personal information of more than 10,000 individuals in aggregate since January 1 of last year; and (iv) other circumstances where the security assessment is required as prescribed by the CAC. A data processor shall, before applying for the security assessment of an outbound data transfer, conduct a self-assessment of the risks in the outbound data transfer. The security assessment of a cross-border data transfer shall focus on assessing risks that may be brought about by the cross-border data transfer to national security, public interests, or the lawful rights and interests of individuals or organizations.

On December 28, 2021, the CAC, the NDRC, the MIIT and several other PRC governmental authorities jointly issued the Cybersecurity Review Measures, which became effective on February 15, 2022 and replaced the Measures for Cybersecurity Review published on April 13, 2020. Pursuant to Cybersecurity Review Measures, critical information infrastructure operators that purchase network products and services and network platform operators engaging in data processing activities that affect or may affect national security are subject to cybersecurity review under the Cybersecurity Review Measures. According to the Cybersecurity Review Measures, before purchasing any network products or services, a critical information infrastructure operator shall assess potential national security risks that may arise from the launch or use of such products or services, and apply for a cybersecurity review with the cybersecurity review office of CAC if national security will or may be affected. In addition, network platform operators who possess personal information of more than one million users and intend to be listed at a foreign stock exchange shall go through the cybersecurity review. As advised by our PRC counsel, Allbright Law Offices, we are not subject to cybersecurity review with the CAC in accordance with the CAC Revised Measures, because (i) we are not in possession of or otherwise holding personal information of over one million users and it is also very unlikely that it will reach such threshold in the near future; (ii) as of the date of this annual report, our data processing activities (including the collection, storage, usage, transmission and publicity of data) do not damage national security; and (iii) as of the date of this annual report, we have not received any notice or determination from applicable PRC governmental authorities identifying it as a critical information infrastructure operator. However, since these statements and regulatory actions are new, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our daily business operation, the ability to accept foreign investments and list on an U.S. exchange.

In addition, given the lack of oversight of many offshore issuers with China-based operating companies, CSRC promulgated a package of rules and regulations to enhance the regulations on such companies.

On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, and five supporting guidelines, which came into effect on March 31, 2023. The Trial Measures clarified that enterprises that have been listed overseas prior to March 31, 2023 constitute “Existing Issuers” and are not required to conduct the overseas listing filing procedure immediately, but shall carry out filing procedures as required if they conduct refinancing or are involved in other circumstances required by CSRC.

On February 24, 2023, the CSRC and certain other PRC regulatory authorities jointly published the revised Provisions on Strengthening Confidentiality and Archives Administration in Respect of Overseas Issuance and Listing of Securities by Domestic Enterprises, or the Confidentiality and Archives Administration Provisions, which came into effect on March 31, 2023. The Confidentiality and Archives Administration Provisions, among other things, (i) require PRC enterprises to comply with confidentiality obligations under applicable PRC rules and regulations when providing documents and materials to securities companies and securities service institutions; (ii) mandate that working papers created within the PRC by securities companies and securities service institutions in connection with their services for overseas securities offerings and listing of PRC enterprises shall be retained within the territory of the PRC; and (iii) prohibit the cross-border transfer of the aforementioned working papers outside the PRC absent prior examination and approval from competent PRC regulatory authorities. The Confidentiality and Archives Administration Provisions, together with Trial Measures, also emphasize that the investigation and evidence collection in relation to the overseas securities offering and listing by the domestic companies conducted by overseas securities regulator and the relevant competent authorities shall go through the cross-border regulatory cooperation mechanism and the CSRC or the relevant authorities shall provide the requisite assistance pursuant to the bilateral and multilateral cooperation mechanism.

The PRC legal system is based on the Constitution of the People’s Republic of China and is made up of written laws, regulations, circulars and directives. With the PRC’s entry into the WTO, the PRC government is in the process of developing its legal system so as to encourage foreign investments and to meet the needs of investors. As the PRC economy is developing at a generally faster rate than its legal system, some degree of uncertainty exists in connection with whether and how existing laws and regulations will apply to certain events or circumstances. Some of the laws and regulations, and the interpretation, implementation and enforcement thereof, are still at the experimental stage and therefore subject to policy changes. There is no assurance that the introduction of new laws or regulations, changes to existing laws and regulations and the interpretation or application thereof or the delays in obtaining approvals from the relevant PRC authorities will not have an adverse impact on our business or prospects. In particular, on August 8, 2006, the Ministry of Commerce, the CSRC, the State-owned Assets Supervision and Administration Commission, the State Administration of Taxation, the State Administration of Industry and Commerce and the State Administration of Foreign Exchange promulgated the “Rules on the Mergers and Acquisition of Domestic Enterprises by Foreign Investors” which came into effect on September 8, 2006, or “the M&A Rules.” Foreign investors should comply with the rules when they purchase shareholding equities of a PRC domestic non-foreign-funded enterprise, or Domestic Company, or subscribe to the increased capital of a Domestic Company, and thus changing the nature of the Domestic Company into a foreign investment enterprise. The rules stipulate, inter alia, (i) that the acquisition of a Domestic Company by an affiliated foreign enterprise established or controlled by PRC entities or individuals must be approved by the Ministry of Commerce; (ii) that the incorporation of a special purpose vehicle, which is directly or indirectly controlled by PRC entities for the purpose of an overseas listing of the equity interest of a Domestic Company, must be subject to the approval of the Ministry of Commerce; (iii) that the acquisition of a Domestic Company by a special purpose vehicle shall be subject to approval of the Ministry of Commerce and (iv) the offshore listing of a special purpose vehicle shall be subject to the prior approval from China Securities Regulatory Commission. As Hengda was incorporated as a FIE and Antelope Enterprises does not fall within the scope of being classified as a special purpose vehicle directly or indirectly established or controlled by PRC entities or individuals, the M&A Rules did not apply to the Business Combination, and we were not required to obtain the approval from the Ministry of Commerce, the approval from the China Securities Regulatory Commission and/or any other approvals from PRC government authorities as stipulated by the M&A Rules. There is however no assurance that the PRC authorities will not issue further directives, regulations, clarifications or implementation rules, which may require us or other relevant parties to obtain further approvals with respect to the Business Combination. If new laws are promulgated or the existing laws are reinterpreted, our structure could be determined to be in violation of such laws and subject to sanction by applicable government authorities.

Environmental, health and safety laws have in the past and may in the future impose material liabilities on us and require us to incur material capital and operational costs.

We are subject to environmental, health and safety laws and regulations in the PRC that impose controls on our air, water and waste discharges, on our storage, handling, use, discharge and disposal of chemicals, and on exposure of our employees to hazardous substances. These laws and regulations could require us to incur costs to maintain compliance and could impose liability to remedy the effects of hazardous substance contamination. Although we do not believe that we have violated any of such laws and regulations and therefore have not incurred any significant liabilities under these laws and regulations in the past, the environmental laws and regulations are constantly evolving and becoming stricter in the PRC. The adoption of new laws or regulations or our failure to comply with these laws or regulations in the future could cause us to incur material liabilities and could require us to incur additional expenses, curtail operations and/or restrict our ability to expand.

17

Our business will suffer if we lose our land use rights.

There is no private ownership of land in China and all land ownership is held by the government of China, its agencies, and collectives. In the case of land used for business purposes, land use rights can be obtained from the government for a period up to 50 years, and are typically renewable. Land use rights can be granted upon approval by the land administrative authorities of China (State Land Administration Bureau) upon payment of the required land granting fee, the entry into a land use agreement with a competent governmental authority and certain other ministerial procedures. We have received land use certificates for certain parcels of land on which our operations reside, but we may not have followed all procedures required to obtain such certificates or paid all required fees. If the Chinese administrative authorities determine that we have not fully complied with all procedures and requirements needed to hold a land use certificate, we may be forced by the Chinese administrative authorities to retroactively comply with such procedures and requirements, which may be burdensome and require us to make payments, or such Chinese administrative authorities may invalidate or revoke our land use certificate entirely. If the land use right certificates needed for our operations are determined by the government of China to be invalid or if they are not renewed, we may lose production facilities or employee accommodations that would be difficult or even impossible to replace. Should we have to relocate, our workforce may be unable or unwilling to work in the new location and our business operations will be disrupted during the relocation. The relocation or loss of facilities could cause us to lose sales and/or increase our costs of production, which would negatively impact our financial results.

We own certain buildings collectively, which may limit our right to use, renovate or dispose of such buildings.

We own several buildings located at the Junbing Industrial Zone in Jinjiang City with a total construction area of 29,120.83 square meters. As a result, our right to use, renovate and dispose of such buildings may be limited.

Our business will suffer if we fail to comply with environmental protection regulations

Companies which cause severe pollution to the environment are required to restore the environment or remedy the effects of the pollution within a prescribed time limit. If a company fails to report and/or register the environmental pollution it caused, it will receive a warning or be penalized. Companies that fail to restore the environment or remedy the effects of the pollution within the prescribed time will be penalized or have their business licenses terminated. Companies that have polluted and endangered the environment must bear the responsibility for remedying the danger and effects of the pollution, as well as to compensate any losses or damages suffered as a result of such environmental pollution.

It may be difficult for overseas shareholders and/or regulators to conduct investigation or collect evidence within China.

Shareholder claims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to providing information needed for regulatory investigations or litigation initiated outside China. Although the authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such cooperation with the securities regulatory authorities in the U.S. may not be efficient in the absence of mutual and practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, or Article 177, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. While detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests.

Our principal business operation is conducted in the PRC. If U.S. regulators carry out an investigation of us and there is a need to conduct investigation or collect evidence within the territory of the PRC, the U.S. regulators may not be able to carry out such investigation or evidence collection directly in the PRC under the PRC laws. The U.S. regulators may consider cross-border cooperation with securities regulatory authority of the PRC by way of judicial assistance, diplomatic channels or regulatory cooperation mechanism established with the securities regulatory authority of the PRC.

Fluctuations in exchange rates could adversely affect our business and the value of our shares.

The value of our shares will be indirectly affected by the foreign exchange rate between U.S. dollars and the Renminbi and between those currencies and other currencies in which our revenue may be denominated. Because all of our earnings and cash assets are denominated in Renminbi, fluctuations in the exchange rate between the U.S. dollar and the Renminbi will affect the relative purchasing power of these proceeds, as well as our financial results reported in U.S. dollar terms without giving effect to any underlying change in our business, financial condition or results of operations. Fluctuations in the exchange rate will also affect the relative value of any dividend we issue that will be exchanged into U.S. dollars and earnings from, and the value of, any U.S. dollar-denominated investments we make in the future. Since July 2005, the Renminbi has not been pegged to the U.S. dollar. Although the People’s Bank of China regularly intervenes in the foreign exchange market to prevent significant short-term fluctuations in the exchange rate, the Renminbi may appreciate or depreciate significantly in value against the U.S. dollar in the medium to long term. Moreover, it is possible that in the future the Chinese authorities may lift restrictions on fluctuations in the Renminbi exchange rate and lessen intervention in the foreign exchange market. Therefore, the RMB exchange rate has become more flexible and the exchange rate regime more transparent and in line with changes in market supply and demand. However, significant fluctuations in the RMB’s value against the U.S. dollar could occur. Very limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may enter into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we may not be able to successfully hedge our exposure at all. In addition, our foreign currency exchange losses may be magnified by Chinese exchange control regulations that restrict our ability to convert Renminbi into foreign currencies.

18

Under the EIT Law, Antelope Enterprises, Success Winner and/or Stand Best, Vast Elite and Antelope HK may be classified as a “resident enterprise” of the PRC. Such classification could result in PRC tax consequences to Antelope Enterprises, our non-PRC resident shareholders, Success Winner and/or Stand Best, Vast Elite and Antelope HK.

The EIT Law and its implementing rules provide that enterprises established outside of China whose “de facto management bodies” are located in China are considered “resident enterprises” under PRC tax laws. The implementing rules promulgated under the EIT Law define the term “de facto management bodies” as a management body which substantially manages, or has control over the business, personnel, finance and assets of an enterprise. In April 2009, the State Administration of Taxation, or SAT, issued a circular, known as Circular 82, which provides certain specific criteria for determining whether the “de facto management bodies” of a PRC-controlled enterprise that is incorporated offshore is located in China. However, there are no further detailed rules or precedents governing the procedures and specific criteria for determining “de facto management body.” If the PRC tax authorities determine that Antelope Enterprises, Success Winner and/or Stand Best, Vast Elite, Antelope HK are a “resident enterprise” for PRC enterprise income tax purposes, a number of PRC tax consequences could follow. First, Antelope Enterprises, Success Winner and/or Stand Best may be subject to the enterprise income tax at a rate of 25% on Antelope Enterprises’, Success Winner’s and/or Stand Best’s worldwide taxable income, as well as PRC enterprise income tax reporting obligations. Second, under the EIT Law and its implementing rules, dividends paid between “qualified resident enterprises” are exempt from enterprise income tax. As a result, if Antelope Enterprises, Success Winner and Stand Best are each treated as “qualified resident enterprises,” all dividends from Hengda to Antelope Enterprises (through Success Winner and Stand Best) should be exempt from the PRC enterprise income tax. If Stand Best, Antelope HK and Vast Elite were treated as a PRC “non-resident enterprise” under the EIT Law, then dividends that Stand Best receives from Hengda, Vast Elite receives from Chengdu Future, Antelope HK receives from Antelope Yangpu, Hainan Antelope and Antelope Chengdu (assuming such dividends were considered sourced within the PRC) (i) may be subject to a 5% PRC withholding tax, provided that Stand Best owns more than 25% of the registered capital of Hengda, continuously within 12 months immediately prior to obtaining such dividend from Hengda, Vast Elite owns more than 25% of the registered capital of Chengdu Future, continuously within 12 months immediately prior to obtaining such dividend from Chengdu Future, and Antelope HK owns more than 25% of the registered capital of Antelope Yangpu, Hainan Antelope and Antelope Chengdu, continuously within 12 months immediately prior to obtaining such dividend from Antelope Yangpu, Hainan Antelope and Antelope Chengdu and the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, or the “PRC-Hong Kong Tax Treaty,” were otherwise applicable, or (ii) if such treaty does not apply (i.e., because the PRC tax authorities may deem Stand Best to be a conduit not entitled to treaty benefits), may be subject to a 10% PRC withholding tax. Similarly, if Success Winner were treated as a “non-resident enterprise” under the EIT Law and Stand Best were treated as a “resident enterprise” under the EIT Law, then dividends Success Winner receives from Stand Best (assuming such dividends were considered sourced within the PRC) may be subject to a 10% PRC withholding tax. A similar situation may arise if Antelope Enterprises were treated as a “non-resident enterprise” under the EIT Law, and Success Winner were treated as a “resident enterprise” under the EIT Law. Any such taxes on dividends could materially reduce the amount of dividends, if any, we could pay to our shareholders. Finally, if Antelope Enterprises is determined to be a “resident enterprise” under the EIT Law, this could result in a situation in which a 10% PRC tax is imposed on dividends Antelope Enterprises pays to its shareholders that are not tax residents of the PRC, or “non-resident investors,” and that are enterprises but not individuals, and gains derived by them from transferring Antelope Enterprises’ shares, if such income is considered PRC-sourced income by the relevant PRC tax authorities. In such event, Antelope Enterprises may be required to withhold a 10% PRC tax on any dividends paid to such non-resident investors. Such non-resident investors also may be responsible for paying PRC tax at a rate of 10% on any gain derived by such investors from the sale or transfer of Antelope Enterprises’ shares in certain circumstances. Antelope Enterprises would not, however, have an obligation to withhold PRC tax with respect to such gain under the PRC tax laws. Also, if Antelope Enterprises is determined to be a “resident enterprise,” its nonresident investors who are individuals may also be subject to potential PRC individual income tax at a rate of 20% with respect to dividends received from Antelope Enterprises and/or gains derived by them from the sale or transfer of Antelope Enterprises’ shares. Moreover, the State Administration of Taxation, or “SAT,” released Circular Guoshuihan No. 698, or Circular 698, on December 10, 2009 that reinforces the taxation of certain equity transfers by non-resident investors through overseas holding vehicles. Circular 698 addresses indirect equity transfers as well as other issues. Circular 698 is retroactively effective from January 1, 2008. According to Circular 698, where a nonresident investor who indirectly holds an equity interest in a PRC resident enterprise through a non-PRC offshore holding company indirectly transfers an equity interest in the PRC resident enterprise by selling an equity interest in the offshore holding company, and the latter is located in a country or jurisdiction where the actual tax burden is less than 12.5% or where the offshore income of its residents is not taxable, the non-resident investor is required to provide the PRC tax authority in charge of that PRC resident enterprise with certain relevant information within 30 days of the execution of the equity transfer agreement. The tax authorities in charge will evaluate the offshore transaction for tax purposes. In the event that the tax authorities determine that such transfer is abusing forms of business organization and a reasonable commercial purpose for the offshore holding company other than the avoidance of PRC income tax liability is lacking, the PRC tax authorities will have the power to re-assess the nature of the equity transfer under the doctrine of substance over form. A reasonable commercial purpose may be established when the overall international (including U.S.) offshore structure is set up to comply with the requirements of supervising authorities of international (including U.S.) capital markets. If the SAT’s challenge of a transfer is successful, it may deny the existence of the offshore holding company that is used for tax planning purposes and subject the non-resident investor to PRC tax on the capital gain from such transfer. Since Circular 698 has a short history, there is uncertainty as to its application. We (or a nonresident investor) may become at risk of being taxed under Circular 698 and may be required to expend valuable resources to comply with Circular 698 or to establish that we (or such non-resident investor) should not be taxed under Circular 698, which could have a material adverse effect on our financial condition and results of operations (or such non-resident investor’s investment in us). In additional, the PRC resident enterprise may be required to provide necessary assistance to support the enforcement of Circular 698. On February 3, 2015, the State Administration of Tax issued a Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-tax Resident Enterprise, or Public Notice 7. Public Notice 7 has introduced a new tax regime that is significantly different from that under Circular 698. Public Notice 7 extends its tax jurisdiction to not only indirect transfers set forth under Circular 698 but also transactions involving transfer of other taxable assets, through the offshore transfer of a foreign intermediate holding company. In addition, Public Notice 7 provides clearer criteria the Circular 698 on how to assess reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. Public Notice 7 also brings challenges to both the foreign transferor and transferee (or other person who is obligated to pay for the transfer) of the taxable assets. Where a non-resident enterprise conducts an “indirect transfer” by transferring the taxable assets indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise being the transferor, or the transferee, or the PRC entity which directly owned the taxable assets may report to the relevant tax authority such indirect transfer. Using a “substance over form” principle, the PRC tax authority may re-characterize such indirect transfer as a direct transfer of the equity interests in the PRC tax resident enterprise and other properties in China, As a result, gains derived from such indirect transfer may be subject on PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of up to 10% for the transfer of equity interests in a PRC resident enterprise. Both the transferor and the transferee may be subject to penalties under PRC tax laws if transferee fails to withhold the taxes and the transferor fails to pay the taxes.

19

We face uncertainties with respect to the reporting and consequences of private equity financing transactions, share exchange or other transactions involving the transfer of shares in our company by investors that are non-PRC resident enterprises, or sale or purchase of shares in other non-PRC resident companies or other taxable assets by us. Our company and other non-resident enterprises in our group may be subject to filing obligations or being taxed if our company and other non-resident enterprises in our group are transferors in such transactions, and may be subject to withholding obligations if our company and other non-resident enterprises in our group are transferees in such transactions, under Circular 698 and Public Notice 7. For the transfer to shares in our company by investors that are non-PRC resident enterprises, our PRC subsidiaries may be requested to assist in the filing under Circular 698 and Public Notice 7. As a result, we may be required to expend valuable resources to comply with Circular 698 and Public Notice 7 to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our company and other non-resident enterprises in our group should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations. The PRC tax authorities have the discretion under Circular 698 and Public Notice 7 to make adjustments to the taxable capital gains based on the difference between the fair value of the taxable assets transferred and the cost of investment. If the PRC tax authorities make adjustments to the taxable income of the transactions under Circular 698 and Public Notice 7, our income tax costs associated with such potential acquisitions will be increased, which may have an adverse effect on our financial condition and results of operations. If any PRC tax applies to a non-resident investor, the non-resident investor may be entitled to a reduced rate of PRC tax under an applicable income tax treaty and/or a deduction for such PRC tax against such investor’s domestic taxable income or a foreign tax credit in respect of such PRC tax against such investor’s domestic income tax liability (subject to applicable conditions and limitations). Shareholders should consult with their own tax advisors regarding the applicability of any such taxes, the effects of any applicable income tax treaties, and any available deductions or foreign tax credits. For a further discussion of these issues, see the section herein captioned “Taxation—PRC Taxation.”

Risks Factors Relating to Our Class A Ordinary Shares

The price of our shares could be volatile and could decline at a time when you want to sell your holdings.

The price of our shares has been and may continue to be volatile, and that volatility may continue for an extended period of time.

We are a “controlled company” within the meaning of the NASDAQ Stock Market Rules and, as a result, may rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.

We are a “controlled company” as defined under the NASDAQ Stock Market Rules because our CEO and chairman, Mr. Weilai (Will) Zhang, beneficially owns more than 50% of voting power for the election of directors. As of the date of this annual report, Mr. Zhang holds all the issued and outstanding 977,755 Class B ordinary shares, each of which is entitled to twenty (20) votes. For so long as we are a controlled company under that definition, we are permitted to elect to rely, and may rely, on certain exemptions from corporate governance rules, including:

| ● | an exemption from the rule that a majority of our board of directors must be independent directors;

| ● | an exemption from the rule that the compensation of our chief executive officer must be determined or recommended solely by independent directors; and

| ● | an exemption from the rule that our director nominees must be selected or recommended solely by independent directors.

As a result, if we elect to rely on the exemptions available for the controlled companies, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements.

20

If we cease to qualify as a foreign private issuer, we would be required to comply fully with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers, and we would incur significant additional legal, accounting and other expenses that we would not incur as a foreign private issuer.

As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as United States domestic issuers, and we are not required to disclose in our periodic reports all of the information that United States domestic issuers are required to disclose. While we currently expect to qualify as a foreign private issuer, we may cease to qualify as a foreign private issuer in the future.

There is a risk that Antelope Enterprises will be classified as a passive foreign investment company, or “PFIC,” which could result in adverse U.S. federal income tax consequences to U.S. holders of its securities.

In general, Antelope Enterprises will be treated as a PFIC for any taxable year in which either (1) at least 75% of its gross income (including its pro rata share of the gross income of its 25% or more-owned corporate subsidiaries) is passive income or (2) at least 50% of the average value of its assets (including its pro rata share of the assets of its 25% or more-owned corporate subsidiaries) produce, or are held for the production of, passive income. Passive income generally includes dividends, interest, rents, royalties, and gains from the disposition of passive assets. If Antelope Enterprises is determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder (as defined in the section entitled “Taxation—United States Federal Income Taxation—General”) of its shares, the U.S. Holder may be subject to increased U.S. federal income tax liability upon a sale or other disposition of the shares of Antelope Enterprises or the receipt of certain excess distributions from Antelope Enterprises and may be subject to additional reporting requirements. Based on the composition (and estimated values) of the assets and the nature of the income of Antelope Enterprises and its subsidiaries during its 2022 taxable year, Antelope Enterprises does not believe that it would be treated as a PFIC for such year. However, because Antelope Enterprises has not performed a definitive analysis as to its PFIC status for its 2022 taxable year, there can be no assurance in respect to its PFIC status for such year. There also can be no assurance with respect to Antelope Enterprises’ status as a PFIC for its current (2023) taxable year or any future taxable year. U.S. Holders of the shares of Antelope Enterprises are urged to consult their own tax advisors regarding the possible application of the PFIC rules. See the discussion in the section entitled “Taxation—United States Federal Income Taxation—U.S. Holders—Passive Foreign Investment Company Rules.”

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As the rights of shareholders under British Virgin Islands law differ from those under U.S. law, you may have fewer protections as a shareholder.

Our corporate affairs will be governed by our memorandum and articles of association, the BVI Business Companies Act, 2022 (as amended) (the “BVI Act”), and the common law of the British Virgin Islands. The rights of shareholders to take legal action against our directors, actions by minority shareholders and the fiduciary responsibilities of our directors under British Virgin Islands law are governed by the common law of the British Virgin Islands and by the BVI Act. The common law of the British Virgin Islands is derived in part from comparatively limited judicial precedent in the British Virgin Islands as well as from English common law, which is applied in the British Virgin Islands by virtue of the Common Law (Declaration of Application) Act. The rights of our shareholders and the fiduciary responsibilities of our directors under British Virgin Islands law are not as clearly established as they would be under statutes or judicial precedents in some jurisdictions in the United States. In particular, the British Virgin Islands has a less developed body of securities laws as compared to the United States, and some states (such as Delaware) have more fully developed and judicially interpreted bodies of corporate law. As a result of all of the above, holders of our shares may have more difficulty in protecting their interests through actions against our management, directors or major shareholders than they would as shareholders of a U.S. company.

British Virgin Islands companies may not be able to initiate shareholder derivative actions, thereby depriving shareholders of the ability to protect their interests.

British Virgin Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States. The circumstances in which any such action may be brought, and the procedures and defenses that may be available in respect to any such action, may result in the rights of shareholders of a British Virgin Islands company being more limited than those of shareholders of a company organized in the United States. Accordingly, shareholders may have fewer alternatives available to them if they believe that corporate wrongdoing has occurred. The British Virgin Islands courts are also unlikely to recognize or enforce against us judgments of courts in the United States based on certain liability provisions of U.S. securities law; and to impose liabilities against us, in original actions brought in the British Virgin Islands, based on certain liability provisions of U.S. securities laws that are penal in nature. There is no statutory recognition in the British Virgin Islands of judgments obtained in the United States, although the courts of the British Virgin Islands will generally recognize and enforce the non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits. This means that even if shareholders were to sue us successfully, they may not be able to recover anything to make up for the losses suffered.

The laws of the British Virgin Islands may provide comparatively limited protection for minority shareholders, so minority shareholders will have limited recourse if the shareholders are dissatisfied with the conduct of our affairs.

Under the laws of the British Virgin Islands, there is limited statutory law for the protection of minority shareholders in the form of the provisions of the BVI Act dealing with shareholder remedies. The principal protection under statutory law is that shareholders may bring an action to enforce the constitutional documents of the company, i.e. the memorandum and articles of association as shareholders are entitled to have the affairs of the company conducted in accordance with the BVI Act and the memorandum and articles of association of the company. A shareholder may also bring an action under statute if he feels that the affairs of the company have been or will be carried out in a manner that is unfairly prejudicial or discriminating or oppressive to him. There are also common law rights for the protection of shareholders that may be invoked, largely dependent on English common law, since the common law of the British Virgin Islands for business companies is limited.

The market price for our shares has been and may continue to be volatile.

The market price for our shares has been and is likely to continue to be highly volatile and subject to wide fluctuations in response to factors including the following:

| ● | actual or anticipated fluctuations in our quarterly operating results and changes or revisions of our expected results;
| ● | changes in financial estimates by securities research analysts;
| ● | changes in the economic performance or market valuations of companies specializing in the ceramics business in China;
| ● | announcements by us and our affiliates or our competitors of new products, acquisitions, strategic relationships, joint ventures or capital commitments;
| ● | addition or departure of our senior management and key personnel; and
| ● | fluctuations of exchange rates between the RMB and the U.S. dollar.

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Volatility in the price of our shares may result in shareholder litigation that could in turn result in substantial costs and a diversion of our management’s attention and resources.

The financial markets in the United States and other countries have experienced significant price and volume fluctuations, and market prices have been and continue to be extremely volatile. Volatility in the price of our shares may be caused by factors outside of our control and may be unrelated or disproportionate to our results of operations. In the past, following periods of volatility in the market price of a public company’s securities, shareholders have frequently instituted securities class action litigation against that company. Litigation of this kind could result in substantial costs and a diversion of our management’s attention and resources.

Although we paid semi-annual dividends in July 2013, January 2014, July 2014 and January 2015, we did not pay a dividend after January 2015 and do not currently plan to pay a dividend in the near future. Therefore, shareholders will benefit from an investment in our shares only if those shares appreciate in value

We paid dividends in July 2013, January 2014, July 2014 and January 2015. The declaration and payment of cash dividends is at the discretion of our board of directors and will depend on factors our board of directors deems relevant, including among others, our results of operations, financial condition and cash requirements, business prospects, and the terms of our credit facilities, if any, and any other financing arrangements. We currently do not plan to pay a dividend in the near future. Therefore, the realization of a gain on shareholders’ investments will depend on the appreciation of the price of our shares, and there is no guarantee that our shares will appreciate in value.

We may not be able to pay any dividends on our shares in the future due to British Virgin Islands law.

Under British Virgin Islands law, we may only pay dividends to our shareholders if the value of our assets exceeds our liabilities and we are able to pay our debts as they become due. We cannot give any assurance that we will declare dividends of any amounts, at any rate or at all in the future. Future dividends, if any, will be at the discretion of our board of directors, and will depend upon our results of operations, cash flows, financial condition, payment to us of cash dividends by our subsidiaries, capital needs, future prospects and other factors that our directors may deem appropriate.

We may need additional capital, and the sale of additional shares or equity or debt securities could result in additional dilution to our shareholders.

We believe that our current cash and cash equivalents and anticipated cash flow from operations will be sufficient to meet our anticipated cash needs for the foreseeable future. We may, however, require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If these resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain one or more additional credit facilities. The sale of additional equity securities could result in additional dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations. It is uncertain whether financing will be available in amounts or on terms acceptable to us, if at all.

ITEM 4. | INFORMATION ON THE COMPANY

| A. | History and Development of the Company

Our principal PRC-based operating subsidiary, Hengda, was established on September 30, 1993 under the laws of PRC. All of the equity interests in Hengda are 100% owned by Stand Best. Hengda is a wholly foreign-owned enterprise in China.

Hengdali was established on May 4, 2008 under the laws of PRC. All of the equity interests in Hengdali are 100% owned by Hengda.

Stand Best was established on January 17, 2008 under the laws of Hong Kong. Stand Best acquired the entire shareholdings of Hengda on April 1, 2008 for consideration of RMB 58,980,000. As a result of this acquisition, Hengda became the wholly owned subsidiary of Stand Best.

Success Winner was established on May 29, 2009 under the laws of British Virgin Islands with Mr. Wong Kung Tok as its sole shareholder and sole director.

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On June 30, 2009, pursuant to the capitalization agreement dated June 30, 2009, Success Winner was issued the 9,999 shares allotted by Stand Best as per the capitalization exercise of a shareholder’s loan of HK$67.9 million (RMB 58.9 million). On the same date, the shareholder of Stand Best, Mr. Wong Kung Tok transferred all his shareholdings in Stand Best to Success Winner. Therefore, Mr. Wong Kung Tok, from June 30, 2009 to November 20, 2009, indirectly owned 100% of Stand Best and in turn, 100% of Hengda.

CHAC was incorporated in Delaware on June 22, 2007 and was organized as a blank check company for the purpose of acquiring, through a stock exchange, asset acquisition or other similar business combination, or controlling, through contractual arrangements, an operating business that had its principal operations in Asia, with a focus on potential acquisition target in China.

Pursuant to the terms of a merger and stock purchase agreement dated August 19, 2009, on November 20, 2009, CHAC merged with and into Antelope Enterprises, its wholly owned British Virgin Islands subsidiary, and immediately thereafter, as part of the same integrated transaction, Antelope Enterprises acquired all of the outstanding securities of Success Winner. Prior to Antelope Enterprises’ acquisition of Success Winner, neither CHAC nor Antelope Enterprises had any operations.

On November 19, 2009, Hengda entered into a definitive acquisition agreement to acquire a new production facility in Gaoan, Jiangxi Province, PRC by purchasing 100% of the equity interests in Hengdali. The closing of the acquisition was subject to the Gaoan City Administration for Industry and Commerce transferring the registration and business license of Hengdali from Hengdali’s former shareholders to Hengda. The transfer occurred on January 8, 2010. Hengda appointed an executive officer to take control over Hengdali’s operating and financing activities on the same day. In total, Hengda assumed loans of RMB 60.0 million and paid cash consideration of RMB 185.5 million for the acquisition, of which RMB 145.4 million was advanced to Hengdali’s former shareholders by December 31, 2009.

On September 22, 2017, Success Winner incorporated a 100% owned subsidiary Vast Elite Limited (“Vast Elite”) in Hong Kong with initial registered capital of HKD1. Vast Elite is engaged in the trading of building materials but during the year ended December 31, 2020, Vast Elite had no operations.

On November 20, 2019, Vast Elite incorporated a 100% owned subsidiary Chengdu Future Talented Management and Consulting Co, Ltd (“Chengdu Future”) in China. Chengdu Future is engaged in business management and consulting services.

On December 3, 2019, Success Winner incorporated a 100% owned subsidiary Antelope Enterprise Holdings Limited (“Antelope Holdings”) in Hong Kong. Antelope Holdings only serves the purpose of a holding company.

On May 9, 2020, Antelope HK incorporated a 100% owned subsidiary Antelope Holdings (Chengdu) Co., Ltd in China, Antelope Chengdu is engaged in computer consulting and software development.

On August 10, 2021, Antelope HK incorporated a 100% owned subsidiary Hainan Antelope Holdings Co., Ltd (“Antelope Hainan”) in China. Antelope Hainan is engaged in business management and consulting services. Antelope Hainan does not have any operations as of this report date.

On August 11, 2021, Antelope HK incorporated a 100% owned subsidiary Antelope Future (Yangpu) Investment Co., Ltd (“Antelope Yangpu”) in China. Antelope Yangpu is engaged in business management and consulting services. Antelope Yangpu does not have any operations as of this report date.

On August 23, 2021, Antelope Hainan incorporated a 100% owned subsidiary Antelope Investment (Hainan) Co., Ltd (“Antelope Investment”) in China.

Antelope Investment is engaged in business management and consulting services. Antelope Investment does not have any operations as of this report date.

On September 9, 2021, Antelope Future incorporated a 100% owned subsidiary Antelope Ruicheng Investment (Hainan) Co., Ltd (“Antelope Ruicheng”) in China. Antelope Ruicheng is engaged in business management and consulting services. Antelope Ruicheng does not have any operations as of this report date.

On September 18, 2021, Antelope Ruicheng incorporated a 51% owned subsidiary Hainan Kylin Cloud Services Technology Co., Ltd (“Hainan Kylin”) in China. Hainan Kylin is engaged in the livestreaming ecommerce business.

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On October 28, 2022, Hainan Kylin incorporated a 100% owned subsidiary Hangzhou Kylin Cloud Services Technoligy Co., Ltd (“Hangzhou Kylin”) in China. Hangzhou Kylin is engaged in business management and consulting services for the livestreaming ecommerce industry.

On November 2, 2022, Hainan Kylin incorporated a 100% owned subsidiary Anhui Kylin Cloud Sevices Technology Co., Ltd (“Anhui Kylin”) in China. Anhui Kylin is engaged in the business of management and consulting services for the livestreaming ecommerce industry.

On December 30, 2022, Stand Best and an unaffiliated entity, New Stonehenge Limited, entered into a purchase agreement, pursuant to which, Stand Best agreed to sell 100% equity interests in Hengda to New Stonehenge Limited, in exchange for a 5% unsecured promissory note with a principal amount of US$8.5 million. The promissory note will mature in four years and the 5% interest and principal amount on the note is to be paid in four annual installments. On February 21, 2023, the Company’s shareholders approved this transaction. On April 28, 2023, this transaction was closed. The has transferred its ownership of the ceramic tile manufacturing business to the New Stonehenge Limited, and New Stonehenge Limited has become the 100% owner of Hengda, which is the 100% owner of Hengdali.

On February 21, 2023, the shareholders of the Company approved and adopted an amended and restated memorandum and articles of association (the “Amended M&A”), which changed the authorized issued share capital of the Company from US$4,800,000 divided into 200,000,000 ordinary shares with a par value of US$0.024 each, to (i) 250,000,000 ordinary shares re-designated as (a) 200,000,000 Class A ordinary shares with no par value each, and (b) 50,000,000 Class B ordinary shares with no par value each, and (ii) 50,000,000 preferred shares with no par value each, (the “Re-Designation of the Authorized Capital”). Each Class A ordinary share is entitled to one (1) vote and each Class B ordinary share is entitled to twenty (20) votes. In connection with the Re-Designation of the Authorized Capital, 977,755 ordinary shares owned by Mr. Weilai (Will) Zhang then were converted into 977,755 Class B ordinary shares, and the rest of the then outstanding and issued outstanding ordinary shares were converted into Class A ordinary shares on a one-for-one basis.

Antelope Enterprise Holdings Limited and its subsidiaries’ corporate structure as of December 31, 2022 is as follows:

Antelope Enterprise’s registered office is c/o Harneys Corporate Services Limited of Craigmuir Chambers, P.O. Box 71, Road Town, Tortola, British Virgin Islands.

Recent Development

September 2022 Registered Direct Offering

On September 30, 2022, the Company commenced a registered direct offering of securities, and executed a Securities Purchase Agreement (the “SPA”) with two institutional accredited investors pursuant to which it sold 1,666,667 of the Company’s common shares at the per share price of $0.60 In a concurrent private placement, the Company sold to such investors warrants to purchase 1,666,667 common shares (the “Investor Warrants”). The Investor Warrants have an exercise price per share of $0.80, subject to adjustment, contain variable pricing features, and have a term of five years. The Investor Warrants were sold without registration under the Securities Act of 1933 (the “Securities Act”) in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering and Rule 506 promulgated under the Securities Act as sales to accredited investors. The proceeds of the transaction will be used for working capital and general working purposes. The Investor Warrants issued in the concurrent private placement are not listed on any securities exchange, and the Company does not expect to list the Investor Warrants. The transactions yielded gross proceeds to the Company of approximately $1,000,000, before payment of commissions and expenses.

In addition, the Company issued warrants (the “Placement Agent Warrants”) to the Placement Agent to purchase a number of common shares equal to 5.0% of the aggregate number of shares sold to the investors in this offering, as well as the warrant shares issuable upon exercise of the Investor Warrants issued in the concurrent private placement, as additional placement agency compensation. The Placement Agent Warrants have substantially the same terms as the Investor Warrants, except that the Placement Agent Warrants will have an exercise price of $0.75. The Placement Agent received customary indemnification in connection with the offering.

December 2022 Private Placement Offering

On December 12, 2022, the Company entered into a note purchase agreement with Atlas Sciences, LLC, a Utah limited liability company (“Atlas”), pursuant to which the Company issued Atlas an unsecured promissory note in the original principal amount of $1,332,500.00 (the “Note”), for $1,250,000.00 in gross proceeds.

The Note bears interest at a rate of eight percent (8%) per annum compounding daily. All outstanding principal and accrued interest on the Note becomes due and payable eighteen (18) months after the closing date, when the purchase price of the Note is delivered by Atlas to the Company. The Note includes an original issue discount of $62,500.00 along with $20,000.00 for Atlas’s fees, costs and other transaction expenses incurred in connection with the purchase and sale of the Note. The Company may prepay all or a portion of the Note at any time by paying 120% of the outstanding balance elected for pre-payment. Atlas has the right to redeem the Note at any time six (6) months after the closing date (the “Redemption Start Date”), subject to maximum monthly redemption amount of $200,000. At the end of each month following the Redemption Start Date, if the Company has not reduced the Outstanding Balance (as defined in the Note) by at least $200,000, then by the fifth (5th) day of the following month, the Company must pay in cash to the Investor the difference between $200,000 and the amount actually redeemed in such month or the Outstanding Balance will automatically increase by one percent (1%) as of such fifth (5th) day.

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Under the purchase agreement, while the Note is outstanding, the Company agreed to keep adequate public information available and maintain its Nasdaq listing. Upon the occurrence of a Trigger Event (as defined in the Note), the Investor shall have the right to increase the balance of the Note by fifteen percent (15%) for Major Trigger Event (as defined in the Note) and five percent (5%) for Minor Trigger Event (as defined in the Note). In addition, the Note provides that upon occurrence of an Event of Default, the interest rate shall accrue on the outstanding balance at the rate equal to the lesser of twenty-two percent (22%) per annum or the maximum rate permitted under applicable law.

January 2023 Private Placement Offerings

On January 10, 2023, the Company entered into a certain securities purchase agreement with Mr. Weilai (Will) Zhang, the Chief Executive Officer of the Company, Mr. Ishak Han, a director of the Company, and another sophisticated purchaser, pursuant to which the Company sold 1,625,000 ordinary shares, par value $0.024 per share at a per share purchase price of $0.80. This transaction was unanimously approved by the disinterested directors and the board of directors of the Company. The gross proceeds to the Company were $1.3 million, before deducting any fees or expenses. The Company intends to use the net proceeds from this transaction for the expansion of its livestreaming ecommerce business and for general corporate purposes.

On January 13, 2023, the Company entered into a certain securities purchase agreement with a certain purchaser, pursuant to which the Company sold 1,234,568 ordinary shares, par value $0.024 per share, at a per share purchase price of $0.81, the closing price of the Company’s ordinary shares reported on the Nasdaq Capital Market as of January 10, 2023. The gross proceeds to the Company from this transaction were approximately $1.0 million, before deducting any fees or expenses. The Company intends to use the net proceeds from this transaction for the expansion of its livestreaming ecommerce business and for general corporate purposes.

March 2023 Private Placement Offering

On March 30, 2023, the Company entered into a certain securities purchase agreement with five sophisticated investors, pursuant to which the Company sold 5,681,820 Class A ordinary shares, no par value, at a per share purchase price of $0.88. On April 12, 2023, the transaction was closed. Upon closing, the beneficial owner of the five investors had approximately 15.15% of the total voting power of the Company, and the Company’s CEO and Chairman, Weilai (Will) Zhang, had about 52.13% of the total voting power of the Company. The gross proceeds to the Company from this transaction were approximately $5 million, before deducting any fees or expenses. The Company plans to use the net proceeds for general corporate purposes.

Cash Transfers Within Our Organization

During each of the fiscal years ended December 31, 2020, 2021 and 2022, the only transfer of assets among Antelope Enterprises and its subsidiaries have consisted of cash. During that same period, there have been no distributions, dividends or loans extended by any of our direct or indirectly held subsidiaries to Antelope Enterprises. During that same period Antelope Enterprises has not declared any dividends or made any distributions to its shareholders.

Antelope Enterprises routinely provides cash to its subsidiaries either by way of capital contribution or by way of loan.

Antelope Enterprises is a holding company incorporated in the British Virgin Islands, and we do not have any substantive operations other than indirectly holding the equity interest in our operating subsidiaries in China. Antelope Enterprises relies on dividends paid by our Hong Kong and Chinese subsidiaries and capital raised from the sale of our securities to satisfy our cash needs. The payment of dividends to Antelope Enterprises by our Chinese subsidiaries is affected by means of dividends by those entities to their Hong Kong direct parent and a redividend by that Hong Kong entity to Antelope Enterprises. Such dividends are effected by resolution of the board of directors of each such entity (after provision for applicable tax obligations).

China is a foreign exchange administration country. Capital injections, cross-border trade and services transactions settled in foreign exchange, overseas financing and profit repatriations are subject to the foreign exchange administration regulations. A Chinese subsidiary owned by foreign company must apply for registration of foreign exchange with the SAFE after the issuance of a business license and obtain a foreign exchange registration certificate. When the Chinese subsidiaries apply for repatriating dividends to foreign shareholders, it must submit the application form to SAFE with the proof that such dividends have been subjected to all applicable tax withholding. A Chinese subsidiary can only distribute dividends out of its accumulated profits, which means that any accumulated losses must be more than offset by its profits in other years, including the current year.

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The cash transfers within the organization during the years ended December 31, 2020, 2021 and 2022 were as follows:

For the year 2020
|  |  |  |  |  |  |  | Equivalent to |  |  |  |  |
Company |  | Company |  | Amount |  |  | amount |  |  |  |  |
(Wire transfer from) |  | (Wire transfer to) |  | (RMB) |  |  | (USD) |  | Purpose |  | Asset type |
Antelope Enterprise Holdings Limited |  | Success Winner Limited |  |  | 7,028,476 |  |  |  | 1,018,000 |  |  | Working capital loan to direct subsidiary |  |  | Cash |
|  | Vast Elite Limited |  |  | 10,013,161 |  |  |  | 1,450,300 |  |  | Working capital loan to direct subsidiary |  |  | Cash |
Success Winner Limited |  | Antelope Enterprise (HK) Holdings Limited |  |  | 3,455,552 |  |  |  | 500,500 |  |  | Working capital loan to direct subsidiary |  |  | Cash |
|  | Stand Best Creation Limited |  |  | 3,935,394 |  |  |  | 570,000 |  |  | Working capital loan to direct subsidiary |  |  | Cash |
Antelope Enterprise (HK) Holdings Limited |  | Success Winner Limited |  |  | 3,452,100 |  |  |  | 500,000 |  |  | Return excessed working capital to direct holding company |  |  | Cash |
Vast Elite Limited |  | Chengdu Future Talented Management and consulting Co., Ltd |  |  | 696,752 |  |  |  | 100,917 |  |  | Capital contribution to direct subsidiary |  |  | Cash |

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For the year 2021
|  |  |  |  |  |  | Equivalent to |  |  |  |  |  |
Company |  | Company |  | Amount |  |  | amount |  |  |  |  |  |
(Wire transfer from) |  | (Wire transfer to) |  | (RMB) |  |  | (USD) |  |  | Purpose |  | Asset Type |
Antelope Enterprise Holdings Limited |  | Success Winner Limited |  |  | 48,304,308 |  |  |  | 7,580,000 |  |  | Working capital loan to direct subsidiary |  |  | Cash |
|  | Vast Elite Limited |  |  | 12,244,951 |  |  |  | 1,921,500 |  |  | Working capital loan to direct subsidiary |  |  | Cash |
Success Winner Limited |  | Antelope Enterprise (HK) Holdings Limited |  |  | 6,691,230 |  |  |  | 1,050,000 |  |  | Working capital loan to direct subsidiary |  |  | Cash |
|  | Stand Best Creation Limited |  |  | 12,936,378 |  |  |  | 2,030,000 |  |  | Working capital loan to direct subsidiary |  |  | Cash |
Antelope Enterprise (HK) Holdings Limited |  | Antelope Holdings (Chengdu) Co., Ltd |  |  | 4,779,450 |  |  |  | 750,000 |  |  | Capital injection to direct subsidiary |  |  | Cash |
Vast Elite Limited |  | Chengdu Future Talented Management and Consulting Co., Ltd |  |  | 3,186,300 |  |  |  | 500,000 |  |  | Capital contribution to direct subsidiary |  |  | Cash |
Jiangxi Hengdali Ceramics Materials Co., Ltd |  | Jinjiang Hengda Ceramics Co, Ltd |  |  | 7,000,000 |  |  |  | 1,098,453 |  |  | Loan repayment to direct holding company |  |  | Cash |

For the year 2022

Company (Wire transfer from) |  | Company(Wire transfer to) |  | Amount (RMB) |  |  | Equivalent to amount (USD) |  |  | Purpose |  | Asset Type |
Antelope Enterprise (HK) Holdings Limited |  | Antelope Holdings (Chengdu) Co., Ltd |  |  | 12,759,820 |  |  |  | 1,850,000 |  |  | Working capital loan to direct subsidiary |  |  | Cash |
Antelope Enterprise (HK) Holdings Limited |  | Antelope Ruicheng Investment (Hainan) Co., Ltd |  |  | 1,456,045 |  |  |  | 406,153 |  |  | Working capital loan to direct subsidiary |  |  |  |
Antelope Enterprise (HK) Holdings Limited |  | Stand Best Creation Limited |  |  | 13,436 |  |  |  | 1,948 |  |  | Loan payback |  |  | Cash |
Success Winner Limited |  | Antelope Enterprise (HK) Holdings Limited |  |  | 14,587,578 |  |  |  | 2,115,000 |  |  | Working capital loan to direct subsidiary |  |  | Cash |
Success Winner Limited |  | Antelope Enterprise Holdings Limited |  |  | 2,414,020 |  |  |  | 350,000 |  |  | Loan payback |  |  | Cash |
Success Winner Limited |  | Vast Elite Limited |  |  | 555,840 |  |  |  | 80,589 |  |  | Working capital loan to direct subsidiary |  |  | Cash |
Antelope Enterprise Holdings Limited |  | Success Winner Limited |  |  | 10,690,660 |  |  |  | 1,550,000 |  |  | Working capital loan to direct subsidiary |  |  | Cash |
Antelope Ruicheng Investment (Hainan) Co., Ltd |  | Hainan Kylin Cloud Services Technology Co., Ltd |  |  | 2,550,000 |  |  |  | 369,715 |  |  | Working capital loan to direct subsidiary |  |  | Cash |
Hainan Kylin Cloud Services Technology Co., Ltd |  | Anhui Kylin Cloud Services Technology Co., Ltd |  |  | 100,000 |  |  |  | 14,499 |  |  | Working capital loan to direct subsidiary |  |  | Cash |
Hainan Kylin Cloud Services Technology Co., Ltd |  | Hangzhou Kylin Cloud Services Technology Co., Ltd |  |  | 500,000 |  |  |  | 72,493 |  |  | Working capital loan to direct subsidiary |  |  | Cash |
Antelope Future (Yangpu) Investment Co., Ltd |  | Antelope Ruicheng Investment (Hainan) Co., Ltd |  |  | 2,755,000 |  |  |  | 399,437 |  |  | Working capital loan to direct subsidiary |  |  | Cash |
Vast Elite Limited |  | Stand Best Creation Limited |  |  | 7,150 |  |  |  | 1,037 |  |  | Loan payback |  |  | Cash |

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| B. | Business Overview

Overview

We are a British Virgin Islands limited liability company with no material operations. Our operations were conducted in China by our subsidiaries. We provide livestream e-commerce services, business management and information systems consulting services, with a legacy ceramic tile manufacturing business.

Livestreaming Ecommerce Business

Our livestreaming ecommerce business is operated in China through our 51% subsidiary, Hainan Kylin and its subsidiaries, Hangzhou Kylin and Anhui Kylin. We aim to provide one-stop solutions for our customers to adopt the emerging sales channel of livestreaming ecommerce. We believe that livestreaming ecommerce is an important growth engine for consumer good brands as it leverages the content of livestreaming to boost customers engagement and sales as it combines instant purchasing of a featured product and audience participation through a chat function or reaction buttons. Our customers usually include consumer goods brands, merchants, and small-scale ecommerce platforms. Our product management office assesses and selects the products from our customers. Then, we connect with different suppliers, usually staffing agencies that have a growing and diverse pool of hosts and influencers. The hosts and influencers register and claim the jobs for livestreaming for our customers’ products via Hainan Kylin’s SaaS platform. We track the sales of products of each host on this SaaS platform and report the sales results to our customers. We are currently expanding our reach to second and third tiers cities in China where livestreaming ecommerce has a high conversion rate.

Hainan Kylin’s SaaS platform also includes a job-listing page designed especially for our enterprise customers to retain and engage freelancers and independent contractors in a cost effective manner. We expect to further develop this function of the SaaS platform to provide value-added services to our livestreaming ecommerce customers.

Hainan Kylin has a limited operating history as it started its business in September 2021. For fiscal year 2022, Hainan Kylin comprised virtually all of our ongoing business operations and accounted for 84.5% of our total revenue.

Ceramic Tile Business

We have historically operated a ceramic tile business which are used for exterior siding and for interior flooring and design in residential and commercial buildings. We are manufacturer of ceramic tiles used for exterior siding and for interior flooring and design in residential and commercial buildings in China. The ceramic tiles, sold under the “HD” or “Hengda,” brands are available in over two thousand styles, colors and size combinations. Currently, we have five principal product categories: (i) porcelain tiles, (ii) glazed tiles, (iii) glazed porcelain tiles, (iv) rustic tiles, and (v) polished glazed tiles. Porcelain tiles are our best-selling products, accounting for over 96.9% of our total revenue of ceramic tile business in fiscal 2022.

For the year ended December 31, 2022, we utilized production facilities capable of producing 1.40 million square meters ceramic tiles, as compared with the year ended December 31, 2021, when we utilized production facilities capable of producing 2.38 million square meters. During the year ended December 31, 2022, we had 10 production lines available for production and utilized two production lines during the peak season. As of December 31, 2022, we had seven production lines available for production (all were from Hengda), one of which was in use as of December 31, 2022.

We primarily sell our ceramic tile products through an exclusive distributor network. We have long-term relationships with our customers; most of our top ten customers in 2022 have been purchasing from us for over ten years. We have been in discussions with some large property developers in China to be their exclusive or primary provider of ceramic tiles and, although no arrangements or agreements have been entered into, we expect to enter into arrangements of that type in the foreseeable future.

We focus our research and development efforts on developing innovative and environmentally friendly products. We own eighteen utility model patents. Our stringent tile management and marketing efforts have created a strong business reputation and high brand awareness as demonstrated by us receiving the “Chinese Well-Known Trademark” award from the Intermediate People’s Court of Xiangtan City and “Asia’s 500 Most Influential Brands 2014” award from the World Brand Laboratory.

Since the ceramic tiles manufacturing business has experienced significant hurdles due to the significant slowdown of the real estate sector and the impacts of COVID-19 in China, we decided to divest the ceramic tiles manufacturing business, which is conducted through our two subsidiaries, Hengda and Hengdali. On December 30, 2022, our operating entities for the ceramic tile business entered into an agreement with an unaffiliated buyer to sell 100% equity interests of our ceramic tile business. On February 21, 2023, our shareholders approved the sale. On April 28, 2023, this transaction was closed. The buyer is now the 100% owner of Hengda, which is the 100% owner of Hengdali.

Business Management and Consulting Business

We also provide business management and consulting services which consists of computer consulting services and software development through our subsidiaries in China, including Chengdu Future and Antelope Chengdu. We diagnose difficulties in infrastructure and enterprise systems and addresses business challenges that enterprises confront by developing strategies to surmount such hurdles to ensure the healthy growth and development of our customers. Our consulting teams have advanced technological knowledge and capabilities to implement workflow solutions via proprietary software products and services to help our customers with customized solutions to solve complex problems.

Impacts of COVID-19

We experienced significant adverse impacts in our legacy ceramic tile business resulting from the COVID-19 pandemic and the related public health orders. The COVID-19 pandemic disrupted supply chains and affected production and sales across a range of industries as a result of quarantines, facility closures, and travel and logistics restrictions in connection with the outbreak. We experienced reduced demand for our ceramic tile products and an increased level of purchase order cancellations as a result of the COVID-19 pandemic. The impact of the COVID-19 outbreak had a material adverse impact on our operations and financial results for our legacy ceramic tile business. Our consulting income also decreased significantly due to the impact of Covid-19 pandemic. However, our livestreaming ecommerce was not impacted by Covid-19 pandemic but instead realized a significant growth due to its nature of internet-based business without in-person interaction. In early December 2022, China announced a nationwide loosening of its zero-COVID policy. However, the impact of COVID-19 pandemic still depends on the future mutations of the virus, including new information concerning the global severity of and actions taken to contain the pandemic, or the appearance of new or more severe strains of the virus, which are highly uncertain and unpredictable. Therefore, while we do not expect the COVID-19 pandemic to negatively impact our business, results of operations, and financial position, the related financial impact cannot be reasonably estimated at this time.

Competitive Advantages

We believe we have a unique business model in the livestreaming ecommerce business in China and our competitors include multi-channel networks (“MCNs”), studios of hosts and influencers, We may also compete with other digital service platforms for enterprises for some or all of the services we offer. We believe that we have the following competitive advantages:

We offer a cost-efficient turnkey solution with less risks exposure to our customers. We have connections with many suppliers through which we can offer competitive pricing packages and a diverse group of hosts and influencers to our customers comparing to MCNs. We make sure that all the suppliers we work with have all the required licenses and permission to operate, to reduce compliance risks that our customers are exposed to.

We provide better benefits to our suppliers as well as the hosts and influencers. We provide more stable and reliable services in terms of qualifications, cash flow, and resources. Our standardized management process ensures the smooth progress of the service and can handle emergencies in the process in a timely manner Hosts and Influencers usually experience issues like arrears of service fees and long settlement cycles with their clients or MCNs. However, we pay the hosts and the influencers the next business days following the completion of their work. All of our customers deposit the service fee into an escrow account upon signing contracts with us. Once the services are delivered, we and our customers will authorize the release of the funds. Therefore, the suppliers, as well as the hosts and influencers, are more willing to work with us than dealing directly with the consumer goods brands.

Growth Strategies

We will continue to leverage on our competitive advantages to execute our growth plan in the following manners.

We will continue to strengthen our business by increasing our sales and marketing efforts. We plan to continue our marketing efforts to further enhance our brand awareness and recognition and to promote our campaigns, services and initiatives. This may include social media marketing, placement of advertisements, as well as search engine marketing and search engine optimization. We plan to allocate resources to enhance our brand image, to boost customer and user spending and to further extend our customers. We plan on investing in content and campaign ideation and production, brand positioning and communication, brand awareness campaigns and digital and performance marketing, as well as other forms of marketing and promotional tactics to expand and broaden our customer base.

We may expand by opportunistic and strategic acquisitions of business and/or companies. Although we will continue to focus on the organic growth of our business, should opportunities arise for the strategic growth through acquisition of other players in the livestreaming ecommerce industry, we would consider consolidating their business with us. In identifying suitable acquisition targets, we will take into account factors including their reputation, popularity, statistics on MUVs, Information technology, revenue and customer base, our financial capability and whether the target company’s business is complementary to our business.

We will invest to enhance our services. We will invest to improve our data analytics capabilities through upgrading our database and IT systems to analyze the preferences and therefore the demand of our customers so as to select the best suitable suppliers of hosts and influencers for them. We are also building and planning to provide our training program to empower the hosts and influencers, or anyone who wants to work as a host and influencer, teaching them how to gain and grow their followers and conversion rate.

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Customers

Livestreaming Ecommerce Business

For the year ended December 31, 2022, we had two customers which accounted for 17.7% and 16.2% of the total revenue generated from the livestreaming ecommerce business. We expect to scale and add more new customers as we operate in a dynamic and competitive industry. With the addition of new customers, we believe customer concentration will decline over time even as we expect to continue to grow our relationships with existing large customers.

Business Management Consulting Services

Our business and profitability of our business management and consulting business is not materially dependent on any industrial, commercial or financial contract with any of our business management consulting customers. Our business management and consulting revenue accounted for 4.4% of our total revenue for the year ended December 31, 2022. None of our directors or executive officers or their respective affiliates has any interest, direct or indirect, in any of our customers.

Ceramic Tile Business

We primarily sell our ceramic tiles products through an exclusive distributor network or directly to property developers. Distributors are located in major cities such as Shanghai, Beijing, and Shenyang and second and third tier cities such as Chengdu, Haikou, Hefei, Tianjin, Wuhan and other rural areas in the PRC. We have long-term relationships with many of our customers; most of our top ten customers in 2022 have been purchasing from us for several years. There were three customers which accounted for 34.9%, 23.6%, and 18.5% of the total revenue generated from the ceramic tile business for the year ended December 31, 2022. There were no customer which generated more than 10% of the total revenue of our ceramic tile business for the year ended December 31, 2021. There were three customers which accounted for 27.2%, 19.1, and 16.3% of the total revenue generated from the ceramic tile business for the year ended December 31, 2020.

Our business and profitability of our ceramic tile business segment is not materially dependent on any industrial, commercial or financial contract with any of our ceramic tile customers. None of our directors or executive officers or their respective affiliates has any interest, direct or indirect, in any of our customers.

Sales and Marketing

The sales and marketing department is responsible for formulating sales policies and pricing based on market analysis, surveys and forecasts, developing and implementing our sales and marketing campaigns, and promoting our products and brand. Additionally, our sales department is responsible for cultivating new customers and business relationships, as well as servicing existing accounts.

We participate in a variety of sales and marketing activities including trade shows, in-house sales and marketing seminars, factory tours, outdoor advertising, B2B catalogs and customer calls. We believe that these techniques allow us to gather and better understand customers’ needs and requirements and to obtain feedback on our products and services and intend to continue utilizing these techniques.

In the future, we intend to participate in international trade fairs and seminars from time to time to promote our brand and products, and to establish a network with industry professionals outside the PRC. To augment our plan to expand our markets internationally, our products will also be advertised on and available to purchase on the Internet.

Major Suppliers & Raw Materials

Ceramic Tile Business

Our suppliers of ceramic tile business are selected by our purchasing department and are assessed on criteria such as the quality of materials supplied, duration of their business relationship with us, pricing, delivery reliability and response time to orders placed by us. We have sufficient raw materials on hand to support, on average, three weeks of production at any point in time to minimize any potential production delays that could arise due to a delay in raw material delivery.

We have not experienced significant production disruptions due to a supply shortage from our suppliers, nor have we had a major dispute with a supplier.

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For the year ended December 31, 2022, the Company did not have any large suppliers. Except for Jinjiang Xinao Gas Company Limited and Foshan City Sanshui Baoligao Inorganic Materials Co., Ltd., no suppliers accounted for more than 15% of our total purchases of raw materials and energy sources for the years ended December 31, 2020 and 2021.

Our business or profitability is not materially dependent on any industrial, commercial or financial contract with any of our suppliers of ceramic tile business.

Livestreaming Ecommerce Business

For the year ended December 31, 2022, there were four vendors that accounted for 31.5%, 20.1%, 18.9%, and 15.1%, respectively, for the total purchase of the livestreaming ecommerce business. Our business or profitability is not materially dependent on any industrial, commercial or financial contract with any of our suppliers of livestreaming ecommerce business.

Business Management and Consulting Business

For the year ended December 31, 2022, there were three vendors that accounted for 39.6%, 38.7%, and 21.7%, respectively, for the total purchases of the business management consulting business. Our business or profitability is not materially dependent on any industrial, commercial or financial contract with any of our suppliers of business management and consulting business.

None of our officers or directors or their respective affiliates has any interest, direct or indirect, in any of the above major suppliers. There are no arrangements or understanding with any suppliers pursuant to which any of our directors and executive officers were appointed.

Research and Development

Livestreaming Ecommerce Business

Our research and development team for the livestreaming ecommerce business focus on developing the SaaS platform to provide comprehensive services to our consumer goods brands customers, including refining our search algorithm for a compatible group of hosts and influencers based on the products feature of our customers. We also hired an outside consultant to help upgrade the SaaS platform. As of December 31, 2022, our research and development team for livestreaming ecommerce business had 3 employees and 25 independent contractors.

Business Management and Information System Business

We currently do not have a designated team of research and development for this business line.

Ceramic Tile Business

We had devoted substantial resources to establishing research and development capabilities in an effort to improve our products and diversify our product mix. Our research and development team focused on new products as well as developing energy and resource efficient production methods.

We focused our research and development efforts on the following:

● | Expanding and improving production capacity;
● | Improving and developing new production and processing techniques;
● | Improving the use and selection of raw materials to lower costs; and
● | Developing new products and designs to address changing market demands.

Our research and development costs were approximately RMB 1.21 million, RMB 0.14 million, and RMB 1.27 million for fiscal years 2020, 2021 and 2022.

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Competition

We face intense competition from our existing competitors and new market entrants. Our primary competitors are usually privately owned companies that are located mainly in the PRC. Our principal competitors are Guangdong White Rabbit Ceramics, Foshan Shiwan Yulong Ceramics Co., Ltd, Jinjiang Haoyuan Ceramics, Co., Ltd, Jinjiang Wanli Ceramics Co., Ltd, Jinjiang Tengda Ceramics Co., Ltd and Jinjiang Haoshan Construction Materials Co., Ltd. We compete primarily based on product quality, brand recognition, and an extensive distributor network.

Intellectual Property

We protect our intellectual property primarily through a mix of patent and trademark registrations.

Registered Trademarks

Our brand name distinguishes our products and promotes consumer awareness of our products.

We have registered the following trademarks in the PRC:

Trademark |  | Class/Products |  | Validity Term |  | Registration No.
|  | 19/ Tile, ceramic tile and wave pattern tile |  | From April 27, 2019 to April 27, 2029 |  | 4971249

Registered Software Copyrights

We have registered the following software copyrights in the PRC:

No. |  | Name |  | First Publication Date |  | Registration No.
1 |  | Internet-based archives intelligent management system V1.0 |  | February 25, 2022 |  | 2022SR0943948
2 |  | Accurate Acquisition Platform V1.0 of Human Resources Big Data Acquisition Platform for New Business Forms |  | January 10, 2022 |  | 2022SR0363211
3 |  | Approval System V1.0 for Leave Application for Employees in New Business Format |  | January 19, 2022 |  | 2022SR0363597
4 |  | New business employment online recruitment service platform V1.0 |  | July 5, 2022 |  | 2022SR1351138
5 |  | Kylin Cloud Contract Management System V1.0 |  | February 14, 2022 |  | 2022SR0700870
6 |  | Kylin Cloud Recruitment Function Management System V1.0 |  | January 25, 2022 |  | 2022SR0700872
7 |  | Kirin cloud service personnel file digital processing management system V1.0 |  | July 4, 2022 |  | 2022SR1351139
8 |  | Kylin Cloud Service Enterprise Current Assets Statistical Analysis Platform V1.0 |  | July 2, 2022 |  | 2022SR1351140
9 |  | Kirin Cloud Service’s Financial Procurement System V1.0 Based on Blockchain Technology Application |  | December 23, 2022 |  | 2022SR0242169
10 |  | Kylin Cloud Settlement Management System V1.0 |  | March 1, 2022 |  | 2022SR0700871
11 |  | Kirin Company Financial Payroll Settlement Management System V1.0 |  | November 11, 2022 |  | 2022SR0014900
12 |  | Kirin company financial reimbursement review system V1.0 |  | November 28, 2022 |  | 2022SR0014288
13 |  | Kirin Financial Assets Integrated Management System V1.0 |  | October 14, 2022 |  | 2022SR0013595
14 |  | Kirin Financial Procurement Internal Management Platform System V1.0 |  | November 6, 2022 |  | 2022SR0014391
15 |  | Kylin Financial Accounting Management System V1.0 |  | June 28, 2022 |  | 2022SR1351141

Except as disclosed above, as of December 31, 2022, our business or profitability is not materially dependent on any other trademarks, copyrights, registered designs, patents, grant of licenses from third parties, new manufacturing processes or other intellectual property rights.

Legal Proceedings

We are currently not involved in any legal proceedings; nor are we aware of any claims that could have a material adverse effect on our business, financial condition, results of operations or cash flows.

Seasonality

The second and third calendar quarters have been the peak season for the real estate development industry, and, therefore, our quarterly sales are usually highest from May to September compared to the rest of the year. We have lower sales between the months of January and March due to the effects of cold weather and the Chinese New Year. The seasonality information above is based on our turnover trend in the last three years and may vary slightly from year to year depending on the demand from our customers and end customers for our products. However, management believes that the seasonality information for the last three years is representative of the seasonality trend going forward.

Governmental Regulations

Environmental Protection Regulations

In accordance with the PRC Environmental Protection Law adopted on December 26, 1989, the Administration Supervisory Department of Environmental Protection of the State Council sets the national guidelines for the discharge of pollutants. The People’s Governments of provinces, autonomous regions and municipalities may also set their own guidelines for the discharge of pollutants within their own provinces or districts in the event that the national guidelines are inadequate. A company which causes environmental pollution and discharges other polluting materials which endanger the public should implement environmental protection methods and procedures into their business operations. This may be achieved by setting up a system of accountability within the company’s business structure for environmental protection, adopting effective procedures to prevent environmental hazards such as waste gases, water and residues, dust powder, radioactive materials and noise arising from production, construction and other activities from polluting and endangering the environment. The environmental protection system and procedures should be implemented simultaneously with the commencement of and during the operation of construction, production and other activities undertaken by the company. Any company which discharges environmental pollutants should report and register such discharge with the Administration Supervisory Department of Environmental Protection and pay any fines imposed for the discharge. A fee may also be imposed on the company for the cost of any work required to restore the environment to its original state. Companies which have caused severe pollution to the environment are required to restore the environment or remedy the effects of the pollution within a prescribed time limit. If a company fails to report and/or register the environmental pollution it caused, it will receive a warning or be penalized. Companies that fail to restore the environment or remedy the effects of the pollution within the prescribed time will be penalized or have their business licenses terminated. Companies that have polluted and endangered the environment must bear the responsibility for remedying the danger and effects of the pollution, as well as to compensate any losses or damages suffered as a result of such environmental pollution. Our Hengda facility obtained a Temporary Pollutant Discharge Permit (No.350582-2014-000260) granted by Jinjiang City Environmental Protection Bureau that will expire on May 1, 2016, and we are currently in the process of applying for the renewal of the permit.

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Livestreaming Ecommerce Regulations

The PRC government extensively regulates the telecommunications industry, and we may be subject to new laws and regulations revised or promogulated from time to time that will require us to obtain additional licenses and permits.

The Telecommunications Regulations of the PRC (2016 Revision) amended on February 6, 2016 distinguished “basic telecommunication services” from “value-added telecommunications services.” The value-added telecommunications service provider shall obtain an operating license from provincial Ministry of Industry and Information Technology (“MIIT”) offices prior to its commencement of operations. The Administrative Measures for Telecommunication Business Operating License, promulgated by the MIIT with latest amendments becoming effective in September 2017, set forth the types of licenses required for value-added telecommunication services and the qualifications and procedures for obtaining such licenses. Moreover, the Administrative Measures on Internet Information Services (2011 Revision), amended on January 8, 2011 by the State Council, further provided that commercial internet information services providers shall obtain an Internet Content Provider License (“ICP”) License, from competent government authorities before providing any commercial internet content services within the PRC. The Catalog of Classification of Telecommunications Services (2015 Edition) amended in June 2019 further defined internet information services, which includes information publication platform and delivery services, information search and inquiry services, information community’s platform services, instant message services, and information security and management services. As a SaaS provider, we cooperated with dozens of livestreaming platforms. As of the date of this annual report, we are not required to hold a valid ICP License.

Besides, the Ministry of Culture (replaced by the Ministry of Culture and Tourism of PRC) promulgated Interim Administrative Provisions on Internet Culture, or the Internet Culture Provisions, on May 10, 2003, and amended on December 15, 2017 which stipulates that providers of internet cultural products or services including but not limited internet entertainment, internet games, internet shows or programs and internet animations shall obtain operating permit on internet culture. If any entity engages in commercial internet culture activities without approval, the cultural administration authorities may order such entity to cease to operate internet culture activities as well as levying penalties including administrative warning and fines up to RMB30,000 depending on the severity of cases. As a SaaS provider, we cooperated with dozens of livestreaming platforms. As of the date of this annual report, we are not required to hold a valid operating permit on internet culture activities.

Government Regulations Relating to Foreign Exchange Controls

The principal regulation governing foreign exchange in the PRC is the Foreign Currency Administration Rules and a series of implementing rules and regulations, as amended. Under these rules, the Renminbi, the PRC’s currency, is freely convertible for trade and service related foreign exchange transactions (such as normal purchases and sales of goods and services from providers in foreign countries), but not for direct investment, loan or investment in securities outside of China unless the prior approval of the State Administration for Foreign Exchange, or SAFE, of the PRC is obtained. Foreign investment enterprises, or FIEs, are required to apply to the SAFE for Foreign Exchange Registration Certificates for FIEs. With such registration certificates, which need to be renewed annually, FIEs are allowed to open foreign currency accounts including a basic account and capital account. Currency translation within the scope of the basic account, such as remittance of foreign currencies for payment of dividends, can be effected without requiring the approval of the SAFE. Such transactions are subject to the consent of PRC banks which are authorized by the SAFE to review basic account currency transactions. However, conversion of currency in the capital account, including capital items such as direct investment, loans and securities, still require approval of the SAFE. On November 21, 2005, the SAFE issued Circular No. 75 on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents Corporate Financing and Roundtrip Investment Through Offshore Special Purpose Vehicles. Circular No. 75 confirms that the use of offshore special purpose vehicles as holding companies for PRC investments are permitted, but proper foreign exchange registration applications are required to be reviewed and accepted by the SAFE.

Regulation of Foreign Currency Exchange

Foreign currency exchange in the PRC is governed by a series of regulations, including, without limitation, the Foreign Currency Administrative Rules (1996), as amended, and the Administrative Regulations Regarding Settlement, Sale and Payment of Foreign Exchange (1996), as amended. Under these regulations, the Renminbi is freely convertible for trade and service-related foreign exchange transactions, but not for direct investment, loans or investments in securities outside China without the prior approval of the SAFE. Pursuant to the Administrative Regulations Regarding Settlement, Sale and Payment of Foreign Exchange, foreign-invested enterprises in China may purchase foreign exchange without the approval of the SAFE for trade and service-related foreign exchange transactions by providing commercial documents evidencing these transactions. They may also retain foreign exchange, subject to a cap approved by SAFE, to satisfy foreign exchange liabilities or to pay dividends. However, the relevant Chinese government authorities may limit or eliminate the ability of foreign-invested enterprises to purchase and retain foreign currencies in the future. In addition, foreign exchange transactions for direct investment, loan and investment in securities outside China are still subject to limitations and require approvals from the SAFE. On August 29, 2008, SAFE issued Circular No. 142 on Relevant Business Operations Issues Concerning Improving the Administration of the Payment and Settlement of Foreign Exchange Capital of Foreign-Invested Enterprises, with respect to the administration of conversion of foreign exchange capital contributions of FIEs into Renminbi, unless otherwise permitted by PRC laws or regulations, Renminbi converted from foreign exchange capital contributions can only be applied to activities within the approved business scope of FIEs and cannot be used for domestic equity investment or acquisitions.

Regulation of Dividend Distribution

The principal laws and regulations in China governing distribution of dividends by foreign-invested companies include:

| ● | The Sino-foreign Equity Joint Venture Law (1979), as amended;

| ● | The Regulations for the Implementation of the Sino-foreign Equity Joint Venture Law (1983), as amended;

| ● | The Sino-foreign Cooperative Enterprise Law (1988), as amended;

| ● | The Detailed Rules for the Implementation of the Sino-foreign Cooperative Enterprise Law (1995), as amended;

| ● | The Foreign Investment Enterprise Law (1986), as amended; and

| ● | The Regulations of Implementation of the Foreign Investment Enterprise Law (1990), as amended.

Under these regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, wholly foreign-owned enterprises in China are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds unless such reserve funds have reached 50% of their respective registered capital. These reserves are not distributable as cash dividends.

Insurance

We have not purchased insurance coverage for product liability or third party liability and are therefore not covered or compensated by insurance in respect of losses, damages, claims and liabilities arising from or in connection with product liability or third party liability. In addition, we currently do not maintain business interruption insurance. As a result, our business and prospects could be adversely affected in the event of such problems in our operations and may suffer losses that could have a material adverse effect on our business, financial condition, results of operations, or cash flows.

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| C. | Organizational Structure

The following chart illustrates Antelope Enterprises’ organizational structure as of December 31, 2022:

Corporate Structure and Background

Our principal PRC-based operating subsidiary, Hengda, was established on September 30, 1993 under the laws of PRC. All of the equity interests in Hengda are 100% owned by Stand Best. Hengda is a wholly foreign-owned enterprise in China.

Hengdali was established on May 4, 2008 under the laws of PRC. All of the equity interests in Hengdali are 100% owned by Hengda.

Stand Best was established on January 17, 2008 under the laws of Hong Kong. Stand Best acquired the entire shareholdings of Hengda on April 1, 2008 for consideration of RMB 58,980,000. As a result of this acquisition, Hengda became the wholly owned subsidiary of Stand Best.

Success Winner was established on May 29, 2009 under the laws of British Virgin Islands with Mr. Wong Kung Tok as its sole shareholder and sole director.

On June 30, 2009, pursuant to the capitalization agreement dated June 30, 2009, Success Winner was issued the 9,999 shares allotted by Stand Best as per the capitalization exercise of a shareholder’s loan of HK$67.9 million (RMB 58.9 million). On the same date, the shareholder of Stand Best, Mr. Wong Kung Tok transferred all his shareholdings in Stand Best to Success Winner. Therefore, Mr. Wong Kung Tok, from June 30, 2009 to November 20, 2009, indirectly owned 100% of Stand Best and in turn, 100% of Hengda.

CHAC was incorporated in Delaware on June 22, 2007 and was organized as a blank check company for the purpose of acquiring, through a stock exchange, asset acquisition or other similar business combination, or controlling, through contractual arrangements, an operating business that had its principal operations in Asia, with a focus on potential acquisition target in China.

Pursuant to the terms of a merger and stock purchase agreement dated August 19, 2009, on November 20, 2009, CHAC merged with and into Antelope Enterprises, its wholly owned British Virgin Islands subsidiary, and immediately thereafter, as part of the same integrated transaction, Antelope Enterprises acquired all of the outstanding securities of Success Winner.

Prior to Antelope Enterprises’ acquisition of Success Winner, neither CHAC nor Antelope Enterprises had any operations.

On November 19, 2009, Hengda entered into a definitive acquisition agreement to acquire a new production facility in Gaoan, Jiangxi Province, PRC by purchasing 100% of the equity interests in Hengdali. The closing of the acquisition was subject to the Gaoan City Administration for Industry and Commerce transferring the registration and business license of Hengdali from Hengdali’s former shareholders to Hengda. The transfer occurred on January 8, 2010. Hengda appointed an executive officer to take control over Hengdali’s operating and financing activities on the same day. In total, Hengda assumed loans of RMB 60.0 million and paid cash consideration of RMB 185.5 million for the acquisition, of which RMB 145.4 million was advanced to Hengdali’s former shareholders by December 31, 2009.

On September 22, 2017, Success Winner incorporated a 100% owned subsidiary Vast Elite Limited (“Vast Elite”) in Hong Kong with initial registered capital of HKD1. Vast Elite is engaged in the trading of building materials but during the year ended December 31, 2020, Vast Elite had no operations.

On November 20, 2019, Vast Elite incorporated a 100% owned subsidiary Chengdu Future Talented Management and Consulting Co, Ltd (“Chengdu Future”) in China. Chengdu Future is engaged in business management and consulting services.

On December 3, 2019, Success Winner incorporated a 100% owned subsidiary Antelope Enterprise Holdings Limited (“Antelope Holdings”) in Hong Kong. Antelope Holdings only serves the purpose of a holding company.

On May 9, 2020, Antelope HK incorporated a 100% owned subsidiary Antelope Holdings (Chengdu) Co., Ltd in China, Antelope Chengdu is engaged in computer consulting and software development.

On August 10, 2021, Antelope HK incorporated a 100% owned subsidiary Hainan Antelope Holdings Co., Ltd (“Antelope Hainan”) in China. Antelope Hainan is engaged in business management and consulting services. Antelope Hainan does not have any operations as of this report date.

On August 11, 2021, Antelope HK incorporated a 100% owned subsidiary Antelope Future (Yangpu) Investment Co., Ltd (“Antelope Yangpu”) in China. Antelope Yangpu is engaged in business management and consulting services. Antelope Yangpu does not have any operations as of this report date.

On August 23, 2021, Antelope Hainan incorporated a 100% owned subsidiary Antelope Investment (Hainan) Co., Ltd (“Antelope Investment”) in China.

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Antelope Investment is engaged in business management and consulting services. Antelope Investment does not have any operations as of this report date.

On September 9, 2021, Antelope Future incorporated a 100% owned subsidiary Antelope Ruicheng Investment (Hainan) Co., Ltd (“Antelope Ruicheng”) in China. Antelope Ruicheng is engaged in business management and consulting services. Antelope Ruicheng does not have any operations as of this report date.

On September 18, 2021, Antelope Ruicheng incorporated a 51% owned subsidiary Hainan Kylin Cloud Services Technology Co., Ltd (“Hainan Kylin”) in China. Hainan Kylin is engaged in the livestreaming ecommerce industry.

On October 28, 2022, Hainan Kylin incorporated a 100% owned subsidiary Hangzhou Kylin Cloud Services Technology Co., Ltd (“Hangzhou Kylin”) in China. Hangzhou Kylin is engaged in the livestreaming ecommerce industry.

On November 2, 2022, Hainan Kylin incorporated a 100% owned subsidiary Anhui Kylin Cloud Sevices Technology Co., Ltd (“Anhui Kylin”) in China. Anhui Kylin is engaged in the livestreaming ecommerce industry.

On December 30, 2022, Stand Best and an unaffiliated entity, New Stonehenge Limited, entered into a purchase agreement, pursuant to which, Stand Best agreed to sell 100% equity interests in Hengda to New Stonehenge Limited, in exchange for a 5% unsecured promissory note with a principal amount of US$8.5 million. The promissory note will mature in four years and the 5% interest and principal amount on the note is to be paid in four annual installments. On February 21, 2023, the Company’s shareholders approved this transaction. On April 28, 2023, this transaction was closed. The has transferred its ownership of the ceramic tile manufacturing business to New Stonehenge Limited, and New Stonehenge Limited has become the 100% owner of Hengda, which is the 100% owner of Hengdali.

| D. | Property, plant and equipment

We jointly own six buildings comprised of one office building and five workshops in Jinjiang, Fujian Province. We recorded the related fixed assets in proportion to the amount we paid for our part of the buildings, which represents our interests in the buildings. As co-owners of these six buildings under the relevant Building Ownership Certificate, all co-owners have collective rights and obligations to the jointly-owned property under PRC law, and typically the disposal of such jointly owned property by one owner without the consent of all other owners is prohibited.

The land-use rights of the workshop and the co-owned six buildings expire in 2055 and cover approximately 10,023 square meters. We also own land-use rights at two locations and seven buildings in Gaoan for office buildings, workshops, warehouses, and raw material yards and staff quarters. The land-use rights for these two facilities expire in 2058 and cover an aggregate of approximately 244,324 square meters.

We currently lease 17 properties in Jinjiang, Fujian Province in the PRC for various uses including warehouses, office space, workshops, staff quarters and stock yards.

In March 2016, we entered into an eight-year contract to lease out one of the production lines from our Hengdali facility. The production line has the capacity to produce approximately 10 million square meters of ceramic tiles annually. The term of the contract is from March 1, 2016 to February 29, 2024, and the contract stipulates for the receipt of rental income of RMB 15.0 million (US$ 0.5 million) per year, including 6% value added tax. The purpose of this arrangement was to generate income from the unused production capacity. In 2021, Hengdali retired two old furnaces. Therefore, for the term of the eight-year lease, and as a result of two old furnaces having been put out of use at the facility, we may only produce up to 22.4 million square meters of ceramic tiles from our Hengdali facility. In 2017, Hengda retired two old furnaces; in July of 2018, Hengda retired two more old furnaces, which caused Hengda’s annual maximum production capacity to be reduced to approximately 22.8 million. Therefore, the Company’s annual production capacity has been effectively reduced from 72 million square meters of ceramic tiles, to 45.2 million ceramic tiles as of fiscal year end 2021. In addition, effective November 1, 2021, Hengdali cancelled the eight-year lease with lessee, and entered a new lease agreement with the same lessee to lease out the building, plant and facilities, and all the machinery and equipment, instead of just the production lines, for a term of five years from November 1, 2021 through October 31, 2026 for an annual rent of RMB 18 million. The leased Hengdali facility has an annual production capacity of 22.4 million square meters of ceramic tiles. Due to the lease agreement, the Company’s total annual production capacity of ceramic tiles is 22.8 million square meters which is solely attributable to its Hengda facility.

Since 2014, our Hengda facility has been required by the local governmental agency to use natural gas to operate the facility, as opposed to coal. Fuel source (comprising coal and natural gas) accounted for 5.2%, 3.7% and 8.9% of the total cost of sales in 2020 2021, and 2022 respectively. There is no assurance that in the future our other production facilities will not be required to make similar modifications which could have similar adverse effects on our operations.

ITEM 4A. | UNRESOLVED STAFF COMMENTS

Not applicable.

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ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our financial statements and related notes thereto.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains certain statements that may be deemed “forward-looking statements” within the meaning of United States of America securities laws. All statements, other than statements of historical fact, that address activities, events or developments that we intend, expect, project, believe or anticipate and similar expressions or future conditional verbs such as will, should, would, could or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.

These statements include, without limitation, statements about our anticipated expenditures, including those related to general and administrative expenses; the potential size of the market for our services, future development and/or expansion of our services in our markets, our ability to generate revenues, our ability to obtain regulatory clearance and expectations as to our future financial performance. Our actual results will likely differ, perhaps materially, from those anticipated in these forward-looking statements as a result of various factors, including: our need and ability to raise additional cash. The forward-looking statements included in this report are subject to a number of additional material risks and uncertainties, including but not limited to the risks described in our filings with the Securities and Exchange Commission.

The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and the related notes to those statements included in this filing. In addition to historical financial information, this discussion may contain forward-looking statements reflecting our current plans, estimates, beliefs and expectations that involve risks and uncertainties. As a result of many important factors, our actual results and the timing of events may differ materially from those anticipated in these forward-looking statements.

Overview

We are a British Virgin Islands limited liability company with no material operations. Our operations were conducted in China by our subsidiaries. We provide livestreaming ecommerce services, business management and information systems consulting services, with a legacy ceramic tile manufacturing business.

Livestreaming ecommerce Business

Our livestreaming ecommerce business is operated in China through our 51% subsidiary, Hainan Kylin and its subsidiaries, Hangzhou Kylin and Anhui Kylin. We aim to provide one-stop solutions for our customers to adopt the emerging sales channel of livestreaming ecommerce. We believe that livestreaming ecommerce is an important growth engine for consumer good brands as it leverages the content of livestreaming to boost customers engagement and sales as it combines instant purchasing of a featured product and audience participation through a chat function or reaction buttons. Our customers usually include consumer goods brands, merchants, and small-scale ecommerce platforms. Our product management office assesses and selects the products from our customers. Then, we connect with different suppliers, usually staffing agencies that have a growing and diverse pool of hosts and influencers. The hosts and influencers register and claim the tasks for livestreaming for our customers’ products via Hainan Kylin’s SaaS platform. We track the sales of products of each host on this SaaS platform and report the sales results to our customers. We expand our reach to the second and third tiers cities in China where the livestreaming ecommerce has high conversion rate.

Hainan Kylin’s SaaS platform also includes a job-listing page designed especially for our enterprises customers to retain and engage freelancers and independent contractors at a cost-efficient way. We expect to further develop this function of the SaaS platform to provide value-added services to our livestreaming ecommerce customers.

Hainan Kylin has a limited operating history as it started its business in September 2021. For fiscal year 2022, Hainan Kylin comprised virtually all of our ongoing business operations and accounted for 84.5% of our total revenue.

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Ceramic Tile Business

We have historically operated a ceramic tile business which are used for exterior siding and for interior flooring and design in residential and commercial buildings. We are manufacturer of ceramic tiles used for exterior siding and for interior flooring and design in residential and commercial buildings in China. The ceramic tiles, sold under the “HD” or “Hengda,” brands are available in over two thousand styles, colors and size combinations. Currently, we have five principal product categories: (i) porcelain tiles, (ii) glazed tiles, (iii) glazed porcelain tiles, (iv) rustic tiles, and (v) polished glazed tiles. Porcelain tiles are our best-selling products, accounting for over 96.9% of our total revenue of ceramic tile business in 2022.

For the year ended December 31, 2022, we utilized production facilities capable of producing 1.40 million square meters ceramic tiles, as compared with the year ended December 31, 2021, when we utilized production facilities capable of producing 2.38 million square meters. During the year ended December 31, 2022, we had 7 production lines available for production and utilized two production lines during the peak season. As of December 31, 2022, we had seven production lines available for production (all were from Hengda), one of which was in use as of December 31, 2022.

We primarily sell our ceramic tile products through an exclusive distributor network. We have long-term relationships with our customers; most of our top ten customers in 2022 have been purchasing from us for over ten years. We have been in discussions with some large property developers in China to be their exclusive or primary provider of ceramic tiles and, although no arrangements or agreements have been entered into, we expect to enter into arrangements of that type in the foreseeable future.

We focus our research and development efforts on developing innovative and environmentally friendly products. We own eighteen utility model patents. Our stringent tile management and marketing efforts have created a strong business reputation and high brand awareness as demonstrated by us receiving the “Chinese Well-Known Trademark” award from the Intermediate People’s Court of Xiangtan City and “Asia’s 500 Most Influential Brands 2014” award from the World Brand Laboratory.

Business Management and Consulting Business

We also provide business management and consulting services which consists of computer consulting services and software development through our subsidiaries in China, including Chengdu Future and Antelope Chengdu. We diagnose difficulties in infrastructure and enterprise systems and addresses business challenges that enterprises confront by developing strategies to surmount such hurdles to ensure the healthy growth and development of our customers. Our consulting teams have advanced technological knowledge and capabilities to implement workflow solutions via proprietary software products and services to help our customers with customized solutions to solve complex problems.

Impacts of COVID-19

We experienced significant adverse impacts in our legacy ceramic tile business resulting from the COVID-19 pandemic and the related public health orders. The COVID-19 pandemic disrupted supply chains and affected production and sales across a range of industries as a result of quarantines, facility closures, and travel and logistics restrictions in connection with the outbreak. We experienced reduced demand for our ceramic tile products and an increased level of purchase order cancellations as a result of the COVID-19 pandemic. The impact of the COVID-19 outbreak had a material adverse impact on our operations and financial results for our legacy ceramic tile business. Our consulting income also decreased significantly due to the impact of Covid-19 pandemic. However, our livestreaming ecommerce was not impacted by Covid-19 pandemic but realized a significant growth due to its nature of internet-based business without in-person interaction. In early December 2022, China announced a nationwide loosening of its zero-COVID policy. However, the impact of COVID-19 pandemic still depends on the future developments of the virus, including new information concerning the global severity of and actions taken to contain the pandemic, or the appearance of new or more severe strains of the virus, which are highly uncertain and unpredictable. Therefore, while we do not expect the COVID-19 pandemic to negatively impact our business, results of operations, and financial position, the related financial impact cannot be reasonably estimated at this time.

Basis of Presentation

The following discussion and analysis of our financial condition and results of operations is based on the selected financial information as of and for the year ended December 31, 2022 and has been prepared based on the consolidated financial statements of Antelope Enterprise Holdings Limited and its subsidiaries. The consolidated financial statements of Antelope Enterprise Holdings Limited and its subsidiaries have been prepared in accordance with IFRS as issued by the International Accounting Standards Board, or “IASB.” The consolidated financial statements have been prepared on the historical cost basis, except for derivative financial instruments that have been measured at fair value.

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A. | Operating Results

The following table sets forth our financial results for the years ended December 31, 2022, 2021 and 2020, respectively:

RMB’000 |  | 2022 |  |  | 2021 |  |  | 2020 |
Net sales |  |  | 286,347 |  |  |  | 71,527 |  |  |  | - |
Cost of goods sold |  |  | 258,431 |  |  |  | 65,493 |  |  |  | - |
Gross profit (loss) |  |  | 27,916 |  |  |  | 6,034 |  |  |  | - |
|  |  |  |  |  |  |  |  |  |  | - |
Other income |  |  | 2,966 |  |  |  | 32 |  |  |  | 7,400 |
Fair value unrealized gain of unlisted financial assets |  |  | 130 |  |  |  | - |  |  |  | - |
Selling and distribution expenses |  |  | (16,380 | ) |  |  | (24 | ) |  |  | - |
Administrative expenses |  |  | (22,757 | ) |  |  | (15,975 | ) |  |  | (7,551 | )
Bad debt Reversal (expense) |  |  | 2,751 |  |  |  | (10,148 | ) |  |  | - |
Finance costs |  |  | (25 | ) |  |  | (51 | ) |  |  | (75 | )
Other expenses |  |  | (42 | ) |  |  | (34 | ) |  |  | - |
Loss before taxation |  |  | (5,441 | ) |  |  | (20,166 | ) |  |  | (226 | )
Income tax expense |  |  | 209 |  |  |  | 217 |  |  |  | 33 |
Net loss for the year from continuing operations |  |  | (5,650 | ) |  |  | (20,383 | ) |  |  | (259 | )
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |
Loss for the year from discontinued operations |  |  | (47,994 | ) |  |  | (69,675 | ) |  |  | (192,836 | )
Net loss for the year |  |  | (53,644 | ) |  |  | (90,058 | ) |  |  | (193,095 | )
Net income (loss) attributable to: |  |  |  |  |  |  |  |  |  |  |  |
Equity holders of the Company |  |  | (57,918 | ) |  |  | (88,752 | ) |  |  | (193,095 | )
Non-controlling interest |  |  | 4,274 |  |  |  | (1,306 | ) |  |  | - |
Net loss for the year |  |  | (53,644 | ) |  |  | (90,058 | ) |  |  | (193,095 | )
Net income (loss) attributable to the equity holders of the Company arise from: |  |  |  |  |  |  |  |  |  |  |  |
Continuing operations |  |  | (9,924 | ) |  |  | (19,077 | ) |  |  | (259 | )
Discontinued operations |  |  | (47,994 | ) |  |  | (69,675 | ) |  |  | (192,836 | )

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The following table shows the Company’s operations by business lines for the years ended December 31, 2022, 2021 and 2020, respectively:

|  | For the year Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |
Revenues |  |  |  |  |  |  |  |  |  |  |  |
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |
Sales of tile products |  |  | 37,696 |  |  |  | 144,743 |  |  |  | 182,989 |
Continuing operations |  |  |  |  |  |  |  |  |  |  |  |
Consulting income / software |  |  | 12,662 |  |  |  | 13,026 |  |  |  | - |
Livestreaming ecommerce |  |  | 273,685 |  |  |  | 58,501 |  |  |  | - |
Total revenues |  |  | 324,043 |  |  |  | 216,270 |  |  |  | 182,989 |
Cost of revenues |  |  |  |  |  |  |  |  |  |  |  |
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |
Sales of tile products |  |  | 41,245 |  |  |  | 83,436 |  |  |  | 208,991 |
Continuing operations |  |  |  |  |  |  |  |  |  |  |  |
Consulting income / software |  |  | 12,819 |  |  |  | 10,002 |  |  |  | - |
Livestreaming ecommerce |  |  | 245,612 |  |  |  | 55,491 |  |  |  | - |
Total cost of revenues |  |  | 299,676 |  |  |  | 148,929 |  |  |  | 208,991 |
Operating costs and expenses |  |  |  |  |  |  |  |  |  |  |  |
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |
Sales of tile products |  |  | 25,324 |  |  |  | 20,292 |  |  |  | 38,723 |
Continuing operations |  |  |  |  |  |  |  |  |  |  |  |
Consulting income / software |  |  | 4,613 |  |  |  | 9,760 |  |  |  | - |
Livestreaming ecommerce |  |  | 25,167 |  |  |  | 195 |  |  |  | - |
Other |  |  | 9,380 |  |  |  | 10,677 |  |  |  | - |
Total operating costs and expenses |  |  | 64,484 |  |  |  | 40,924 |  |  |  | 38,723 |
Bad debt expense (reversal) |  |  |  |  |  |  |  |  |  |  |  |
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |
Sales of tile products |  |  | 33,365 |  |  |  | 115,407 |  |  |  | 150,268 |
Continuing operations |  |  |  |  |  |  |  |  |  |  |  |
Consulting income / software |  |  | 1,000 |  |  |  | 4,854 |  |  |  | - |
Livestreaming ecommerce |  |  | (3,751 | ) |  |  | 5,293 |  |  |  | - |
Total bad debt expense (reversal) |  |  | (30,614 | ) |  |  | 125,554 |  |  |  | 150,268 |
Other expense |  |  |  |  |  |  |  |  |  |  |  |
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |
Sales of tile products |  |  | - |  |  |  | 90 |  |  |  | - |
Continuing operations |  |  |  |  |  |  |  |  |  |  |  |
Consulting income / software |  |  | 36 |  |  |  | 34 |  |  |  | - |
Livestreaming ecommerce |  |  | 6 |  |  |  | - |  |  |  | - |
Total other expense |  |  | 42 |  |  |  | 124 |  |  |  | - |
Other income |  |  |  |  |  |  |  |  |  |  |  |
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |
Sales of tile products |  |  | 14,244 |  |  |  | 9,389 |  |  |  | 14,682 |
Continuing operations |  |  |  |  |  |  |  |  |  |  |  |
Consulting income / software |  |  | 115 |  |  |  | 29 |  |  |  | 7,249 |
Livestreaming ecommerce |  |  | 2,148 |  |  |  | - |  |  |  | - |
Other |  |  | 703 |  |  |  | 2 |  |  |  | - |
Total other income |  |  | 17,210 |  |  |  | 9,420 |  |  |  | 21,931 |
Loss from operations |  |  |  |  |  |  |  |  |  |  |  |
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |
Sales of tile products |  |  | (47,994 | ) |  |  | (65,093 | ) |  |  | (193,062 | )
Continuing operations |  |  |  |  |  |  |  |  |  |  |  |
Consulting income / software |  |  | (5,691 | ) |  |  | (11,595 | ) |  |  | - |
Livestreaming ecommerce |  |  | 8,929 |  |  |  | (2,478 | ) |  |  | - |
Other |  |  | (8,677 | ) |  |  | (10,675 | ) |  |  | - |
Loss from operations |  |  | (53,433 | ) |  |  | (89,841 | ) |  |  | (193,062 | )

Description of Selected Income Statement Items

Revenue from sales of livestreaming ecommerce business. Beginning in 2021, we started to generate revenue from our livestreaming ecommerce business which is operated by Hainan Kylin. For the years ended December 31, 2022 and 2021, respectively, we generated RMB 273.7 million and RMB 58.5 million in revenue from this sector.

Revenue from sales of ceramic tile products. We generate revenue from the sales of ceramic tiles, including porcelain tiles, glazed porcelain tiles, glazed tiles, rustic tiles and polished glazed tiles, net of rebates and discounts. For the past three fiscal years, the second and third calendar quarters have been the peak season of the property developing industry, and, therefore, our quarterly sales are usually highest from May to September compared to the rest of the year. Conversely, our sales were lower between the months of January to March. This is because property developing activities tend to be low due to the effects of cold weather and the PRC Spring Festival. While we adjusted the pricing of our products in previous years, in 2020 we did not have any price adjustments of our ceramic tile products. In July 2021, Hengda increased the pricing of its ceramic tile products by an average of 15% and Hengdali decreased the pricing of its ceramic tile products by an average of 5%, and our total sales of ceramic tiles was significantly impacted by the COVID-19 pandemic. Revenue from the sale of ceramic tile products decreased by 74.0% for the year ended December 31, 2022 as compared to the year ended December 31, 2021, mainly due to the 78.5% decrease in sales volume which was only partially offset by the increase in the average selling price of 20.1%.

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Revenue from business management and information system consulting services. We also generated revenue from business management consulting, information system technology consulting services, including the sales of software use rights for digital data deposit platforms and asset management systems. For the year ended December 31, 2022 and 2021, we generated RMB 12.7 million and RMB 13.0 million from Antelope Chengdu and Chengdu Future who are engaged in these sectors.

Cost of revenues.

Cost of revenues for livestreaming ecommerce. Cost of sales for the livestreaming ecommerce was RMB 245.6 million (US$ 36.5 million) and RMB 55.5 million (US$ 8.6 million) for the years ended December 31, 2022 and 2021. For the year ended December 31, 2022, we had cost of sales related to livestreaming ecommerce of RMB 245.6 million, mainly consisting of professional costs for outsourcing technology services.

Cost of revenues for tile products. Cost of revenues for tile products consists of costs directly attributable to production, including the cost of clay, color materials, glaze materials, coal, salaries for staff engaged in production activity, electricity, depreciation, packing materials and related expenses.

Clay is a key material for making ceramic tiles, and accounted for approximately 13.0% and 5.7% of our cost of sales for the years ended December 31, 2022 and 2021, respectively. Fujian and Jiangxi Provinces, where our production facilities are located, are the largest clay resources areas in China.

Dyes are another key material for making ceramic tiles, and accounted for approximately 17.0% and 6.6% of our cost of sales for the years ended December 31, 2022 and 2021, respectively. A number of dyes are used in ceramic tiles, and the prices of different dyes have experienced fluctuations over the past few years.

Our Hengda facility used natural gas instead of coal for manufacturing ceramic tiles, and natural gas accounted for approximately 8.9% and 3.6% of our cost of sales for the years ended December 31, 2022 and 2021, respectively.

Cost of revenues for business management and information system consulting services. For the year ended December 31, 2022, we had cost of revenues related to business management and consulting income of RMB 12.8 million, which mainly consisted of professional costs for outsourcing technology services.

Other income and other expenses. Other income consists of interest income, foreign exchange gain/loss, gain on disposal of equipment and rental income by leasing out one of its production lines. Other expenses primarily consist of the loss on disposal of equipment and the depreciation by leasing out one of our production lines.

Selling and distribution expenses. Selling and distribution expenses consist of payroll, travel expenses, transportation and advertising expenses incurred by our selling and distribution team.

Administrative expenses. Administrative expenses consist primarily of R&D expense, employee remuneration, payroll taxes and benefits, general office expenses and depreciation. We expect administrative expenses to remain constant as compared to the prior year.

Income taxes. Our subsidiaries in the PRC are subject to the PRC Enterprise Income Tax Law, and the applicable income tax rate pursuant to such law for the years ended December 31, 2022 and 2021 is 25% for Hengda, Hengdali and Hainan Kylin Cloud Services Technology, and 5% for Chengdu Future, Antelope Chengdu, Anhui Kylin Cloud Services Technology and Hangzhou Kylin Cloud Services Technology.

Results of Operations

Fiscal Year Ended 2022 Compared to the Fiscal Year Ended 2021

Revenue from livestreaming ecommerce. For the years ended December 31, 2022 and 2021, revenue from the livestreaming ecommerce was RMB 273.7 million (US$ 40.7 million) and RMB 58.5 million (US$ 9.1 million), representing an increase of RMB 215.2 million, or 368%. The significant increase was because we started operating the livestreaming ecommerce business in September 2021. The revenue generated from livestreaming ecommerce business increased significantly as a result of the rapid growth of e-commence livestreaming industry in China.

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Revenue from sales of tile products. The following table sets forth the breakdown of revenue, by product categories, for the years ended December 31, 2022 and 2021.

Revenue RMB (000) |  | 2022 |  |  | Percentage |  |  | 2021 |  |  | Percentage |
Porcelain |  |  | 36,541 |  |  |  | 96.9 | % |  |  | 121,502 |  |  |  | 83.9 | %
Glazed Porcelain |  |  | 745 |  |  |  | 2.0 | % |  |  | 387 |  |  |  | 0.3 | %
Glazed |  |  | 410 |  |  |  | 1.1 | % |  |  | 202 |  |  |  | 0.1 | %
Rustic |  |  | - |  |  |  | - | % |  |  | 22,449 |  |  |  | 15.6 | %
Polished Glazed |  |  | - |  |  |  | - | % |  |  | 203 |  |  |  | 0.1 | %
Total |  |  | 37,696 |  |  |  | 100.0 | % |  |  | 144,743 |  |  |  | 100.0 | %

Revenue from sales of tile products was RMB 37.7 million (US$ 5.6 million) for the year ended December 31, 2022, compared to RMB 144.7 million (US$ 22.4 million) for the year ended December 31, 2021, representing a decrease of RMB 107.0 million, or 74.0%. The decrease in revenue was primarily due to the decrease in sales volume of 78.5% and which was only partially offset by an increase in the average selling price of 20.8%. The decrease in sales resulted from the continued slowdown of China’s economy, and both the manufacturing sector and the real estate industry were affected by the weaker economy and the adverse impact of the COVID-19 outbreak. Moreover, the Company leased out its Hengdali facility beginning in November 2021.

Cost of revenues for livestreaming ecommerce. Cost of sales for the livestreaming ecommerce was RMB 245.6 million (US$ 36.5 million) and RMB 55.5 million (US$ 8.6 million) for the years ended December 31, 2022 and 2021. For the years ended December 31, 2022 and 2021, our cost of sales mainly consisted of professional costs for outsourcing technology services. The increase in the cost of revenues for our livestreaming ecommerce resulted from the rapid growth of this business.

Cost of revenues for sales of tile products. The following table sets forth the breakdown of cost of sales, by product segment, for the years ended December 31, 2022 and 2021:

Cost of sales RMB (‘000) |  | 2022 |  |  | Percentage |  |  | 2021 |  |  | Percentage |
Porcelain |  |  | 39,792 |  |  |  | 96.5 | % |  |  | 71,002 |  |  |  | 85.1 | %
Glazed Porcelain |  |  | 946 |  |  |  | 2.2 | % |  |  | 237 |  |  |  | 0.3 | %
Glazed |  |  | 507 |  |  |  | 1.3 | % |  |  | 111 |  |  |  | 0.1 | %
Rustic |  |  | - |  |  |  | - | % |  |  | 11,983 |  |  |  | 14.4 | %
Polished Glazed |  |  | - |  |  |  | - | % |  |  | 103 |  |  |  | 0.1 | %
Total |  |  | 41,245 |  |  |  | 100.00 | % |  |  | 83,436 |  |  |  | 100.00 | %

Cost of revenues for sales of tile products was RMB 41.3 million (US$ 6.1 million) for the year ended December 31, 2022 compared to RMB 83.4 million (US$ 12.9 million) for the year ended December 31, 2021, representing a decrease of RMB 42.2 million, or 50.6%. The decrease in cost of sales was primarily due to decreased sales and production, which was partly offset by the decrease in the reversal of an inventory impairment provision.

Cost of sales for business management and information system consulting services. Cost of sales for business management and consulting services was RMB 12.8 million (US$ 1.9 million) and RMB 10.0 million (US$ 1.6 million) for the years ended December 31, 2022 and 2021.

Gross profit for livestreaming ecommerce. Gross profit for the livestreaming ecommerce was RMB 28.1 million (US$ 4.2 million) and RMB 3.0 million (US$ 0.5 million) for the years ended December 31, 2022 and 2021.

Gross profit (loss) for sales of tile products. The following table sets forth the breakdown of our gross profit (loss) and gross profit (loss) margin by product segment for the years ended December 31, 2022 and 2021:

|  | 2022 |  |  | 2021 |
|  | Gross Profit |  |  | Profit (Loss) |  |  | Gross |  |  | Profit |
RMB (‘000) |  | (Loss) |  |  | Margin |  |  | Profit |  |  | Margin |
Porcelain |  |  | (3,251 | ) |  |  | (8.9 | )% |  |  | 50,500 |  |  |  | 41.6 | %
Glazed Porcelain |  |  | (201 | ) |  |  | (27.0 | )% |  |  | 150 |  |  |  | 38.8 | %
Glazed |  |  | (97 | ) |  |  | (23.5 | )% |  |  | 91 |  |  |  | 45.0 | %
Rustic |  |  | - |  |  |  | - | % |  |  | 10,466 |  |  |  | 46.6 | %
Polished Glazed |  |  | - |  |  |  | - | % |  |  | 100 |  |  |  | 49.3 | %
All products |  |  | (3,549 | ) |  |  | (9.4 | )% |  |  | 61,307 |  |  |  | 42.4 | %

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Gross loss was RMB 3.5 million (US$ 0.5 million) for the year ended December 31, 2022, as compared to a gross profit of RMB 61.3 million (US$ 9.5 million) for the year ended December 31, 2021, an increase loss of RMB 64.9 million.

Gross profit (loss) for business management and consulting. Gross profit (loss) for the business management and consulting services was RMB (157,000) (US$ (23,331)) and RMB 3.0 million (US$ 0.5 million) for the years ended December 31, 2022 and 2021.

Other income. Other income for the year ended December 31, 2022 was RMB 3.0 million (US$ 0.4 million), as compared to RMB 32,000 (US$ 4,500) for the same period of 2021. For the year ended December 31, 2022, other income mainly consists of a government grant of RMB 0.8 million and VAT receivable of 1.4 million from Hainan Kylin, and exchange gain of RMB 73,203.

For both 2022 and 2021, we had other income from discontinued operation of RMB 14.2 million (US$ 2.1million) and RMB 9.4 million (US$1.5 million) was mainly attributable to the income from leasing out one of the production lines from our Hengdali facility pursuant to an eight-year lease contract.

Selling and distribution expenses. Selling and distribution expenses were RMB 16.4 million (US$ 2.4 million) for the year ended December 31, 2022, compared to RMB 24,000 (US$ 4,000) for the year ended December 31, 2021, representing an increase of RMB 16.4 million. The increase in selling and distribution expenses was primarily due to an increased advertising expense of RMB 7.0 million and the increased commission expense of RMB 9.3 million due to the significant growth of our livestreaming ecommerce business. For the years ended December 31, 2022 and 2021, we had selling and distribution expenses RMB 5.9 million (US$ 0.9 million) and RMB 6.3 million (US$ 1.0 million) from discontinued operations.

Administrative expenses. Administrative expenses were RMB 22.8 million (US$ 3.4 million) for the year ended December 31, 2022, compared to RMB 16.0 million (US$ 2.5 million) for the year ended December 31, 2021, representing an increase of RMB 6.8 million, or 42.5%. The increase in administrative expenses was primarily due to an increase in (i) insurance expense of RMB 2.1 million, (ii) an RMB 1.3 million increase in research and development expenses, (iii) an RMB 1.4 million increase in payroll expenses, (iv) an RMB 1.3 million increase in other compensation expense, (v) an RMB 71,000 increase in auto expense, (vi) an RMB 0.2 million increase in depreciation expense and an RMB 0.5 million increase in other G&A expenses due to the increased expense resulting from our new subsidiaries. For the years ended December 31, 2022 and 2021, we have administrative expenses of RMB 51.3 million (US$ 7.6 million) and RMB 131.9 million (US$ 20.8 million) from discontinued operations.

Bad debt expense (reversal). Bad debt reversal was RMB 2.8 million (US$ 0.4 million) for the year ended December 31, 2022, compared to bad debt expense of RMB 10.1 million (US$ 1.6 million) for the year ended December 31, 2021. We recognize a loss allowance for expected credit loss on our financial assets, primarily on trade receivables, which are subject to impairment under IFRS 9, Financial Instruments, first effective for year 2018. We believe that we have undertaken appropriate measures to resolve the bad debt expense. We will continue to review each of our customers for credit quality as well as assiduously test their accounts receivables balances in each upcoming fiscal period. For the years ended December 31, 2022 and 2021, we have bad debt reversal of RMB 33.4 million (US$ 4.95 million) and bad debt expense of RMB 115.4 million (US$ 17.9 million) from discontinued operations.

Finance costs. Finance costs were RMB 25,000 (US$ 3,715) for the year ended December 31, 2022, compared to RMB 51,000 (US$ 7,906) for the year ended December 31, 2021. The decrease was mainly due to the decrease of interest expense on lease liabilities. We adopted IFRS 16 during the year ended December 31, 2019, and recognized lease liabilities in relation to leases which had previously been classified as “operating leases”. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of January 1, 2019. The difference between the actual payment and lease liabilities was the interest expense. For the years ended December 31, 2022 and 2021, we have financial cost of RMB 1.5 million (US$ 0.2 million) and RMB 2.2 million (US$ 0.3 million) from discontinued operations.

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Other expenses. Other expenses were RMB 42,000 (US$ 6,000) for the year ended December 31, 2022, as compared to RMB 33,000 (US$ 5,000) for the year ended December 31, 2021, representing an increase of RMB 9,000 or 27.3%. The increased other expenses were mainly due to an increase in the foreign currency transaction exchange loss. For the years ended December 31, 2022 and 2021, we had a financial cost of RMB nil (US $nil) and RMB 90,000 (US $13,952) from discontinued operations.

Loss before taxation. Loss before taxation was RMB 5.4 million (US$ 0.8 million) for the year ended December 31, 2022, as compared to a loss before taxation of RMB 20.2 million (US$ 3.1 million) for the year ended December 31, 2021. The decrease in loss before taxation was mainly due to an increased reversal of the bad debt expense and increased gross profit for the year ended December 31, 2022 which was partly offset by increased selling and distribution expense and increased administrative expenses as described above. For the years ended December 31, 2022 and 2021, we had a loss before taxation of RMB 48.0 million (US$ 7.1 million) and RMB 69.7 million (US$ 10.8 million) from discontinued operations.

Income taxes. We incurred an income tax expense of RMB 0.2 million (US$ 31,000) for the year ended December 31, 2022 compared to an income tax expense of RMB 0.2 million (US$ 34,000) for the year ended December 31, 2021. Our PRC statutory enterprise income tax rate was 25% for the year ended December 31, 2022 and 2021.

Net loss attributable to equity holders of the Company. Net loss attribute to equity holders of the Company from continue operation was RMB 5.7 million (US$ 0.8 million) for the year ended December 31, 2022, as compared to a loss attributable to the Company’s shareholders of RMB 20.4 million (US$ 3.2 million) for the year ended December 31, 2021. The decrease in net loss attributable to shareholders in 2021 was attributable to the reasons described above. For the years ended December 31, 2022 and 2021, we had a loss attributable to equity holders of the Company of RMB 48.0 million (US$ 7.1 million) and RMB 69.7 million (US$ 10.8 million) from discontinued operations.

Net income (loss) attributed to non-controlling interest. Net income attributed to non-controlling interest was RMB 4.3 million (US$ 0.6 million) and net loss of RMB 1.3 million (US$ 0.2 million) for the years ended December 31, 2022 and 2021. Non-controlling interest represented the 49% ownership of Hainan Kylin and its subsidiaries.

Fiscal Year Ended 2021 Compared to the Fiscal Year Ended 2020

Revenue from sales of tile products. The following table sets forth the breakdown of revenue, by product categories, for the years ended December 31, 2021 and 2020.

Revenue RMB (000) |  | 2020 |  |  | Percentage |  |  | 2021 |  |  | Percentage |
Porcelain |  |  | 142,230 |  |  |  | 77.7 | % |  |  | 121,502 |  |  |  | 83.9 | %
Glazed Porcelain |  |  | 1,624 |  |  |  | 0.9 | % |  |  | 387 |  |  |  | 0.3 | %
Glazed |  |  | 2,736 |  |  |  | 1.5 | % |  |  | 202 |  |  |  | 0.1 | %
Rustic |  |  | 24,461 |  |  |  | 13.4 | % |  |  | 22,449 |  |  |  | 15.6 | %
Polished Glazed |  |  | 11,938 |  |  |  | 6.5 | % |  |  | 203 |  |  |  | 0.1 | %
Total |  |  | 182,989 |  |  |  | 100.0 | % |  |  | 144,743 |  |  |  | 100.0 | %

Revenue from sales of tile products was RMB 144.7 million (US$ 22.4 million) for the year ended December 31, 2021, compared to RMB 183.0 million (US$ 26.5 million) for the year ended December 31, 2020, representing a decrease of RMB 38.3 million, or 20.9%. The decrease in revenue was primarily due to the decrease in sales volume of 14.0% and a decrease in average selling price of 7.3%. The decrease in sales resulted from the continued slowdown of China’s economy, and both the manufacturing sector and the real estate industry were affected by the weaker economy and the adverse impact of the COVID-19 pandemic.

Porcelain tiles. Revenue from the sales of porcelain tiles decreased 14.6%, from RMB 142.2 million (US$ 20.6 million) for the year ended December 31, 2020 to RMB 121.5 million (US$ 18.8 million) for the year ended December 31, 2021. The decrease was primarily attributable to a decrease in our sales volume for the year 2021 as compared to the same period of 2020. Porcelain tiles for exterior walls are still our most popular product and have the largest market potential of all of our tiles.

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Glazed porcelain tiles. Revenue from glazed porcelain tiles decreased 76.2%, from approximately RMB 1.6 million (US$ 0.2 million) for the year ended December 31, 2020 to RMB 0.4 million (US$ 59,960) for the year ended December 31, 2021.

Glazed tiles. Revenue from glazed tiles decreased 92.6%, from RMB 2.7 million (US$ 0.4 million) for the year ended December 31, 2020 to RMB 0.2 million (US$ 31,370) for the year ended December 31, 2021.

Rustic tiles. Revenue from rustic tiles decreased 8.2%, from RMB 24.5 million (US$ 3.5 million) for the year ended December 31, 2020 to RMB 22.4 million (US$ 3.5 million) for the year ended December 31, 2021.

Polished glazed tiles. Revenue from polished glazed tiles decreased 98.3%, from RMB 11.9 million (US$ 1.7 million) for the year ended December 31, 2020 to RMB 0.2 million (US$ 31,460) for the year ended December 31, 2021. We believe that this product represents both a functional and cost-effective replacement for actual marble or stone materials used in a decorative fashion inside homes. However, the demand for this type of tile decreased significantly due to the impact of the continued effects of the Covid-19 pandemic.

Revenue from business management and consulting. For the year ended December 31, 2021, revenue from our new sector of business management and consulting income was RMB 13.0 million (US$ 1.9 million).

Revenue from the livestreaming ecommerce. For the year ended December 31, 2021, revenue from our new livestreaming ecommerce was RMB 58.5 million (US$ 9.1 million).

Cost of sales for sales of tile products. The following table sets forth the breakdown of cost of sales, by product segment, for the years ended December 31, 2021 and 2020:

Cost of sales RMB (‘000) |  | 2020 |  |  | Percentage |  |  | 2021 |  |  | Percentage |
Porcelain |  |  | 164,247 |  |  |  | 78.6 | % |  |  | 71,002 |  |  |  | 85.1 | %
Glazed Porcelain |  |  | 2,334 |  |  |  | 1.1 | % |  |  | 237 |  |  |  | 0.3 | %
Glazed |  |  | 3,132 |  |  |  | 1.5 | % |  |  | 111 |  |  |  | 0.1 | %
Rustic |  |  | 25,538 |  |  |  | 12.2 | % |  |  | 11,983 |  |  |  | 14.4 | %
Polished Glazed |  |  | 13,740 |  |  |  | 6.6 | % |  |  | 103 |  |  |  | 0.1 | %
Total |  |  | 208,991 |  |  |  | 100.00 | % |  |  | 83,436 |  |  |  | 100.00 | %

Cost of sales for sales of tile products was RMB 83.4 million (US$ 12.9 million) for the year ended December 31, 2021 compared to RMB 209.0 million (US$ 30.3 million) for the year ended December 31, 2020, representing a decrease of RMB 125.6 million, or 60.0%. The decrease in cost of sales was primarily due to decreased sales and production, and the substantial increase in the reversal of an inventory impairment provision.

Cost of sales for business management and consulting. Cost of sales for business management and consulting services was RMB 10.0 million (US$ 1.9 million) for the year ended December 31, 2021.

Cost of sales for the livestreaming ecommerce. Cost of sales for the livestreaming ecommerce was RMB 55.5 million (US$ 8.6 million) for the year ended December 31, 2021.

Gross profit for sales of tile products. The following table sets forth the breakdown of our gross profit (loss) and gross profit (loss) margin by product segment for the years ended December 31, 2021 and 2020:

|  | 2020 |  |  | 2021 |
|  | Gross Profit |  |  | Profit (Loss) |  |  | Gross |  |  | Profit |
RMB (‘000) |  | (Loss) |  |  | Margin |  |  | Profit |  |  | Margin |
Porcelain |  |  | (22,017 | ) |  |  | (15.5 | )% |  |  | 50,500 |  |  |  | 41.6 | %
Glazed Porcelain |  |  | (710 | ) |  |  | (43.8 | )% |  |  | 150 |  |  |  | 38.8 | %
Glazed |  |  | (396 | ) |  |  | (14.5 | )% |  |  | 91 |  |  |  | 45.0 | %
Rustic |  |  | (1,077 | ) |  |  | (4.4 | )% |  |  | 10,466 |  |  |  | 46.6 | %
Polished Glazed |  |  | (1,802 | ) |  |  | (15.1 | )% |  |  | 100 |  |  |  | 49.3 | %
All products |  |  | (26,002 | ) |  |  | (14.2 | )% |  |  | 61,307 |  |  |  | 42.4 | %

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Gross profit was RMB 61.3 million (US$ 9.5 million) for the year ended December 31, 2021, as compared to a gross loss of RMB 26.0 million (US$ 3.8 million) for the year ended December 31, 2020, an increase of RMB 87.3 million.

Gross profit for business management and information system consulting services. Gross profit for the business management and consulting services was RMB 3.0 million (US$ 0.5 million) for the year ended December 31, 2021.

Gross profit for the livestreaming ecommerce. Gross profit for the livestreaming ecommerce was RMB 3.0 million (US$ 0.5 million) for the year ended December 31, 2021.

Other income. Other income for the year ended December 31, 2021 was RMB 9.4 million (US$ 1.5 million), as compared to RMB 21.9 million (US$ 3.2 million) for the same period of 2020. For both 2021 and 2020, other income was mainly attributable to the income from leasing out one of the production lines from our Hengdali facility pursuant to an eight-year lease contract. In addition, we generated RMB 7.2 million from computer consulting and software development during the year ended December 31, 2020. Since these new businesses had just launched and their income was fairly modest, it was included in this reporting line item for fiscal 2020.

Selling and distribution expenses. Selling and distribution expenses were RMB 6.3 million (US$ 1.0 million) for the year ended December 31, 2021, compared to RMB 9.4 million (US$ 1.4 million) for the year ended December 31, 2020, representing a decrease of RMB 3.0 million, or 32.4%. The decrease in selling and distribution expenses was primarily due to the decreased advertising expense of RMB 2.0 million and the decreased salary expense for salespersons of RMB 1.0 million.

Administrative expenses. Administrative expenses were RMB 32.4 million (US$ 5.0 million) for the year ended December 31, 2021, compared to RMB 26.6 million (US$ 3.9 million) for the year ended December 31, 2020, representing an increase of RMB 5.8 million, or 21.9%. The increase in administrative expenses was primarily due to an increase in consultant fees of RMB 8.5 million which was partly offset by (i) an RMB 1.1 million decrease in research and development expenses, (ii) an RMB 1.4 million decrease in professional fees, and (iii) an RMB 0.2 million decrease in directors’ fees.

Bad debt expense. Bad debt expense was RMB 125.6 million (US$ 19.5 million) for the year ended December 31, 2021, compared to RMB 150.3 million (US$ 21.8 million) for the year ended December 31, 2020. We recognize a loss allowance for expected credit loss on our financial assets, primarily on trade receivables, which are subject to impairment under IFRS 9, Financial Instruments, first effective for year 2018. We believe that we have undertaken appropriate measures to resolve the bad debt expense.

Finance costs. Finance costs were RMB 2.2 million (US$ 0.3 million) for the year ended December 31, 2021, compared to RMB 2.7 million (US$ 0.4 million) for the year ended December 31, 2020. The decrease was mainly due to the decrease of interest expense on lease liabilities. We adopted IFRS 16 during the year ended December 31, 2019, and recognized lease liabilities in relation to leases which had previously been classified as “operating leases”. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of January 1, 2019. The difference between the actual payment and lease liabilities was the interest expense.

Other expenses. Other expenses were RMB 124,000 (US$ 19,000) for the year ended December 31, 2021, as compared to RMB nil (US$ nil) for the year ended December 31, 2020. The increased other expenses were mainly due to an increase in the foreign currency transaction exchange loss.

Loss before taxation. Loss before taxation was RMB 89.8 million (US$ 13.9 million) for the year ended December 31, 2021, as compared to a loss before taxation of RMB 193.1 million (US$ 28.0 million) for the year ended December 31, 2020. The decrease in loss before taxation was mainly due to an increase in the reversal of the inventory provision, decreased bad debt expense and increased gross profit for the year ended December 31, 2021 as described above.

Income taxes. We incurred an income tax expense of RMB 0.2 million (US$ 34,000) for the year ended December 31, 2021 compared to an income tax expense of RMB 33,000 (US$ 5,000) for the year ended December 31, 2020. Our PRC statutory enterprise income tax rate was 25% for the year ended December 31, 2021 and 2020.

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Net loss attributable to equity holders of the Company. Net loss attributable to equity holders of the Company was RMB 88.8 million (US$ 13.8 million) for the year ended December 31, 2021, as compared to a loss attributable to the Company’s shareholders of RMB 193.1 million (US$ 28.0 million) for the year ended December 31, 2020. The decrease in net loss attributable to shareholders in 2021 was due to the reasons described above.

Net loss attributed to non-controlling interest. Net loss attributable to non-controlling interest was RMB 1.3 million (US$ 0.2 million) and RMB nil (US$ nil) for the years ended December 31, 2021 and 2020. Non-controlling interest represented the 49% ownership of Hainan Kylin.

B. | Liquidity and Capital Resources

The following table presents a summary of our cash flows and beginning and ending cash balances for the years ended December 31, 2020, 2021 and 2022:

RMB (‘000) |  | 2020 |  |  | 2021 |  |  | 2022 |
Net cash used in operating activities |  |  | (313 | ) |  |  | (8,123 | ) |  |  | (15,452 | )
Net cash generated from / (used in) investing activities |  |  | 2,739 |  |  |  | (1,279 | ) |  |  | (10,490 | )
Net cash generated from financing activities |  |  | 1,335 |  |  |  | 24,397 |  |  |  | 2,272 |
Net cash flow |  |  | 3,761 |  |  |  | 14,995 |  |  |  | (23,670 | )
Cash and cash equivalents at beginning of year |  |  | 8,212 |  |  |  | 12,344 |  |  |  | 27,880 |
Effect of foreign exchange rate differences |  |  | 371 |  |  |  | 541 |  |  |  | 32 |
Cash and cash equivalents at end of year |  |  | 12,344 |  |  |  | 27,880 |  |  |  | 4,242 |

We have historically financed our liquidity requirements mainly through operating cash flow, bank loans and issuance of new shares. We believe that we will generate sufficient cash from operations to meet our needs for the next twelve months.

However, we may sell additional equity or obtain credit facilities to enhance our liquidity position or to increase our cash reserve for future acquisitions and capital equipment expenditures. The sale of additional equity would result in further dilution of our equity to our shareholders. The incurrence in indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot provide assurance that financing will be available in amounts or on terms acceptable to us, if at all.

Cash flows from operating activities.

Our net cash used in operating activities was RMB 15.5 million (US$ 2.3 million) for the year ended December 31, 2022, an increase of RMB 7.3 million as compared to a cash outflow of RMB 8.1 million for the year ended December 31, 2021. The increase of cash outflow was mainly due to an increase in cash outflow on unearned revenue of RMB 31.1 million, an increase in cash outflow on accrued liabilities and other payable of RMB 4.8 million and decreased cash inflow from trade payables of RMB 2.1million, which were partly offset by an increase of cash inflow from inventories of RMB 9.7 million, a decrease in cash outflow from other receivable and prepayments of RMB 19.0 million, and a decrease in operating cash outflow before working capital changes of RMB 1.4 million. Also, there was cash inflow from operating activities of RMB 5.0 million and RMB 3.3 million from our discontinued operations.

Our net cash used in operating activities was RMB 8.1 million (US$ 1.3 million) for the year ended December 31, 2021, an increase of RMB 7.8 million as compared to a cash outflow of RMB 0.3 million for the year ended December 31, 2020. The increase in cash outflow was mainly due to an increase in operating cash outflow before working capital changes of RMB 17.2 million, an increase in cash outflow on trade receivables of RMB 0.8 million, an increase in cash outflow on other receivables and prepayments of RMB 21.1 million and increased cash outflow on taxes payable of RMB 4.7 million, which was partly offset by an increase in cash inflow from inventories of RMB 4.5 million, a decrease in cash out flow on unearned revenue of RMB 16.2 million and a decrease in cash outflow from trade payables of RMB 15.4 million.

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Cash flows from investing activities.

Net cash used in investing activities for the year ended December 31, 2022 was RMB 10.5 million (US$ 1.6 million), compared to a cash outflow of RMB 1.3 million for the year ended December 31, 2021. The increase in cash outflow was mainly due to the increase in restricted cash and increase in available-for-sale financial asset.

Net cash used in investing activities for the year ended December 31, 2021 was RMB 1.3 million (US$ 0.2 million), compared to cash inflow of RMB 2.7 million for the year ended December 31, 2020. The increase of cash outflow was mainly due to the purchase of fixed assets in 2021, while we had cash inflow from the release of restricted cash in 2020.

Cash flows from financing activities.

Net cash generated from financing activities was RMB 2.3 million (US$ 0.3 million) for the year ended December 31, 2022, compared to RMB 24.4 million for the year ended December 31, 2021, primarily due to a decrease in the issuance of share capital by RMB 23.9 million and the decrease in proceeds from warrants exercised of RMB 10.3 million for the year ended December 31, 2022, which was partly offset by an increase in capital contribution from noncontrolling interest of RMB 2.5 million and an increase in proceeds from a promissory note of RMB 8.8 million. For the years ended December 31, 2022 and 2021, net cash used in financing activities includes a cash outflow of RMB 14.3 million (US$ 2.1 million) and RMB 14.3 million from our discontinued operations.

Net cash generated from financing activities was RMB 24.4 million (US$ 3.8 million) for the year ended December 31, 2021, compared to a cash inflow of RMB 1.3 million for the year ended December 31, 2020, primarily due to an increase in the issuance of share capital of RMB 13.5 million and proceeds from warrants exercised of RMB 10.3 million for the year ended December 31, 2021, which was partly offset by an increase in a payment for a lease liability by RMB 0.6 million and a decrease in an advance from related parties of RMB 0.1 million.

Cash and bank balances were RMB 3.9 million (US$ 0.6 million) as of December 31, 2022, as compared to RMB 27.9 million as of December 31, 2021.

As of December 31, 2022, our total outstanding bank loan amounts were nil.

Operating lease commitments totaled RMB 485,000 (US$ 70,318) as of December 31, 2022. Operating lease commitments totaled RMB 46.7 million (US$ 7.3 million) as of December 31, 2021.

There were no commitments for advertising and insurance expenditure as of December 31, 2022.

In our opinion, our working capital, including our cash, income and cash flows from operations, and short-term borrowings, is sufficient for our present requirements.

However, we may sell additional equity or obtain credit facilities to enhance our liquidity position or to increase our cash reserve for future acquisitions and capital equipment expenditures. The sale of additional equity would result in further dilution of our equity to our shareholders. The incurrence in indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot provide assurance that financing will be available in amounts or on terms acceptable to us, if at all.

Inventory Management

Our inventory is comprised of raw materials, work in progress and finished goods. Raw materials are purchased from our suppliers located in Fujian, Guangdong and Jiangxi Provinces and comprise mainly of clay, coal, colorings and glazing materials.

We have sufficient raw materials to support, on average, three weeks of production at any point in time. This helps to minimize any potential delays in our production process which may arise due to insufficient raw materials. Our production of ceramic tiles is based on customers’ orders. In doing so, we minimize storage space and maintain a relatively low inventory level of finished products. Our inventory turnover of discontinue operations for the years ended December 31, 2022, 2021 and 2020 are as follows:

|  | 2020 |  |  | 2021 |  |  | 2022 |
Inventories (RMB’000) |  |  | 52,201 |  |  |  | 31,589 |  |  |  | 28,749 |
Inventory turnover (days) (1) |  |  | 190 |  |  |  | 183 |  |  |  | 267 |

(1) | The average inventory turnover is computed based on the formula: (simple average opening and closing inventories balance in a financial year / cost of sales) × 365 days.

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The write-down of inventory of discontinue operations for the years ended December 31, 2022, 2021 and 2020 was a reversal of write-down RMB 4.0 million, a reversal of write-down RMB 99.2 million in 2021 and a reversal of write-down RMB 2.3 million in 2020, and was charged to Cost of Sales.

Credit Management

Credit terms to our customers

We typically extend credit terms of approximately 90 days to our customers. We grant credit terms based on the reputation, creditworthiness, size of orders, payment records and number of years we have done business with the customer. We do not have a products’ return policy. In the year ended December 31, 2022 and 2021, we recorded a reversal of RMB 2.8 million (US$ 0.4 million) and RMB 10.1 million (US$1.6 million), respectively, for provision for bad debt related to the amount of outstanding trade receivables that did not conform with the Company’s credit policy. For the years ended December 31, 2022 and 2021, the Company recorded a reversal of RMB 74.9 million (US$ 11.1 million) and bad debt expense of RMB 115.4 million (US$ 17.9 million) from our discontinue operations.

Personnel from our sales and marketing department typically conduct visits to new customers to evaluate their credit worthiness before entering into any arrangements with them. In addition, as Hengda was awarded a Top 500 Brand award, we increased the deposit required from new distributors from RMB 0.4 million to RMB 1.0 million.

Our average trade receivables’ turnover for sales of tile products in discontinued operations for the years ended December 31, 2022, 2021 and 2020 are as follows:

|  | 2020 |  |  | 2021 |  |  | 2022 |
Trade receivables (RMB’000) |  |  | 101,470 |  |  |  | 51,335 |  |  |  | 11,683 |
Trade receivables turnover (days) (1) |  |  | 242 |  |  |  | 168 |  |  |  | 265 |

Our average trade receivables’ turnover for livestreaming ecommerce for the years ended December 31, 2022, 2021 and 2020 are as follows:

|  | 2020 |  |  | 2021 |  |  | 2022 |
Trade receivables (RMB’000) |  |  | — |  |  |  | 81 |  |  |  | — |
Trade receivables turnover (days) (1) |  |  | — |  |  |  | 11 |  |  |  | — |

(1) | The average trade payables’ turnover is computed based on the formula: (simple average opening and closing trade payables balance, net of value-added tax in facial year / purchases) × 365 days.

Credit terms from our suppliers

Our typical credit terms from our major suppliers are from 1 to 4 months after the raw materials have been delivered. Our average trade payables’ turnover for sales of tile products in discontinued operations for the years ended December 31, 2022, 2021 and 2020 are as follows:

|  | 2020 |  |  | 2021 |  |  | 2022 |
Trade payables (RMB’000) |  |  | 6,750 |  |  |  | 3,673 |  |  |  | — |
Trade payables turnover (days) (1) |  |  | 22 |  |  |  | 20 |  |  |  | — |

Our average trade payables’ turnover for our livestreaming ecommerce for the years ended December 31, 2022, 2021 and 2020 are as follows:

|  | 2020 |  |  | 2021 |  |  | 2022 |
Trade payables (RMB’000) |  |  | — |  |  |  | 2,617 |  |  |  | 3,079 |
Trade payables turnover (days) (1) |  |  | — |  |  |  | 7 |  |  |  | 3 |

(1) | The average trade payables’ turnover is computed based on the formula: (simple average opening and closing trade payables balance, net of value-added tax in facial year / purchases) × 365 days.

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Capital Expenditures

Historically, our capital expenditures primarily consist of expenditures on property, plant and equipment. The capital expenditures for the fiscal year ended December 31, 2022 was RMB 22,000.

Contractual Obligations

Our contractual obligations consist mainly of debt obligations, operating lease obligations and other purchase obligations and commitments, and will be paid off with our cash flow from operations. The following table sets forth a breakdown of our contractual obligations (including both interest and principal cash flows) as of December 31, 2022:

|  | Payment Due by Period |
|  |  |  |  | Less than 1 |  |  | 1-3 |  |  | 3-5 |  |  | More than 5 |
|  | Total |  |  | year |  |  | years |  |  | years |  |  | years |
Short-term debt obligations |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Operating lease obligations (2) |  |  | 495 |  |  |  | 350 |  |  |  | 145 |  |  |  | — |  |  |  | — |
Promissory note (3) |  |  | 8,775 |  |  |  | — |  |  |  | 8,775 |  |  |  | — |  |  |  | — |
Total |  |  | 9,270 |  |  |  | 350 |  |  |  | 8,920 |  |  |  | — |  |  |  | — |

Off-Balance Sheet Arrangements

We do not have any outstanding off-balance arrangements and have not entered into any transactions that are established for the purpose of facilitating off-balance sheet arrangements.

Impact of Inflation

The general annual inflation rate in China was approximately 0.9% in 2021, and 2.0% in 2022 according to the National Bureau of Statistics. Our results of operations may be affected by inflation, particularly rising prices for energy, labor costs, raw materials and other operating costs. See “Item 3. Key Information — Risk Factors — Risks relating to our business. If China’s inflation increases or the prices of energy or raw materials increase, we may not be able to pass the resulting increased costs to our customers and this may adversely affect our profitability or cause us to suffer operating losses.”

FINANCIAL RISK MANAGEMENT

We are exposed to financial risks arising from our operations and the use of financial instruments. The key financial risks included credit risk, liquidity risk, interest rate risk, foreign currency risk and market price risk.

We do not hold or issue derivative financial instruments for trading purposes or to hedge against fluctuations, if any, in interest rates and foreign exchange rates.

| (i) | Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to us. Our exposure to credit risk arises primarily from bank balances and trade receivables. For trade receivables, we adopt the policy of dealing only with customers of appropriate credit history to mitigate credit risk. For other financial assets, we adopt the policy of dealing only with high credit quality counterparties.

As we do not hold any collateral, the maximum exposure to credit risk for each class of financial assets is the carrying amount of that class of financial assets presented on the consolidated statements of financial position.

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Cash and bank balances

Our bank deposits are placed with reputable banks in the PRC, Hong Kong and the United States. The credit exposure of our cash and bank balances (excluding restricted cash) as of December 31, 2020, 2021 and 2022 were RMB 12,344,000 and RMB 27,880,000 and RMB 3,936,000, respectively.

| (ii) | Liquidity risk

Liquidity risk is the risk that we will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value.

Our exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. Our objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.

The table below summarizes the maturity profile of the liabilities based on contractual undiscounted payments:

|  | As of December 31, 2022 |
|  |  |  |  | More than 1 |  |  |  |
|  |  |  |  | year but less |  |  |  |
|  | Within 1 year |  |  | than 5 years |  |  | Total |
|  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |
Trade payables |  |  | 3,079 |  |  |  | — |  |  |  | 3,079 |
Amounts owed to related parties |  |  | 1,291 |  |  |  | — |  |  |  | 1,291 |
Note payable |  |  | — |  |  |  | 8,775 |  |  |  | 8,775 |
Lease liabilities |  |  | 349 |  |  |  | 146 |  |  |  | 496 |
Total |  |  | 4,719 |  |  |  | 8,921 |  |  |  | 13,641 |

| (iii) | Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of our financial instruments will fluctuate because of changes in market interest rates.

Our interest-bearing bank deposits and borrowings were nil as of December 31, 2022.

| (iv) | Foreign currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Currency risk arises when transactions are denominated in foreign currencies.

Our operations are primarily conducted in the PRC. All the sales and purchases transactions are denominated in RMB. As such, our operations are not exposed to exchange rate fluctuation.

As of December 31, 2020, 2021 and 2022, nearly all of our monetary assets and monetary liabilities were denominated in RMB except certain bank balances and other payables which were denominated in US dollars and HKD.

C. | Research and development, patents and licenses, etc.

We focus our research and development efforts on developing innovative Kylin-Cloud service platform.

Costs associated with research activities are expensed in profit or loss as they incur. Costs that are directly attributable to development activities are recognized as intangible assets if, and only if, all of the following have been demonstrated:

| (i) | the technical feasibility of completing the intangible asset so that the asset will be available for use or sale;

| (ii) | the intention to complete the intangible asset and use or sell it;

| (iii) | the ability to use or sell the intangible asset;

| (iv) | how the intangible asset will generate probable future economic benefits;

| (v) | the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

| (vi) | the ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognized for internally generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally generated intangible asset can be recognized, development expenditure is recognized in profit or loss in the period in which it is incurred.

Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

Gains and losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in profit or loss when the asset is derecognized.

D. | Trend information.

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2022 to December 31, 2022 that are reasonably likely to have a material effect on our net revenue, income, profitability, liquidity or capital resources, or that would cause the reported financial information not necessarily to be indicative of future operating results or financial conditions.

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Critical Accounting Policies and Judgment

The preparation of the condensed consolidated interim financial statements, which have been prepared in accordance with International Accounting Standard (“IAS”) as issued by the International Accounting Standards Board (“IASB”), requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Estimates and judgments are continually evaluated and are based on historical experiences and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may materially differ from these estimates under different assumptions or conditions.

See Note 2 to our consolidated financial statements, “Basis of Preparation and Summary of Significant Accounting Policies.”

Inventories

Inventories are carried at the lower of cost and net realizable value. Cost is determined using the weighted average basis, and in the case of work in progress and finished goods, comprises direct materials, direct labor and an appropriate proportion of overhead.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and applicable selling expenses.

When inventories are sold, the carrying amount of those inventories is recognized as an expense in the period in which the related revenue is recognized. The amount of any write-down of inventories to net realizable value and all losses of inventories are recognized as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories is recognized as a reduction in the amount of inventories recognized as an expense in the period in which the reversal occurs.

Financial instruments

Financial assets and financial liabilities are recognized when a group entity becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value except for trade debtors arising from contracts with customers which are initially measured in accordance with HKFRS 15 since 1 January 2018. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets or liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

The effective interest method is a method of calculating the amortized cost of a financial asset or financial liability and of allocating interest income and interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts and payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset or financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Interest income which are derived from the Company’s ordinary course of business are presented as revenue.

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Financial assets

Classification and subsequent measurement of financial assets (upon application of IFRS 9)

Financial assets that meet the following conditions are subsequently measured at amortized cost:

● the financial asset is held within a business model whose objective is to collect contractual cash flows; and

● the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

All other financial assets are subsequently measured at fair value through profit or loss (“FVTPL”).

A financial asset is classified as held for trading if:

● it has been acquired principally for the purpose of selling in the near term; or

● on initial recognition it is a part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or

● it is a derivative that is not designated and effective as a hedging instrument.

In addition, the Company may irrevocably designate a financial asset that are required to be measured at the amortized cost as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch.

| (i) | Amortized cost and interest income

Interest income is recognized using the effective interest method for financial assets measured subsequently at amortized cost. Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired. For financial assets that have subsequently become credit-impaired, interest income is recognized by applying the effective interest rate to the amortized cost of the financial asset from the next reporting period. If the credit risk on the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired, interest income is recognized by applying the effective interest rate to the gross carrying amount of the financial asset from the beginning of the reporting period following the determination that the asset is no longer credit impaired.

| (ii) | Financial assets at FVTPL

Financial assets that do not meet the criteria for being measured at amortized cost are measured at FVTPL.

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognized in profit or loss. The net gain or loss recognized in profit or loss includes any dividend or interest earned on the financial asset and is included in the “other gains and losses” line item.

Impairment of financial assets (upon application IFRS 9)

The Company recognizes a loss allowance for expected credit loss (“ECL”) on financial assets which are subject to impairment under IFRS 9 (including trade and other receivables, bank deposits and bank balances). ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition.

General approach

ECLs are recognized in two measurement bases. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

At each reporting date, the Company assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information that is available without undue cost or effort, including historical and forward looking information.

The Company considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

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Financial assets at amortized cost are subject to impairment under the general approach and they are classified within the following stages for measurement of ECLs except for trade receivables which apply the simplified approach as detailed below.

Stage 1 — Financial instruments for which credit risk has not increased significantly since initial recognition and for which the loss allowance is measured at an amount equal to 12-month ECLs

Stage 2 — Financial instruments for which credit risk has increased significantly since initial recognition but that are not credit-impaired financial assets and for which the loss allowance is measured at an amount equal to lifetime ECLs

Stage 3 — Financial assets that are credit-impaired at the reporting date (but that are not purchased or originated credit-impaired) and for which the loss allowance is measured at an amount equal to lifetime ECLs

Simplified approach

For trade receivables that do not contain a significant financing component or when the Company applies the practical expedient of not adjusting the effect of a significant financing component, the Company applies the simplified approach in calculating ECLs. Under the simplified approach, the Company does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date.

The Company assesses at the end of each reporting period whether there is any objective evidence that a financial asset or a group of financial assets is impaired. An impairment exists if one or more events that occurred after the initial recognition of the asset have an impact on the estimated future cash flows of the financial asset or the Company of financial assets that can be reliably estimated. Evidence of impairment may include indications that a debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortized cost

For financial assets carried at amortized cost, the Company first assesses whether impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Company determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognized are not included in a collective assessment of impairment.

The amount of any impairment loss identified is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate (i.e., the effective interest rate computed at initial recognition).

The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognized in profit or loss. Interest income continues to be accrued on the reduced carrying amount using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. Loans and receivables together with any associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realized or has been transferred to the Company.

If, in a subsequent period, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is credited to other expenses in the statement of profit or loss.

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Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are initially recognized at fair value. Subsequent to initial recognition, loans and receivables (including trade and other receivables, pledged bank deposits, fixed bank deposits with maturity periods over three months and bank balances) are measured at amortized cost using the effective interest method, less any identified impairment losses).

Impairment of financial assets

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial assets have been affected.

Objective evidence of impairment could include:

● significant financial difficulty of the issuer or counterparty; or

● breach of contract, such as a default or delinquency in interest or principal payments; or

● it becoming probable that the borrower will enter bankruptcy or financial re-organization; or disappearance of an active market for that financial asset because of financial difficulties.

If any such evidence exists, the impairment loss on trade receivables and other current receivables and other financial assets carried at amortized cost is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition of these assets), where the effect of discounting is material. This assessment is made collectively where these financial assets share similar risk characteristics, such as similar past due status, and have not been individually assessed as impaired. Future cash flows for financial assets which are assessed for impairment collectively are based on historical loss experience for assets with credit risk characteristics similar to the collective group.

If in a subsequent period the amount of an impairment loss decreases and the decrease can be linked objectively to an event occurring after the impairment loss was recognized, the impairment loss is reversed through profit or loss. A reversal of an impairment loss shall not result in the asset’s carrying amount exceeding that which would have been determined had no impairment loss been recognized in prior years.

Impairment losses are written off against the corresponding assets directly, except for impairment losses recognized in respect of trade receivables included within trade and other receivables and prepayments, whose recovery is considered doubtful, but not remote. In this case, the impairment losses for doubtful debts are recorded using an allowance account. When the Company is satisfied that recovery is remote, the amount considered irrecoverable is written off against trade debtors directly and any amounts held in the allowance account relating to that debt are reversed. Subsequent recoveries of amounts previously charged to the allowance account are reversed against the allowance account. Other changes in the allowance account and subsequent recoveries of amounts previously written off directly are recognized in profit or loss.

Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and recognizes a collateralized borrowing for the proceeds received.

On derecognition of a financial asset measured at amortized cost, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.

Financial liabilities and equity instruments

Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

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Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.

Effective interest method

The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Interest expense is recognized on an effective interest basis.

Financial liabilities

Interest-bearing borrowings are recognized initially at fair value less attributable transaction costs. They are subsequently stated at amortized cost with any difference between the amount initially recognized and redemption value being recognized in profit or loss over the period of the borrowings, together with any interest and fees payable, using the effective interest method.

Trade and other payables are initially recognized at fair value. They are subsequently stated at amortized cost unless the effect of discounting would be immaterial, in which case they are stated at cost.

Derecognition

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire.

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss.

The Company derecognizes a financial liability when, and only when, the Company’s obligations are discharged, cancelled or expire. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

Derivative financial instruments

Initial recognition and subsequent measurement

We use derivative financial instruments, such as forward currency contracts, for investment purposes. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss.

Leases

Financial leases refers to the situation that the economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards of ownership of the leased asset.

All other leases are treated as operating leases. Where we have the right to use of assets held under operating leases, payments made under the leases are charged to profit or loss on a straight line basis over the lease terms except where an alternative basis is more representative of the time pattern of benefits to be derived from the leased assets. Lease incentives received are recognized in profit or loss as an integral part of the aggregate net lease payments made. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred. Operating leases were treated in accordance to IFRS 16 commencing January 1, 2019.

All of our leases are operating leases for the years ended December 31, 2022, 2021 and 2020.

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Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods, net of rebates and discounts. No such rebates were paid to distributors since year 2013. Provided it is probable that the economic benefits will flow to us and the revenue and costs, if applicable, can be measured reliably, revenue is recognized as follows:

| ● | Sales of goods are recognized upon transfer of the significant risks and rewards of ownership to the customer. This is usually taken as the time when the goods are delivered and the customer has accepted the goods. Once goods are accepted by a customer, there is no continuing management involvement with the goods and we do not have the obligation to accept the return of the goods to us from the customer. Consulting service and livestreaming ecommerce service are recognized upon providing of the services to customers.
| ● | Rental income is recognized based upon our annual rental over the life of the lease under operating lease, using the straight-line method.
| ● | Interest income is recognized on a time-proportion basis using the effective interest method.

Impairment of non-financial assets

Impairment testing is made on our goodwill at each reporting date. Property, plant and equipment and land use rights are tested for impairment if there is any indication that the assets may be impaired at the balance sheet date.

If any indication exists, or when annual impairment testing for an asset is required, we estimate the asset’s recoverable amount.

Calculation of recoverable amount

An asset’s recoverable amount is the greater of an asset’s or cash-generating unit’s fair value less costs of disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).

Recognition of impairment losses

An impairment loss is recognized in profit or loss whenever the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to that cash-generating unit (or group of units), and then, to reduce on a pro rata basis the carrying amount of the other assets in the unit (or group of units), except that the carrying amount of an asset will not be reduced below its individual fair value less costs of disposal (if measurable) or value in use (if determinable).

Reversal of impairment losses

In respect of assets other than goodwill, an impairment loss is reversed if there has been a favorable change in the estimates used to determine the recoverable amount. An impairment loss in respect to goodwill is not reversed.

A reversal of an impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognized in prior years. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognized.

Share-based employee remuneration

We operate equity-settled share-based remuneration plans for its employees. None of our plans feature any options for a cash settlement.

The fair value of share options granted to employees is recognized as an employee cost with a corresponding increase in the share-based payment reserve within equity. The fair value is measured at the grant date using the Black Scholes Option Pricing Model, taking into account the terms and conditions upon which the options were granted. Where the employees have to meet vesting conditions before becoming unconditionally entitled to the share options, the total estimated fair value of the share options is spread over the vesting period, taking into account the probability that the options will vest.

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During the vesting period, the number of share options expected to vest is reviewed. Any resulting adjustment to the cumulative fair value recognized in prior years is charged/credited to the profit or loss for the year under review, unless the original employee expenses qualify for recognition as an asset, with a corresponding adjustment to the share-based payment reserve. On the vesting date, the amount recognized as an expense is adjusted to reflect the actual number of share options that vest (with a corresponding adjustment to the share-based payment reserve) except where forfeiture is only due to not achieving vesting conditions that relate to the market price of our shares. The equity amount is recognized in the share-based payment reserve until either the option is exercised (when it is transferred to the share premium account) or the option expires (when it is released directly to retained earnings).

Accounting for income taxes

Income tax comprises current tax and deferred tax.

Current tax and movements in deferred tax assets and liabilities are recognized in profit or loss except to the extent that they relate to items recognized in other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognized in other comprehensive income or directly in equity, respectively.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.

Deferred tax is calculated using the liability method on temporary differences at the reporting date between the carrying amounts of assets and liabilities in the financial statements and their respective tax bases. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences, tax losses available to be carried forward as well as other unused tax credits, to the extent that it is probable that taxable profit, including existing taxable temporary differences, will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilized.

Deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither taxable nor accounting profit or loss.

Deferred tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries, associates and joint ventures, except where we are able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax is calculated, without discounting, at tax rates that are expected to apply in the period the liability is settled or the asset realized, based on tax rate (and tax laws) that have been enacted or substantively enacted at the reporting date.

The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the related tax benefit to be utilized. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be available.

Additional income taxes that arise from the distribution of dividends are recognized when the liability to pay the related dividends is recognized.

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Current tax assets and current tax liabilities are presented in net if we have the legally enforceable right to set off the recognized amounts and the following additional conditions are met:

| a) | in the case of current tax assets and liabilities, we intend either to settle on a net basis, or to realize the asset and settle the liability simultaneously; or
| b) | in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation authority on either:

| (i) | the same taxable entity; or
| (ii) | different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered, intend either to settle current tax liabilities and realize the current tax assets on a net basis, or to settle the liabilities and realize the assets simultaneously.

E. | Critical accounting estimates and assumptions

We make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The key sources of estimation uncertainty and key assumptions concerning the future at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Useful lives and impairment assessment of property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and identified impairment losses. The estimation of useful lives impacts the level of annual depreciation expenses recorded. Property, plant and equipment are evaluated for possible impairment on a specific asset basis or in groups of similar assets, as applicable. This process requires management’s estimate of future cash flows generated by each asset or group of assets. For any instance where this evaluation process indicates impairment, the relevant asset’s carrying amount is written down to the recoverable amount and the amount of the write-down is charged against profit or loss.

Useful lives and impairment assessment of investment property

Investment properties are stated at cost less accumulated depreciation and identified impairment losses. The estimation of useful lives impacts the level of annual depreciation expenses recorded. Investment properties are evaluated for possible impairment on a specific asset basis or in groups of similar assets, as applicable. This process requires management’s estimate of future cash flows generated by each asset or group of assets. For any instance where this evaluation process indicates impairment, the relevant asset’s carrying amount is written down to the recoverable amount and the amount of the write-down is charged against profit or loss.

Impairment loss recognized in respect of property, plant and equipment

As of December 31, 2022, the carrying amount of property, plant and equipment was approximately RMB 1,006,000 (2021: RMB 1,250,000). No impairment loss was recognized in 2022 and 2021. Determining whether property, plant and equipment are impaired requires an estimation of the recoverable amount of the property, plant and equipment. Such an estimate was based on certain assumptions which are subject to uncertainty and might materially differ from the actual results.

Impairment loss recognized in respect of investment property

As of December 31, 2022, the carrying amount of investment property was nil (2021: nil). No impairment loss was recognized in 2022 and 2021. Determining whether an investment property is impaired requires an estimate of the recoverable amount of the investment property. Such an estimate was based on certain assumptions which are subject to uncertainty and might materially differ from the actual results.

Impairment loss recognized in respect of land use rights

As of December 31, 2022, the carrying amounts of land used rights was nil (2021: nil). No impairment loss were recognized against the original carrying amount of land use rights in fiscal 2022 and 2021, respectively. Determining whether land use rights are impaired requires an estimate of the recoverable amount of the land use rights. Such an estimate was based on certain assumptions which are subject to uncertainty and might materially differ from the actual results.

Income tax

The Company has exposure to income taxes in the PRC. Significant judgment is required in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognizes liabilities for expected tax issues based on estimates of whether additional taxes will be due. When the final tax outcome of these matters is different from the amounts that were initially recognized, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

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Impairment of financial assets (trade receivables)

The Company recognizes a loss allowance for expected credit loss (“ECL”) on financial assets which are subject to impairment under IFRS 9 (including trade and other receivables, amounts due from related parties, restricted cash, bank balances and cash). The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition.

Lifetime ECL represents the ECL that will result from all possible default events over the expected life of the relevant instrument. In contrast, 12-month ECL (“12m ECL”) represents the portion of lifetime ECL that is expected to result from default events that are possible within 12 months after the reporting date. Assessment are done based on the Company’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current conditions at the reporting date as well as the forecast of future conditions.

The Company applies the IFRS 9 simplified approach to measure ECL which uses a lifetime ECL for all trade receivables. The ECL on these assets are assessed individually for debtors with significant balances and/or collectively using a provision matrix with appropriate groupings.

For all other instruments, the Company measures the loss allowance equal to 12m ECL, unless when there has been a significant increase in credit risk since initial recognition, the Company recognizes lifetime ECL. The assessment of whether lifetime ECL should be recognized is based on significant increases in the likelihood or risk of a default occurring since initial recognition.

The Company recognized bad debts reversal of RMB 4.3 million and bad debts expense of RMB 10.4 million in the years ended December 31, 2022 and 2021, respectively. The Company’s discontinued operation recognized bad debts reversal of RMB 74.9 million and bad debts expense of RMB 115.4 million for the years ended December 31, 2022 and 2021.

Net realizable value of inventories

Net realizable value of inventories is management’s estimate of future selling price in the ordinary course of business, less estimated costs of completion and selling expenses. These estimates are based on current market conditions and the historical experience of selling products of a similar nature and could change significantly as a result of various market factors.

Share-based payment transaction

The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the stock option, volatility and dividend yield, and the assumptions as to these components.

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ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

| A. | Directors and senior management

Our current directors and executive officers are:

Name |  | Age |  | Position
Weilai (Will) Zhang |  | 49 |  | Chair of the Board and Chief Executive Officer
Hen Man Edmund |  | 49 |  | Chief Financial Officer
Dian Zhang (1)(2)(3)(4) |  | 38 |  | Director
Ishak Han(1)(2)(3) |  | 35 |  | Director
Huashu Yuan (1)(2)(3) |  | 26 |  | Director
Song Chungen (1)(2)(3) |  | 46 |  | Director
Tingting Zhang |  | 28 |  | Executive Director and Corporate Secretary
Qiguo Wang |  | 45 |  | Executive Director

(1) | Member of audit committee

(2) | Member of compensation committee

(3) | Member of nominations committee

(4) | Audit committee financial expert

Mr. Zhang has served as our Chief Executive Officer since January 2023 and joined our Board in February 2023. From 2011 to 2020, he acted as the Chairman of Huitong Tianxia Investment Ltd., an investment company. Since 2020, Mr. Zhang has acted as the chariman of Jinke Yulv Technology Co., Ltd., which is an International Technology firm in China. Mr. Zhang completed the course and obtained a Diploma in Capital and M&A Entrepreneurship from Fudan University in 2021, and a Diploma in Finance and Capital Investment from Southwest University in Finance and Economics in 2014.

Hen Man Edmund has served as our Chief Financial Officer since November 20, 2009. Mr. Hen is responsible for the corporate finance function and oversees matters relating to compliance and reporting obligation of our company. Prior to joining us, Mr. Hen was a Financial Controller of a switchgear manufacturer in Sichuan PRC and was responsible for the corporate finance function of the company. Prior to that, Mr. Hen was the accountant of Dickson Concepts (International) Ltd., a public listed company in Hong Kong and oversaw the accounting and financial administration of the company. He also worked at a variety of international accountancy firms, including Deloitte Touche Tohmatsu, in assurance and advisory services during the period from 1995 to 2001. Mr. Hen graduated from the University of East Anglia, United Kingdom, with a Bachelor’s Degree in Science in 1995. He is a member of the Institute of Chartered Accountants in England and Wales and a member of the Hong Kong Institute of Certified Public Accountants.

Mr. Dian Zhang joined our Board in November 2022. Mr. Dian Zhang is currently Chief Financial Officer of Baiya International Group Inc., an SaaS (software as a service) platform company in China. Previously, Mr. Zhang worked at Eaton Square from 2014 to 2020, an M&A advisory firm, where he was responsible for investments in new ventures and their financing in the Chinese market. Previous to that, Mr. Zhang worked at the Chengdu branch of ShineWing Certified Public Accountants from 2009 to 2013 where his responsibilities included the auditing of annual reports of publicly listed companies and due diligence for IPO projects. Mr. Zhang holds a Bachelor’s degree in Management Accounting from Aston University, a Master’s degree in Banking and Finance from Monash University, and a Master’s degree in Financial Management from the Australian National University.

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Mr. Ishak Han joined our Board in November 2022. Mr. Han is the General Manager of Shenzhen Baisifu Industrial Co., Ltd., which engages in property management and leasing, management services for catering businesses, and enterprise management consulting. Having founded the firm in 2017, Mr. Han developed Shenzhen Baisifu Industrial Co., Ltd.’s marketing strategy, management policies, financial budgeting, and corporate planning activities. From 2011 to 2016, Mr. Han was the General Manager of Shenzhen Baisi Technology Co., Ltd. which engages in the development of self-service website application systems, the training and development of online ventures, online marketing training, and e-commerce product consignments. As the founder of Shenzhen Baisi Technology Co., Ltd., Mr. Han oversaw its financial budgeting and corporate planning functions, and was responsible for its overall marketing strategy. Mr. Han graduated with a higher degree diploma in marketing from Guangdong Open University in 2021.

Song Chungen joined our Board in November 2019 as an independent member of the Board as well as a member of Audit, Compensation and Nominating Committees, to fill the vacancy following Liu Jun’s resignation. From 2009 to present, Song Chungen has been a practicing lawyer at Guangdong Weihao Law firm. He obtained his law license in May 2003, and in November 2009, he obtained Securities Qualification in China. Song Chungen holds a Bachelor’s degree in Law from Sun Yat Sen University (2007).

Ms. Huashu Yuan joined our Board in March 2023. Ms. Yuan has been the marketing specialist of Vesta living corp. since March 2022. Ms. Yuan served as an outside consultant providing marketing advice to the Company from June 2021 to February 2023. Ms. Yuan served as the marketing manager for American Tianfu-Wenhui Publishing Company from March 2021 to February 2022. Ms. Yuan worked at Strands Haircare Inc. as a social media intern from October 2020 to February 2021. Ms. Yuan obtained her Master’s degree in Emerging Media Studies from Boston University in 2020 and obtained her Bachelor’s degree in Communication Science and Rhetoric Studies from University of Wisconsin-Madison in 2019.

Ms. Tingting Zhang joined our Board in October 2022. Ms. Zhang joined China Mobile’s digital content subsidiary Migo Co Ltd in 2021 at its Xiamen headquarters as the manager of its post-production department. Her current responsibilities include video production of programs including the 2022 Winter Olympics, the Golden Rooster Award and other large-scale China award productions. Previous to that, from 2018 to 2021, Ms. Zhang worked as a multimedia designer at 4399 Networks Ltd., where she was responsible for media productions. Ms. Zhang graduated with a Bachelor’s degree in Design from Asia University Taiwan.

Mr. Qiguo Wang joined our Board in November 2022. Mr. Wang is currently General Manager of Chengdu Zhongbo Industry Research Technology Development Co., Ltd., having joined the institute in 2018, where he is focused on the promotion of scientific and technological products and commercial transformations, as well as investment planning services for the industrial park. Previously, Mr. Wang was Executive Director of Chengdu Zhongbo Future Technology Research Institute Co., Ltd. from 2018 to 2020, where he led the investment team to fund projects through the company’s incubation platform. Previous to that, Mr. Wang was General Manager of Shanghai Shenghui Performing Arts Development Co., Ltd. from 2007 to 2015, where he managed large-scale conferences, volunteer activities and other events. Mr. Wang graduated with a Bachelor’s degree in Information Security and Network Management from PLA Institute of Electronic Engineering.

There are no family relationships among our directors or officers.

The business address of each party described above is Room 1802, Block D, Zhonghai International Center, Hi-Tech Zone, Chengdu, Sichuan Province, PRC.

| B. | Compensation

Compensation Committee Interlocks and Insider Participation

No member of our compensation committee has at any time been our officer or employee, or our subsidiaries. No interlocking relationship exists between our board of directors or compensation committee and the board of directors or compensation committee of any other company, nor has any interlocking relationship existed in the past.

During the last fiscal year, none of our officers and employees, and none of our former officers participated in deliberations of our Board of Directors concerning executive officer compensation.

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Director Compensation

The following table sets forth all of the compensation paid by us or our significant subsidiaries in 2022 to each of our non-employee directors for such person’s service as a director (including contingent or deferred compensation accrued during 2022):

|  |  |  |  | Value of |  |  |  |
|  | Compensation |  |  | Options (1) |  |  |  |
Name and Principal Position |  | RMB |  |  | RMB |  |  | Total RMB |
Song Chungen |  |  | 559,071 |  |  |  | — |  |  |  | 559,071 |
Roy Tan Choon Kang |  |  | 290,286 |  |  |  | — |  |  |  | 290,286 |
Alex Ng Man Shek |  |  | 978,000 |  |  |  | — |  |  |  | 978,000 |
Shen Cheng Liang |  |  | — |  |  |  | — |  |  |  | — |

(1) | No options were granted to our directors in 2021.

Executive Officers

The following table sets forth all of the compensation paid by us or our significant subsidiaries in 2022 to each of our officers for such person’s service as an officer (including contingent or deferred compensation accrued during 2022, but not including any amounts paid to such persons for their services as directors):

|  |  |  |  |  |  |  | Value of Stock |  |  |  |
|  | Salary |  |  | Bonus |  |  | Compensation (2) |  |  | Total |
Name and Principal Position (1) |  | RMB |  |  | RMB |  |  | RMB |  |  | RMB |
Huang Meishuang, CEO |  |  | 56,917 |  |  |  | — |  |  |  | 1,261,775 |  |  |  | 1,318,692 |
Hen Man Edmund, CFO |  |  | 579,208 |  |  |  | — |  |  |  | 573,534 |  |  |  | 1,152,742 |

(1) | No options were granted to our executives in 2021.

(2) | Stock Compensation were granted to our Chief Executive Officer and Chief Financial Officer in 2021.

Retirement Benefits

As of December 31, 2022, we have contributed to the government-mandated employee welfare and retirement benefit plan and provided pension, retirement or similar benefits to its employees. The PRC regulations require us to pay the local labor administration bureau a monthly contribution at a stated contribution rate based on the monthly basic compensation of qualified employees. The local labor administration bureau, which manages various investment funds, will take care of employee retirement, medical and other fringe benefits. We have no further commitments beyond our monthly contribution.

Employment Agreements

We entered into employment agreements with the following officers: Weilai Zhang, CEO and Hen Man Edmund, CFO,

| ● | The term of the employment agreements is three years (January 5, 2023 to January 4, 2026 for Weilai Zhang), three years (October 1, 2022 to September 30, 2025 for Hen Man Edmund).

| ● | From October 1, 2022, Hen Man Edmund received compensation of RMB 61,074 (HKD 70,200) per month.

| ● | We may dismiss any of the above officers if any of the following events occurs with respect to the officer: (1) failure to show up for work, (2) failure to provide required documents, (3) falsification of documents, criminal record, etc., (4) serious violation of such officers’ labor rules and of regulations, (5) serious lapse of duties and responsibilities, (6) activities that violate regulations, resulting in loss of more than RMB 4,000, (7) operation of his own business during the term of his employment, (8) criminal prosecution and labor punishment, (9) request by the officer to resign, (10) causing us to sign or change any contract through fraud, coercion and other fraudulent means, or (11) other situations stipulated by law and statutes.

| ● | Each officer is subject to the non-compete provisions of the agreement for a period of three years following termination of the employment agreement and non-solicitation provisions of the agreement for a period of two years following termination of the employment agreement.

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Other Employees

Compensation for our senior executives is comprised of four elements: a base salary, an annual performance bonus, equity and benefits.

In developing salary ranges, potential bonus payouts, equity awards and benefit plans, it is anticipated that our compensation committee takes into account: 1) competitive compensation among comparable companies and for similar positions in the market, 2) relevant ways to incentivize and reward senior management for improving shareholder value while building a successful company, 3) individual performance, 4) how best to retain key executives, 5) the overall performance of us and our various key component entities, 6) our ability to pay and 7) other factors deemed to be relevant at the time.

Our senior management have discussed our above-mentioned planned process for executive compensation and the four compensation components. Specific compensation plans for our key executives are negotiated and established by our compensation committee.

We have not entered into any service contracts with any of our officers, directors or employees that contain any provisions for benefits upon termination of employment.

Antelope Enterprise Holdings Limited 2022 Equity Compensation Plan

On September 29, 2022, the Board of Directors of the Company (the “Board”) approved the 2022 Equity Compensation Plan (the “Plan”) is to attract and retain outstanding individuals as employees, directors and consultants of the Company and its subsidiaries, to recognize the contributions made to the Company and its Subsidiaries by such individuals and to provide them with additional incentive to expand and improve the profits and achieve the objectives of the Company

The Plan is administered by the Board. The Board, in its sole discretion, will determine the eligible individuals to whom, and the time or times at which awards will be granted, the form and amount of each award, the expiration date of each award, the time or times within which the awards may be exercised, the cancellation of the awards and the other limitations, restrictions, terms and conditions applicable to the grant of the awards.

The total number of shares that may be issued under the Plan is (i) initially 600,000 Class A ordinary shares; and (ii) will increase annually on the first day of each calendar year beginning January 1, 2023 and ending on and including January 1, 2031, equal to the lesser of (A) 3% of the aggregate number of shares of Common Stock outstanding on the final day of the immediately preceding calendar year and (B) such smaller number of Shares as is determined by the Board., subject to adjustments in the event of any reorganization, recapitalization, share split, distribution, merger, consolidation, split-up, spin-off, combination, subdivision, consolidation or exchange of shares, any change in the capital structure of the Company or any similar corporate transaction. The Board may, in its discretion, (a) grant shares under the Plan to any participant without consideration from such Participant or (b) sell shares under the Plan to any participant for such amount of cash, shares or other consideration as the Board deems appropriate. Notwithstanding any of the provisions of the Plan or any outstanding award agreement, upon a Change in Control of the Company, the Board is authorized and has sole discretion to provide that all restrictions applicable to all awards shall terminate or lapse in order that Participants may fully realize the benefits thereunder. Awards granted under the Plan, and any rights and privileges pertaining thereto, may not be transferred, assigned, pledged or hypothecated in any manner, or be subject to execution, attachment or similar process, by operation of law or otherwise, other than by will or by the laws of descent and distribution. The Board may terminate, suspend, or amend the Plan, in whole or in part, from time to time. The Board also has the authority to amend any award agreement at any time.

The Company has filed a Form S-8 (File No. 333-267671) to register the 2022 Equity Compensation Plan and has issued 444,837 Class A ordinary shares pursuant to this S-8 as of the date of this annual report.

C. Board Practices

The term of each director is until their resignation or removal.

Our board of directors has established an audit committee, a compensation committee and a governance and nominating committee.

Audit Committee. The audit committee consists of Dian Zhang (Chair and the Audit Committee financial expert), Huashu Yuan and Song Chungen.

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The board of directors has adopted an audit committee charter, providing for the following responsibilities of the audit committee:

| ● | appointing and replacing our independent auditors and pre-approving all auditing and permitted non-auditing services to be performed by the independent auditors;

| ● | reviewing and discussing the annual audited financial statements with management and the independent auditors;

| ● | annually reviewing and reassessing the adequacy of our audit committee charter;

| ● | such other matters that are specifically delegated to our audit committee by our board of directors from time to time;

| ● | meeting separately and periodically with management, the internal auditors and the independent auditors; and

| ● | reporting regularly to the board of directors.

A copy of the audit committee charter is available on our website at http://aehltd.com/Corporate-Governance.html. The information contained on our website is not a part of this Annual Report.

Compensation Committee. Our compensation committee consists of Huashu Yuan (Chair), Ishak Han, Song Chungen and Dian Zhang. Our board of directors adopted a compensation committee charter, providing for the following responsibilities of the compensation committee:

| ● | reviewing and making recommendations to the board regarding our compensation policies and forms of compensation provided to our directors and officers;

| ● | reviewing and making recommendations to the board regarding bonuses for our officers and other employees;

| ● | administering our incentive-compensation plans for our directors and officers;

| ● | reviewing and assessing the adequacy of the charter annually;

| ● | administering our share option plans, if they are established in the future, in accordance with the terms thereof; and

| ● | such other matters that are specifically delegated to the compensation committee by our board of directors from time to time.

A copy of the compensation committee charter is available on our website at http://aehltd.com/Corporate-Governance.html. The information contained on our website is not a part of this Annual Report.

Governance and Nominating Committee. Our governance and nominating committee consists Huashu Yuan (Chair), Ishak Han, Song Chungen and Dian Zhang. Our board of directors adopted a governance and nominating committee charter, providing for the following responsibilities of the governance and nominating committee:

| ● | overseeing the process by which individuals may be nominated to our board of directors;

| ● | identifying potential directors and making recommendations as to the size, functions and composition of our board of directors and its committees;

| ● | reviewing candidates proposed by our shareholders;

| ● | developing the criteria and qualifications for the selection of potential directors; and

| ● | making recommendations to the board of directors on new candidates for board membership.

A copy of the governance and nominating committee charter is available on our website at http://www.aehl-kylin.com/. The information contained on our website is not a part of this Annual Report.

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In making nominations, the governance and nominating committee is required to submit candidates who have the highest personal and professional integrity, who have demonstrated exceptional ability and judgment and who shall be most effective, in conjunction with the other nominees to the board, in collectively serving the long-term interests of the shareholders. In evaluating nominees, the governance and nominating committee is required to take into consideration the following attributes, which are desirable for a member of the board: leadership, independence, interpersonal skills, financial acumen, business experiences, industry knowledge, and diversity of viewpoints.

Code of Ethics

In May 2010, our board of directors adopted a code of ethics that applies to our directors, officers and employees. Our code of ethics is available on our website at http://aehltd.com/Corporate-Governance.html.

Director Independence

Our Board is subject to the independence requirements of the Nasdaq Stock Market (“Nasdaq”). The Board undertakes periodic reviews of director independence. During this review, the Board considers transactions and relationships between each director or any member of his immediate family, the Company and its affiliates to determine whether any such relationships or transactions exist that are inconsistent with a determination that the director is independent. Our Board has determined that all current members of the Audit Committee, the Compensation Committee and the Nominating and Governance Committee (Song Chungen, Roy Tan Choon Kang, and Shen Cheng Liang) are ‘‘independent” in accordance with the Nasdaq independence requirements. Our Chairman and Chief Executive Officer does not serve on any of the Board committees. The majority of the Board is comprised of independent directors. The Board based these determinations primarily on a review of the responses of the directors and executive officers to questions regarding employment and transaction history, affiliations and family and other relationships and on discussions with the directors and the fact that no director previously reported a change in circumstances that could affect his independence.

Board Diversity

The table below provides certain information regarding the diversity of our board of directors as of the date of this annual report.

Board Diversity Matrix
Country of Principal Executive Offices: | China
Foreign Private Issuer | Yes
Disclosure Prohibited under Home Country Law | No
Total Number of Directors | 7
| Female | Male | Non- Binary | Did Not Disclose Gender
Part I: Gender Identity |
Directors | 2 | 5 | 0 | 0
Part II: Demographic Background |
Underrepresented Individual in Home Country Jurisdiction | 0
LGBTQ+ | 0
Did Not Disclose Demographic Background | 0

| D. | Employees

The table below provides information as to the total number of employees at the end of the last three fiscal years. We have no contracts or collective bargaining agreements with labor unions and have never experienced work stoppages due to labor dispute. We consider our relations with our employees to be good.

|  | 2020 |  |  | 2021 |  |  | 2022 |
Number of Employees |  |  | 297 |  |  |  | 236 |  |  |  | 63 |

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| E. | Share Ownership

See Item 7 below.

| F. | Disclosure of a registrant’s action to recover erroneously awarded compensation

None.

ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

| A. | Major shareholders

The following table sets forth certain information regarding beneficial ownership of our shares by each person who is known by us to beneficially own more than 5% of our shares. The table also identifies the share ownership of each of our directors, each of our named executive officers, and all directors and officers as a group. Except as otherwise indicated, the shareholders listed in the table have sole voting and investment powers with respect to the shares indicated. Our major shareholders do not have different voting rights than any other holder of our shares.

Shares which an individual or group has a right to acquire within 60 days pursuant to the exercise or conversion of options, warrants or other similar convertible or derivative securities are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table.

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting and investment power. Except as otherwise indicated below, each beneficial owner holds voting and investment power directly. The percentage of ownership is based on 17,992,693 Class A ordinary shares and 977,755 Class B ordinary shares issued and outstanding as of April 27, 2023.

|  | Class A Ordinary Shares |  |  | % |  |  | Class B Ordinary Shares |  |  | % |  |  | % of Total Voting Power (1) |
Directors and Executive Officers: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Weilai (Will) Zhang (2) |  |  | 461,739 |  |  |  | 2.57 | % |  |  | 977,755 |  |  |  | 100.00 | % |  |  | 53.31 | %
Hen Man Edmund |  |  | 37,355 |  |  |  | * |  |  |  | - |  |  |  | - |  |  |  | * |
Ishak Han |  |  | 1,325,000 |  |  |  | 7.36 | % |  |  | - |  |  |  | - |  |  |  | 3.53 | %
Song Chungen |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Dian Zhang |  |  | 10,000 |  |  |  | * |  |  |  | - |  |  |  | - |  |  |  | * |
Huashu Yuan |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Tingting Zhang |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Qiguo Wang |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
All directors and executive officers as a group (8 individuals) |  |  | 1,798,851 |  |  |  | 10.19 | % |  |  | 977,755 |  |  |  | 100.00 | % |  |  | 56.97 | %
5% Shareholders |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Wisdom Asset Management Inc. (3) |  |  | 1,234,568 |  |  |  | 6.86 | % |  |  | - |  |  |  | - |  |  |  | 3.29 | %
Invine Indeed LLC (4) |  |  | 1,136,364 |  |  |  | 6.32 | % |  |  | - |  |  |  | - |  |  |  | 3.03 | %
Multiplying Hundreds LLC(4) |  |  | 1,136,364 |  |  |  | 6.32 | % |  |  | - |  |  |  | - |  |  |  | 3.03 | %
Mustard Seeding LLC(4) |  |  | 1,136,364 |  |  |  | 6.32 | % |  |  | - |  |  |  | - |  |  |  | 3.03 | %
The Beatitudes In All LLC(4) |  |  | 1,136,364 |  |  |  | 6.32 | % |  |  | - |  |  |  | - |  |  |  | 3.03 | %
Zion Rock LLC(4) |  |  | 1,136,364 |  |  |  | 6.32 | % |  |  | - |  |  |  | - |  |  |  | 3.03 | %

* | Less than 1%

Unless otherwise indicated, the business address of each of the individuals is Room 1802, Block D, Zhonghai International Center, Hi-Tech Zone, Chengdu, Sichuan Province, PRC.

(1) Each Class A ordinary share is entitled to one (1) vote, and each Class B ordinary share is entitled to twenty (20) votes.

(2) The mailing address for this individual is 2302 Bldg. 2 Renheng, Binhewan No. 88, Jinjiang District, Chengdu, China.

(3) The business address for Wisdom Asset Management Inc. is 1600 Broadway, APT 6G, New York, NY 10019/

(4) The business address for Invine Indeed LLC, Multiplying Hundreds LLC, Mustard Seeding LLC, The Beatitudes In All LLC, Zion Rock LLC is 7901 4th St N Ste 300, St Petersburg, FL 33702. These five entities are under common control of one beneficial owner, Mr. Gordon Hu.

| B. | Related Party Transactions

During the year ended December 31, 2022, the Company incurred a total of RMB 2,847,000 in consultancy fees to Anhui Zhongjun Enterprise Management Co., Ltd. (“Anhui Zhongjun”), of which the whole amount were expensed during the year. During the year ended December 31, 2022, the Company received a total of RMB 2,635,000 in cash from Anhui Zhongjun for the provision of business management services. The Company completed all performance obligations pertaining to the RMB 2,635,000 received and recognized revenue of RMB 2,486,000, net of PRC value-added tax of RMB 149,000. The director of Anhui Zhongjun, Zhang Yonghong is also a director of the Company’s subsidiary, Chengdu Future Talented Management and Consulting Co., Ltd.

During the year ended December 31, 2021, the Company paid a total of RMB 8,840,000 in consultancy fees to Anhui Zhongjun Enterprise Management Co., Ltd. (“Anhui Zhongjun”); of the RMB 8,840,000 total consultancy fees, RMB 5,993,000 were expensed during the year. The remaining RMB 2,847,000 was recorded under prepayments under current assets as of December 31, 2021. During the year ended December 31, 2022, the Company expensed the remaining RMB 2,847,000 prepayment. During the year ended December 31, 2022, the Company received a total of RMB 2,486,000 from Anhui Zhongjun for the provision of business management services. The Company completed all performance obligations pertaining to the RMB 2,635,000 received and recognized revenue of RMB 2,486,000, net of PRC value-added tax of RMB 149,000. During the year ended December 31, 2021, the Company received a total of RMB 1,460,000 from Anhui Zhongjun for the provision of business management services. The Company completed all performance obligations pertaining to the RMB 1,460,000 received and recognized revenue of RMB 1,378,000, net of PRC value-added tax of RMB 82,000.

The director of Anhui Zhongjun, Zhang Yonghong, is also a director of the Company’s subsidiary, Chengdu Future Talented Management and Consulting Co., Ltd.

During the year ended December 31, 2021, the Company incurred a total of RMB 36,929,000 in cost of revenue to Lianjie (Hainan)Technology Co., Ltd. (“Lianjie”). The Company paid RMB 34,364,000 to Lianjie for the cost of revenue incurred. As of December 31, 2021, the Company had trade accounts payable of RMB nil due to Lianjie. Lin Yufeng, a director of the Company’s subsidiary, Hainan Kylin Cloud Services Technology Co., Ltd., was a significant shareholder of Lianjie from September 22, 2021 until November 19, 2021. Lin Yufeng was no longer a significant shareholder of Lianjie during the year ended December 31, 2022, and thus Lianjie was no longer a related party of the Company.

| C. | Interests of Experts and Counsel

Not required.

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ITEM 8. | FINANCIAL INFORMATION

| A. | Consolidated Statements and Other Financial Information.

See Item 18 for our audited consolidated financial statements.

Legal Proceedings

From time to time in the ordinary course of our business, we may be involved in legal proceedings, the outcomes of which may not be determinable. The results of litigation are inherently unpredictable. Any claims against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time and result in diversion of significant resources. We are not able to estimate an aggregate amount or range of reasonably possible losses for those legal matters for which losses are not probable and estimable, primarily for the following reasons: (i) many of the relevant legal proceedings are in preliminary stages, and until such proceedings develop further, there is often uncertainty regarding the relevant facts and circumstances at issue and potential liability; and (ii) many of these proceedings involve matters of which the outcomes are inherently difficult to predict. We have insurance policies covering potential losses where such coverage is cost effective.

We are not at this time involved in any legal proceedings.

Dividend Policy

Our Board of Directors has discretion to pay dividends. The form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that our Board of Directors may deem relevant. Although we have paid dividends in the past, there is no assurance that we will continue to pay dividends in the future.

On February 25, 2014, we announced two semi-annual cash dividends of $0.0125 per share. The first dividend of $0.0125 per share was paid on July 14, 2014 and the second of $0.0125 per share was paid on January 14, 2015, with record dates of June 13, 2014 and December 12, 2014, respectively. No dividends were paid subsequent to January 14, 2015. The Company does not anticipate paying dividends in the near future.

We are a holding company incorporated in the British Virgin Islands operating our business through our subsidiaries in China. As a holding company, we may rely on dividends and other distributions on equity paid by our subsidiary in Hong Kong, and the subsidiaries in China, for our cash and financing requirements. The payment of dividends to Antelope Enterprises by our Chinese subsidiaries is affected by means of dividends by those entities to their Hong Kong direct parent and a redividend by that Hong Kong entity to Antelope Enterprises. Such dividends are effected by resolution of the board of directors of each such entity (after provision for applicable tax obligations). China is a foreign exchange administration country. Capital injections, cross-border trade and services transactions settled in foreign exchange, overseas financing and profit repatriations are subject to the foreign exchange administration regulations. A Chinese subsidiary owned by foreign company must apply for registration of foreign exchange with the SAFE after the issuance of a business license and obtain a foreign exchange registration certificate. When the Chinese subsidiaries apply for repatriating dividends to foreign shareholders, it must submit the application form to SAFE with the proof that such dividends have been subjected to all applicable tax withholding. A Chinese subsidiary can only distribute dividends out of its accumulated profits, which means that any accumulated losses must be more than offset by its profits in other years, including the current year. Please refer to “Item 4 Information on the Company – History and Development of the Company - Cash Transfers Within Our Organization” for more information.

| B. | Significant Changes

Except as disclosed elsewhere in this Annual Report, we have not experienced any significant changes since the date of our audited consolidated financial statements included in this Annual Report.

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ITEM 9. | THE OFFER AND LISTING

| A. | Offer and Listing Details

Our Class A ordinary shares are listed on the Nasdaq Capital Market under the symbol “AEHL”.

B. Plan of Distribution

Not Applicable.

| C. | Markets

Our Class A ordinary shares are listed on the NASDAQ Capital Market since October 15, 2020 under the symbol “AEHL”.

Previously, our shares had been listed on the NASDAQ Stock Market under the symbol “CCCL” since January 18, 2011. Our shares were listed on the NASDAQ Capital Market from November 3, 2010 through January 17, 2011 and were relisted on the NASDAQ Capital Market on March 23, 2016 following the listing transfer where it is trading now under the same symbol “CCCL.” Our shares were listed on the NASDAQ Global Market from January 18, 2011 until March 22, 2016.

Our shares were previously quoted on the OTC Bulletin Board from December 29, 2009 through November 2, 2010. Prior to December 29, 2009, our shares were traded on NYSE Amex, under the symbols “HOL” and “CHAC”. CHAC’s shares commenced to trade on December 17, 2007.

| D. | Selling Shareholders

Not Applicable.

| E. | Dilution

Not Applicable.

| F. | Expenses of the Issue

Not Applicable.

ITEM 10. | ADDITIONAL INFORMATION

| A. | Share Capital

Not Applicable.

| B. | Memorandum and Articles of Association

We incorporate by reference into this annual report the description of our amended and restated memorandum and articles of association and the description of differences in corporate laws, Exhibits 1.1 and 2.3.

| C. | Material Contracts

We have not entered into any material contracts other than in the ordinary course of business and other than those described in “Item 4. Information on the Company,” “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions,” or elsewhere in this annual report on Form 20-F.

| D. | Exchange controls

Under British Virgin Islands law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends, interest or other payments to nonresident holders of our shares.

| E. | Taxation

The following summary of the material PRC and U.S. federal income tax consequences of the acquisition, ownership and disposition of Antelope Enterprises shares, sometimes referred to as “securities,” is based upon laws and relevant interpretations thereof in effect as of the date of this Annual Report, all of which are subject to change. This summary does not deal with all possible tax consequences relating to an investment in Antelope Enterprises’ securities, such as the tax consequences under state, local and other tax laws. For purposes of this discussion, references to “Antelope Enterprises,” “we,” “us” or “our” refer only to Antelope Enterprises Co., Ltd.

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PRC Taxation

The following discussion summarizes the material PRC income tax considerations relating to the acquisition, ownership and disposition of Antelope Enterprises’ securities. You should consult with your own tax adviser regarding the PRC tax consequences of the acquisition, ownership and disposition of Antelope Enterprises’ securities.

Resident Enterprise Treatment

On March 16, 2007, the Fifth Session of the Tenth National People’s Congress passed the Enterprise Income Tax Law of the PRC (“EIT Law”), which became effective on January 1, 2008. Under the EIT Law, enterprises are classified as “resident enterprises” and “non-resident enterprises.” Pursuant to the EIT Law and its implementing rules, enterprises established outside China whose “de facto management bodies” are located in China are considered “resident enterprises” and subject to the uniform 25% enterprise income tax rate on their worldwide taxable income. According to the implementing rules of the EIT Law, “de facto management body” refers to a managing body that in practice exercises overall management control over the production and business, personnel, accounting and assets of an enterprise.

On April 22, 2009, the State Administration of Taxation issued the Notice on the Issues Regarding Recognition of Enterprises that are Domestically Controlled as PRC Resident Enterprises Based on the De Facto Management Body Criteria, which was retroactively effective as of January 1, 2008. This notice provides that an overseas incorporated enterprise that is controlled by PRC domestic companies will be recognized as a “tax-resident enterprise” if it satisfies all of the following conditions: (i) the senior management responsible for daily production/business operations are primarily located in the PRC, and the location(s) where such senior management execute their responsibilities are primarily in the PRC; (ii) strategic financial and personnel decisions are made or approved by organizations or personnel located in the PRC; (iii) major properties, accounting ledgers, company seals and minutes of board meetings and stockholder meetings, etc., are maintained in the PRC; and (iv) 50% or more of the board members with voting rights or senior management habitually reside in the PRC.

Given the short history of the EIT Law and lack of applicable legal precedent, it remains unclear how the PRC tax authorities will determine the resident enterprise status of a company organized under the laws of a foreign (non-PRC) jurisdiction, such as Antelope Enterprises, Success Winner and Stand Best. If the PRC tax authorities determine that Antelope Enterprises, Success Winner and/or Stand Best is a “resident enterprise” under the EIT Law, a number of tax consequences could follow. First, Antelope Enterprises, Success Winner and/or Stand Best could be subject to the enterprise income tax at a rate of 25% on their worldwide taxable income, as well as PRC enterprise income tax reporting obligations. Second, the EIT Law provides that dividend income between “qualified resident enterprises” is exempt from income tax. As a result, if Antelope Enterprises, Success Winner and Stand Best are each treated as a “qualified resident enterprise,” all dividends paid from Hengda to Antelope Enterprises, through Success Winner and Stand Best, should be exempt from the PRC enterprise income tax.

As of the date of this Annual Report, there has not been a definitive determination by Antelope Enterprises, Success Winner, Stand Best or the PRC tax authorities as to the “resident enterprise” or “non-resident enterprise” status of Antelope Enterprises, Success Winner and Stand Best. However, since it is not anticipated that Antelope Enterprises, Success Winner and/or Stand Best would receive dividends or generate other income in the near future, Antelope Enterprises, Success Winner and Stand Best are not expected to have any income that would be subject to the 25% enterprise income tax on worldwide taxable income in the near future. Antelope Enterprises, Success Winner and Stand Best will make any necessary tax payment if Antelope Enterprises, Success Winner or Stand Best (based on future clarifying guidance issued by the PRC), or the PRC tax authorities, determine that Antelope Enterprises, Success Winner or Stand Best is a resident enterprise under the EIT Law, and if Antelope Enterprises, Success Winner or Stand Best were to have income in the future.

Dividends From Hengda

If Stand Best is not treated as a resident enterprise under the EIT Law, then dividends that Stand Best receives from Hengda may be subject to PRC withholding tax. The EIT Law and the implementing rules of the EIT Law provide that (A) an income tax rate of 25% will normally be applicable to investors that are “non-resident enterprises” which (i) have an establishment or place of business inside the PRC, and (ii) have income in connection with their establishment or place of business that is sourced from the PRC or is earned outside the PRC but has an actual connection with their establishment or place of business inside the PRC, and (B) a PRC withholding tax at a rate of 10% will normally be applicable to dividends payable to non-resident enterprises that (i) do not have an establishment or place of business in the PRC or (ii) have an establishment or place of business in the PRC, but the relevant income is not effectively connected with such establishment or place of business, to the extent such dividends are derived from sources within the PRC.

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As described above, the PRC tax authorities may determine the resident enterprise status of entities organized under the laws of foreign jurisdictions on a case-by-case basis. Antelope Enterprises, Success Winner and Stand Best are holding companies and substantially all of Antelope Enterprises’, Success Winner’s and Stand Best’s income may be derived from dividends. Thus, if Antelope Enterprises, Success Winner and/or Stand Best are considered a “non-resident enterprise” under the EIT Law and the dividends paid to Antelope Enterprises, Success Winner and/or Stand Best are considered income sourced within the PRC, such dividends received may be subject to PRC withholding tax as described in the foregoing paragraph.

The State Council of the PRC or a tax treaty between China and the jurisdiction in which the non-resident enterprise resides may reduce such income or withholding tax, with respect to a non-resident enterprise. Pursuant to the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the “PRC-Hong Kong Tax Treaty”), if the Hong Kong resident enterprise that is not deemed to be a conduit by the PRC tax authorities owns more than 25% of the equity interest in a PRC resident enterprise, the 10% PRC withholding tax on the dividends the Hong Kong resident enterprise receives from such PRC resident enterprise is reduced to 5%.

Antelope Enterprises is a British Virgin Islands holding company, and it has a British Virgin Islands subsidiary (Success Winner), which owns a 100% equity interest in a subsidiary in Hong Kong (Stand Best), which in turns owns a 100% equity interest in Hengda, a PRC company. As a result, if Stand Best were treated as a “non-resident enterprise” under the EIT Law, then dividends that Stand Best receives from Hengda (assuming such dividends were considered sourced within the PRC) (i) may be subject to a 5% PRC withholding tax, if the PRC-Hong Kong Tax Treaty were applicable, or (ii) if such treaty does not apply (i.e., because the PRC tax authorities may deem Stand Best to be a conduit that is not entitled to treaty benefits), may be subject to a 10% PRC withholding tax. Similarly, if Success Winner were treated as a PRC “non-resident enterprise” under the EIT Law and Stand Best were treated as a PRC “resident enterprise” under the EIT Law, then dividends that Success Winner receives from Stand Best (assuming such dividends were considered sourced within the PRC) may be subject to a 10% PRC withholding tax. A similar situation may arise if Antelope Enterprises were treated as a “non-resident enterprise” under the EIT Law, and Success Winner were treated as a “resident enterprise” under EIT Law. Any such taxes on dividends could materially reduce the amount of dividends, if any, Antelope Enterprises could pay to its shareholders.

As of the date of this Annual Report, there has not been a definitive determination by Antelope Enterprises, Success Winner, Stand Best or the PRC tax authorities as to the “resident enterprise” or “non-resident enterprise” status of Antelope Enterprises, Success Winner and Stand Best. As described above, however, Hengda, Stand Best and Success Winner are not expected to pay any dividends in the near future. Hengda, Stand Best and Success Winner will make any necessary tax withholding if, in the future, Hengda, Stand Best or Success Winner were to pay any dividends and Hengda, Stand Best or Success Winner (based on future clarifying guidance issued by the PRC), or the PRC tax authorities, determine that Stand Best, Success Winner or Antelope Enterprises is a non-resident enterprise under the EIT Law.

Dividends that Non-PRC Resident Investors Receive From Antelope Enterprises; Gain on the Sale or Transfer of Antelope Enterprises’ Securities

If we are determined to be a resident enterprise under the EIT Law and dividends payable to (or gains realized by) Antelope Enterprises’ investors that are not tax residents of the PRC (“non-resident investors”) are treated as income derived from sources within the PRC, then the dividends that the non-resident investors receive from us and any such gain derived by such investors on the sale or transfer of Antelope Enterprises’ securities may be subject to income tax under the PRC tax laws.

Under the PRC tax laws, PRC withholding tax at the rate of 10% is applicable to dividends payable to non-resident investors that are enterprises, but not individuals, and that (i) do not have an establishment or place of business in the PRC or (ii) have an establishment or place of business in the PRC but the relevant income is not effectively connected with the establishment or place of business, to the extent that such dividends are deemed to be sourced within the PRC. Similarly, any gain realized on the transfer of Antelope Enterprises’ securities by such investors also is subject to 10% PRC income tax if such gain is regarded as income derived from sources within the PRC.

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The dividends paid by us to such non-resident investors with respect to Antelope Enterprises’ securities, or gain such non-resident investors may realize from the sale or transfer of Antelope Enterprises’ securities, may be treated as PRC-sourced income and, as a result, may be subject to PRC tax at a rate of 10%. In such event, Antelope Enterprises may be required to withhold a 10% PRC tax on any dividends paid to such non-resident investors. In addition, such non-resident investors in Antelope Enterprises’ securities may be responsible for paying PRC tax at a rate of 10% on any gain realized from the sale or transfer of Antelope Enterprises’ securities if such non-resident investors and the gain satisfy the requirements under the PRC tax laws. However, under the PRC tax laws, Antelope Enterprises would not have an obligation to withhold PRC income tax in respect of the gains that such non-resident investors (including U.S. enterprise investors) may realize from the sale or transfer of Antelope Enterprises’ securities. Also, if Antelope Enterprises is determined to be a “resident enterprise,” its non-resident investors who are individuals may also be subject to potential PRC individual income tax at a rate of 20% with respect to dividends received from Antelope Enterprises and/or gains derived by them from the sale or transfer of Antelope Enterprises’ securities.

If Antelope Enterprises were to pay any dividends in the future, and if Antelope Enterprises (based on future clarifying guidance issued by the PRC), or the PRC tax authorities, determine that Antelope Enterprises must withhold PRC tax on any dividends payable by Antelope Enterprises under the PRC tax laws, Antelope Enterprises will make any necessary tax withholding on dividends payable to its non-resident investors. If non-resident investors as described under the PRC tax laws (including U.S. investors) realize any gain from the sale or transfer of Antelope Enterprises’ securities and if such gain were considered as PRC-sourced income, such non-resident investors would be responsible for paying the applicable PRC income tax on the gain from the sale or transfer of Antelope Enterprises’ securities. As indicated above, under the PRC tax laws, Antelope Enterprises would not have an obligation to withhold PRC income tax in respect of the gains that non-resident investors (including U.S. investors) may realize from the sale or transfer of Antelope Enterprises’ securities.

On December 10, 2009, the SAT released Circular Guoshuihan No. 698 (“Circular 698”) that reinforces the taxation of certain equity transfers by non-resident investors through overseas holding vehicles. Circular 698 addresses indirect equity transfers as well as other issues. Circular 698 is retroactively effective from January 1, 2008. According to Circular 698, where a non-resident investor who indirectly holds an equity interest in a PRC resident enterprise through a non-PRC offshore holding company indirectly transfers an equity interest in the PRC resident enterprise by selling an equity interest in the offshore holding company, and the latter is located in a country or jurisdiction where the actual tax burden is less than 12.5% or where the offshore income of its residents is not taxable, the non-resident investor is required to provide the PRC tax authority in charge of that PRC resident enterprise with certain relevant information within 30 days of the execution of the equity transfer agreement. The tax authorities in charge will evaluate the offshore transaction for tax purposes. In the event that the PRC tax authorities determine that such transfer is abusing forms of business organization and a reasonable commercial purpose for the offshore holding company other than the avoidance of PRC income tax liability is lacking, the PRC tax authorities will have the power to re-assess the nature of the equity transfer under the doctrine of substance over form. A reasonable commercial purpose may be established when the overall international (including U.S.) offshore structure is set up to comply with the requirements of supervising authorities of international (including U.S.) capital markets. If the SAT’s challenge of a transfer is successful, it may deny the existence of the offshore holding company that is used for tax planning purposes and subject the seller to PRC tax on the capital gain from such transfer. Since Circular 698 has a short history, there is uncertainty as to its application. Antelope Enterprises (or a non-resident investor) may become at risk of being taxed under Circular 698 and may be required to expend valuable resources to comply with Circular 698 or to establish that Antelope Enterprises (or such non-resident investor) should not be taxed under Circular 698, which could have a material adverse effect on Antelope Enterprises’ financial condition and results of operations (or such non-resident investor’s investment in Antelope Enterprises).

In addition, the PRC resident enterprise may be required to provide necessary assistance to support the enforcement of Circular 698.

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On February 3, 2015, the State Administration of Tax issued a Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-tax Resident Enterprise, or Public Notice 7. Public Notice 7 has introduced a new tax regime that is significantly different from that under Circular 698. Public Notice 7 extends its tax jurisdiction to not only indirect transfers set forth under Circular 698 but also transactions involving transfer of other taxable assets, through the offshore transfer of a foreign intermediate holding company. In addition, Public Notice 7 provides clearer criteria the Circular 698 on how to assess reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. Public Notice 7 also brings challenges to both the foreign transferor and transferee (or other person who is obligated to pay for the transfer) of the taxable assets. Where a non-resident enterprise conducts an “indirect transfer” by transferring the taxable assets indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise being the transferor, or the transferee, or the PRC entity which directly owned the taxable assets may report to the relevant tax authority such indirect transfer. Using a “substance over form” principle, the PRC tax authority may re-characterize such indirect transfer as a direct transfer of the equity interests in the PRC tax resident enterprise and other properties in China. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of up to 10% for the transfer of equity interests in a PRC resident enterprise. Both the transferor and the transferee may be subject to penalties under PRC tax laws if transferee fails to withhold the taxes and the transferor fails to pay the taxes.

We face uncertainties with respect to the reporting and consequences of private equity financing transactions, share exchange or other transactions involving the transfer of shares in our company by investors that are non-PRC resident enterprises, or sale or purchase of shares in other non-PRC resident companies or other taxable assets by us. Our company and other non-resident enterprises in our group may be subject to filing obligations or being taxed if our company and other non-resident enterprises in our group are transferors in such transactions, and may be subject to withholding obligations if our company and other non-resident enterprises in our group are transferees in such transactions, under Circular 698 and Public Notice 7. For the transfer of shares to our company by investors that are non-PRC resident enterprises, our PRC subsidiaries may be requested to assist in the filing under Circular 698 and Public Notice 7. As a result, we may be required to expend valuable resources to comply with Circular 698 and Public Notice 7 to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our company and other non-resident enterprises in our group should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.

The PRC tax authorities have the discretion under Circular 698 and Public Notice 7 to make adjustments to the taxable capital gains based on the difference between the fair value of the taxable assets transferred and the cost of investment. If the PRC tax authorities make adjustments to the taxable income of the transactions under Circular 698 and Public Notice 7, our income tax costs associated with such potential acquisitions will be increased, which may have an adverse effect on our financial condition and results of operations.

Penalties for Failure to Pay Applicable PRC Income Tax

A non-resident investor in us may be responsible for paying PRC tax on any gain realized from the sale or transfer of Antelope Enterprises’ securities if such non-resident investor and the gain satisfy the requirements under the PRC tax laws, as described above.

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According to the EIT Law and its implementing rules, the PRC Individual Income Tax Law and its implementing rules, the PRC Tax Administration Law (the “Tax Administration Law”) and its implementing rules, the Provisional Measures for the Administration of Withholding of Enterprise Income Tax for Non-resident Enterprises (the “Administration Measures”) and other applicable PRC laws or regulations (collectively the “Tax Related Laws”), where any gain derived by a non-resident investor from the sale or transfer of Antelope Enterprises’ securities is subject to any income tax in the PRC, and such non-resident investor fails to file any tax return or pay tax in this regard pursuant to the Tax Related Laws, such investor may be subject to certain fines, penalties or punishments, including without limitation: (1) if the non-resident investor fails to file a tax return and present the relevant information in connection with tax payments, the competent tax authorities shall order it to do so within the prescribed time limit and may impose a fine up to RMB 2,000, and in egregious cases, may impose a fine ranging from RMB 2,000 to RMB 10,000; (2) if the non-resident investor fails to file a tax return or fails to pay all or part of the amount of tax payable, the non-resident investor shall be required to pay the unpaid tax amount payable, a surcharge on overdue tax payments (the daily surcharge is 0.05% of the overdue amount, beginning from the day the deferral begins) and a fine ranging from 50% to 500% of the unpaid amount of the tax payable; (3) if the non-resident investor fails to file a tax return and to pay the tax within the prescribed time limit according to the order by the PRC tax authorities, the PRC tax authorities may collect and check information about the income receivable by the non-resident investor in the PRC from other payers (the “Other Payers”) who will pay amounts to such non-resident investor, and send a “Notice of Tax Issues” to the Other Payers to collect and recover the tax payable and overdue fines imposed on such non-resident investor from the amounts otherwise payable to such non-resident investor by the Other Payers; (4) if the non-resident investor fails to pay the tax payable within the prescribed time limit as ordered by the PRC tax authorities, a fine may be imposed on the non-resident investor ranging from 50% to 500% of the unpaid tax payable, and the PRC tax authorities may, upon approval by the director of the tax bureau (or sub-bureau) of, or higher than, the county level, take the following compulsory measures: (i) notify in writing the non-resident investor’s bank or other financial institution to withhold from the account thereof for payment of the amount of tax payable, and (ii) detain, seal off, or sell by auction or on the market the non-resident investor’s commodities, goods or other property in a value equivalent to the amount of tax payable; or (5) if the non-resident investor fails to pay all or part of the amount of tax payable or surcharge for overdue tax payment, and cannot provide a guarantee to the PRC tax authorities, the tax authorities may notify the frontier authorities to prevent the non-resident investor or its legal representative from leaving the PRC.

United States Federal Income Taxation

General

The following is a summary of the material U.S. federal income tax consequences of the acquisition, ownership and disposition of Antelope Enterprises’ securities.

The discussion below of the U.S. federal income tax consequences to “U.S. Holders” will apply to a beneficial owner of Antelope Enterprises’ securities that is for U.S. federal income tax purposes:

| ● | an individual citizen or resident of the United States;

| ● | a corporation (or other entity treated as a corporation) that is created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia;

| ● | an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or

| ● | a trust if (i) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or (ii) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

A beneficial owner of our securities that is described above is referred to herein as a “U.S. Holder.” If a beneficial owner of Antelope Enterprises’ securities is not described as a U.S. Holder and is not an entity treated as a partnership or other pass-through entity for U.S. federal income tax purposes, such owner will be considered a “Non-U.S. Holder.” The material U.S. federal income tax consequences applicable specifically to Non-U.S. Holders are described below under the heading “Non-U.S. Holders.”

This summary is based on the Internal Revenue Code of 1986, as amended, or the “Code,” its legislative history, Treasury regulations promulgated thereunder, published rulings and court decisions, all as currently in effect. These authorities are subject to change or differing interpretations, possibly on a retroactive basis.

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This discussion does not address all aspects of U.S. federal income taxation that may be relevant to any particular holder of Antelope Enterprises’ securities based on such holder’s individual circumstances. In particular, this discussion considers only holders that own and hold Antelope Enterprises’ securities as capital assets within the meaning of Section 1221 of the Code. This discussion also does not address the alternative minimum tax. In addition, this discussion does not address the U.S. federal income tax consequences to holders that are subject to special rules, including:

| ● | financial institutions or financial services entities;

| ● | broker-dealers;

| ● | persons that are subject to the mark-to-market accounting rules under Section 475 of the Code;

| ● | tax-exempt entities;

| ● | governments or agencies or instrumentalities thereof;

| ● | insurance companies;

| ● | regulated investment companies;

| ● | real estate investment trusts;

| ● | certain expatriates or former long-term residents of the United States;

| ● | persons that actually or constructively own 5% or more of Antelope Enterprises’ voting shares;

| ● | persons that acquired Antelope Enterprises’ securities pursuant to an exercise of employee share options, in connection with employee share incentive plans or otherwise as compensation;

| ● | persons that hold Antelope Enterprises’ securities as part of a straddle, constructive sale, hedging, conversion or other integrated transaction;

| ● | persons whose functional currency is not the U.S. dollar;

| ● | controlled foreign corporations; or

| ● | passive foreign investment companies.

This discussion does not address any aspect of U.S. federal non-income tax laws, such as gift or estate tax laws, or state, local or non-U.S. tax laws, or, except as discussed herein, any tax reporting obligations of a holder of Antelope Enterprises’ securities. Additionally, this discussion does not consider the tax treatment of partnerships or other pass-through entities or persons who hold Antelope Enterprises’ securities through such entities. If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of Antelope Enterprises’ securities, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. This discussion also assumes that any distribution made (or deemed made) in respect to the Antelope Enterprises’ securities and any consideration received (or deemed received) by a holder in connection with the sale or other disposition of such securities will be in U.S. dollars.

Antelope Enterprises has not sought, and will not seek, a ruling from the Internal Revenue Service, or “IRS,” or an opinion of counsel, as to any U.S. federal income tax consequence described herein. The IRS may disagree with the description herein, and its determination may be upheld by a court. Moreover, there can be no assurance that future legislation, regulations, administrative rulings or court decisions will not adversely affect the accuracy of the statements in this discussion.

U.S. Holders

Taxation of Cash Distributions Paid on Shares

Subject to the passive foreign investment company, or “PFIC,” rules discussed below, a U.S. Holder generally will be required to include in gross income as ordinary income the amount of any cash dividend paid on the shares of Antelope Enterprises. A cash distribution on such shares generally will be treated as a dividend for U.S. federal income tax purposes to the extent the distribution is paid out of current or accumulated earnings and profits of Antelope Enterprises (as determined for U.S. federal income tax purposes). Such dividend generally will not be eligible for the dividends received deduction generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations. The portion of such cash distribution, if any, in excess of such earnings and profits will be applied against and reduce (but not below zero) the U.S. Holder’s adjusted basis in its shares in Antelope Enterprises. Any remaining excess generally will be treated as gain from the sale or other taxable disposition of such shares.

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With respect to non-corporate U.S. Holders, such dividends may be subject to U.S. federal income tax at the lower applicable regular long-term capital gains tax rate (see “—Taxation on the Disposition of Securities” below) provided that (1) the shares of Antelope Enterprises are readily tradable on an established securities market in the United States or, in the event Antelope Enterprises is deemed to be a Chinese “resident enterprise” under the EIT Law, Antelope Enterprises is eligible for the benefits of the Agreement between the Government of the United States of America and the Government of the People’s Republic of China for the Avoidance of Double Taxation and the Prevention of Tax Evasion with Respect to Taxes on Income, or the “U.S.-PRC Tax Treaty,” (2) Antelope Enterprises is not a PFIC, as discussed below, for either the taxable year in which the dividend was paid or the preceding taxable year, and (3) certain holding period requirements are met. Under published IRS authority, shares are considered for purposes of clause (1) above to be readily tradable on an established securities market in the United States only if they are listed on certain exchanges, which presently include the NASDAQ Stock Market. Although Antelope Enterprises’ shares are currently listed and traded on the NASDAQ Stock Market, it cannot guarantee that its shares will continue to be listed or traded on the NASDAQ Stock Market. U.S. Holders should consult their own tax advisors regarding the availability of the lower rate for any dividends paid with respect to the shares of Antelope Enterprises.

If a PRC income tax applies to any cash dividends paid to a U.S. Holder on the shares of Antelope Enterprises, such tax may be treated as a foreign tax eligible for a deduction from such holder’s U.S. federal taxable income or a foreign tax credit against such holder’s U.S. federal income tax liability (subject to applicable conditions and limitations). In addition, if such PRC tax applies to such dividends, such U.S. Holder may be entitled to certain benefits under the U.S.-PRC Tax Treaty if such holder is considered a resident of the United States for purposes of, and otherwise meets the requirements of, the U.S.-PRC Tax Treaty. U.S. Holders should consult their own tax advisors regarding the deduction or credit for any such PRC tax and their eligibility for the benefits of the U.S.-PRC Tax Treaty.

Taxation on the Disposition of Securities

Upon a sale or other taxable disposition of the securities in Antelope Enterprises, and subject to the PFIC rules discussed below, a U.S. Holder generally will recognize capital gain or loss in an amount equal to the difference between the amount realized and the U.S. Holder’s adjusted tax basis in the securities.

The regular U.S. federal income tax rate on capital gains recognized by U.S. Holders generally is the same as the regular U.S. federal income tax rate on ordinary income, except that long-term capital gains recognized by non-corporate U.S. Holders are generally subject to U.S. federal income tax at a maximum regular rate of 20%. Capital gain or loss will constitute long-term capital gain or loss if the U.S. Holder’s holding period for the securities exceeds one year. The deductibility of capital losses is subject to various limitations.

If a PRC income tax applies to any gain from the disposition of the securities in Antelope Enterprises by a U.S. Holder, such tax may be treated as a foreign tax eligible for a deduction from such holder’s U.S. federal taxable income or a foreign tax credit against such holder’s U.S. federal income tax liability (subject to applicable conditions and limitations). In addition, if such PRC tax applies to any gain, such U.S. Holder may be entitled to certain benefits under the U.S.-PRC Tax Treaty if such holder is considered a resident of the United States for purposes of, and otherwise meets the requirements of, the U.S.-PRC Tax Treaty. U.S. Holders should consult their own tax advisors regarding the deduction or credit for any such PRC tax and their eligibility for the benefits of the U.S.-PRC Tax Treaty.

Additional Taxes

U.S. Holders that are individuals, estates or trusts and whose income exceeds certain thresholds generally will be subject to a 3.8% Medicare contribution tax on unearned income, including, without limitation, dividends on, and gains from the sale or other taxable disposition of, Antelope Enterprises’ securities, subject to certain limitations and exceptions. Under regulations, in the absence of a special election, such unearned income generally would not include income inclusions under the qualified electing fund, or QEF, rules discussed below under “ Passive Foreign Investment Company Rules,” but would include distributions of earnings and profits from a QEF. U.S. Holders should consult their own tax advisors regarding the effect, if any, of such tax on their ownership and disposition of Antelope Enterprises’ securities.

Passive Foreign Investment Company Rules

A foreign (i.e., non-U.S.) corporation will be a PFIC if at least 75% of its gross income in a taxable year of the foreign corporation, including its pro rata share of the gross income of any corporation in which it is considered to own at least 25% of the shares by value, is passive income. Alternatively, a foreign corporation will be a PFIC if at least 50% of its assets in a taxable year of the foreign corporation, ordinarily determined based on fair market value and averaged quarterly over the year, including its pro rata share of the assets of any corporation in which it is considered to own at least 25% of the shares by value, are held for the production of, or produce, passive income. Passive income generally includes dividends, interest, rents and royalties (other than certain rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets.

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Based on the composition (and estimated values) of the assets and the nature of the income of Antelope Enterprises and its subsidiaries during its 2022 taxable year, Antelope Enterprises does not believe that it was treated as a PFIC for such year. However, because Antelope Enterprises has not performed a definitive analysis as to its PFIC status for its 2015 taxable year, there can be no assurance in respect to its PFIC status for such year. There also can be no assurance with respect to Antelope Enterprises’ status as a PFIC for its current (2023) taxable year or any future taxable year.

If Antelope Enterprises is determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder of Antelope Enterprises’ shares and, the U.S. Holder did not make a timely QEF election for Antelope Enterprises’ first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) shares, a QEF election along with a purging election or a mark-to-market election, each as described below, such holder generally will be subject to special rules for regular U.S. federal income tax purposes with respect to:

| ● | any gain recognized by the U.S. Holder on the sale or other disposition of its shares; and

| ● | any “excess distribution” made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of the shares of Antelope Enterprises during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holder’s holding period for the shares).

Under these rules:

| ● | the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for the shares;

| ● | the amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the excess distribution or to the period in the U.S. Holder’s holding period before the first day of the first taxable year of Antelope Enterprises in which Antelope Enterprises qualified as a PFIC will be taxed as ordinary income;

| ● | the amount allocated to other taxable years (or portions thereof) of the U.S. Holder and included in its holding period will be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and

| ● | the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such other taxable year of the U.S. Holder.

In general, if we are determined to be a PFIC, a U.S. Holder may avoid the PFIC tax consequences described above in respect to its shares in Antelope Enterprises by making a timely QEF election (or a QEF election along with a purging election). Pursuant to the QEF election, a U.S. Holder generally will be required to include in income its pro rata share of Antelope Enterprises’ net capital gains (as long-term capital gain) and other earnings and profits (as ordinary income), on a current basis, in each case whether or not distributed, in the taxable year of the U.S. Holder in which or with which Antelope Enterprises’ taxable year ends if Antelope Enterprises is treated as a PFIC for that taxable year. A U.S. Holder may make a separate election to defer the payment of taxes on undistributed income inclusions under the QEF rules, but if deferred, any such taxes will be subject to an interest charge.

The QEF election is made on a shareholder-by-shareholder basis and, once made, can be revoked only with the consent of the IRS. A U.S. Holder generally makes a QEF election by attaching a completed IRS Form 8621 (Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund), including the information provided in a PFIC annual information statement, to a timely filed U.S. federal income tax return for the taxable year to which the election relates. Retroactive QEF elections generally may be made only by filing a protective statement with such return and if certain other conditions are met or with the consent of the IRS.

In order to comply with the requirements of a QEF election, a U.S. Holder must receive certain information from Antelope Enterprises. Upon request from a U.S. Holder, Antelope Enterprises will endeavor to provide to the U.S. Holder, no later than 90 days after the request, such information as the IRS may require, including a PFIC annual information statement, in order to enable the U.S. Holder to make and maintain a QEF election. However, there is no assurance that Antelope Enterprises will have timely knowledge of its status as a PFIC in the future or of the required information to be provided.

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If a U.S. Holder has made a QEF election with respect to its shares in Antelope Enterprises, and the special tax and interest charge rules do not apply to such shares (because of a timely QEF election for Antelope Enterprises’ first taxable year as a PFIC in which the U.S. Holder holds (or is deemed to hold) such shares or a QEF election, along with a purge of the PFIC taint pursuant to a purging election, as described below), any gain recognized on the sale or other taxable disposition of such shares generally will be taxable as capital gain and no interest charge will be imposed. As discussed above, for regular U.S. federal income tax purposes, U.S. Holders of a QEF generally are currently taxed on their pro rata shares of the QEF’s earnings and profits, whether or not distributed. In such case, a subsequent distribution of such earnings and profits that were previously included in income generally should not be taxable as a dividend to such U.S. Holders. The adjusted tax basis of a U.S. Holder’s shares in a QEF will be increased by amounts that are included in income, and decreased by amounts distributed but not taxed as dividends, under the above rules. Similar basis adjustments apply to property if by reason of holding such property the U.S. Holder is treated under the applicable attribution rules as owning shares in a QEF.

Although a determination as to Antelope Enterprises’ PFIC status will be made annually, an initial determination that it is a PFIC generally will apply for subsequent years to a U.S. Holder who held shares of Antelope Enterprises while it was a PFIC, whether or not it met the test for PFIC status in those subsequent years. A U.S. Holder who makes the QEF election discussed above for Antelope Enterprises’ first taxable year as a PFIC in which the U.S. Holder holds (or is deemed to hold) shares in Antelope Enterprises, however, will not be subject to the PFIC tax and interest charge rules discussed above in respect to such shares. In addition, such U.S. Holder will not be subject to the QEF inclusion regime with respect to such shares for any taxable year of Antelope Enterprises that ends within or with a taxable year of the U.S. Holder and in which Antelope Enterprises is not a PFIC. On the other hand, if the QEF election is not effective for each of the taxable years of Antelope Enterprises in which Antelope Enterprises is a PFIC and during which the U.S. Holder holds (or is deemed to hold) shares in Antelope Enterprises, the PFIC rules discussed above will continue to apply to such shares unless the holder files on a timely filed U.S. income tax return (including extensions) a QEF election and a purging election to recognize under the rules of Section 1291 of the Code any gain that the U.S. Holder would otherwise recognize if the U.S. Holder had sold its shares for their fair market value on the “qualification” date. The qualification date is the first day of Antelope Enterprises’ tax year in which it qualifies as a QEF with respect to such U.S. Holder. The purging election can only be made if such U.S. Holder held shares on the qualification date. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, the U.S. Holder will increase the adjusted tax basis in its shares by the amount of the gain recognized and will also have a new holding period in the shares for purposes of the PFIC rules.

Alternatively, if a U.S. Holder, at the close of its taxable year, owns shares in a PFIC that are treated as marketable stock, the U.S. Holder may make a mark-to-market election with respect to such shares for such taxable year. If the U.S. Holder makes a valid mark-to-market election for the first taxable year of the U.S. Holder in which the U.S. Holder holds (or is deemed to hold) shares in Antelope Enterprises and for which Antelope Enterprises is determined to be a PFIC, such holder generally will not be subject to the PFIC rules described above in respect to its shares as long as such shares continue to be treated as marketable stock. Instead, in general, the U.S. Holder will include as ordinary income for each year that Antelope Enterprises is treated as a PFIC, the excess, if any, of the fair market value of its shares at the end of its taxable year over the adjusted tax basis in its shares. The U.S. Holder also will be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted tax basis of its shares over the fair market value of its shares at the end of its taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). The U.S. Holder’s adjusted tax basis in its shares will be adjusted to reflect any such income or loss amounts, and any further gain recognized on a sale or other taxable disposition of the shares in a taxable year in which Antelope Enterprises is treated as a PFIC generally will be treated as ordinary income. Special tax rules may apply if a U.S. Holder makes a mark-to-market election for a taxable year after the U.S. Holder holds (or is deemed to hold) the shares and for which Antelope Enterprises is determined to be a PFIC.

The mark-to-market election is available only for stock that is regularly traded on a national securities exchange that is registered with the Securities and Exchange Commission, including the NASDAQ Stock Market, or on a foreign exchange or market that the IRS determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. Although Antelope Enterprises’ shares are currently listed and traded on the NASDAQ Stock Market, it cannot guarantee that its shares will continue to be listed or traded on the NASDAQ Stock Market. U.S. Holders should consult their own tax advisors regarding the availability and tax consequences of a mark-to-market election in respect to the shares of Antelope Enterprises under their particular circumstances.

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If Antelope Enterprises is a PFIC and, at any time, has a foreign subsidiary that is classified as a PFIC, a U.S. Holder of Antelope Enterprises’ shares generally should be deemed to own a portion of the shares of such lower-tier PFIC, and generally could incur liability for the deferred tax and interest charge described above if Antelope Enterprises receives a distribution from, or disposes of all or part of its interest in, or the U.S. Holder were otherwise deemed to have disposed of an interest in, the lower-tier PFIC. Upon request, Antelope Enterprises will endeavor to cause any lower-tier PFIC to provide to a U.S. Holder no later than 90 days after the request the information that may be required to make or maintain a QEF election with respect to the lower- tier PFIC. However, there is no assurance that Antelope Enterprises will have timely knowledge of the status of any such lower-tier PFIC or will be able to cause the lower-tier PFIC to provide the required information. A mark-to-market election generally would not be available with respect to such a lower-tier PFIC. U.S. Holders are urged to consult their own tax advisors regarding the tax issues raised by lower-tier PFICs.

A U.S. Holder that owns (or is deemed to own) shares in a PFIC during any taxable year of the U.S. Holder may have to file an IRS Form 8621 (whether or not a QEF election or mark-to-market election is or has been made) with such U.S. Holder’s U.S. federal income tax return and provide such other information as may be required by the U.S. Treasury Department.

The rules dealing with PFICs and with the QEF and mark-to-market elections are very complex and are affected by various factors in addition to those described above. Accordingly, U.S. Holders of shares in Antelope Enterprises should consult their own tax advisors concerning the application of the PFIC rules to such shares under their particular circumstances.

Non-U.S. Holders

Cash dividends paid or deemed paid to a Non-U.S. Holder in respect to its securities in Antelope Enterprises generally will not be subject to U.S. federal income tax, unless the dividends are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base that such holder maintains or maintained in the United States).

In addition, a Non-U.S. Holder generally will not be subject to U.S. federal income tax on any gain attributable to a sale or other taxable disposition of securities in Antelope Enterprises unless such gain is effectively connected with its conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base that such holder maintains or maintained in the United States) or the Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of such sale or other disposition and certain other conditions are met (in which case, such gain from U.S. sources generally is subject to U.S. federal income tax at a 30% rate or a lower applicable tax treaty rate).

Dividends and gains that are effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base that such holder maintains or maintained in the United States) generally will be subject to regular U.S. federal income tax at the same regular U.S. federal income tax rates applicable to a comparable U.S. Holder and, in the case of a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes, may also be subject to an additional branch profits tax at a 30% rate or a lower applicable tax treaty rate.

Backup Withholding and Information Reporting

In general, information reporting for U.S. federal income tax purposes should apply to distributions made on the securities of Antelope Enterprises within the United States to a U.S. Holder (other than an exempt recipient) and to the proceeds from sales and other dispositions of securities of Antelope Enterprises by a U.S. Holder (other than an exempt recipient) to or through a U.S. office of a broker. Payments made (and sales and other dispositions effected at an office) outside the United States will be subject to information reporting in limited circumstances. In addition, certain information concerning a U.S. Holder’s adjusted tax basis in its securities and adjustments to that tax basis and whether any gain or loss with respect to such securities is long-term or short-term also may be required to be reported to the IRS, and certain holders may be required to file an IRS Form 8938 (Statement of Specified Foreign Financial Assets) to report their interest in our securities.

Moreover, backup withholding of U.S. federal income tax at a rate of 28% generally will apply to dividends paid on the securities of Antelope Enterprises to a U.S. Holder (other than an exempt recipient) and the proceeds from sales and other dispositions of securities of Antelope Enterprises by a U.S. Holder (other than an exempt recipient), in each case who (a) fails to provide an accurate taxpayer identification number; (b) is notified by the IRS that backup withholding is required; or (c) in certain circumstances, fails to comply with applicable certification requirements.

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A Non-U.S. Holder generally may eliminate the requirement for information reporting and backup withholding by providing certification of its foreign status, under penalties of perjury, on a duly executed applicable IRS Form W-8 or by otherwise establishing an exemption.

Backup withholding is not an additional tax. Rather, the amount of any backup withholding will be allowed as a credit against a U.S. Holder’s or a Non-U.S. Holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that certain required information is timely furnished to the IRS. Holders are urged to consult their own tax advisors regarding the application of backup withholding and the availability of and procedures for obtaining an exemption from backup withholding in their particular circumstances.

| F. | Dividends and paying agents

Not required.

| G. | Statement by experts

Not required.

| H. | Documents on display

We file annual reports and other information with the Securities and Exchange Commission. We file annual reports on Form 20-F and submit other information under cover of Form 6-K. As a foreign private issuer, we are exempt from the proxy requirements of Section 14 of the Exchange Act and our officers, directors and principal shareholders are exempt from the insider short-swing disclosure and profit recovery rules of Section 16 of the Exchange Act. You may call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms and you can request copies of the documents upon payment of a duplicating fee, by writing to the Commission. In addition, the Commission maintains a web site that contains reports and other information regarding registrants (including us) that file electronically with the Commission which can be assessed at http://www.sec.gov.

| I. | Subsidiary Information

Not required.

| J. | Annual Report to Security Holders

ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Interest Rate Risk

Our exposure to interest rate risk primarily relates to our outstanding debts and interest income generated by excess cash, which is mostly held in interest-bearing bank deposits. Interest-earning instruments carry a degree of interest rate risk. As of December 31, 2021, our total outstanding loans for the continuing operations amounted to RMB nil ($ nil). We have not been exposed, nor do we anticipate being exposed, to material risks due to changes in market interest rates.

Foreign Currency Risk

As of December 31, 2021, nearly all of our monetary assets and monetary liabilities were denominated in RMB except for certain bank balances, bank borrowings and other payables which were denominated in US dollars. However, in the future, a proportion of our sales may be denominated in other currencies as we expand into overseas markets. In such circumstances, we anticipate our primary market risk, if any, to be related to fluctuations in exchange rates. Exchange rate risk may arise if we are required to use different currencies for various aspects of its operations.

The Renminbi’s exchange rate with the U.S. dollar and other currencies is affected by, among other things, changes in China’s political and economic conditions. The exchange rate for conversion of Renminbi into foreign currencies is heavily influenced by intervention in the foreign exchange market by the People’s Bank of China. From 1995 until July 2005, the People’s Bank of China intervened in the foreign exchange market to maintain an exchange rate of approximately 8.3 Renminbi per U.S. dollar. On July 21, 2005, the PRC government changed this policy and began allowing modest appreciation of the Renminbi versus the U.S. dollar. However, the Renminbi is restricted to a rise or fall of no more than 0.5% per day versus the U.S. dollar, and the People’s Bank of China continues to intervene in the foreign exchange market to prevent significant short-term fluctuations in the Renminbi exchange rate. On March 17, 2014, the People’s Bank of China announced that the RMB exchange rate flexibility increased to 2% in order to proceed further with reform of the RMB exchange rate regime. These could result in a further and more significant floatation in the RMB’s value against the U.S. dollar. The international reaction to the RMB revaluation has generally been positive. But, international pressure continues to be placed on the Chinese government to adopt an even more flexible currency policy, which could result in significant fluctuation of the RMB against the U.S. dollar.

Very limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations. While we have no present intention to enter into currency hedging transactions in the future. we may decide to enter into hedging transactions if we are exposed to foreign currency risk. The availability and effectiveness of these hedging transactions may be limited and we may not be able to successfully hedge our exposure at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert Renminbi into foreign currency.

ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not required.

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PART II

ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

There has been no default of any indebtedness nor is there any arrearage in the payment of dividends.

ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not applicable.

ITEM 15. | CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2022. Based on that evaluation, management, including our Chief Executive Officer and Chief Financial Officer, has concluded that our disclosure controls and procedures as of December 31, 2022 were effective.

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Management’s annual report on internal control over financial reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities and Exchange Act of 1934. Our internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our management and other personnel to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external reporting purposes in accordance with IFRS. Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that in reasonable detail accurately reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with the authorization of our board of directors and management; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

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

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management has concluded that our internal control over financial reporting was effective as of December 31, 2022.

Changes in Internal Controls over Financial Reporting

During the year ended December 31, 2022, there were no changes in the company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect our company’s internal control over financial reporting.

It should be noted that while our management believes that our disclosure controls and procedures provide a reasonable level of assurance; our management does not expect that our disclosure controls and procedures or internal financial controls will prevent all errors or fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

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ITEM 16. | RESERVED

ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT.

Our Board of Directors has determined that Mr. Dian Zhang is an audit committee financial expert as that term is defined in Item 16A(b) of Form 20-F, and “independent” as that term is defined in the NASDAQ listing standards.

ITEM 16B. | CODE OF ETHICS.

We have adopted a Code of Business Conduct and Ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, and principal accounting officer. A copy of the Code of Business Conduct and Ethics is available on our website, http://www.cceramics.com/Corporate-Governance.html. The information on our corporate website is not a part of this Annual Report.

ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The following table represents the approximate aggregate fees for services rendered by Centurion ZD CPA & Co. for the periods indicated:

|  | December 31, |  |  | December 31, |
|  | 2022 |  |  | 2021 |
|  | RMB’000 |  |  | RMB’000 |
Audit Fees – Centurion ZD CPA & Co. |  |  | 1,787 |  |  |  | 1,898 |
Audit Related Fees– Centurion ZD CPA & Co. |  |  | 216 |  |  |  | — |
Tax Fees |  |  | — |  |  |  | — |
All Other Fees |  |  | — |  |  |  | — |
Total Fees |  |  | 2,003 |  |  |  | 1,898 |

Audit Fees

Centurion ZD CPA & Co. audit fees for 2022 and 2021 consisted of fees in relation to the audit of our financial statements for the year ended December 31, 2022 and 2021.

Audit Related Fees

Centurion ZD CPA & Co. audited related fees for 2022 consisted of fees in relation to the reviews and consents for Form 6-K filings for the year ended December 31, 2022.

Tax Fees

There were no tax fees.

All Other Fees

There were no other fees.

Pre-Approval of Services

Our audit committee evaluated and approved in advance the scope and cost of the engagement of an auditor before the auditor rendered its audit and non-audit services.

ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.

None.

ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.

No purchase of our securities were made by us or our affiliates in 2021.

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ITEM 16F. | CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT.

There were no changes to our certifying accountants for the year ended December 31, 2022.

ITEM 16G. | CORPORATE GOVERNANCE

Pursuant to the home country rule exemption set forth under Nasdaq Listing Rule 5615, we elected to be exempt from the requirement under NASDAQ Listing Rule 5635 to obtain shareholder approval for (i) certain acquisitions of stock or assets of another company; (ii) an issuance of shares that will result in a change of control of the company; (iii) the establishment or amendment of certain equity based compensation plans and arrangements; and (iv) certain transactions (other than a public offering) involving issuances of a 20% or more of our outstanding shares. Our shares are listed on the NASDAQ Capital Market (“NASDAQ”). As such, we are subject to corporate governance requirements imposed by NASDAQ. Under NASDAQ rules, listed non-US companies may, in general, follow their home country corporate governance practices in lieu of some of the NASDAQ corporate governance requirements.

Nasdaq Listing Rule 5605(b)(1) requires listed companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we are permitted to, and we may follow home country practice in lieu of the above requirements. The corporate governance practice in our home country, the British Virgin Islands, does not require a majority of our board to consist of independent directors. Currently, a majority of our board members are independent. However, if we change our board composition such that independent directors do not constitute a majority of our board of directors, our shareholders may be afforded less protection than they would otherwise enjoy under Nasdaq’s corporate governance requirements applicable to U.S. domestic issuers.

Except for the foregoing, we endeavor to comply with the NASDAQ corporate governance practices and except for the foregoing, there is no significant difference between our corporate governance practices and what the NASDAQ requires of domestic U.S. companies.

ITEM 16H. | MINE SAFETY DISCLOSURE

Not applicable.

ITEM 16I. | DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENUE INSPECTION

Not applicable.

82

PART III

ITEM 17. | FINANCIAL STATEMENTS

We have elected to provide financial statements pursuant to Item 18.

ITEM 18. | FINANCIAL STATEMENTS

The financial statements are filed as part of this Annual Report beginning on page F-1.

ITEM 19. | EXHIBITS

Exhibit No. |  | Description
1.1 |  | Amended and Restated Memorandum and Articles of Association of Antelope Enterprise Holdings Limited, effective on February 23, 2023*
1.2 |  | Memorandum and Articles of Association of Success Winner Limited (2).
1.3 |  | Memorandum and Articles of Association of Stand Best Creation Limited (2).
1.4 |  | Operation Charter of Jinjiang Hengda Ceramics Co., Ltd. (2).
2.1 |  | Specimen Unit Certificate (3).
2.2 |  | Specimen of Class A Ordinary Shares*
2.3 |  | Description of Securities*
3.1 |  | Form of Voting Agreement (2).
4.1 |  | Common Stock Warrant (14).
4.2 |  | Merger and Stock Purchase Agreement among CHAC, Antelope Enterprise Holdings Limited, Hengda, Success Winner and the Seller (2).
4.3 |  | Form of Registration Rights Agreement among CHAC and the founders (3).
4.4 |  | Form of Earn-Out Escrow Agreement (2).
4.5 |  | Form of Indemnity Escrow Agreement (2).
4.6 |  | Form of Lock-Up Agreement for CHAC founders (2).
4.7 |  | Form of Lock-Up Agreement (2).
4.8 |  | Acquisition Agreement, dated November 19, 2009, by and between Jinjiang Hengda Ceramics Co., Ltd., all of the shareholders of Jiangxi Hengdali Constructional Ceramics Co., Ltd., and Jiangxi Hengdali Constructional Ceramics Co., Ltd (8).
4.9 |  | License Agreement between Huang Jia Dong and Jinjiang Hengda Ceramics Co., Ltd. (6).
4.10 |  | Antelope Enterprise Holdings Limited 2010 Incentive Compensation Plan (7).
4.11 |  | Employment Agreement, dated as of February 1, 2016, by and between Antelope Enterprises and Huang Jia Dong (9).
4.12 |  | Employment Agreement, dated as of February 1, 2016, by and between Antelope Enterprises and Su Wei Feng (9).
4.13 |  | Employment Agreement, dated as of August 1, 2015, by and between Antelope Enterprises and Hen Man Edmund (9).
4.14 |  | Term sheets relating to agreements for derivative instruments (10).
4.15 |  | Agreement between Taishin International Bank, Co., Ltd., Stand Best Creation Limited and Sound Treasure Limited, dated July 31, 2014 (10).
4.16 |  | Agreement between Stand Best Creation Limited, Huang Jia Dong, Wong Kung Tok, Mr. Huang’s brother-in-law, and Sound Treasure Limited, dated July 31, 2014 (10).

83

4.17 |  | Form of Securities Purchase Agreement (10).
4.18 |  | 2022 Incentive Award Plan (11)
4.19 |  | Form of Securities Purchase Agreement dated September 30, 2022 (12)
4.20 |  | Form of Investor Warrant dated September 30, 2022 (12)
4.21 |  | Form of Placement Agent Warrant dated September 30, 2022 (12)

4.22 |  | Director Offer Letter dated December 1, 2022 (13)
4.23 |  | Purchase Agreement, dated December 12, 2022 (14)
4.23 |  | Form of Promissory Note, dated December 12, 2022 (14)
4.24 |  | Employment agreement with Weilai (Will) Zhang, dated January 5, 2023 (15)
4.25 |  | Share Purchase Agreement, dated December 30, 2022 (15)
4.26 |  | Form of Promissory Note (15)
4.27 |  | Form of Securities Purchase Agreement, dated January 10, 2023 (16)
4.28 |  | Form of Securities Purchase Agreement, dated January 13, 2023 (17)
4.29 |  | Director Offer Letter to Weilai (Will) Zhang, dated February 24, 2023 (18)
4.30 |  | Director Offer Letter to Ms. Huashu Yuan, dated March 30, 2023 (19)
4.31 |  | Form of Securities Purchase Agreement, dated March 30, 2023 (20)
8.1 |  | List of Subsidiaries*
11.1 |  | Code of Business Conduct and Ethics (8).
12.1 |  | Certification of the Chief Executive Officer (Principal Executive Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act, as amended. **
12.2 |  | Certification of the Chief Financial Officer (Principal Financial Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act, as amended. **
13.1 |  | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
15.1 |  | Consent of Centurion ZD CPA & Co., an independent registered public accounting firm.*
101.1NS |  | XBRL Instance Document
101.SCH |  | XBRL Taxonomy Extension Schema Document
101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF |  | XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document

(1) | Incorporated by reference to Annexes C and D of Antelope Enterprises’ Prospectus on Form 424B3 filed with the SEC on November 13, 2009.

(2) | Incorporated by reference to Antelope Enterprises’ Registration Statement on Form F-4 (File No. 333-161557).

(3) | Incorporated by reference to exhibits of the same number filed with CHAC’s Registration Statement on Form F-1 or amendments thereto (File No. 333-145085).

(4) | Incorporated by reference to CHAC’s Form 8-K, dated November 21, 2007.

(5) | Incorporated by reference to exhibits of the same number filed with Antelope Enterprises’ Registration Statement on Form F-1 (File No. 333-170237).

(8) | Incorporated by reference to Annex A to Exhibit 99.1 filed with Antelope Enterprises’ Report on Form 6-K filed with the SEC on November 20, 2010

(7) | Incorporated by reference to Antelope Enterprises’ Annual Report on Form 20-F filed with the SEC on May 17, 2010.

(8) | Incorporated by reference to Antelope Enterprises’ Annual Report on Form 20-F filed with the SEC on April 20, 2016.

(9) | Incorporated by reference to Antelope Enterprises’ Annual Report on Form 20-F filed with the SEC on July 31, 2014.

(10) | Incorporated by reference to Antelope Enterprises’ Report on Form 6-K filed with the SEC on December 20, 2019.

(11) | Incorporated by reference to Antelope Enterprises’ Report on Form 6-K filed with the SEC on September 26, 2022.

(12) | Incorporated by reference to Antelope Enterprises’ Report on Form 6-K filed with the SEC on October 5, 2022.
(13) | Incorporated by reference to Antelope Enterprises’ Report on Form 6-K filed with the SEC on December 1, 2022.
(14) | Incorporated by reference to Antelope Enterprises’ Report on Form 6-K filed with the SEC on December 13, 2022.
(15) | Incorporated by reference to Antelope Enterprises’ Report on Form 6-K filed with the SEC on January 5, 2023.
(16) | Incorporated by reference to Antelope Enterprises’ Report on Form 6-K filed with the SEC on January 12, 2023.

(17) | Incorporated by reference to Antelope Enterprises’ Report on Form 6-K filed with the SEC on January 17, 2023.
(18) | Incorporated by reference to Antelope Enterprises’ Report on Form 6-K filed with the SEC on February 27, 2023.
(19) | Incorporated by reference to Antelope Enterprises’ Report on Form 6-K filed with the SEC on March 31, 2023.
(20) | Incorporated by reference to Antelope Enterprises’ Report on Form 6-K filed with the SEC on April 5, 2023.

* | Filed herein
** | Furnished herein

84

SIGNATURES

The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

| ANTELOPE ENTERPRISE HOLDINGS LIMITED
May 1, 2023 | By: | /s/ Weilai (Will) Zhang
| Name: | Weilai (Will) Zhang
| Title: | Chief Executive Officer (Principal Executive Officer) and Chairman

| ANTELOPE ENTERPRISE HOLDINGS LIMITED
May 1, 2023 | By: | /s/ Hen Man Edmund
| Name: | Hen Man Edmund
| Title: | Chief Financial Officer (Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

Signature |  | Title |  | Date
By: | /s/ Weilai (Will) Zhang |  | Chief Executive Officer (Principal Executive Officer) and |  | May 1, 2023
| Weilai (Will) Zhang |  | Chairman |  |
By: | /s/ Hen Man Edmund |  | Chief Financial Officer (Principal Financial and Accounting Officer) |  | May 1, 2023
| Hen Man Edmund |  |  |  |
By: | /s/ Song Chungen |  | Director |  | May 1, 2023
| Song Chungen |  |  |  |
By: | /s/ Ishak Han |  | Director |  | May 1, 2023
| Ishak Han |  |  |  |
By: | /s/ Dian Zhang |  | Director |  | May 1, 2023
| Dian Zhang |  |  |  |
By: | /s/ Tingting Zhang |  | Director |  | May 1, 2023
| Tingting Zhang |  |  |  |
By: | /s/ Qiguo Wang |  | Director |  | May 1, 2023
| Qiguo Wang |  |  |  |
By: | /s/ Huashu Yuan |  | Director |  | May 1, 2023
| Huashu Yuan |  |  |  |

85

| 中正達會計師事務所 Centurion ZD CPA & Co. Certified Public Accountants (Practising)

Unit 1304, 13/F, Two Harbourfront, 22 Tak Fung Street, Hunghom, Hong Kong.

香港 紅磡 德豐街22號 海濱廣場二期 13樓1304室

Tel 電話: (852) 2126 2388 Fax 傳真: (852) 2122 9078

Email 電郵: info@czdcpa.com

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Antelope Enterprise Holdings Limited

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial position of Antelope Enterprises Holdings Limited and subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of comprehensive income (loss), changes in equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with International Financial Reporting Standards issued by the International Accounting Standards Board.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

F-1

Inventory write-down in discontinued operations

As described in Note 2.8 of the consolidated financial statements, inventories are stated at the lower of cost and net realizable value, with cost determined on a weighted-average basis. Write-down of potential obsolete or slow moving inventories is recorded based on management’s assumptions about future demands, product trends and market conditions. As described in Note 15 of the consolidated financial statements, the Company recorded a reversal of inventory impairment charges on inventories held by discontinued operations of RMB 4.0 million for the year ended December 31, 2022. Inventories include items that have been written down to the Company’s best estimate of their realizable value, which includes consideration of various factors. The net inventories amounting to RMB 28.7 million were held by Jinjiang Hengda Ceramics Co., Limited, a subsidiary of a disposal group whose assets were classified as held for sale as of December 31, 2022, as described in Note 29.

We identified the inventory write-down in discontinued operations as a critical audit matter. The Company’s determination of future markdowns is subjective. Specifically, there was a high degree of subjective auditor judgment in evaluating how the Company’s merchandising strategy considerations and related inventory markdown assumptions affected the realizable value of inventory.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included the following, among others: (i) observing the physical condition of inventories during inventory counts; (ii) evaluating the appropriateness of management’s process for developing the estimates of net realizable value; (iii) testing the reliability of reports used by management by agreeing to underlying records; (iv) testing the reasonableness of the assumptions about quality, damages, future demand, selling prices and market conditions by considering with historical trends and consistency with evidence obtained in other areas of the audit; and corroborating the assumptions with individuals within the product team; (v) assessing the Company’s adjustments of inventory costs to net realizable value for slow-moving and obsolete inventories by (1) comparing the historical estimate for net realizable value adjustments to actual adjustments of inventory costs, and (2) analyzing sales subsequent to the measurement date.

Measurement of expected credit losses on trade receivables in discontinued operations

As described in Note 16 and 29 to the consolidated financial statements, net trade receivables in discontinued operations of disposal group classified as held for sale amounted to RMB 11.7 million. The valuation of trade receivables requires management judgement due to the credit risks associated with each individual trade receivable account. Management assesses the recoverability of trade receivables by reviewing customers’ aging profile, credit history, collection period and status of subsequent settlement, and determines whether an impairment provision is required.

We identified the expected credit loss (“ECL”) as a critical audit matter. The Company’s determination of future credit loss is subjective. Specifically, there was a high degree of subjective auditor judgment in evaluating how the Company’s credit granting policies and related accounts receivable written down assumptions affected the net accounts receivable balance.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included the following, among others: (i) obtaining an understanding of the Company’s credit control procedures and assessing the design, implementation and operating effectiveness of key internal controls over granting of credit to customers; (ii) evaluating the appropriateness of management’s process for developing the ECL model, related assumptions and considerations; (iii) testing a sample of the data used in the ECL model to the underlying records; (iv) evaluating the ECL model calculations, agreeing the data inputs and checking the mathematical accuracy of the calculations; (v) comparing the Company’s definition of default, as outlined in the accounting policy against the definition that Company uses for credit risk management; (vi) assessing the Company’s adjustments of provision for credit loss to net accounts receivable collection period for slow-collecting and aging outstanding accounts receivable balance by (1) comparing the historical estimate for net provision value adjustments to actual adjustments of accounts receivable balance, (2) analyzing accounts receivable collection and recovery time subsequent to the measurement date; and (3) assessing the disclosures in the consolidated financial statements are appropriate and adequate.

/s/ Centurion ZD CPA & Co. |
Centurion ZD CPA & Co. |
We have served as the Company’s auditor since 2016. Hong Kong, China |
May 1, 2023 |

PCAOB ID: 2769

F-2

ANTELOPE ENTERPRISE HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

|  | Notes |  |  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |
|  |  |  |  | Years ended December 31, |
|  |  |  |  | 2022 |  |  | 2021 |  |  | 2020 |
|  | Notes |  |  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |
Net sales |  |  | 5 |  |  |  | 286,347 |  |  |  | 71,527 |  |  |  | - |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  | - |
Cost of goods sold |  |  |  |  |  |  | 258,431 |  |  |  | 65,493 |  |  |  | - |
Gross profit (loss) |  |  |  |  |  |  | 27,916 |  |  |  | 6,034 |  |  |  | - |
Other income |  |  | 5 |  |  |  | 2,966 |  |  |  | 32 |  |  |  | 7,400 |
Fair value unrealized gain of unlisted financial assets |  |  | 14 |  |  |  | 130 |  |  |  | - |  |  |  | - |
Selling and distribution expenses |  |  |  |  |  |  | (16,380 | ) |  |  | (24 | ) |  |  | - |
Administrative expenses |  |  |  |  |  |  | (22,757 | ) |  |  | (15,975 | ) |  |  | (7,551 | )
Bad debt Reversal (expense) |  |  |  |  |  |  | 2,751 |  |  |  | (10,148 | ) |  |  | - |
Finance costs |  |  | 6 |  |  |  | (25 | ) |  |  | (51 | ) |  |  | (75 | )
Other expenses |  |  |  |  |  |  | (42 | ) |  |  | (34 | ) |  |  | - |
Loss before taxation |  |  | 7 |  |  |  | (5,441 | ) |  |  | (20,166 | ) |  |  | (226 | )
Income tax expense |  |  | 8 |  |  |  | (209 | ) |  |  | (217 | ) |  |  | (33 | )
Net loss for the year from continuing operations |  |  |  |  |  |  | (5,650 | ) |  |  | (20,383 | ) |  |  | (259 | )
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss for the year from discontinued operations |  |  | 29 |  |  |  | (47,994 | ) |  |  | (69,675 | ) |  |  | (192,836 | )
Net loss for the year |  |  |  |  |  |  | (53,644 | ) |  |  | (90,058 | ) |  |  | (193,095 | )
Net loss attributable to : |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity holders of the Company |  |  |  |  |  |  | (57,918 | ) |  |  | (88,752 | ) |  |  | (193,095 | )
Non-controlling interest |  |  |  |  |  |  | 4,274 |  |  |  | (1,306 | ) |  |  | - |
Net loss for the year |  |  |  |  |  |  | (53,644 | ) |  |  | (90,058 | ) |  |  | (193,095 | )
Net loss attributable to the equity holders of the Company arise from: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Continuing operations |  |  |  |  |  |  | (9,924 | ) |  |  | (19,077 | ) |  |  | (259 | )
Discontinued operations |  |  | 29 |  |  |  | (47,994 | ) |  |  | (69,675 | ) |  |  | (192,836 | )
Other comprehensive loss |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Exchange differences on translation of financial statements of foreign operations |  |  |  |  |  |  | 198 |  |  |  | 585 |  |  |  | 371 |
Total comprehensive loss for the year |  |  |  |  |  |  | (53,446 | ) |  |  | (89,473 | ) |  |  | (192,724 | )
Total comprehensive loss attributable to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity holders of the Company |  |  |  |  |  |  | (57,720 | ) |  |  | (88,167 | ) |  |  | (192,724 | )
Non-controlling interest |  |  |  |  |  |  | 4,274 |  |  |  | (1,306 | ) |  |  | - |
Total comprehensive loss for the year |  |  |  |  |  |  | (53,446 | ) |  |  | (89,473 | ) |  |  | (192,724 | )
Total comprehensive loss attributable to the equity holders of the Company arise from: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Continuing operations |  |  |  |  |  |  | (5,452 | ) |  |  | (19,798 | ) |  |  | 112 |
Discontinued operations |  |  | 29 |  |  |  | (47,994 | ) |  |  | (69,675 | ) |  |  | (192,836 | )
Loss per share attributable to the equity holders of the Company |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic (RMB) |  |  | 9 |  |  |  |  |  |  |  |  |  |  |  |  |
— from continuing operations |  |  |  |  |  |  | (1.19 | ) |  |  | (3.71 | ) |  |  | (0.09 | )
— from discontinued operations |  |  |  |  |  |  | (5.73 | ) |  |  | (13.54 | ) |  |  | (65.58 | )
Diluted (RMB) |  |  | 9 |  |  |  |  |  |  |  |  |  |  |  |  |
— from continuing operations |  |  |  |  |  |  | (1.19 | ) |  |  | (3.71 | ) |  |  | (0.09 | )
— from discontinued operations |  |  |  |  |  |  | (5.73 | ) |  |  | (13.54 | ) |  |  | (65.58 | )

The accompanying notes are an integral part of these consolidated financial statements.

F-3

ANTELOPE ENTERPRISE HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

|  |  |  |  | As of December 31, 2022 |  |  | As of December 31, 2021 |
|  | Notes |  |  | RMB’000 |  |  | RMB’000 |
ASSETS AND LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |
NONCURRENT ASSETS |  |  |  |  |  |  |  |  |  |  |  |
Property and equipment, net |  |  | 11 |  |  |  | 1,006 |  |  |  | 1,250 |
Intangible assets, net |  |  | 13 |  |  |  | 6 |  |  |  | - |
Right-of-use assets, net |  |  | 22 |  |  |  | 469 |  |  |  | 44,288 |
Total noncurrent assets |  |  |  |  |  |  | 1,481 |  |  |  | 45,538 |
CURRENT ASSETS |  |  |  |  |  |  |  |  |  |  |  |
Inventories, net |  |  | 15 |  |  |  | - |  |  |  | 31,589 |
Trade receivables, net |  |  | 16 |  |  |  | - |  |  |  | 51,416 |
VAT receivables |  |  |  |  |  |  | 142 |  |  |  | 663 |
Other receivables and prepayments |  |  | 17 |  |  |  | 19,180 |  |  |  | 20,781 |
Financial assets |  |  | 14 |  |  |  | 8,523 |  |  |  | - |
Restricted cash |  |  | 18 |  |  |  | 2,069 |  |  |  | - |
Cash and bank balances |  |  | 18 |  |  |  | 3,936 |  |  |  | 27,880 |
Total current assets |  |  |  |  |  |  | 33,850 |  |  |  | 132,329 |
Assets classified as held for sale |  |  | 29 |  |  |  | 74,675 |  |  |  | - |
Total assets |  |  |  |  |  |  | 110,006 |  |  |  | 177,867 |
CURRENT LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |
Trade payables |  |  | 19 |  |  |  | 3,079 |  |  |  | 6,290 |
Accrued liabilities and other payables |  |  | 20 |  |  |  | 799 |  |  |  | 22,381 |
Unearned revenue |  |  |  |  |  |  | - |  |  |  | 15,545 |
Amounts owed to related parties |  |  | 27 |  |  |  | 1,291 |  |  |  | 36,348 |
Lease liabilities |  |  | 22 |  |  |  | 328 |  |  |  | 13,404 |
Taxes payable |  |  | 21 |  |  |  | 582 |  |  |  | 1,018 |
Total current liabilities |  |  |  |  |  |  | 6,079 |  |  |  | 94,986 |
NET CURRENT ASSETS |  |  |  |  |  |  | 27,771 |  |  |  | 37,343 |
NONCURRENT LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |
Lease liabilities |  |  | 22 |  |  |  | 157 |  |  |  | 33,325 |
Note payable |  |  | 23 |  |  |  | 8,775 |  |  |  | - |
Total noncurrent liabilities |  |  |  |  |  |  | 8,932 |  |  |  | 33,325 |
Liabilities directly associated with assets classified as held for sale |  |  | 29 |  |  |  | 88,530 |  |  |  | - |
Total liabilities |  |  |  |  |  |  | 103,541 |  |  |  | 128,311 |
NET ASSETS |  |  |  |  |  |  | 6,465 |  |  |  | 49,556 |
EQUITY |  |  |  |  |  |  |  |  |  |  |  |
Share capital |  |  | 24 |  |  |  | 1,288 |  |  |  | 943 |
Reserves |  |  | 25 |  |  |  | (241 | ) |  |  | 49,919 |
Non-controlling interest |  |  |  |  |  |  | 5,418 |  |  |  | (1,306 | )
Total equity |  |  |  |  |  |  | 6,465 |  |  |  | 49,556 |

The accompanying notes are an integral part of these consolidated financial statements.

F-4

ANTELOPE ENTERPRISE HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

|  | Share capital |  |  | Share premium |  |  | Reverse recapitalization reserve |  |  | Merger reserve |  |  | Share-based payment reserves |  |  | Statutory reserve |  |  | Capital reserve |  |  | Retained earnings |  |  | Currency translation reserve |  |  | Total |  |  | Non-controlling Interest |  |  | Total Equity |
|  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |
Notes |  |  | Note 24 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at January 1, 2020 |  |  | 397 |  |  |  | 701,944 |  |  |  | (507,235 | ) |  |  | 58,989 |  |  |  | 125,042 |  |  |  | 135,343 |  |  |  | 61,266 |  |  |  | (300,973 | ) |  |  | (1,880 | ) |  |  | 272,893 |  |  |  | - |  |  |  | 272,893 |
Net loss for the year |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (193,095 | ) |  |  | - |  |  |  | (193,095 | ) |  |  | - |  |  |  | (193,095 | )
Exchange difference on transaction of financial statements of foreign operations |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 371 |  |  |  | 371 |  |  |  | - |  |  |  | 371 |
Total comprehensive loss for the year |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (193,095 | ) |  |  | 371 |  |  |  | (192,724 | ) |  |  | - |  |  |  | (192,724 | )
Issuance of new shares for equity financing |  |  | 181 |  |  |  | 15,864 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 16,045 |  |  |  | - |  |  |  | 16,045 |
Equity compensation - employee share-based compensation |  |  | 13 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,122 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,135 |  |  |  | - |  |  |  | 1,135 |
Transfer to statutory reserves |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Balance at December 31, 2020 |  |  | 591 |  |  |  | 717,808 |  |  |  | (507,235 | ) |  |  | 58,989 |  |  |  | 126,164 |  |  |  | 135,343 |  |  |  | 61,266 |  |  |  | (494,068 | ) |  |  | (1,509 | ) |  |  | 97,349 |  |  |  | - |  |  |  | 97,349 |
Net loss for the year |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (88,752 | ) |  |  | - |  |  |  | (88,752 | ) |  |  | (1,306 | ) |  |  | (90,058 | )
Exchange difference on transaction of financial statements of foreign operations |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 585 |  |  |  | 585 |  |  |  | - |  |  |  | 585 |
Total comprehensive loss for the year |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (88,752 | ) |  |  | 585 |  |  |  | (88,167 | ) |  |  | (1,306 | ) |  |  | (89,473 | )
Issuance of new shares for equity financing |  |  | 230 |  |  |  | 29,357 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 29,587 |  |  |  | - |  |  |  | 29,587 |
Warrants exercised |  |  | 105 |  |  |  | 10,153 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 10,258 |  |  |  | - |  |  |  | 10,258 |
Equity compensation - employee share-based compensation |  |  | 17 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,818 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,835 |  |  |  | - |  |  |  | 1,835 |
Transfer to statutory reserves |  |  |  |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Balance at December 31, 2021 |  |  | 943 |  |  |  | 757,318 |  |  |  | (507,235 | ) |  |  | 58,989 |  |  |  | 127,982 |  |  |  | 135,343 |  |  |  | 61,266 |  |  |  | (582,820 | ) |  |  | (924 | ) |  |  | 50,862 |  |  |  | (1,306 | ) |  |  | 49,556 |
Balance |  |  | 943 |  |  |  | 757,318 |  |  |  | (507,235 | ) |  |  | 58,989 |  |  |  | 127,982 |  |  |  | 135,343 |  |  |  | 61,266 |  |  |  | (582,820 | ) |  |  | (924 | ) |  |  | 50,862 |  |  |  | (1,306 | ) |  |  | 49,556 |
Net income (loss) for the year |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (57,918 | ) |  |  | - |  |  |  | (57,918 | ) |  |  | 4,274 |  |  |  | (53,644 | )
Exchange difference on transaction of financial statements of foreign operations |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 198 |  |  |  | 198 |  |  |  | - |  |  |  | 198 |
Total comprehensive loss for the year |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (57,918 | ) |  |  | 198 |  |  |  | (57,720 | ) |  |  | 4,274 |  |  |  | (53,446 | )
Issuance of new shares for equity financing |  |  | 276 |  |  |  | 5,449 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5,725 |  |  |  | - |  |  |  | 5,725 |
Capital contribution |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,450 |  |  |  | 2,450 |
Equity compensation - employee share-based compensation |  |  | 69 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,111 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,180 |  |  |  | - |  |  |  | 2,180 |
Transfer to statutory reserves |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Balance at December 31, 2022 |  |  | 1,288 |  |  |  | 762,767 |  |  |  | (507,235 | ) |  |  | 58,989 |  |  |  | 130,093 |  |  |  | 135,343 |  |  |  | 61,266 |  |  |  | (640,738 | ) |  |  | (726 | ) |  |  | 1,047 |  |  |  | 5,418 |  |  |  | 6,465 |
Balance |  |  | 1,288 |  |  |  | 762,767 |  |  |  | (507,235 | ) |  |  | 58,989 |  |  |  | 130,093 |  |  |  | 135,343 |  |  |  | 61,266 |  |  |  | (640,738 | ) |  |  | (726 | ) |  |  | 1,047 |  |  |  | 5,418 |  |  |  | 6,465 |

The accompanying notes are an integral part of these consolidated financial statements.

F-5

ANTELOPE ENTERPRISE HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

|  |  |  |  | Years ended December 31, |  |  |  |
|  |  |  |  | 2022 |  |  | 2021 |  |  | 2020 |
|  | Notes |  |  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |
CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss before taxation |  |  |  |  |  |  | (5,441 | ) |  |  | (20,166 | ) |  |  | (226 | )
Adjustments for |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating lease charge |  |  | 22 |  |  |  | 484 |  |  |  | 1,266 |  |  |  | 536 |
Depreciation of property, plant and equipment |  |  | 11 |  |  |  | 255 |  |  |  | 84 |  |  |  | - |
Fair value gain on unlisted financial assets |  |  | 14 |  |  |  | (130 | ) |  |  | - |  |  |  | - |
Write down of inventories ( reversal of inventory provision) |  |  | 15 |  |  |  | - |  |  |  | - |  |  |  | - |
Bad debt provision of trade receivables (reversal of bad debt ) |  |  |  |  |  |  | (2,751 | ) |  |  | 10,148 |  |  |  | - |
Share based compensation |  |  | 26 |  |  |  | 2,180 |  |  |  | 1,835 |  |  |  | 1,135 |
Interest expense on lease liability |  |  | 6 |  |  |  | 25 |  |  |  | 51 |  |  |  | 73 |
Amortization of OID of convertible note |  |  |  |  |  |  | 15 |  |  |  | - |  |  |  | - |
Operating cash flows before working capital changes |  |  |  |  |  |  | (5,363 | ) |  |  | (6,782 | ) |  |  | 1,518 |
(Decrease)/Increase in trade receivables |  |  |  |  |  |  | 4,292 |  |  |  | (5,374 | ) |  |  | (4,855 | )
Decrease (Increase) in other receivables and prepayments |  |  |  |  |  |  | (898 | ) |  |  | (19,936 | ) |  |  | (812 | )
Decrease (Increase) in trade payables |  |  |  |  |  |  | 464 |  |  |  | 2,602 |  |  |  | 14 |
Decrease(Increase) in unearned revenue |  |  |  |  |  |  | (15,545 | ) |  |  | 15,545 |  |  |  | (619 | )
Decrease (Increase) in taxes payable |  |  |  |  |  |  | (958 | ) |  |  | (163 | ) |  |  | - |
Decrease (Increase) in accrued liabilities and other payables |  |  |  |  |  |  | (2,100 | ) |  |  | 2,712 |  |  |  | 86 |
Cash generated from (used in) operations |  |  |  |  |  |  | (20,108 | ) |  |  | (11,396 | ) |  |  | (4,668 | )
Interest paid |  |  |  |  |  |  | - |  |  |  | - |  |  |  | - |
Income tax paid |  |  |  |  |  |  | (326 | ) |  |  | (41 | ) |  |  | (45 | )
Net cash generated from operating activities from discontinued operations |  |  | 29 |  |  |  | 4,982 |  |  |  | 3,314 |  |  |  | 4,400 |
Net cash used in operating activities |  |  |  |  |  |  | (15,452 | ) |  |  | (8,123 | ) |  |  | (313 | )
CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Acquisition of fixed assets |  |  |  |  |  |  | (22 | ) |  |  | (1,279 | ) |  |  | (46 | )
Acquisition of intangible assets |  |  |  |  |  |  | (6 | ) |  |  | - |  |  |  | - |
Increase in unlisted financial assets |  |  | 14 |  |  |  | (8,393 | ) |  |  | - |  |  |  | - |
Increase in restricted cash |  |  | 18 |  |  |  | (2,069 | ) |  |  | - |  |  |  | 2,785 |
Net cash used in investing activities from discontinued operations |  |  | 29 |  |  |  | - |  |  |  | - |  |  |  | - |
Net cash generated from (used in) investing activities |  |  |  |  |  |  | (10,490 | ) |  |  | (1,279 | ) |  |  | 2,739 |
CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment for lease liabilities |  |  | 22 |  |  |  | (358 | ) |  |  | (1,144 | ) |  |  | (705 | )
Insurance of share capital for equity financing |  |  | 24 |  |  |  | 5,724 |  |  |  | 29,586 |  |  |  | 16,045 |
Warrants exercised |  |  | 24 |  |  |  | - |  |  |  | 10,258 |  |  |  | - |
Capital contribution from noncontrolling interest |  |  |  |  |  |  | 2,450 |  |  |  | - |  |  |  | - |
Proceeds from promissory note |  |  | 23 |  |  |  | 8,759 |  |  |  | - |  |  |  | - |
Advance from related parties |  |  | 27 |  |  |  | - |  |  |  | - |  |  |  | 131 |
Net cash used in financing activities from discontinued operations |  |  | 29 |  |  |  | (14,303 | ) |  |  | (14,303 | ) |  |  | (14,136 | )
Net cash generated from financing activities |  |  |  |  |  |  | 2,272 |  |  |  | 24,397 |  |  |  | 1,335 |
NET (DECREASE) INCREASE IN CASH & EQUIVALENTS |  |  |  |  |  |  | (23,670 | ) |  |  | 14,995 |  |  |  | 3,761 |
CASH & EQUIVALENTS, BEGINNING OF YEAR |  |  |  |  |  |  | 27,880 |  |  |  | 12,344 |  |  |  | 8,212 |
EFFECT OF FOREIGN EXCHANGE RATE DIFFERENCES |  |  |  |  |  |  | 32 |  |  |  | 541 |  |  |  | 371 |
CASH & EQUIVALENTS, END OF YEAR |  |  |  |  |  |  | 4,242 |  |  |  | 27,880 |  |  |  | 12,344 |
ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  |  |  |  |  | 3,936 |  |  |  | 27,880 |  |  |  | 12,344 |
Cash and cash equivalents included in assets classified as held for sale |  |  |  |  |  |  | 306 |  |  |  | - |  |  |  | - |
CASH & EQUIVALENTS, END OF YEAR |  |  |  |  |  |  | 4,242 |  |  |  | 27,880 |  |  |  | 12,344 |

The accompanying notes are an integral part of these consolidated financial statements.

F-6

ANTELOPE ENTERPRISE HOLDINGS LIMITED AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Three Years Ended December 31, 2020, 2021 and 2022

1. GENERAL INFORMATION

Antelope Enterprise Holdings Limited (“Antelope Enterprises” or the “Company”), formerly known as China Ceramics Co., Ltd (“CCCL”), is a British Virgin Islands company operating under the BVI Business Companies Act (2004) with its shares listed on the NASDAQ (“symbol: AEHL”). Its predecessor company, China Holdings Acquisition Corp. (“CHAC”), was incorporated in Delaware on June 22, 2007, and was organized as a blank check company for the purpose of acquiring, through a stock exchange, asset acquisition or other similar business combination, or controlling, through contractual arrangements, an operating business, that has its principal operations in Asia. The Company has no operations and has no assets or liabilities of consequence outside its investments in its operating subsidiaries. The head office of the Company is located at Junbing Industrial Zone, Jinjiang City, Fujian Province, the People’s Republic of China (“PRC”).

On November 20, 2009, CHAC merged with and into Antelope Enterprises, its wholly owned British Virgin Islands subsidiary, with Antelope Enterprise surviving the merger (the “Redomestication”). On the same day, pursuant to the terms of a merger and stock purchase agreement dated August 19, 2009 (the “acquisition agreement”), Antelope Enterprise acquired all of the outstanding securities of Success Winner Limited (“Success Winner”) held by Mr. Wong Kung Tok in exchange for US$10.00 and 5,743,320 shares of Antelope Enterprise (the “Success Winner Acquisition”). The total number of issued and outstanding shares of Antelope Enterprise immediately after the acquisition was 8,950,171.

Prior to the Success Winner Acquisition on November 20, 2009, neither CHAC nor Antelope Enterprises had an operating business.

Jinjiang Hengda Ceramics Co., Ltd. (“Hengda”), which became the operating entity of Antelope Enterprise in connection with the Success Winner Acquisition, was established on September 30, 1993 under the laws of PRC with 15% of its equity interest owned by Fujian Province Jinjiang City Anhai Junbing Hengda Construction Material Factory (“Anhai Hengda”) and 85% owned by Chi Wah Trading Import and Export Company (“Chi Wah”). Chi Wah is a sole proprietor under the laws of Hong Kong with its legal and equitable interest solely owned by Mr. Wong Kung Tok. Anhai Hengda was owned by Mr. Wong Kung Tok’s family, which was considered an act-in-concert party of Mr. Wong Kung Tok for accounting purposes.

Hengda is principally engaged in the manufacture and sale of ceramic tiles used for exterior siding and for interior flooring and design in residential and commercial buildings.

Hengda’s owners reorganized the corporate structure in 2008 and 2009 (the “Hengda Reorganization” or the “Reorganization”), as follows:

Stand Best Creation Limited (“Stand Best”) was established on January 17, 2008 under the laws of Hong Kong with its paid-up share capital being HK$1.00 divided into 1 ordinary share solely owned by Mr. Wong Kung Tok. Stand Best acquired 100% of Hengda’s equity interest from Anhai Hengda and Chi Wah on April 1, 2008 at the consideration of RMB 58,980,000.

Success Winner Limited (“Success Winner”) was incorporated in the British Virgin Islands on May 29, 2009 as a limited liability company. Its paid-up and issued capital is US$1 divided into 1 ordinary share solely owned by Mr. Wong Kung Tok.

On June 30, 2009, through a capitalization agreement between Mr. Wong Kung Tok and Stand Best, Stand Best capitalized a shareholder loan due to Mr. Wong Kung Tok in the amount of HK$ 67.9 million (equivalent to approximately RMB 58.9 million) through the issuance of an aggregate of 9,999 ordinary shares of HK$ 1.00 par value which Mr. Wong Kung Tok allotted to Success Winner.

F-7

On the same date, Mr. Wong Kung Tok transferred his ownership of the remaining 1 ordinary share of Stand Best to Success Winner, thus making Success Winner the sole parent company of Stand Best.

On January 8, 2010, Hengda completed the acquisition of all voting equity interests of Jiangxi Hengdali Ceramic Materials Co., Ltd. (“Hengdali” or the “Gaoan Facility”), located in Gaoan, Jiangxi Province (the “Hengdali Acquisition”). Hengdali manufactures and sells ceramics tiles used for exterior siding and for interior flooring. In total, Hengda assumed loans of RMB 60.0 million and paid cash consideration of RMB 185.5 million for the acquisition.

On September 22, 2017, Success Winner incorporated a 100% owned subsidiary Vast Elite Limited (“Vast Elite”) in Hong Kong with an initial registered capital of HKD1. Vast Elite is a holding company and had no material operations during the year ended December 31, 2019.

On November 20, 2019, Vast Elite incorporated a 100% owned subsidiary Chengdu Future Talented Management and Consulting Co, Ltd (“Chengdu Future”) in China. Chengdu Future is engaged in business management and consulting services.

On December 3, 2019, Success Winner incorporated a 100% owned subsidiary Antelope Enterprise (HK) Holdings Limited (“Antelope HK”) in Hong Kong. Antelope HK only serves the purpose of a holding company.

On May 5, 2020, Antelope HK incorporated a 100% owned subsidiary Antelope Holdings (Chengdu) Co., Ltd (“Antelope Chengdu”) in China. Antelope Chengdu is engaged in business management and consulting services.

On August 10, 2021, Antelope HK incorporated a 100% owned subsidiary Hainan Antelope Holdings Co., Ltd (“Antelope Hainan”) in China. Antelope Hainan is engaged in business management and consulting services. Antelope Hainan does not have any operations as of this report date.

On August 11, 2021, Antelope HK incorporated a 100% owned subsidiary Antelope Future (Yangpu) Investment Co., Ltd (“Antelope Yangpu”) in China. Antelope Yangpu is engaged in business management and consulting services. Antelope Yangpu does not have any operations as of this report date.

On August 23, 2021, Antelope Hainan incorporated a 100% owned subsidiary Antelope Investment (Hainan) Co., Ltd (“Antelope Investment”) in China. Antelope Investment is engaged in business management and consulting services. Antelope Investment does not have any operations as of this report date.

On September 9, 2021, Antelope Future incorporated a 100% owned subsidiary Antelope Ruicheng Investment (Hainan) Co., Ltd (“Antelope Ruicheng”) in China. Antelope Ruicheng is engaged in business management and consulting services. Antelope Ruicheng does not have any operations as of this report date.

On September 18, 2021, Antelope Ruicheng incorporated a 51% owned subsidiary Hainan Kylin Cloud Services Technology Co., Ltd ((“Hainan Kylin”) in China. Hainan Kylin is engaged in the business management and consulting services for livestreaming ecommerce industry.

On October 28, 2022, Hainan Kylin incorporated a 100% owned subsidiary Hangzhou Kylin Cloud Services Technology Co., Ltd (“Hangzhou Kylin”) in China. Hangzhou Kylin is engaged in business management and consulting services for the livestreaming ecommerce industry.

On November 2, 2022, Hainan Kylin incorporated a 100% owned subsidiary Anhui Kylin Cloud Services Technology Co., Ltd (“Anhui Kylin”) in China. Anhui Kylin is engaged in business management and consulting services for the livestreaming ecommerce industry.

Since the ceramic tiles manufacturing business of the Company has experienced significant hurdles due to the significant slowdown of the real estate sector and the impacts of COVID-19 in China, the Company plans to divest its ceramic tiles manufacturing business, which is conducted through the Company’s subsidiaries, Stand Best, Hengda and Hengdali (the “Target”).

On December 30, 2022, Stand Best and an unaffiliated entity, New Stonehenge Limited, entered into a purchase agreement, pursuant to which, Stand Best agreed to sell 100% equity interests in Hengda to New Stonehenge Limited, in exchange for a 5% unsecured promissory note with a principal amount of US$8.5 million. The promissory note will mature in four years and the 5% interest and principal amount on the note is to be paid in four annual installments. On February 21, 2023, the Company’s shareholders approved this transaction. On April 28, 2023, this transaction was closed. The has transferred its ownership of the ceramic tile manufacturing business to the New Stonehenge Limited, and New Stonehenge Limited has become the 100% owner of Hengda, which is the 100% owner of Hengdali.

On February 21, 2023, the shareholders of the Company approved and adopted an amended and restated memorandum and articles of association (the “Amended M&A”), which changed the authorized issued share capital of the Company from US$4,800,000 divided into 200,000,000 ordinary shares with a par value of US$0.024 each, to (i) 250,000,000 ordinary shares re-designated as (a) 200,000,000 Class A ordinary shares with no par value each, and (b) 50,000,000 Class B ordinary shares with no par value each, and (ii) 50,000,000 preferred shares with no par value each, (the “Re-Designation of the Authorized Capital”). Each Class A ordinary share is entitled to one (1) vote and each Class B ordinary share is entitled to twenty (20) votes. In connection with the Re-Designation of the Authorized Capital, 977,755 ordinary shares owned by Mr. Weilai (Will) Zhang then were converted into 977,755 Class B ordinary shares, and the rest of the then outstanding and issued outstanding ordinary shares were converted into Class A ordinary shares on an one-for-one basis.

F-8

Antelope Enterprise Holdings Limited and its subsidiaries’ (the “Company”) corporate structure as of December 31, 2022 is as follows:

F-9

SCHEDULE OF CHINA CERAMICS AND ITS SUBSIDIARIES CORPORATE STRUCTURE

Name |  | Place and date of incorporation or establishment/ operations |  | Nominal value of issued ordinary share /registered capital |  | Percentage of equity attributable to the Company |  |  | Principal activities
|  |  |  |  |  |  | Direct |  |  | Indirect |  |  |
Success Winner Limited |  | British Virgin Islands, May 29, 2009 |  | US$ | 1 |  |  |  | 100 |  |  |  | — |  |  | Investment holding
Stand Best Creation Limited |  | Hong Kong, January 17, 2008 |  | HKD | 10,000 |  |  |  | — |  |  |  | 100 |  |  | Investment holding
Jinjiang Hengda Ceramics Co., Ltd. |  | PRC, September 30, 1993 |  | RMB | 288,880,000 |  |  |  | — |  |  |  | 100 |  |  | Manufacture and sale of ceramic tiles
Jiangxi Hengdali Ceramic Materials Co., Ltd. |  | PRC, May 4, 2008 |  | RMB | 55,880,000 |  |  |  | — |  |  |  | 100 |  |  | Manufacture and sale of ceramic tiles
Vast Elite Limited |  | Hong Kong, September 22, 2017 |  | HKD | 1 |  |  |  | — |  |  |  | 100 |  |  | Trading of building material
Chengdu Future Talented Management and Consulting Co, Ltd (note 2) |  | PRC, November 20, 2019 |  | RMB | 30,000,000 |  |  |  | — |  |  |  | 100 |  |  | Business management and consulting services
Antelope Enterprise (HK) Holdings Limited |  | Hong Kong, December 3, 2019 |  | HKD | 10,000 |  |  |  | — |  |  |  | 100 |  |  | Investment holding
Antelope Holdings (Chengdu) Co., Ltd (note 3) |  | PRC, May 9, 2020 |  | USD | 10,000,000 |  |  |  | — |  |  |  | 100 |  |  | Business management and consulting services
Hainan Antelope Holdings Co., Ltd (note 4) |  | PRC, August 10, 2021 |  | USD | 10,000,000 |  |  |  | — |  |  |  | 100 |  |  | Business management and consulting services
Antelope Future (Yangpu) Investment Co., Ltd (note 5) |  | PRC, August 11, 2021 |  | USD | 10,000,000 |  |  |  | — |  |  |  | 100 |  |  | Business management and consulting services
Antelope Investment (Hainan) Co., Ltd (note 6) |  | PRC, August 23, 2021 |  | RMB | 50,000,000 |  |  |  | — |  |  |  | 100 |  |  | Business management and consulting services
Antelope Ruicheng Investment (Hainan) Co., Ltd (note 7) |  | PRC, September 9, 2021 |  | RMB | 50,000,000 |  |  |  | — |  |  |  | 100 |  |  | Business management and consulting services
Hainan Kylin Cloud Services Technology Co., Ltd (note 8) |  | PRC, September 18, 2021 |  | RMB | 5,000,000 |  |  |  | — |  |  |  | 51 |  |  | Business management and consulting services
Hangzhou Kylin Cloud Services Technology Co., Ltd (note 9) |  | PRC, October 28, 2022 |  | RMB | 5,000,000 |  |  |  | — |  |  |  | 51 |  |  | Business management and consulting services
Anhui Kylin Cloud Services Technology Co., Ltd (note 10) |  | PRC, November 2, 2022 |  | RMB | 5,000,000 |  |  |  | — |  |  |  | 51 |  |  | Business management and consulting services

Note:

1. | The registered capital of Hengda, Hengdali, Vast Elite and Antelope HK had been fully paid up.
2. | Chengdu Future is allowed to pay the registered capital in full before November 12, 2049.
3. | Antelope Chengdu is allowed to pay the registered capital in full before April 13, 2060.
4. | Hainan Antelope is allowed to pay the registered capital in full before December 31, 2041.
5. | Antelope Future is allowed to pay the registered capital in full before December 31, 2051.
6. | Antelope Investment is allowed to pay the registered capital in full before December 31, 2041.
7. | Antelope Ruicheng is allowed to pay the registered capital in full before December 31, 2051.
8. | Hainan Kylin is allowed to pay the registered capital in full before September 16, 2050.
9. | Hangzhou Kylin is allowed to pay the registered capital in full before October 21, 2042.
10. | Anhui Kylin is allowed to pay the registered capital in full before October 31, 2042.

F-10

On September 3, 2020, the Company effected a reverse stock split, every three issued and outstanding ordinary shares as of the effective date will automatically be combined into one issued and outstanding share. Consequently, the reverse stock split will reduce the number of outstanding ordinary shares of the Company from approximately 9.2 million shares to approximately 3.1 million shares, and the par value per share will increase from $0.008 to $0.024. All outstanding stock options, warrants and other rights to purchase the Company’s ordinary shares will be adjusted proportionately as a result of the reverse stock split.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board (“IASB”), which collective term includes all applicable individual International Financial Reporting Standards, International Accounting Standards and Interpretations issued by the IASB.

The significant accounting policies that have been used in the preparation of these consolidated financial statements are summarized below. These policies have been consistently applied to all the years presented unless otherwise stated. The adoption of new or amended IFRSs and the impacts on the Company’s financial statements, if any, are disclosed in Note 3.

The COVID-19 pandemic has created and may continue to create significant uncertainty in macroeconomic conditions, which may cause further business slowdowns or shutdowns, depress demand for the Company’s business, and adversely impact its results of operations. During the years ended December 31, 2022 and 2021, the Company faced increasing uncertainties around its estimates of revenue collectability, accounts receivable credit losses, impairment of inventory and long-lived assets. The Company expects uncertainties around its key accounting estimates to continue to evolve depending on the duration and degree of impact associated with the COVID-19 pandemic. Its estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in its consolidated financial statements. Judgments made by management in the application of IFRSs that have significant effect on the financial statements and major sources of estimation uncertainty are discussed in Note 4. However, Since January 2023, China has dropped all COVID restrictions.

The consolidated financial statements have been prepared on the historical cost basis, except for derivative financial instruments that have been measured at fair value.

The preparation of financial statements in conformity with IFRSs requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying amounts of assets and liabilities not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgments made by management in the application of IFRSs that have significant effect on the financial statements and major sources of estimation uncertainty are discussed in Note 4.

The consolidated financial statements were approved and authorized for issue by the Board of Directors on April 28, 2023.

2.2 Basis of consolidation

(i) 100% owned Subsidiaries

The Success Winner Acquisition on November 22, 2009 has been accounted for as a reverse recapitalization. The acquisition agreement resulted in the former owner of Success Winner obtaining effective operating and financial control of the combined entity. Prior to the acquisition, Antelope Enterprise had no operating business. Accordingly, the acquisition does not constitute a business combination for accounting purposes and is accounted for as a capital transaction. That is, the transaction is in substance a reverse recapitalization, equivalent to the issuance of equity interests by Success Winner for the net monetary assets of Antelope Enterprise accompanied by a recapitalization. The consolidated financial statements are a continuation of the financial statements of Success Winner. The assets and liabilities of Antelope Enterprise are recognized at their carrying amounts at the date of acquisition with a corresponding credit to the consolidated equity and no goodwill or other intangible assets are recognized. The equity of the combined entity recognized at the date of acquisition represents the equity balances of Success Winner together with the deemed proceeds from the reverse recapitalization determined as described above. However, the equity structure presented in the consolidated financial statements (number and values of equity instruments issued) reflects the equity structure of the legal parent, Antelope Enterprise. Costs directly attributable to the transaction have been debited to equity to the extent of net monetary assets received.

F-11

Success Winner and its subsidiaries as a group is regarded as a continuing entity resulting from the Hengda Reorganization since the management of all the entities which took part in the Reorganization were controlled by the same director and shareholder before and immediately after the Reorganization. Immediately after the Reorganization, there was a continuation of the control over the entities’ financial and operating policy decision and risk and benefits to the ultimate shareholders that existed prior to the Reorganization. Accordingly, the reorganization has been accounted for as a reorganization under common control and the financial statements of Success Winner, Stand Best and Hengda have been combined on the basis of merger accounting for all periods presented.

The assets and liabilities of the combining entities or businesses are combined using the existing book values from the controlling party’s perspective. No amount is recognized as consideration for goodwill or excess of the acquirer’s interest in the net fair values of the acquiree’s identifiable assets, liabilities and contingent liabilities over cost at the time of the common control combination. The consolidated statement of comprehensive income includes the results of each of the combining entities or businesses from the earliest date presented or the date of their incorporation/establishment or since the date when the combining entities or businesses first came under common control, where this is a shorter period, regardless of the date of the common control combination.

The Hengdali Acquisition on January 8, 2010 has been accounted for as a business combination using the acquisition method. Hengdali is a subsidiary of the Company, and the Company has the power to govern the financial and operating policies which accompanies its shareholding of 100% of the voting rights in Hengdali. Therefore, Hengdali as a subsidiary is fully consolidated from January 8, 2010, the date on which control was transferred to the Company.

The accounting for the Hengdali Acquisition under the acquisition method, treats the consideration transferred for the acquisition of Hengdali as the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Company. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in this business combination are measured initially at their fair values at the acquisition date.

The excess of the consideration transferred over the fair value of the identifiable net assets acquired is recorded as goodwill.

The Company’s financial statements consolidate those of the Company and all of its subsidiaries as of December 31, 2022. Subsidiaries are entities controlled by the Company. The Company controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. When assessing whether the Company has power, only substantive rights (held by the Company and other parties) are considered. All subsidiaries have a reporting date of December 31.

An investment in a subsidiary is consolidated into the consolidated financial statements form the date that control commences until the date that control ceases. Inter-company transactions, balances and unrealized gains or losses on transactions between group companies are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Company.

(ii) Non-controlling interests

Antelope Ruicheng owns 51% of Hainan Kylin, while non-controlling interest owns 49% of Hainan Kylin. Hainan Kylin 100% owns Hangzhou Kylin and Anhui Kylin. Non-controlling interests in the financial results and equity of subsidiaries are shown separately in the Consolidated Statements of Comprehensive Income (Loss), Consolidated Statements of Financial Position and Consolidated Statements of Changes in Equity respectively.

2.3 Foreign currency translation

The financial statements are presented in RMB (to the nearest thousand), being the currency that best reflects the economic substance of the underlying events and circumstances relevant to the Company. The Company’s operations are conducted through the subsidiaries in the People’s Republic of China (“PRC”). The functional currency of these subsidiaries in China is Renminbi (“RMB”). The functional currency of Antelope Enterprise and Antelope HK is the United State dollars (US$). The functional currency of Vast Elite is Hong Kong dollar.

In the individual financial statements of the consolidated entities, foreign currency transactions are translated into the functional currency of the individual entity using the exchange rates prevailing at the dates of the transactions. At the reporting date, monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling at that date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the reporting date retranslation of monetary assets and liabilities are recognized in profit or loss.

Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined and are reported as part of the fair value gain or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

In the consolidated financial statements, all individual financial statements of foreign operations, originally presented in a currency different from the Company’s presentation currency, have been converted into Renminbi. Assets and liabilities have been translated into Renminbi at the closing rates at the reporting date. Income and expenses have been converted into Renminbi at the exchange rates ruling at the transaction dates, or at the average rates over the reporting period provided that the exchange rates do not fluctuate significantly. Any differences arising from this procedure have been recognized in other comprehensive income and accumulated separately in the currency translation reserve in equity.

When a foreign operation is sold, such exchange differences are reclassified from equity to profit or loss as part of the gain or loss on sale.

The translation of certain RMB amounts as of and for the year ended December 31, 2022 into US$ is included in these financial statements solely for the convenience of readers and was made at the rate of RMB 6.90 to US$1.00, which was based on the noon buying rate on December 31, 2022 in the City of New York cable transfers of RMB as certified for customers purposes by the Federal Reserve Bank of New York. Such translation should be construed as representation that RMB amounts could be converted, realized or settled into US$ at the rate stated above or at any other rate.

F-12

2.4 Property, plant and equipment

Leasehold land and buildings for own use

When a lease includes both land and building elements, the Company assesses the classification of each element as a finance or an operating lease separately based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each element have been transferred to the Company, unless it is clear that both elements are operating leases in which case the entire lease is classified as an operating lease. Specifically, the minimum lease payments (including any lump sum upfront payments) are allocated between the land and the building elements in proportion to the relative fair values of the leasehold interests in the land element and building element of the lease at the inception of the lease.

To the extent the allocation of the lease payments can be made reliably, interest in leasehold land that is accounted for as an operating lease is presented as “land use rights” in the consolidated statements of financial position and is amortized over the lease term on a straight-line basis.

All buildings are depreciated over their expected useful lives of 40 years.

Other property, plant and equipment

Property, plant and equipment are stated in the consolidated statements of financial position at cost less any accumulated depreciation and any accumulated impairment losses.

Depreciation is provided to write off the cost less their residual values over their estimated useful lives as follows, using the straight-line method:

SCHEDULE OF DEPRECIATION USING STRAIGHT-LINE METHOD

Plant and machinery |  |  | 10 years |
Motor vehicles |  |  | 10 years |
Office equipment |  |  | 5 years |

The assets’ residual values, depreciation methods and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other costs, such as repairs and maintenance, are charged to profit or loss during the financial period in which they are incurred.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

The gain or loss arising on retirement or disposal is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

2.5 Investment property

Investment properties are properties held to earn rentals or for capital appreciation.

Investment properties are initially measured at historical cost, including any directly attributable expenditure. Subsequent to initial recognition, investment properties are measured at their historical cost less any accumulated depreciation and any accumulated impairment losses.

Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other costs, such as repairs and maintenance, are charged to profit or loss during the financial period in which they are incurred.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

The gain or loss arising on retirement or disposal is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use or no future economic benefits are expected from its disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the item is derecognized.

2.6 Land use rights

Upfront payments made to acquire land held under an operating lease are stated at cost less accumulated amortization and any accumulated impairment losses. Amortization is calculated on a straight line basis over the leasing period of 50 years. The carrying amounts of land used rights were reclassified to right-of-use assets to conform to IFRS 16.

F-13

2.7 Goodwill

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.

For the purposes of impairment testing, goodwill is allocated to each of the Company’s cash-generating units, or groups of cash-generating units, that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently whenever there is indication that the unit may be impaired. If some or all of the goodwill allocated to a cash-generating unit was acquired in a business combination during the current annual period, that unit shall be tested for impairment before the end of the current annual period. If the recoverable amount of the cash-generating unit is less than the carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro – rata basis based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

On disposal of the relevant cash generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

2.8 Inventories

Inventories are carried at the lower of cost and net realizable value. Cost is determined using the weighted average basis, and in the case of work in progress and finished goods, comprises direct materials, direct labor and an appropriate proportion of overhead.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and applicable selling expenses.

When inventories are sold, the carrying amount of those inventories is recognized as an expense in the period in which the related revenue is recognized. The amount of any write-down of inventories to net realizable value and all losses of inventories are recognized as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories is recognized as a reduction in the amount of inventories recognized as an expense in the period in which the reversal occurs.

2.9 Cash and cash equivalents

Cash and cash equivalents include cash at bank and in hand, demand deposits with banks and short term highly liquid investments with original maturities of three months or less that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. For the purpose of the statement of cash flows presentation, cash and cash equivalents include bank overdrafts which are repayable on demand and form an integral part of the Company’s cash management.

2.10 Financial instruments

Financial assets and financial liabilities are recognized when a group entity becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value except for trade debtors arising from contracts with customers which are initially measured in accordance with HKFRS 15 since 1 January 2019. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets or liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

F-14

The effective interest method is a method of calculating the amortized cost of a financial asset or financial liability and of allocating interest income and interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts and payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset or financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Interest income which are derived from the Company’s ordinary course of business are presented as revenue.

Financial assets

Classification and subsequent measurement of financial assets (upon application of IFRS 9)

Financial assets that meet the following conditions are subsequently measured at amortized cost:

| ● | the financial asset is held within a business model whose objective is to collect contractual cash flows; and

| ● | the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

All other financial assets are subsequently measured at fair value through profit or loss (“FVTPL”).

A financial asset is classified as held for trading if:

| ● | it has been acquired principally for the purpose of selling in the near term; or

| ● | on initial recognition it is a part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or

| ● | it is a derivative that is not designated and effective as a hedging instrument.

In addition, the Company may irrevocably designate a financial asset that are required to be measured at the amortized cost as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch.

(i) Amortized cost and interest income

Interest income is recognized using the effective interest method for financial assets measured subsequently at amortized cost. Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired. For financial assets that have subsequently become credit-impaired, interest income is recognized by applying the effective interest rate to the amortized cost of the financial asset from the next reporting period. If the credit risk on the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired, interest income is recognized by applying the effective interest rate to the gross carrying amount of the financial asset from the beginning of the reporting period following the determination that the asset is no longer credit impaired.

(ii) Financial assets at FVTPL

Financial assets that do not meet the criteria for being measured at amortized cost are measured at FVTPL.

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognized in profit or loss. The net gain or loss recognized in profit or loss includes any dividend or interest earned on the financial asset and is included in the “other gains and losses” line item.

Impairment of financial assets (upon application IFRS 9)

F-15

The Company recognizes a loss allowance for expected credit loss (“ECL”) on financial assets which are subject to impairment under IFRS 9 (including trade and other receivables, bank deposits and bank balances). ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition.

General approach

ECLs are recognized in two measurement bases. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

At each reporting date, the Company assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information that is available without undue cost or effort, including historical and forward looking information.

The Company considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Financial assets at amortized cost are subject to impairment under the general approach and they are classified within the following stages for measurement of ECLs except for trade receivables which apply the simplified approach as detailed below.

Stage 1 — Financial instruments for which credit risk has not increased significantly since initial recognition and for which the loss allowance is measured at an amount equal to 12-month ECLs

Stage 2 — Financial instruments for which credit risk has increased significantly since initial recognition but that are not credit-impaired financial assets and for which the loss allowance is measured at an amount equal to lifetime ECLs

Stage 3 — Financial assets that are credit-impaired at the reporting date (but that are not purchased or originated credit-impaired) and for which the loss allowance is measured at an amount equal to lifetime ECLs

Simplified approach

For trade receivables that do not contain a significant financing component or when the Company applies the practical expedient of not adjusting the effect of a significant financing component, the Company applies the simplified approach in calculating ECLs. Under the simplified approach, the Company does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date.

The Company assesses at the end of each reporting period whether there is any objective evidence that a financial asset or a group of financial assets is impaired. An impairment exists if one or more events that occurred after the initial recognition of the asset have an impact on the estimated future cash flows of the financial asset or the Company of financial assets that can be reliably estimated. Evidence of impairment may include indications that a debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortized cost

For financial assets carried at amortized cost, the Company first assesses whether impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Company determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognized are not included in a collective assessment of impairment.

The amount of any impairment loss identified is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate (i.e., the effective interest rate computed at initial recognition).

The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognized in profit or loss. Interest income continues to be accrued on the reduced carrying amount using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. Loans and receivables together with any associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realized or has been transferred to the Company.

If, in a subsequent period, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is credited to other expenses in the statement of profit or loss.

F-16

Classification and subsequent measurement of financial assets (before application of IFRS 9 on January 1, 2018)

The Company’s financial assets are loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are initially recognized at fair value. Subsequent to initial recognition, loans and receivables (including trade and other receivables, pledged bank deposits, fixed bank deposits with maturity periods over three months and bank balances) are measured at amortized cost using the effective interest method, less any identified impairment losses).

Impairment of financial assets

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial assets have been affected.

Objective evidence of impairment could include:

| ● | significant financial difficulty of the issuer or counterparty; or

| ● | breach of contract, such as a default or delinquency in interest or principal payments; or

| ● | it becoming probable that the borrower will enter bankruptcy or financial re-organization; or disappearance of an active market for that financial asset because of financial difficulties.

If any such evidence exists, the impairment loss on trade receivables and other current receivables and other financial assets carried at amortized cost is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition of these assets), where the effect of discounting is material. This assessment is made collectively where these financial assets share similar risk characteristics, such as similar past due status, and have not been individually assessed as impaired. Future cash flows for financial assets which are assessed for impairment collectively are based on historical loss experience for assets with credit risk characteristics similar to the collective group.

If in a subsequent period the amount of an impairment loss decreases and the decrease can be linked objectively to an event occurring after the impairment loss was recognized, the impairment loss is reversed through profit or loss. A reversal of an impairment loss shall not result in the asset’s carrying amount exceeding that which would have been determined had no impairment loss been recognized in prior years.

Impairment losses are written off against the corresponding assets directly, except for impairment losses recognized in respect of trade receivables included within trade and other receivables and prepayments, whose recovery is considered doubtful but not remote. In this case, the impairment losses for doubtful debts are recorded using an allowance account. When the Company is satisfied that recovery is remote, the amount considered irrecoverable is written off against trade debtors directly and any amounts held in the allowance account relating to that debt are reversed. Subsequent recoveries of amounts previously charged to the allowance account are reversed against the allowance account. Other changes in the allowance account and subsequent recoveries of amounts previously written off directly are recognized in profit or loss.

Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and recognizes a collateralized borrowing for the proceeds received.

On derecognition of a financial asset measured at amortized cost, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.

Financial liabilities and equity instruments

Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.

F-17

Effective interest method

The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Interest expense is recognized on an effective interest basis.

Financial liabilities

Interest-bearing borrowings are recognized initially at fair value less attributable transaction costs. They are subsequently stated at amortized cost with any difference between the amount initially recognized and redemption value being recognized in profit or loss over the period of the borrowings, together with any interest and fees payable, using the effective interest method.

Trade and other payables are initially recognized at fair value. They are subsequently stated at amortized cost unless the effect of discounting would be immaterial, in which case they are stated at cost.

Derecognition

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire.

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss.

The Company derecognizes a financial liability when, and only when, the Company’s obligations are discharged, cancelled or expire. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

2.11 Derivative financial instruments

Initial recognition and subsequent measurement

The Company uses derivative financial instruments, such as forward currency contracts, for investment purposes. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss.

2.12 Leases

Finance leases refers to the situation that the economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards of ownership of the leased asset.

All other leases are treated as operating leases. Where the Company has the use of assets under operating leases, payments made under the leases are charged to profit or loss on a straight line basis over the lease terms except where an alternative basis is more representative of the time pattern of benefits to be derived from the leased assets. Lease incentives received are recognized in profit or loss as an integral part of the aggregate net lease payments made. Contingent rental are charged to profit or loss in the accounting period in which they are incurred. Operating leases were treated in accordance to IFRS 16 commencing January 1, 2019.

All the leases of the Company are operating leases for the years ended December 31, 2022, 2021 and 2020.

F-18

2.13 Provisions and contingencies

Provisions for product warranties, legal disputes, onerous contracts or other claims are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.

All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future uncertain events not wholly within the control of the Company are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

2.14 Share capital

Ordinary shares are classified as equity. Share capital is determined using the nominal value of shares that have been issued.

Any transaction costs associated with the issuing of shares are deducted from share premium (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction.

2.15 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods, net of rebates and discounts. No such rebates were paid to distributors since year 2013. Provided it is probable that the economic benefits will flow to the Company and the revenue and costs, if applicable, can be measured reliably, revenue is recognized as follows:

Sales of goods are recognized upon transfer of the significant risks and rewards of ownership to the customer. This is usually taken as the time when the goods are delivered and the customer has accepted the goods. Once goods are accepted by a customer, there is no continuing management involvement with the goods and the Company does not have the obligation to accept the return of the goods to the Company from the customer.

Consulting service and livestreaming ecommerce service are recognized upon service is provided to customers.

Rental income is recognized based upon our annual rental over the life of the lease under operating lease, using the straight-line method.

Interest income is recognized on a time-proportion basis using the effective interest method.

2.16 Impairment of non-financial assets

Impairment testing is made on the Company’s goodwill at each reporting date. Property, plant and equipment and land use rights are tested for impairment if there is any indication that the assets may be impaired at the balance sheet date.

If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount.

Calculation of recoverable amount

An asset’s recoverable amount is the greater of an asset’s or cash-generating unit’s fair value less costs of disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).

F-19

Recognition of impairment losses

An impairment loss is recognized in profit or loss whenever the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to that cash-generating unit (or group of units), and then, to reduce on a pro rata basis the carrying amount of the other assets in the unit (or group of units), except that the carrying amount of an asset will not be reduced below its individual fair value less costs of disposal (if measurable) or value in use (if determinable).

Reversal of impairment losses

In respect of assets other than goodwill, an impairment loss is reversed if there has been a favorable change in the estimates used to determine the recoverable amount. An impairment loss in respect of goodwill is not reversed.

A reversal of an impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognized in prior years. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognized.

2.17 Employee benefits

Retirement benefits

The employees of the Company’s PRC subsidiaries are required to participate in a central pension scheme operated by the local municipal government. Contributions are recognized as an expense in profit or loss as employees render services during the year. The Company’s obligation under these plans is limited to the fixed percentage contributions payable.

Share-based employee remuneration

The Company operates equity-settled share-based remuneration plans for its employees. None of the Company’s plans feature any options for a cash settlement.

The fair value of share options granted to employees is recognized as an employee cost with a corresponding increase in the share-based payment reserve within equity. The fair value is measured at the grant date using the Black Scholes Option Pricing Model, taking into account the terms and conditions upon which the options were granted. Where the employees have to meet vesting conditions before becoming unconditionally entitled to the share options, the total estimated fair value of the share options is spread over the vesting period, taking into account the probability that the options will vest.

During the vesting period, the number of share options expected to vest is reviewed. Any resulting adjustment to the cumulative fair value recognized in prior years is charged/credited to the profit or loss for the year under review, unless the original employee expenses qualify for recognition as an asset, with a corresponding adjustment to the share-based payment reserve. On the vesting date, the amount recognized as an expense is adjusted to reflect the actual number of share options that vest (with a corresponding adjustment to the share-based payment reserve) except where forfeiture is only due to not achieving vesting conditions that relate to the market price of the Company’s shares. The equity amount is recognized in the share-based payment reserve until either the option is exercised (when it is transferred to the share premium account) or the option expires (when it is released directly to retained earnings).

F-20

2.18 Borrowing costs

Borrowing costs consist of interest and other costs incurred in connection with the borrowing of funds. Borrowing costs directly attributable to the acquisition, construction or production of qualifying asset which necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of that asset until such time as the assets are substantially ready for their intended use or sale. Other borrowing costs are expensed when incurred.

2.19 Accounting for income taxes

Income tax comprises current tax and deferred tax.

Current tax and movements in deferred tax assets and liabilities are recognized in profit or loss except to the extent that they relate to items recognized in other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognized in other comprehensive income or directly in equity, respectively.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.

Deferred tax is calculated using the liability method on temporary differences at the reporting date between the carrying amounts of assets and liabilities in the financial statements and their respective tax bases. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences, tax losses available to be carried forward as well as other unused tax credits, to the extent that it is probable that taxable profit, including existing taxable temporary differences, will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilized.

Deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither taxable nor accounting profit or loss.

Deferred tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries, associates and joint ventures, except where the Company is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax is calculated, without discounting, at the tax rates that are expected to apply in the period the liability is settled or the asset realized, based on tax rate (and tax laws) that have been enacted or substantively enacted at the reporting date.

The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the related tax benefit to be utilized. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be available.

Additional income taxes that arise from the distribution of dividends are recognized when the liability to pay the related dividends is recognized.

F-21

Current tax balances and deferred tax balances, and movements therein, are presented separately from each other and are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets are offset against deferred tax liabilities, if the Company has the legally enforceable right to set off the recognized amounts and the following additional conditions are met:

| (a) | in the case of current tax assets and liabilities, the Company intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously; or

| (b) | in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation authority on either:

| (i) | the same taxable entity; or

| (ii) | different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered, intend either to settle current tax liabilities and realize the current tax assets on a net basis, or to settle the liabilities and realize the assets simultaneously.

2.20 Research and development activities

Costs associated with research activities are expensed in profit or loss as they incur. Costs that are directly attributable to development activities are recognized as intangible assets if, and only if, all of the following have been demonstrated:

| (i) | the technical feasibility of completing the intangible asset so that the asset will be available for use or sale;

| (ii) | the intention to complete the intangible asset and use or sell it;

| (iii) | the ability to use or sell the intangible asset;

| (iv) | how the intangible asset will generate probable future economic benefits;

| (v) | the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

| (vi) | the ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognized for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognized, development expenditure is recognized in profit or loss in the period in which it is incurred.

Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

Gains and losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in profit or loss when the asset is derecognized.

2.21 Segment reporting

The Company identifies operating segments and prepares segment information based on the regular internal financial information reported to the Chief Executive Officer and executive directors, who are the Company’s chief operating decision maker, for their decisions about the allocation of resources to the Company’s business components and for their review of the performance of those components.

Business segment

The Company operates principally in the 1) manufacturing and sale of medium to high-end ceramic tiles and 2) providing business management consulting, information system technology consulting services including the sales of software use rights for digital data deposit platforms and asset management systems, and online social media platform development and consulting. The Chief Executive Officer and executive directors regularly review the Company’s business as two business segments.

F-22

Geographical segment

The business of the Company is engaged entirely in the PRC. The Chief Executive Officer and executive directors regularly review the Company’s business as one geographical segment.

2.22 Related parties

| (a) | A person, or a close member of that person’s family, is related to the Company if that person:

| (i) | has control or joint control over the Company;

| (ii) | has significant influence over the Company; or

| (iii) | is a member of the key management personnel of the Company.

| (b) | An entity is related to the Company if any of the following conditions applies:

| (iv) | The entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

| (v) | One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

| (vi) | Both entities are joint ventures of the same third party.

| (vii) | One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

| (viii) | The entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company.

| (ix) | The entity is controlled or jointly controlled by a person identified in (a).

| (x) | A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

2.21 Non-current assets (or disposal groups) held for sale and discontinued operations

Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement.

An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.

Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.

Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the consolidated statement of financial position. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the consolidated statement of financial position.

A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the consolidated statement of comprehensive income.

3. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

3.1 Adoption of new or amended IFRSs

The following amendments to standards have been adopted by the Company for the first time for the financial year beginning on 1 January 2019.

IFRS 16 Lease

IFRS 16 will result in almost all leases being recognized on the statement of financial position, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognized. The only exceptions are short-term and low-value leases. The accounting for lessors will not be significantly changed. The standard will affect primarily the accounting for Company’s operating leases.

F-23

Management has just commenced its assessment and have not yet determined to what extent its commitments will result in the recognition of an asset and a liability for future payments and how this will affect the Company’s profit and classification of cash flows.

The Company adopted IFRS 16 Leases retrospectively from January 1, 2019. In accordance with the transitional provision under IFRS 16, the Company applied the simplified transition approach, and all right-of-use assets were measured at the amount of the lease liabilities on adoption (adjusted for any prepaid or accrued lease expenses). Comparative figures for the 2018 financial year have not been restated.

On adoption of IFRS 16, the Company recognized lease liabilities in relation to leases which had previously been classified as “operating leases” under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of January 1, 2019. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on January 1, 2019 was 5.75%.

SUMMARY OF LIABILITIES MEASURED AT THE PRESENT VALUE OF THE REMAINING LEASE PAYMENTS, DISCOUNTED USING THE LESSEE’S INCREMENTAL BORROWING RATE

|  | RMB’000 |
Operating lease commitments disclosed as at December 31, 2018 |  |  | 19,695 |
Discounted using weighted average incremental borrowing rate of 5.75% |  |  | 15,496 |
Lease liabilities recognized as at January 1, 2019 |  |  | 19,380 |

All right-of-use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the consolidated statement of financial position as at December 31, 2018. The impact on transition of IFRS 16 is summarized as below:

SUMMARY OF IMPACT ON TRANSITION OF IFRS 16

|  | January 1, 2019 |
|  | RMB’000 |
Right-of-use assets |  |  | 17,266 |
Lease liability |  |  | (19,380 | )
Retained earnings |  |  | 2,114 |

The IASB has issued a number of new IFRSs and amendments to IFRSs that are first effective for the current accounting period of the Group. Of these, the following developments are relevant to the Group’s financial statements:

(i) Amendments to IFRS3, Definition of a Business

(ii) Amendments to the Conceptual Framework for Financial Reporting, Amendments to references to the Conceptual Framework in IFRS Standards

(iii) Amendments to IAS1 and IAS8, Definition of Material

(iv) Amendments to IFRS7, IAS39 and IFRS9, Interest Rate Benchmark Reform (Phase 1)

The application of the above new and amendments to IFRSs in the current year has had no material effect on the Group’s financial performance and positions for the current and prior years and/or on the disclosures set out in these consolidated financial statements.

F-24

3.2 Accounting standards issued but not yet effective

Up to the date of issue of these financial statements, the IASB has issued a number of amendments, new standards and interpretations which are not yet effective for the year ended December 31, 2022 and which have not been adopted in these financial statements. These include the following which may be relevant to the Group:

IFRS 17 |  | Insurance Contracts (3)
Amendments to IFRS 10 and IAS 28 |  | Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (4)
Amendments to IFRS 3 |  | Reference to the Conceptual Framework (2)
Amendments to IAS 16 |  | Property, Plant and Equipment—Proceeds before Intended Use (2)
Amendments to IAS 37 |  | Onerous Contracts—Cost of Fulfilling a Contract (2)
Amendments to IAS 1 |  | Classification of Liabilities as Current or Non-current (3)
Amendments to IFRS 4 |  | Extension of the Temporary Exemption from Applying IFRS 9 (3)
Annual Improvements to IFRS Standards 2018-2020 Cycle |  | Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IFRS 16 Leases, and IAS 41 Agriculture (2)

2. Effective for annual periods beginning on or after January 1, 2022

3. Effective for annual periods beginning on or after January 1, 2023

4. The effective date of the amendments has yet to be set by the IASB; however, earlier application of the amendments is permitted

The management of the Company anticipate that the application of all the new and amendments to IFRSs will have no material impact on the consolidated financial statements in the foreseeable future.

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of the Company’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The key sources of estimation uncertainty and key assumptions concerning the future at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Useful lives and impairment assessment of property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and identified impairment losses. The estimation of useful lives impacts the level of annual depreciation expenses recorded. Property, plant and equipment are evaluated for possible impairment on a specific asset basis or in groups of similar assets, as applicable. This process requires management’s estimate of future cash flows generated by each asset or group of assets. For any instance where this evaluation process indicates impairment, the relevant asset’s carrying amount is written down to the recoverable amount and the amount of the write-down is charged against profit or loss.

Investment properties are stated at cost less accumulated depreciation and identified impairment losses. The estimation of useful lives impacts the level of annual depreciation expenses recorded. Investment properties are evaluated for possible impairment on a specific asset basis or in groups of similar assets, as applicable. This process requires management’s estimate of future cash flows generated by each asset or group of assets. For any instance where this evaluation process indicates impairment, the relevant asset’s carrying amount is written down to the recoverable amount and the amount of the write-down is charged against profit or loss.

F-25

Impairment loss recognized in respect of property, plant and equipment

As of December 31, 2022, the net carrying amount of property, plant and equipment was approximately RMB 1,006,000 (2021: RMB 1,250,000). No impairment loss was recognized against the original carrying amount of property, plant and equipment for the years ended December 31, 2022, 2021 and 2020. Determining whether property, plant and equipment are impaired requires an estimation of the recoverable amount of the property, plant and equipment. Such estimation was based on certain assumptions, which are subject to uncertainty and might materially differ from the actual results.

Impairment loss recognized in respect of investment property

As of December 31, 2022, the net carrying amount of investment property was nil (2021: nil). No impairment loss was recognized against the original carrying amount of investment property for the years ended December 31, 2022, 2021 and 2020, respectively. Determining whether investment property are impaired requires an estimation of the recoverable amount of the investment property. Such estimation was based on certain assumptions, which are subject to uncertainty and might materially differ from the actual results.

Impairment loss recognized in respect of land use rights

As of December 31, 2022, the net carrying amount of land use rights was nil (2021: nil). No impairment loss was recognized against the original carrying amount of land use rights for the years ended December 31, 2022, 2021 and 2020. The carrying amounts of land used rights were reclassified to right-of-use assets to conform to IFRS 16 during the year ended December 31, 2022. Determining whether land use rights are impaired requires an estimation of the recoverable amount of the land use rights. Such estimation was based on certain assumptions, which are subject to uncertainty and might materially differ from the actual results.

Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires the Company to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Where the actual future cash flows are less than expected, a material impairment loss may arise. No impairment was made on goodwill for the years ended December 31, 2022, 2021 and 2020.

Income tax

The Company has exposure to income taxes in the PRC. Significant judgment is required in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognizes liabilities for expected tax issues based on estimates of whether additional taxes will be due. When the final tax outcome of these matters is different from the amounts that were initially recognized, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amounts of the Company’s income tax payable as of December 31, 2022 and 2021 were RMB 93,000 and 209,000, respectively.

Provision for deferred tax

Determining income tax provisions involves judgement on the future tax treatment of certain transactions. The management evaluates tax implications of transactions and tax provisions are set up accordingly. The tax treatment of such transactions is reconsidered periodically to take into account all changes in tax legislation. Deferred tax assets are recognized for tax losses not yet used and temporary deductible differences. As those deferred tax assets can only be recognized to the extent that it is probable that future taxable profit will be available against which the unused tax credits can be utilized, management’s judgement is required to assess the probability of future taxable profits. Management’s assessment is constantly reviewed and additional deferred tax assets are recognized if it becomes probable that future taxable profits will allow the deferred tax asset to be recovered.

F-26

Impairment of trade receivables

The Company recognizes a loss allowance for expected credit loss (“ECL”) on financial assets which are subject to impairment under IFRS 9 (including trade and other receivables, amounts due from related parties, restricted cash, bank balances and cash). The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition.

Lifetime ECL represents the ECL that will result from all possible default events over the expected life of the relevant instrument. In contrast, 12-month ECL (“12m ECL”) represents the portion of lifetime ECL that is expected to result from default events that are possible within 12 months after the reporting date. Assessment are done based on the Company’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current conditions at the reporting date as well as the forecast of future conditions.

The Company applies the IFRS 9 simplified approach to measure ECL which uses a lifetime ECL for all trade receivables. The ECL on these assets are assessed individually for debtors with significant balances and/or collectively using a provision matrix with appropriate groupings.

For all other instruments, the Company measures the loss allowance equal to 12m ECL, unless when there has been a significant increase in credit risk since initial recognition, the Company recognizes lifetime ECL. The assessment of whether lifetime ECL should be recognized is based on significant increases in the likelihood or risk of a default occurring since initial recognition.

The Company recognized provision for bad debt (reversal) expense of RMB (2,751,000) and RMB 10,148,000 from continuing operations during the years ended December 31, 2022 and 2021, respectively. The Company recognized provision for bad debt expense of RMB 33,365,000 and RMB 115,406,000 million from discontinued operation during the years ended December 31, 2022 and 2021, respectively. The net carrying amounts of the Company’s trade receivables as of December 31, 2022 and 2021 were RMB nil and RMB 51,416,000, respectively.

Net realizable value of inventories

Net realizable value of inventories is the management’s estimation of future selling price in the ordinary course of business, less estimated costs of completion and selling expenses. These estimates are based on the current market condition and the historical experience of selling products of a similar nature. It could change significantly as a result of various market factors. The net carrying amounts of the Company’s inventories as of December 31, 2022 and 2021 were RMB 0 and RMB 31,589,000, respectively.

Share-based payment transaction

The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the stock option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 26.

5. REVENUE AND OTHER INCOME

Revenue comprises the fair value of the consideration received or receivable for the sale of goods. An analysis of the Company’s revenue and other income is as follows:

SCHEDULE OF ANALYSIS ABOUT COMPANY'S REVENUE AND OTHER INCOME

|  | For the years ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |
Revenue |  |  |  |  |  |  |  |  |  |  |  |
Continuing operations |  |  |  |  |  |  |  |  |  |  |  |
Business management and consulting |  |  | 12,662 |  |  |  | 13,026 |  |  |  | — |
Livestreaming ecommerce |  |  | 273,685 |  |  |  | 58,501 |  |  |  | — |
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |
Sale of goods (Note 29) |  |  | 37,696 |  |  |  | 144,743 |  |  |  | 182,989 |
Total revenue |  |  | 324,043 |  |  |  | 216,270 |  |  |  | 182,989 |
Total revenues |  |  | 324,043 |  |  |  | 216,270 |  |  |  | 182,989 |
Other income |  |  |  |  |  |  |  |  |  |  |  |
Continuing operations |  |  |  |  |  |  |  |  |  |  |  |
Interest income |  |  | 10 |  |  |  | 10 |  |  |  | 23 |
Foreign exchange gain |  |  | 73 |  |  |  | — |  |  |  | — |
Consulting income |  |  | — |  |  |  | — |  |  |  | 7,249 |
Other income |  |  | 2,883 |  |  |  | 22 |  |  |  | 128 |
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |
Other income (Note 29) |  |  | 14,244 |  |  |  | 9,388 |  |  |  | 14,531 |
Total other income |  |  | 17,210 |  |  |  | 9,420 |  |  |  | 21,931 |

F-27

b) Segment reporting

The Company identifies operating segments and prepares segment information based on the regular internal financial information reported to the Chief Executive Officer and executive directors, who are the Company’s chief operating decision makers for their decisions about the allocation of resources to the Company’s business components and for their review of the performance of those components.

All of the Company’s operations are considered by the chief operating decision makers to be aggregated into two reportable operating segments: 1) the manufacture and sale of standard to high-end ceramic tiles, 2) the business management consulting, information system technology consulting services including the sales of software use rights for digital data deposit platforms and asset management systems, and online social media platform development and consulting. Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the Company’s chief operating decision makers in deciding how to allocate resources and in assessing performance.

The business of the Company is engaged entirely in the PRC. The Chief Executive Officer and executive directors regularly review the Company’s business as one geographical segment.

The following table shows the Company’s operations by business segment for the years ended December 31, 2022, 2021 and 2020.

SCHEDULE OF OPERATIONS BY BUSINESS SEGMENT

|  | For the year Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |
Revenues |  |  |  |  |  |  |  |  |  |  |  |
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |
Sales of tile products |  |  | 37,696 |  |  |  | 144,743 |  |  |  | 182,989 |
Continuing operations |  |  |  |  |  |  |  |  |  |  |  |
Consulting income / software |  |  | 12,662 |  |  |  | 13,026 |  |  |  | - |
Livestreaming ecommerce |  |  | 273,685 |  |  |  | 58,501 |  |  |  | - |
Total revenues |  |  | 324,043 |  |  |  | 216,270 |  |  |  | 182,989 |
Cost of revenues |  |  |  |  |  |  |  |  |  |  |  |
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |
Sales of tile products |  |  | 41,245 |  |  |  | 83,436 |  |  |  | 208,991 |
Continuing operations |  |  |  |  |  |  |  |  |  |  |  |
Consulting income / software |  |  | 12,819 |  |  |  | 10,002 |  |  |  | - |
Livestreaming ecommerce |  |  | 245,612 |  |  |  | 55,491 |  |  |  | - |
Total cost of revenues |  |  | 299,676 |  |  |  | 148,929 |  |  |  | 208,991 |
Operating costs and expenses |  |  |  |  |  |  |  |  |  |  |  |
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |
Sales of tile products |  |  | 25,324 |  |  |  | 20,292 |  |  |  | 38,723 |
Continuing operations |  |  |  |  |  |  |  |  |  |  |  |
Consulting income / software |  |  | 4,613 |  |  |  | 9,760 |  |  |  | - |
Livestreaming ecommerce |  |  | 25,167 |  |  |  | 195 |  |  |  | - |
Other |  |  | 9,380 |  |  |  | 10,677 |  |  |  | - |
Total operating costs and expenses |  |  | 64,484 |  |  |  | 40,924 |  |  |  | 38,723 |
Bad debt expense (reversal) |  |  |  |  |  |  |  |  |  |  |  |
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |
Sales of tile products |  |  | 33,365 |  |  |  | 115,407 |  |  |  | 150,268 |
Continuing operations |  |  |  |  |  |  |  |  |  |  |  |
Consulting income / software |  |  | 1,000 |  |  |  | 4,854 |  |  |  | - |
Livestreaming ecommerce |  |  | (3,751 | ) |  |  | 5,293 |  |  |  | - |
Total bad debt expense (reversal) |  |  | (30,614 | ) |  |  | 125,554 |  |  |  | 150,268 |
Other expense |  |  |  |  |  |  |  |  |  |  |  |
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |
Sales of tile products |  |  | - |  |  |  | 90 |  |  |  | - |
Continuing operations |  |  |  |  |  |  |  |  |  |  |  |
Consulting income / software |  |  | 36 |  |  |  | 34 |  |  |  | - |
Livestreaming ecommerce |  |  | 6 |  |  |  | - |  |  |  | - |
Total other expense |  |  | 42 |  |  |  | 124 |  |  |  | - |
Other income |  |  |  |  |  |  |  |  |  |  |  |
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |
Sales of tile products |  |  | 14,244 |  |  |  | 9,389 |  |  |  | 14,682 |
Continuing operations |  |  |  |  |  |  |  |  |  |  |  |
Consulting income / software |  |  | 115 |  |  |  | 29 |  |  |  | 7,249 |
Livestreaming ecommerce |  |  | 2,148 |  |  |  | - |  |  |  | - |
Other |  |  | 703 |  |  |  | 2 |  |  |  | - |
Total other income |  |  | 17,210 |  |  |  | 9,420 |  |  |  | 21,931 |
Loss from operations |  |  |  |  |  |  |  |  |  |  |  |
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |
Sales of tile products |  |  | (47,994 | ) |  |  | (65,093 | ) |  |  | (193,062 | )
Continuing operations |  |  |  |  |  |  |  |  |  |  |  |
Consulting income / software |  |  | (5,691 | ) |  |  | (11,595 | ) |  |  | - |
Livestreaming ecommerce |  |  | 8,929 |  |  |  | (2,478 | ) |  |  | - |
Other |  |  | (8,677 | ) |  |  | (10,675 | ) |  |  | - |
Loss from operations |  |  | (53,433 | ) |  |  | (89,841 | ) |  |  | (193,062 | )

F-28

|  | As of |  |  | As of |
|  | December 31, |  |  | December 31, |
|  | 2022 |  |  | 2021 |
Segment assets |  |  |  |  |  |  |  |
Discontinued operations |  |  |  |  |  |  |  |
Sale of tile products |  |  | 74,675 |  |  |  | 147,890 |
Continuing operations |  |  |  |  |  |  |  |
Business management and consulting |  |  | 15,924 |  |  |  | 21,255 |
Livestreaming ecommerce |  |  | 15,004 |  |  |  | 5,967 |
Others |  |  | 4,403 |  |  |  | 2,755 |
Total assets |  |  | 110,006 |  |  |  | 177,867 |

6. FINANCE COSTS

Finance costs comprise interest expense recognized from lease liabilities upon application of IFRS 16:

SCHEDULE OF INTEREST EXPENSE ON THE COMPANY’S BANK BORROWINGS

|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | For the years ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |
Interest on lease liability– continuing operations |  |  | 25 |  |  |  | 51 |  |  |  | 75 |
Interest on lease liability - discontinued operations (Note 29) |  |  | 1,479 |  |  |  | 2,115 |  |  |  | 2,673 |

7. LOSS BEFORE TAXATION

The Company’s loss before taxation is arrived at after charging:

SCHEDULE OF LOSS BEFORE TAXATION

|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | For the years ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |
Cost of inventories recognized as expense(1) |  |  | 41,245 |  |  |  | 148,929 |  |  |  | 208,991 |
Depreciation expenses |  |  | 266 |  |  |  | 96 |  |  |  | 12 |
Amortization of land use rights |  |  | — |  |  |  | — |  |  |  | — |
Right-of-use asset amortization charge |  |  | 13,285 |  |  |  | 14,067 |  |  |  | 13,082 |
Auditors’ remuneration |  |  |  |  |  |  |  |  |  |  |  |
– Audit fees |  |  | 2,003 |  |  |  | 1,898 |  |  |  | 1,951 |
– Audit-related fees |  |  | — |  |  |  | — |  |  |  | — |
Auditor's remuneration for other services |  |  | 2,003 |  |  |  | 1,898 |  |  |  | 1,951 |
Directors’ remuneration |  |  |  |  |  |  |  |  |  |  |  |
– salaries and related cost |  |  | 1,619 |  |  |  | 1,656 |  |  |  | 1,457 |
– retirement scheme contribution |  |  | 13 |  |  |  | 16 |  |  |  | 16 |
– share-based payments |  |  | — |  |  |  | — |  |  |  | — |
Key management personnel (other than directors) |  |  |  |  |  |  |  |  |  |  |  |
– salaries and related cost |  |  | 712 |  |  |  | 639 |  |  |  | 693 |
– retirement scheme contribution |  |  | 16 |  |  |  | 23 |  |  |  | 25 |
– share-based payments |  |  | 2,050 |  |  |  | 1,835 |  |  |  | 1,135 |
Research and development personnel |  |  |  |  |  |  |  |  |  |  |  |
– salaries and related cost |  |  | 439 |  |  |  | 644 |  |  |  | 240 |
– retirement scheme contribution |  |  | 81 |  |  |  | 111 |  |  |  | 44 |
Other personnel |  |  |  |  |  |  |  |  |  |  |  |
– salaries and related cost |  |  | 6,093 |  |  |  | 7,493 |  |  |  | 13,351 |
– retirement scheme contribution |  |  | 1,262 |  |  |  | 1,318 |  |  |  | 2,466 |
Total employee benefit expenses |  |  | 12,285 |  |  |  | 13,735 |  |  |  | 19,427 |

| (1) | Cost of inventories recognized as expense included staff costs of RMB 2,539,000, RMB 4,065,000 and RMB 7,554,000, retirement scheme contributions of RMB 556,108, RMB 756,704 and RMB 1,590,660, depreciation and amortization expense of RMB nil, RMB nil and RMB nil, right-of-use asset depreciation/operating lease charges of RMB 12,801,485, RMB 12,801,485 and RMB 13,082,071, and (reversal of ) / write-down of inventories of RMB (4,045,000), RMB (99,237,173) and RMB (2,301,000) for the years ended December 31, 2022, 2021, and 2020, which amounts are also included in the respective total amounts disclosed separately for each of these types of expenses.

F-29

8. INCOME TAX EXPENSE / (CREDIT)

SCHEDULE OF INFORMATION ABOUT INCOME TAX EXPENSES/(CREDIT)

|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | For the years ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |
Continuing operations |  |  |  |  |  |  |  |  |  |  |  |
Current Tax: |  |  |  |  |  |  |  |  |  |  |  |
PRC Income Tax |  |  | 209 |  |  |  | 217 |  |  |  | 33 |
Reversal of income tax refundable |  |  | — |  |  |  | — |  |  |  | - |
Current tax expense (income) and adjustments for current tax of prior periods |  |  |  |  |  |  |  |  |  |  |  |
Deferred tax expense |  |  | — |  |  |  | — |  |  |  | — |
Tax per financial statements |  |  | 209 |  |  |  | 217 |  |  |  | 33 |

Discontinued operations did not incur any income tax expense for the years ended December 31, 2022, 2021 and 2020.

Reconciliation between income tax expense (credit) and (loss) profit before taxation at applicable tax rates is as follows:

SCHEDULE OF RECONCILIATION BETWEEN INCOME TAX EXPENSES (CREDIT) AND (LOSS) PROFIT BEFORE TAXATION AT APPLICABLE TAX RATES

|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | For the years ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |
Loss before taxation |  |  | (53,435 | ) |  |  | (89,841 | ) |  |  | (193,062 | )
Tax calculated at a tax rate of 25% |  |  | (13,359 | ) |  |  | (22,460 | ) |  |  | (48,266 | )
Tax effect on non-deductible expenses |  |  | — |  |  |  | — |  |  |  | — |
Tax effect on different tax rates of group entities operating in other jurisdictions |  |  | 4,705 |  |  |  | 5,163 |  |  |  | 1,607 |
Inventory provision (reversal) that are not tax deductible (taxable) |  |  | (1,011 | ) |  |  | (24,809 | ) |  |  | (575 | )
Bad debts expense (reversal) that are not tax deductible |  |  | (19,613 | ) |  |  | 30,417 |  |  |  | 37,567 |
Depreciation and amortization adjustments that are not tax deductible |  |  | (7,584 | ) |  |  | (11,337 | ) |  |  | (14,757 | )
Other |  |  | — |  |  |  | — |  |  |  | - |
Lease charge under IFRS 16 |  |  | (42 | ) |  |  | (193 | ) |  |  | 282 |
Net operating losses not recognized to deferred tax assets |  |  | 37,113 |  |  |  | 23,436 |  |  |  | 24,175 |
Tax per financial statements |  |  | 209 |  |  |  | 217 |  |  |  | 33 |

British Virgin Islands Profits Tax

The Company has not been subject to any taxation in this jurisdiction for the years ended December 31, 2022, 2021 and 2020.

F-30

Hong Kong Profits Tax

The subsidiary in Hong Kong is subject to tax charged on Hong Kong sourced income with a statutory tax rate of 8.25% for the years ended December 31, 2022, 2021 and 2020. No Hong Kong profits tax has been provided as the Company has no assessable profit arising in Hong Kong for the years ended December 31, 2022, 2021 and 2020.

PRC Income Tax

The subsidiaries in the PRC are subject to the enterprise income tax in accordance with “PRC Enterprise Income Tax Law” (“EIT Law”), and the applicable income tax rate for the years ended December 31, 2022, 2021 and 2020 is 25%.

Under the prevailing EIT Law and its relevant regulations, any dividends paid by the Company’s PRC subsidiaries to an overseas parent made out of profits earned after January 1, 2008 to non-PRC corporate residents are subject to a 10% PRC dividend withholding tax, unless reduced by tax treaties or arrangements. In addition, under the Sino-Hong Kong Double Tax Arrangement and its relevant regulations, a qualified Hong Kong tax resident will be liable for withholding tax at the rate of 5% for dividend income derived from the PRC if the Hong Kong tax resident is the “beneficial owner” and holds 25% or more of the equity interests of the PRC company. Deferred tax liabilities have been provided for based on the expected dividends to be distributed from these subsidiaries in the foreseeable future in respect of the profits generated since 1 January 2008.

Dividends withholding tax represents tax charged/to be charged by the PRC tax authority on dividends distributed or intended to be distributed by the Company’s subsidiaries in Mainland China during the years.

The Company did not recognize any deferred tax (assets)/liabilities in the consolidated statements of financial position as of December 31, 2022, 2021 and 2020.

The Company’s PRC subsidiaries, have cumulative undistributed earnings of RMB 75,114,000, RMB 88,164,000 and RMB 174,072,000, as of December 31, 2022, 2021 and 2020, which are included in consolidated retained earnings. No provision has been made for deferred taxes related to future repatriation of the remaining earnings, as the Company controls the dividend policy of these PRC subsidiaries and it has been determined that it is probable that these profits will not be distributed in the foreseeable future. If the Company were to distribute these cumulated earnings in the foreseeable future, the deferred tax liabilities of RMB 3,266,000, RMB 4,408,000 and RMB 8,704,000 would be recognized as of December 31, 2022, 2021 and 2020.

9. LOSS PER SHARE

SCHEDULE OF LOSS PER SHARE

|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | For the years ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Loss attributable to holders of ordinary shares (RMB’000): |  |  |  |  |  |  |  |  |  |  |  |
Net loss from continuing operations |  |  | (9,924 | ) |  |  | (19,077 | ) |  |  | (259 | )
Net loss from discontinued operations |  |  | (47,994 | ) |  |  | (69,675 | ) |  |  | (192,836 | )
Weighted average number of ordinary shares outstanding used in computing basic (loss)/earnings per share |  |  | 8,368,803 |  |  |  | 5,147,737 |  |  |  | 2,940,265 |
Weighted average number of ordinary shares outstanding used in computing basic and diluted (loss)/earnings per share |  |  | 8,368,803 |  |  |  | 5,147,737 |  |  |  | 2,940,265 |
Loss per share - basic (RMB) |  |  |  |  |  |  |  |  |  |  |  |
- From continuing operations |  |  | (1.19 | ) |  |  | (3.71 | ) |  |  | (0.09 | )
- From discontinued operations |  |  | (5.73 | ) |  |  | (13.54 | ) |  |  | (65.58 | )
Loss per share - diluted (RMB) |  |  |  |  |  |  |  |  |  |  |  |
- From continuing operations |  |  | (1.19 | ) |  |  | (3.71 | ) |  |  | (0.09 | )
- From discontinued operations |  |  | (5.73 | ) |  |  | (13.54 | ) |  |  | (65.58 | )

F-31

Warrants to purchase common stock are not included in the diluted loss per share calculations when their effect is antidilutive. For the year ended December 31, 2022, about 3,701,748 of potential shares of common stock related to outstanding warrants and stock options were excluded from the calculation of diluted net loss per share as such shares are antidilutive when there is a loss. There were 1,868,414 and 968,894 post-reverse split outstanding warrants and stock options were excluded from the calculation of diluted net loss per share as such shares are antidilutive for the years ended December 31, 2021 and 2020, respectively.

10. GOODWILL

SCHEDULE OF GOODWILL

|  | 2022 |  |  | 2021 |
|  | As of December 31, |
|  | 2022 |  |  | 2021 |
|  | RMB’000 |  |  | RMB’000 |
Discontinued operations |  |  |  |  |  |
Carrying amount |  |  | 3,735 |  |  |  | 3,735 |
Accumulated impairment losses |  |  | (3,735 | ) |  |  | (3,735 | )
GOODWILL |  |  | — |  |  |  | — |

On January 8, 2010, the Company consummated the acquisition of all voting equity interests of Hengdali (which is considered to be a CGU), and the excess of the consideration transferred over the fair value of the identifiable net assets acquired is recorded as goodwill.

The Company performs a goodwill impairment test in year 2015 and was fully impaired at that time. At the end of the reporting period, the Company assessed the recoverable amount of goodwill, and determined that no further impairment of goodwill was required for the 2016 year-end because it was written down to zero in 2015. The impairment loss on goodwill recognized during the year ended December 31, 2015 was RMB 3,735,000.

11. PROPERTY, PLANT AND EQUIPMENT

SCHEDULE OF INFORMATION ABOUT PROPERTY, PLANT AND EQUIPMENT

Cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  | Plant and |  |  | Motor |  |  | Office |  |  |  |
|  | Buildings |  |  | machinery |  |  | vehicles |  |  | equipment |  |  | Total |
|  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |
Cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
At January 1, 2021 |  | 349,630 |  |  |  | 746,042 |  |  |  | 4,225 |  |  |  | 1,932 |  |  |  | 1,101,829 |
Additions |  | — |  |  |  | — |  |  |  | 1,144 |  |  |  | 133 |  |  |  | 1,277 |
Transferred to investment property |  | (331,359 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (331,359 | )
At December 31,2021 |  | 18,271 |  |  |  | 746,042 |  |  |  | 5,369 |  |  |  | 2,065 |  |  |  | 771,747 |
Additions |  | — |  |  |  | — |  |  |  | — |  |  |  | 22 |  |  |  | 22 |
Transferred to assets classified as held for sale |  | (18,271 | ) |  |  | (746,042 | ) |  |  | (4,225 | ) |  |  | (1,886 | ) |  |  | (770,424 | )
Disposals |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
At December 31, 2022 |  | — |  |  |  | — |  |  |  | 1,144 |  |  |  | 201 |  |  |  | 1,345 |
Accumulated depreciation |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
At January 1, 2021 |  | 49,297 |  |  |  | 349,382 |  |  |  | 3,748 |  |  |  | 1,559 |  |  |  | 403,986 |
Depreciation charge |  | — |  |  |  | — |  |  |  | 54 |  |  |  | 42 |  |  |  | 96 |
Transferred to investment property |  | (47,452 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (47,452 | )
At December 31, 2021 |  | 1,845 |  |  |  | 349,382 |  |  |  | 3,802 |  |  |  | 1,601 |  |  |  | 356,630 |
Depreciation charge |  | — |  |  |  | — |  |  |  | 217 |  |  |  | 49 |  |  |  | 266 |
Transferred to assets classified as held for sale |  | (1,845 | ) |  |  | (349,382 | ) |  |  | (3,748 | ) |  |  | (1,582 | ) |  |  | (356,557 | )
At December 31, 2022 |  | — |  |  |  | — |  |  |  | 271 |  |  |  | 68 |  |  |  | 339 |
Impairment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
At January1, 2021 |  | 300,333 |  |  |  | 396,660 |  |  |  | 477 |  |  |  | 304 |  |  |  | 697,774 |
Transferred to investment property |  | (283,907 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (283,907 | )
At December 31, 2021 |  | 16,426 |  |  |  | 396,660 |  |  |  | 477 |  |  |  | 304 |  |  |  | 413,867 |
Impairment losses recognized in profit or loss |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Transferred to assets classified as held for sale |  | (16,426 | ) |  |  | (396,660 | ) |  |  | (477 | ) |  |  | (304 | ) |  |  | (413,867 | )
At December 31, 2022 |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Carrying amount |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
At December 31, 2021 |  | — |  |  |  | — |  |  |  | 1,090 |  |  |  | 160 |  |  |  | 1,250 |
At December 31, 2022 |  | — |  |  |  | — |  |  |  | 873 |  |  |  | 133 |  |  |  | 1,006 |

F-32

All property, plant and equipment held by the Company are located in the PRC. The Company’s buildings are situated on land under medium-term land use rights and were reclassified as assets held for sale as of December 31, 2022.

For the buildings owned collectively by the Company and other three unrelated companies, the cost of buildings are stated according to the amounts paid by the Company for its part of buildings, which represent the Company’s interests in the buildings. Buildings are depreciated over their expected useful lives of 40 years. These buildings’ cost was RMB 2,913,000, and accumulated depreciation of RMB 1,226,000 and RMB 1,226,000 as of December 31, 2022 and 2021, respectively, and an impairment allocation of RMB 1,687,000 and RMB 1,687,000 as of December 31, 2022 and 2021, respectively. No property, plant and equipment was pledged to secure the Company interest-bearing bank borrowings at December 31, 2022 and 2021. As of December 31, 2022, all buildings were reclassified as assets held for sale.

During the year ended December 31, 2021, Hengdali subleased all its land and buildings. The cost, accumulated depreciation and impairment of land and buildings were reclassified to investment property, which in turn was reclassified to assets held for sale as of December 31, 2022. The net effect on the consolidated balance sheet was nil.

Loss (gain) on disposal of property, plant and equipment in fiscal years 2022, 2021 and 2020 was nil.

12. INVESTMENT PROPERTY

SCHEDULE OF INFORMATION ABOUT INVESTMENT PROPERTY

|  | 2022 |  |  | 2021 |
|  | RMB’000 |  |  | RMB’000 |
Cost |  |  |  |  |  |  |  |
As of beginning of the year |  |  | 401,231 |  |  |  | 37,253 |
Transferred from property, plant and equipment |  |  | — |  |  |  | 331,359 |
Transferred from right-of-use assets |  |  | — |  |  |  | 32,619 |
Transferred to assets classified as held for sale |  |  | (401,231 | ) |  |  |  |
As of end of the year |  |  | — |  |  |  | 401,231 |
Accumulated depreciation |  |  |  |  |  |  |  |
As of beginning of the year |  |  | (53,987 | ) |  |  | (1,886 | )
Depreciation for the year |  |  | — |  |  |  | — |
Transferred from property, plant and equipment |  |  | — |  |  |  | (47,452 | )
Transferred from right-of-use assets |  |  | — |  |  |  | (4,649 | )
Transferred to assets classified as held for sale |  |  | 53,987 |  |  |  |  |
As of end of the year |  |  | — |  |  |  | (53,987 | )
Impairment for the year |  |  |  |  |  |  |  |
As of beginning of the year |  |  | (347,244 | ) |  |  | (35,367 | )
Investment property, beginning balance |  |  | (347,244 | ) |  |  | (35,367 | )
Transferred from property, plant and equipment |  |  | — |  |  |  | (283,907 | )
Transferred from right-of-use assets |  |  | — |  |  |  | (27,970 | )
Transferred to assets classified as held for sale |  |  | 347,244 |  |  |  |  |
As of end of the year |  |  | — |  |  |  | (347,244 | )
Investment property, ending balance |  |  | — |  |  |  | (347,244 | )
Carrying amount |  |  |  |  |  |  |  |
At December 31, 2022 and 2021 |  |  | — |  |  |  | — |
Investment property |  |  | — |  |  |  | — |

F-33

The Company’s investment property was reclassified as an asset held for sale as of December 31, 2022 and thus has no fair value. The fair value of this investment property, which is the estimation of the depreciated replacement cost, as of December 31, 2021 was RMB 269,900,000.

However, due to the absence of the real estate ownership certificate, the Company assessed the recoverable amount of investment property, and determined that carrying amount was nil at December 31, 2022 and 2021.

During the year ended December 31, 2021, Hengdali subleased all its land and buildings. The cost, accumulated depreciation and impairment of land and buildings were reclassified to investment property. The net effect on the consolidated balance sheet was nil.

13. INTANGIBLE ASSETS

SCHEDULE OF INTANGIBLE ASSET

|  | 2022 |  |  | 2021 |
|  | As of December 31, |
|  | 2022 |  |  | 2021 |
|  | RMB’000 |  |  | RMB’000 |
Cost |  |  |  |  |  |  |  |
As of beginning of the year |  |  | — |  |  |  | — |
Addition |  |  | 7 |  |  |  | — |
Amortization for the year |  |  | (1 | ) |  |  | — |
As of end of the year |  |  | 7 |  |  |  | — |
Accumulated amortization |  |  |  |  |  |  |  |
As of beginning of the year |  |  | — |  |  |  | — |
Intangible assets and goodwill, beginning |  |  | — |  |  |  | — |
Amortization for the year |  |  | (1 | ) |  |  | — |
As of end of the year |  |  | (1 | ) |  |  | — |
Intangible assets and goodwill, beginning |  |  | (1 | ) |  |  | — |
Carrying amount |  |  | - |  |  |  | - |
At December 31, 2022 and 2021 |  |  | 6 |  |  |  | — |

Intangible assets consisted of a purchased software license as of December 31, 2022. The Company had no intangible assets as of December 31, 2021. The amortization expense for the years ended December 31, 2022 and 2021 were RMB 1,000 and RMB nil.

14. FINANCIAL ASSETS

The following is an analysis of financial assets:

SCHEDULE OF FINANCIAL ASSETS

|  | 2022 |  |  | 2021 |
|  | As of December 31, |
|  | 2022 |  |  | 2021 |
|  | RMB’000 |  |  | RMB’000 |
Unlisted financial assets |  |  | 8,523 |  |  |  | — |

As of December 31, 2022, the fair value of unlisted securities in three accounts owned by the Company held in Ping An Bank Co., Limited (“Ping An Bank”) amounted to RMB 8,523,000 is determined based on the valuation determined by Ping An Bank using inputs that are not observable in active market.

During the year ended December 31, 2022, fair value unrealized gain of unlisted financial assets was RMB 130,000.

15. INVENTORIES

SCHEDULE OF INFORMATION ABOUT INVENTORIES

|  | 2022 |  |  | 2021 |
|  | As of December 31, |
|  | 2022 |  |  | 2021 |
|  | RMB’000 |  |  | RMB’000 |
Raw materials |  |  | — |  |  |  | 4,659 |
Work in progress |  |  | — |  |  |  | 244 |
Finished goods |  |  | — |  |  |  | 26,686 |
Inventories |  |  | — |  |  |  | 31,589 |

F-34

As of December 31, 2022, total inventory held by discontinued operations was RMB 28,749,000 (Note 29).

The analysis of the amount of inventories recognized from discontinued operations as an expense and included in profit or loss is as follows:

SCHEDULE OF ANALYSIS OF THE AMOUNT OF INVENTORIES RECOGNIZED AS AN EXPENSE AND INCLUDED IN PROFIT OR LOSS

|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | For the years ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |
Discontinued operations |  |  |  |  |  |  |  |  |  |  |  |
Carrying amount of inventories sold |  |  | 45,290 |  |  |  | 248,166 |  |  |  | 211,292 |
Write down (reversal) of inventories (included in cost of sales) |  |  | (4,045 | ) |  |  | (99,237 | ) |  |  | (2,301 | )
Cost of inventories recognized from discontinued operations |  |  | 41,245 |  |  |  | 148,929 |  |  |  | 208,991 |

16. TRADE RECEIVABLES

SCHEDULE OF INFORMATION ABOUT TRADE RECEIVABLES

|  | As of December 31, |
|  | 2022 |  |  | 2021 |
|  | RMB’000 |  |  | RMB’000 |
Trade receivables |  |  | — |  |  |  | 822,747 |
Less: provision for bad debt allowance |  |  | — |  |  |  | (771,331 | )
Trade receivables, net |  |  | — |  |  |  | 51,416 |

As of December 31, 2022, total trade receivables of discontinued operations were RMB 11,683,000 (Note 29).

The Company’s trade receivables are denominated in Renminbi and non-interest bearing. As of December 31, 2022 and 2021, the Company accrued RMB 795,000,000 and RMB 771,331,000, respectively, as a provision for bad debt related to the amount of outstanding trade receivables that did not conform with the Company’s credit policy. As of December 31, 2022, the Company had an increase in bad debts of RMB 33,365,000 in discontinued operations due slower collection of trade receivables.

All of the trade receivables are expected to be recovered within one year. An aging analysis of the Company’s trade receivables, based on the invoice date, is as follows:

SCHEDULE OF AGING ANALYSIS OF THE COMPANY'S TRADE RECEIVABLES, BASED ON THE INVOICE DATE

|  | As of December 31, |
|  | 2022 |  |  | 2021 |
|  | RMB’000 |  |  | RMB’000 |
Within 90 days |  |  | — |  |  |  | 81 |
Between 3 and 6 months |  |  | — |  |  |  | — |
More than 6 months |  |  | — |  |  |  | 51,335 |
Trade receivables |  |  | — |  |  |  | 51,416 |

An aging analysis of trade receivables that were neither past due nor impaired or past due but not impaired, is as follows:

SCHEDULE OF AGING ANALYSIS OF TRADE RECEIVABLES THAT WERE NEITHER PAST DUE NOR IMPAIRED OR PAST DUE BUT NOT IMPAIRED

|  |  |  |  | Past due but not impaired |  |  |  |
|  | Neither past due nor |  |  | Less than |  |  | 31 to 120 |  |  | Over 120 |  |  |  |  |  |  |
|  | impaired |  |  | 30 days |  |  | days |  |  | days |  |  | Sub-total |  |  | Total |
|  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |
December 31, 2021 |  |  | 81 |  |  |  | — |  |  |  | — |  |  |  | 51,335 |  |  |  | — |  |  |  | 51,416 |
December 31, 2022 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |

F-35

Receivables that were neither past due nor impaired relate to a large number of customers for whom there was no recent history of default. All amounts are short-term. The Company does not hold any collateral over these receivables.

The net carrying value of trade receivables is considered a reasonable approximation of fair value. As of December 31, 2021, the Company is exposed to certain credit risks as 16% and 47% of the total trade receivables were due from the Company’s largest and the five largest customers, respectively.

17. OTHER RECEIVABLES AND PREPAYMENTS

SCHEDULE OF INFORMATION ABOUT OTHER RECEIVABLES AND PREPAYMENTS

|  | As of December 31, |
|  | 2022 |  |  | 2021 |
|  | RMB’000 |  |  | RMB’000 |
Prepaid expense and prepayments |  |  | 13,269 |  |  |  | 20,264 |
Security deposit |  |  | 109 |  |  |  | 105 |
Other receivable |  |  | 5,802 |  |  |  | 412 |
Other receivables and prepayments |  |  | 19,180 |  |  |  | 20,781 |

As of December 31, 2022, total other receivables and prepayments of discontinued operations was RMB 3,000,000 (Note 29).

All of the other receivables and prepayments are expected to be recovered or recognized as expense within one year. The net carrying value of these balances is considered a reasonable approximation of fair value. Prepaid expense mainly consisted of advance payment to the vendors as of December 31, 2022.

18. CASH AND BANK BALANCES

SCHEDULE OF CASH AND BANK BALANCES

|  | As of December 31, |
|  | 2022 |  |  | 2021 |
|  | RMB’000 |  |  | RMB’000 |
Cash on hand |  |  | — |  |  |  | 1,709 |
Cash at banks |  |  | 3,936 |  |  |  | 26,171 |
Cash and bank balances |  |  | 3,936 |  |  |  | 27,880 |

Cash and bank balances are denominated in the following currencies:

SCHEDULE OF CASH AND BANK BALANCES THAT ARE DENOMINATED IN VARIOUS CURRENCIES

|  | As of December 31, |
|  | 2022 |  |  | 2021 |
|  | RMB’000 |  |  | RMB’000 |
Renminbi |  |  | 3,104 |  |  |  | 4,594 |
Hong Kong dollars |  |  | 2 |  |  |  | 74 |
US dollars |  |  | 830 |  |  |  | 23,212 |
Cash and cash equivalents |  |  | 3,936 |  |  |  | 27,880 |

As of December 31, 2022, total cash and bank balances held by discontinued operations was RMB 306,000 (Note 29).

Bank balances denominated in Renminbi are deposited with banks in the PRC and are not freely convertible to foreign currencies. The conversion of these RMB denominated balances into foreign currencies is subject to the foreign exchange control rules and regulations promulgated by the PRC Government.

Bank balances denominated in US dollars are mainly held in bank accounts in Hong Kong and the United States of America.

F-36

Cash at banks and bank deposits comprise cash held by the Company and short-term bank deposits with an original maturity of three months or less. The deposits carry interest at prevailing market rates.

Restricted cash

As of December 31, 2022, the Company had restricted cash of RMB 2,069,000 (2021: nil), of which nil (2021: nil) was used as collateral for the Company’s bank borrowings, and nil was used as collateral for the Company’s financial derivatives (2021: nil). The nature of restricted cash is that of a term deposit maturing on January 15, 2023. They were temporarily not available for general use by the Company as of December 31, 2022.

19. TRADE PAYABLES

SCHEDULE OF INFORMATION ABOUT TRADE PAYABLES

|  | As of December 31, |
|  | 2022 |  |  | 2021 |
|  | RMB’000 |  |  | RMB’000 |
Trade payables |  |  | 3,079 |  |  |  | 6,290 |

Trade payables are denominated in Renminbi, non-interest bearing and generally settled within 120-day terms. All of the trade payables are expected to be settled within one year. The carrying value of trade payables is considered to be a reasonable approximation of fair value. There was no trade payables held by discontinued operations.

20. ACCRUED LIABILITIES AND OTHER PAYABLES

SCHEDULE OF INFORMATION ABOUT ACCRUED LIABILITIES AND OTHER PAYABLES

|  | As of December 31, |
|  | 2022 |  |  | 2021 |
|  | RMB’000 |  |  | RMB’000 |
Deposits received from distributors |  |  | — |  |  |  | 16,200 |
Accrued salary |  |  | 402 |  |  |  | 514 |
Accrued rent, electricity and water |  |  | — |  |  |  | 1,156 |
Accrued other taxes |  |  | — |  |  |  | 866 |
Rental income received in advance |  |  | — |  |  |  | - |
Others |  |  | 397 |  |  |  | 3,645 |
Current accrued expenses and other current liabilities |  |  | 799 |  |  |  | 22,381 |

Accrued liabilities and other payables are denominated in the following currencies:

SCHEDULE OF ACCRUED LIABILITIES AND OTHER PAYABLES DENOMINATED IN VARIOUS CURRENCIES

|  | As of December 31, |
|  | 2022 |  |  | 2021 |
|  | ‘000 |  |  | ‘000 |
In Renminbi |  |  | 799 |  |  |  | 22,381 |
In US dollars |  |  | — |  |  |  | — |

As of December 31, 2022, total accrued liabilities and other payables of discontinued operations was RMB 19,197,000 (Note 29).

Deposits received represent deposits from the Company’s distributors. The Company usually requests a deposit from RMB 400,000 to RMB 1,000,000 from new distributors upon signing a distributorship agreement as security for the performance of their obligations under the distributorship agreement.

Accrued liabilities consist mainly of accrued rental, wages and utility expenses. Others consist mainly of advance from third-party individuals and companies, which bear no interest and payable upon demand.

The carrying value of accrued liabilities and other payables is considered to be a reasonable approximation of fair value.

F-37

21. TAXES PAYABLE

SCHEDULE OF TAXES PAYABLE

|  | As of December 31, |
|  | 2022 |  |  | 2021 |
|  | RMB’000 |  |  | RMB’000 |
VAT |  |  | 436 |  |  |  | 44 |
Income tax |  |  | 93 |  |  |  | 209 |
Property tax |  |  | — |  |  |  | 718 |
Other |  |  | 53 |  |  |  | 47 |
Taxes payable |  |  | 582 |  |  |  | 1,018 |

As of December 31, 2022, total taxes payable of discontinued operations was RMB 951,000 (Note 29).

22. RIGHT-OF-USE ASSETS AND LEASES LIABILITIES

(a) Amounts recognized in the consolidated statement of financial position

The carrying amounts of right-of-use assets for lease are as below:

SUMMARY OF CARRYING AMOUNTS OF RIGHT-OF-USE ASSETS FOR LEASE

Net book amount at January 1, 2021 |  | RMB 58,458,000
Net book amount at December 31, 2021 |  | RMB 44,288,000
Net book amount at January 1, 2022 |  | RMB 44,288,000
Net book amount at December 31, 2022 |  | RMB 469,000

As of December 31, 2022, total net book amount of right-of-use assets of discontinued operations amounts was RMB 30,937,000.

During the year ended December 31, 2022, Hengdali subleased all its land and buildings. The cost, accumulated depreciation and impairment of land and buildings were reclassified to investment property. The net effect on the consolidated balance sheet was nil.

The lease liabilities for continuing operations are as below:

SCHEDULE OF LEASE LIABILITIES

|  | As of December 31, |
|  | 2022 |  |  | 2021 |
|  | RMB’000 |  |  | RMB’000 |
Lease liabilities - current |  |  | 328 |  |  |  | 13,404 |
Lease liabilities – noncurrent |  |  | 157 |  |  |  | 33,325 |
Total lease liabilities |  |  | 485 |  |  |  | 46,729 |

As of December 31, 2022, total lease liabilities of discontinued operations was RMB 33,325,000 (Note 29).

Contractual undiscounted cash flows for the leases:

SCHEDULE OF CONTRACTUAL UNDISCOUNTED CASH FLOWS FOR THE LEASES

|  | As of December 31, 2022 |
|  |  |  |  |  |  |  | Total contractual |
|  |  |  |  |  |  |  | undiscounted |
|  | Within one year |  |  | One to five years |  |  | cash flow |
|  |  | RMB’000 |  |  |  | RMB’000 |  |  |  | RMB’000 |
|  |  | 350 |  |  |  | 145 |  |  |  | 495 |

(b) Amounts recognized in the consolidated income statement

The consolidated income statement shows the following amounts from continuing operations relating to leases:

SUMMARY OF CONSOLIDATED INCOME STATEMENT SHOWING THE AMOUNTS RELATING TO LEASES

|  | Year ended |
|  | December 31, 2022 |
Amortization charge of right-of-use assets |  |  | 484 |
Interest expense |  |  | 25 |

F-38

|  | Year ended |
|  | December 31, 2021 |
Amortization charge of right-of-use assets |  |  | 1,266 |
Interest expense |  |  | 51 |

|  | Year ended |
|  | December 31, 2020 |
Amortization charge of right-of-use assets |  |  | 536 |
Interest expense |  |  | 75 |

The consolidated income statement shows the following amounts from discontinued operations relating to leases:

|  | Year ended |
|  | December 31, 2022 |
Amortization charge of right-of-use assets |  |  | 12,801 |
Interest expense |  |  | 1,479 |

|  | Year ended |
|  | December 31, 2021 |
Amortization charge of right-of-use assets |  |  | 12,801 |
Interest expense |  |  | 2,115 |

|  | Year ended |
|  | December 31, 2020 |
Amortization charge of right-of-use assets |  |  | 12,546 |
Interest expense |  |  | 2,673 |

The total cash outflow in financing activities for leases during the years ended December 31, 2022, 2021 and 2020 was RMB 358,000, RMB 1,144,000 and RMB 706,000, respectively.

The total cash outflow in financing activities from discontinued operations for leases during the years ended December 31, 2022, 2021 and 2020 was RMB 14,303,000, RMB 14,303,000 and RMB 14,136,000, respectively.

23. NOTE PAYABLE

Unsecured Promissory Note in December 2022

On December 12, 2022, the Company entered into a Note Purchase Agreement with an investor, pursuant to which the Company issued to the Purchaser an unsecured Promissory Note of $1,332,500, for $1,250,000 in gross proceeds. The Note included an original issue discount (“OID”) of $62,500 along with $20,000 for investor’s fees, costs and other transaction expenses in connection with the issuance of the note. The OID was recognized as a debt discount is amortized over the life of the note. The Note bears interest at 8% per annum compounding daily, and has a term of 18 months. All outstanding principal and accrued interest on the Note will become due and payable eighteen (18) months after the purchase price of the Note is delivered by Purchaser to the Company (the “Purchase Price Date”). The Company may prepay all or a portion of the Note at any time by paying 120% of the outstanding balance elected for pre-payment. The Investor has the right to redeem the Note at any time six (6) months after the Purchase Price Date (the “Redemption Start Date”), subject to maximum monthly redemption amount of $200,000. The Company should pay the applicable redemption amount in cash to the Investor within three (3) Trading Days following the investor’s delivery of a redemption notice. At the end of each month following the Redemption Start Date, if the Company has not reduced the Outstanding Balance by at least $200,000, then by the fifth (5th) day of the following month, the Company must pay in cash to the Investor the difference between $200,000 and the amount actually redeemed in such month or the Outstanding Balance will automatically increase by one percent (1%) as of such fifth (5th) day. Under the Note Purchase Agreement, while the Note is outstanding, the Company agreed to keep adequate public information available and maintain its Nasdaq listing. Upon the occurrence of a Trigger Event (as defined in the Note), the Investor shall have the right to increase the balance of the Note by fifteen percent (15%) for Major Trigger Event (as defined in the Note) and five percent (5%) for Minor Trigger Event (as defined in the Note). In addition, the Note provides that upon occurrence of an Event of Default, the interest rate shall accrue on the outstanding balance at the rate equal to the lesser of twenty-two percent (22%) per annum or the maximum rate permitted under applicable law.

During the year ended December 31, 2022, the Company amortized OID of RMB 415,624 (US: $60,260) and recorded RMB 39,851 (US: $5,922) interest expense on this Note. As of December 31, 2022, the outstanding principal balance of this note was RMB 8,775,000 (US: $1,272,240, net of unamortized OID of $60,260).

F-39

24. SHARE CAPITAL

SCHEDULE OF INFORMATION ABOUT CLASSES OF SHARE CAPITAL

|  | As of December 31, |
|  | 2022 |  |  | 2021 |
|  | Number |  |  | US$ |  |  | Number |  |  | US$ |
|  | of shares |  |  | ‘000 |  |  | of shares |  |  | ‘000 |
Authorized: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ordinary shares of US$0.024 each |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  | 50,000,000 |  |  |  | 1,200 |  |  |  | 50,000,000 |  |  |  | 1,200 |

|  | As of December 31, |
|  | 2022 |  |  | 2021 |
|  | Number |  |  | RMB |  |  | Number |  |  | RMB |
|  | of shares |  |  | ‘000 |  |  | of shares |  |  | ‘000 |
Issued: |  |  | 8,057,847 |  |  |  | 1,288 |  |  |  | 5,976,098 |  |  |  | 943 |
Outstanding and fully paid: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ordinary shares of US$0.024 each |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
At January 1 |  |  | 5,976,098 |  |  |  | 943 |  |  |  | 3,674,370 |  |  |  | 591 |
Issuance of new shares for equity financing |  |  | 1,666,667 |  |  |  | 276 |  |  |  | 1,502,110 |  |  |  | 230 |
Warrants exercised into shares |  |  | - |  |  |  | - |  |  |  | 685,339 |  |  |  | 105 |
Equity compensation |  |  | 415,082 |  |  |  | 69 |  |  |  | 114,279 |  |  |  | 17 |
At December 31 |  |  | 8,057,847 |  |  |  | 1,288 | (2) |  |  | 5,976,098 |  |  |  | 943 | (1)

(1) | Equivalent to US$143,000

(2) | Equivalent to US$193,000

On September 3, 2020, the Company effected a reverse stock split, every three issued and outstanding ordinary shares as of the effective date will automatically be combined into one issued and outstanding share. Consequently, the reverse stock split will reduce the number of outstanding ordinary shares of the Company from approximately 9.2 million shares to approximately 3.1 million shares, and the par value per share will increase from $0.008 to $0.024. All outstanding stock options, warrants and other rights to purchase the Company’s ordinary shares will be adjusted proportionately as a result of the reverse stock split.

Equity Financing

On December 16, 2019, the Company entered into a Securities Purchase Agreement with certain institutional investors for the sale by the Company of 1,200,000 pre-reverse split common shares, at a purchase price of $0.75 per share (pre-reverse split). Concurrently with the sale of the Common Shares, the Company also sold warrants to purchase 1,200,000 pre-reverse split common shares. The Company sold the Common Shares and Warrants for aggregate gross proceeds of $900,000 (the “Offering”). Subject to certain beneficial ownership limitations, the five-year Warrants will be initially exercisable on the six-month anniversary of the issuance date at an exercise price equal to $0.82 per share (pre-reverse split), subject to adjustments as provided under the terms of the Warrants, and will terminate on the five-year anniversary of the initial exercise date of the Warrants. The closing of the sales of these securities under the Purchase Agreement took place on December 18, 2019. The Company received net proceeds from the transactions of approximately $748,000, after deducting certain fees due to the placement agent and the Company’s estimated transaction expenses. The net proceeds received by the Company from the transactions will be used for working capital and general corporate purposes.

Pursuant to the terms and provisions of the engagement letter between the Company and the Placement Agent, the Company agreed to pay the Placement Agent a cash placement fee equal to 8% of the gross proceeds of the Offering, or $72,000, plus other expenses of the Placement Agent not to exceed $45,000. The Placement Agent also received five-year warrants to purchase up to a number of common shares equal to 5% of the aggregate number of shares sold in the Offering, including the warrant shares issuable upon exercise of the Warrants, which such Compensation Warrants have substantially the same terms as the Warrants sold in the Offering, except that such Compensation Warrants have an exercise price of $0.9375 per share (pre-reverse split) and will terminate on the five year anniversary of the effective date of this offering.

F-40

The total fair value of the warrants granted to investors and placement agent is RMB 5,250,000. The fair values of warrants granted were determined using a variation of the Black-Scholes Option Pricing Model that takes into account factors specific to the share incentive plans, such as the vesting period. The following principal assumptions were used in the valuation:

SCHEDULE OF PRINCIPAL ASSUMPTIONS USED IN VALUATION

Grant date |  | December 18, 2019 |
Share price at date of grant (pre-reverse split) |  | US$ | 0.68 |
Exercise price at date of grant (investors and placement agent, respectively) (pre-reverse split) |  | US$ | 0.82 & 0.9375 |
Volatility |  |  | 141 | %
Warrant life |  |  | 5 years |
Dividend yield |  |  | 0 | %
Risk-free interest rate |  |  | 1.74 | %
Average fair value at grant date |  | US$ | 0.598 |

On January 8, 2020, the Company executed a subscription agreement (each, a “Subscription Agreement”) in connection with a $500,000 private placement (the “Private Placement”) of its 666,666 pre-reverse stock split ordinary shares with three accredited investors at the price of $0.75 per share (pre-reverse stock split). The Company agreed to register the shares sold in the Private Placement for resale no later than 270 days after the closing of the Private Placement. There were no discounts or brokerage fees associated with this Offering. The net proceeds of the Private Placement will be used for working capital and general corporate purposes.

On May 22, 2020, the Company entered into a Securities Purchase Agreement with certain institutional investors for the sale by the Company of 1,102,950 common shares (pre-reverse stock split), at a purchase price of $0.68 per share (pre-reverse stock split). Concurrently with the sale of the Common Shares, pursuant to the Purchase Agreement the Company also sold Warrants to purchase 1,102,950 Common Shares (pre-reverse stock split). The Company sold the Common Shares and Warrants for aggregate gross proceeds of $750,006. Subject to certain beneficial ownership limitations, the five-year Warrants will be initially exercisable on the six-month anniversary of the issuance date at an exercise price equal to $0.79 per share (pre-reverse stock split), and will terminate on the five-year anniversary of the initial exercise date of the Warrants. The closing of the sales of these securities under the Purchase Agreement will take place on May 27, 2020. The net proceeds from the transactions will be approximately $595,000, after deducting certain fees due to the placement agent and the Company’s estimated transaction expenses, and will be used for working capital and general corporate purposes.

The Placement Agent also received five-year Warrants to purchase up to a number of common shares equal to 5% of the aggregate number of shares sold in the offering, including the warrant shares issuable upon exercise of the Warrants, which such Compensation Warrants having substantially the same terms as the Warrants sold in the Offering, except that such Compensation Warrants have an exercise price of $0.85 per share (pre-reverse stock split) and will terminate on the five year anniversary of the effective date of this offering.

The total fair value of the Warrants granted to investors and the Placement Agent is RMB 3,552,000. The fair value of the Warrants granted were determined using a variation of the Black-Scholes Option Pricing Model that takes into account factors specific to the share incentive plans, such as the vesting period. The following principal assumptions were used in the valuation:

Grant date (investors and placement agent, respectively) |  | May 27 and May 25, 2020 |
Share price at date of grant (investors and placement agent, respectively) (pre-reverse stock split) |  | US$ | 0.59 & 0.64 |
Exercise price at date of grant (investors and placement agent, respectively) (pre-reverse stock split) |  | US$ | 0.79 & 0.85 |
Volatility |  |  | 100 | %
Warrant life |  |  | 5 years |
Dividend yield |  |  | 0 | %
Risk-free interest rate |  |  | 0.34 | %
Average fair value at grant date |  | US$ | 0.416 |

F-41

On December 7, 2020, the Company executed subscription agreements with three individual accredited investors to offer and sell in a private placement 566,379 of the Company’s common shares at the per share price of $2.32 (which was the closing price for the Company’s common shares on December 4, 2020) for gross proceeds of approximately $1.3 million. The proceeds of the transaction will be used for working capital and general working purposes. There were no discounts or brokerage fees associated with this offering.

On February 12, 2021, the Company entered into a Securities Purchase Agreement with certain institutional investors for the sale of 588,235 common shares, at a purchase price of $3.57 per share. Concurrently with the sale of the Common Shares, pursuant to the Purchase Agreement the Company also sold warrants to purchase 588,235 common shares. The Company sold the Common Shares and Warrants for aggregate gross proceeds of approximately US$2.1 million, before commissions and expenses. The five-year Warrants will be immediately exercisable at an exercise price equal to $3.57 per share, and will terminate on the five-year anniversary of the initial exercise date of the Warrants. The net proceeds from the transactions will be approximately US$1.86 million, after deducting certain fees due to the placement agent and the Company’s estimated transaction expenses, and will be used for working capital and general corporate purposes.

In addition, the Placement Agent of this offering also received five-year warrants (the “Compensation Warrants”) to purchase up to a number of common shares equal to 5% of the aggregate number of shares sold in the Offering, including the warrant shares issuable upon exercise of the Warrants, which such Compensation Warrants have substantially the same terms as the Warrants sold in the Offering, except that such Compensation Warrants have an exercise price of $4.46 per share and will be exercisable six months from the effective date of this offering and will terminate on the five year anniversary of the effective date of this offering.

Grant date (investors and placement agent, respectively) |  | February 17, 2021 |
Share price at date of grant (investors and placement agent, respectively) |  | US$ | 4.45 |
Exercise price at date of grant (investors and placement agent, respectively) |  | US$ | 3.57 & 4.46 |
Volatility |  |  | 107 | %
Warrant life |  |  | 5 years |
Dividend yield |  |  | 0 | %
Risk-free interest rate |  |  | 0.57 | %
Average fair value at grant date |  | US$ | 3.54 |

On June 10, 2021, the Company commenced a registered direct offering of securities, and executed a Securities Purchase Agreement (the “SPA”) with three institutional accredited investors pursuant to which it sold 913,875 of the Company’s common shares at the per share price of $3.48 (which was priced in excess of the average of the five-day closing price for the Company’s common shares preceding execution of the SPA, which was $3.42). In a concurrent private placement, the Company sold to such investors warrants to purchase 913,875 common shares (the “Investor Warrants”). The Investor Warrants have an exercise price per share of $3.42, subject to adjustment, and have a term of five years. The transactions yielded gross proceeds to the Company of $3,180,285, before the payment of commissions and expenses.

F-42

In addition, the Company issued warrants (the “Placement Agent Warrants”) to the Placement Agent to purchase a number of common shares equal to 5.0% of the aggregate number of shares sold to the investors in this offering, as well as the warrant shares issuable upon exercise of the Warrants issued in the concurrent private placement, as additional placement agency compensation. The Placement Agent Warrants have substantially the same terms as the Investor Warrants, except that the Placement Agent Warrants will have an exercise price of $4.35.

Grant date (investors and placement agent, respectively) |  | June 14, 2021 |
Share price at date of grant (investors and placement agent, respectively) |  | US$ | 3.15 |
Exercise price at date of grant (investors and placement agent, respectively) |  | US$ | 3.42 & 4.35 |
Volatility |  |  | 115 | %
Warrant life |  |  | 5 years |
Dividend yield |  |  | 0 | %
Risk-free interest rate |  |  | 0.80 | %
Average fair value at grant date |  | US$ | 2.50 |

On September 30, 2022, the Company commenced a registered direct offering of securities, and executed a Securities Purchase Agreement (the “SPA”) with two institutional accredited investors pursuant to which it sold 1,666,667 of the Company’s common shares at the per share price of $0.60. In a concurrent private placement, the Company sold to such investors warrants to purchase 1,666,667 common shares (the “Investor Warrants”). The Investor Warrants have an exercise price per share of $0.82, subject to adjustment, and have a term of five years. The transactions yielded gross proceeds to the Company of $1,000,000, before the payment of commissions and expenses. The offering was closed on October 4, 2022.

In addition, the Company issued warrants (the “Placement Agent Warrants”) to the Placement Agent to purchase a number of common shares equal to 5.0% of the aggregate number of shares sold to the investors in this offering, as well as the warrant shares issuable upon exercise of the Warrants issued in the concurrent private placement, as additional placement agency compensation. The Placement Agent Warrants have substantially the same terms as the Investor Warrants, except that the Placement Agent Warrants will have an exercise price of $0.75.

Grant date (investors and placement agent, respectively) |  | October 4, 2022 |
Share price at date of grant (investors and placement agent, respectively) |  | US$ | 0.58 |
Exercise price at date of grant (investors and placement agent, respectively) |  | US$ | 0.82 & 0.75 |
Volatility |  |  | 104 | %
Warrant life |  |  | 5 years |
Dividend yield |  |  | 0 | %
Risk-free interest rate |  |  | 3.96 | %
Average fair value at grant date |  | US$ | 0.43 |

Following is a summary of the warrant activity (post-reverse stock split) for the years ended December 31, 2022 and 2021:

SCHEDULE OF SUMMARY OF THE WARRANT ACTIVITY

|  |  |  |  |  |  |  | Weighted |
|  |  |  |  |  |  |  | Average |
|  |  |  |  |  |  |  | Remaining |
|  |  |  |  | Average |  |  | Contractual |
|  | Number of |  |  | Exercise |  |  | Term in |
|  | Warrants |  |  | Price |  |  | Years |
Outstanding at January 1, 2021 |  |  | 980,894 |  |  | $ | 1.21 |  |  |  | 3.85 |
Exercisable at January 1, 2021 |  |  | 980,894 |  |  | $ | 1.21 |  |  |  | 3.85 |
Granted |  |  | 1,652,322 |  |  |  | 3.56 |  |  |  | 5.00 |
Exercised |  |  | 700,516 |  |  |  | 2.43 |  |  |  | — |
Forfeited |  |  | — |  |  |  | — |  |  |  | — |
Expired |  |  | 64,286 |  |  |  | 18.72 |  |  |  | — |
Outstanding at December 31, 2021 |  |  | 1,868,414 |  |  |  | 3.50 |  |  |  | 4.14 |
Exercisable at December 31, 2021 |  |  | 1,868,414 |  |  |  | 3.50 |  |  |  | 4.14 |
Granted |  |  | 1,833,334 |  |  |  | 0.81 |  |  |  | 5.00 |
Exercised |  |  | — |  |  |  | — |  |  |  | — |
Forfeited |  |  | — |  |  |  | — |  |  |  | — |
Expired |  |  | — |  |  |  | — |  |  |  | — |
Outstanding at December 31, 2022 |  |  | 3,701,748 |  |  | $ | 2.17 |  |  |  | 4.02 |
Exercisable at December 31, 2022 |  |  | 3,701,748 |  |  | $ | 2.17 |  |  |  | 4.02 |

F-43

During the year ended December 31, 2021, a total of 700,516 shares of warrants were exercised into 685,339 shares of the Company’s common stock (of which, 32,677 shares of warrants were exercised cashless into 17,500 common shares) for total proceeds of RMB 10,258,000.

Share-based Compensation

From January to December 31, 2020, the Company issued aggregate of 46,256 shares to its Chief Financial Officer as stock compensation expense. The fair value of 46,256 shares was RMB 587,000. From January to December 31, 2020, the Company issued aggregate of 36,201 shares to its Chief Executive Officer as stock compensation expense. The fair value of 36,201 shares was RMB 548,000.

From January to December 31, 2021, the Company issued aggregate of 33,269 shares to its Chief Financial Officer as stock compensation expense. The fair value of 33,269 shares was RMB 573,000. From January to December 31, 2021, the Company issued aggregate of 81,010 shares to its Chief Executive Officer as stock compensation expense. The fair value of 81,010 shares was RMB 1,262,000.

From January to December 31, 2022, the Company issued aggregate of 110,343 shares to its Chief Financial Officer as stock compensation expense. The fair value of 110,343 shares was RMB 621,000. From January to December 31, 2022, the Company issued aggregate of 268,331 shares to its Chief Executive Officer as stock compensation expense. The fair value of 268,331 shares was RMB 1,490,000. From January to December 31, 2022, the Company issued aggregate of 36,408 shares to its employee as stock compensation expense. The fair value of 36,408 shares was RMB 69,000.

25. RESERVES

| (a) | Statutory reserve
|  | In accordance with the relevant laws and regulations of the PRC, the Company’s PRC subsidiaries are required to transfer 10% of its profit after taxation prepared in accordance with the accounting regulation of the PRC to the statutory reserve until the reserve balance reaches 50% of the respective registered capital. Such reserve may be used to offset accumulated losses or increase the registered capital of these subsidiaries, subject to the approval from the Board of Directors, and are not available for dividend distribution to the shareholders.
| (b) | Currency translation reserve
|  | The reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations.
| (c) | Merger reserve
|  | The merger reserve of the Company represents the difference between the nominal value of the shares of the subsidiaries acquired in the Hengda Reorganization (Note 1) over the nominal value of the shares of the Company issued in exchange thereof.
| (d) | Share-based payment reserve
|  | After the successful consummation of the reverse recapitalization, Mr. Wong Kung Tok, the former sole shareholder of Success Winner, allotted a total of 1,521,528 the Company’s ordinary shares (pre-reverse stock split) to two financial advisors for their financial advisory services related to the recapitalization activities. The shared based payment reserve represents the fair value of these allotted shares measured based on the average market price over the service periods. The share-based payment reserve also represents the equity-settled share options granted to employees (Note 26). The reserve is made up of the cumulative value of services received from employees recorded over the vesting period commencing from the grant date of equity-settled share options, and is reduced by the expiry or exercise of the share options.

F-44

|  | The share-based payment reserve also represents the shares issued to its senior officers as stock compensation expense.
| (e) | Reverse recapitalization reserve
|  | The reverse recapitalization reserve arises as a result of the method of accounting for the Success Winner Acquisition. In accordance with IFRS, the acquisition has been accounted for as a reverse recapitalization.
| (f) | Capital reverse
|  | On July 31, 2014, Sound Treasure Limited, the Company’s largest shareholder and an affiliate of the Company’s Chief Executive Officer, entered into a three party agreement (the “Novation”) with the financial institution that originated the foreign currency transaction agreements and the Company. Under the Novation, Sound Treasure Limited assumed these agreements and all assets (mainly deposits placed with the financial institution) and all existing and future liabilities arising under these agreements, and the Company was released from the liabilities arising under the foreign currency transaction agreements. As a result, after July 31, 2014, the Company is no longer required to fund any losses related to these agreements, and the Company will neither suffer any future liabilities arising under those agreements nor enjoy any benefit arising under those agreements.
|  | At the time that each of the foreign currency transaction agreements was established with the financial institution, the Company was required to deposit monies with the financial institution. RMB 6.7 million of a total of RMB 15.6 million in deposits were funded on behalf of the Company by Wong Kung Tok (who is the brother-in-law of the Company’s Chief Executive Officer) at the request of the Chief Executive Officer, and were included in a total of RMB 40.2 million in loans owed by the Company to Wong Kung Tok as of July 9, 2014. In connection with the Novation discussed above, the Company’s Chief Executive Officer, Sound Treasure Limited and Wong Kung Tok entered into an agreement with the Company (the “Offset Agreement”) pursuant to which loans totaling RMB 20.7 million owed by the Company to Wong Kung Tok as of the date of the Offset Agreement were transferred to Sound Treasure Limited and then were forgiven by Sound Treasure Limited; and in return the Company agreed to forego any claim to RMB 15.6 million in deposits under the foreign currency transaction agreements which were transferred to Sound Treasure Limited pursuant to the Novation. As a result of these transactions, Sound Treasure Limited released the Company from liabilities aggregating RMB 76.8 million and the Company transferred ownership of RMB 15.6 million in deposits held at the financial institution from the Company to Sound Treasure Limited. Except as disclosed above, neither the Company’s Chief Executive Officer nor any affiliate of the Chief Executive Officer received any remuneration for agreeing to assume the foreign currency transaction agreements. The material terms of the Novation and the Sound Treasure Agreement were reviewed and approved by the Audit Committee of the Company. As a result of the Novation and the Offset Agreement, approximately RMB 76.8 million in liabilities on the Company’s books were extinguished in 2014 and the Capital Reserve account was increased by approximately RMB 61.3 million.

26. SHARE-BASED EMPLOYEE REMUNERATION

(a) Employee share scheme

The Board of Directors duly adopted and approved the 2019 Equity Compensation Plan (“the 2019 Plan”) on December 20, 2019. The purpose of the 2019 Plan was to attract and retain outstanding individuals as Employees, Directors and Consultants of the Company and its Subsidiaries, to recognize the contributions made to the Company and its Subsidiaries by Employees, Directors and Consultants, and to provide such Employees, Directors and Consultants with additional incentive to expand and improve the profits and achieve the objectives of the Company and its Subsidiaries, by providing such Employees, Directors and Consultants with the opportunity to acquire or increase their proprietary interest in the Company through receipt of Awards.

F-45

The Board, in its sole discretion, shall determine the Employees, Consultants and Directors to whom, and the time or times at which Awards will be granted, the form and amount of each Award, the expiration date of each Award, the time or times within which the Awards may be exercised, the cancellation of the Awards and the other limitations, restrictions, terms and conditions applicable to the grant of the Awards. To the extent permitted by applicable law, regulation, and rules of a stock exchange on which the Ordinary Shares are listed or traded, the Board may delegate its authority to grant Awards to Employees or Consultants and to determine the terms and conditions thereof to its standing committee, e.g., Compensation Committee, as it may determine in its discretion, on such terms and conditions as it may impose.

The total number of shares that may be issued under the 2019 Plan was 333,333. Such shares may be either be authorized but unissued shares or treasury shares. In the event of any reorganization, recapitalization, share split, distribution, merger, consolidation, split-up, spin-off, combination, subdivision, consolidation or exchange of shares, any change in the capital structure of the Company or any similar corporate transaction, the Board shall make such adjustments as it deems appropriate, in its sole discretion, to preserve the benefits or intended benefits of the 2019 Plan and Awards granted under the 2019 Plan.

The number of shares issued to Employees, Directors and Consultants is the offer amount divided by the Fair Market Value, meaning (i) if the principal trading market for the Ordinary Shares is the NASDAQ Capital Market or another national securities exchange, the “closing transaction” price at which shares of Ordinary Shares are traded on such securities exchange on the relevant date or (if there were no trades on that date) the latest preceding date upon which a sale was reported, (ii) if the Ordinary Shares is not principally traded on a national securities exchange, but is quoted on the NASD OTC Bulletin Board (“OTCBB”) or the Pink Sheets, the last reported “closing transaction” price of Ordinary Shares on the relevant date, as reported by the OTCBB or Pink Sheets, or, if not so reported, as reported in a customary financial reporting service, as the Committee determines, or (iii) if the Ordinary Shares is not publicly traded or, if publicly traded, is not subject to reported closing transaction prices as set forth above, the Fair Market Value per share shall be as determined by the Board.

From January to December 31, 2020, the Company issued aggregate of 46,256 shares to its Chief Financial Officer as stock compensation expense, and issued aggregate of 36,201 shares to its Chief Executive Officer as stock compensation expense.

From January to December 31, 2021, the Company issued aggregate of 33,269 shares to its Chief Financial Officer as stock compensation expense, and issued aggregate of 81,010 shares to its Chief Executive Officer as stock compensation expense.

From January to December 31, 2022, the Company issued aggregate of 110,343 shares to its Chief Financial Officer as stock compensation expense, and issued aggregate of 268,331 shares to its Chief Executive Officer as stock compensation expense.

For the years ended December 31, 2022, 2021 and 2020, employee remuneration expense (all of which related to equity-settled share-based payment transactions) of RMB 2,180,000, RMB 1,835,000 and RMB 1,135,000, respectively, has been included in profit or loss and credited to the share capital and share-based payment reserve.

27. SIGNIFICANT RELATED PARTY TRANSACTIONS

Apart from those discussed elsewhere in these financial statements, the following are significant related party transactions entered into between the Company and its related parties at agreed rates:

SCHEDULE OF SIGNIFICANT RELATED PARTY TRANSACTIONS

|  | 2022 |  |  | 2021 |
|  | RMB’000 |  |  | RMB’000 |
Amounts owed to related parties |  |  | 1,291 |  |  |  | 36,348 |
Current payables to related parties, Total |  |  | 1,291 |  |  |  | 36,348 |

F-46

As of December 31, 2022, total of amounts owed to related parties held by discontinued operations was RMB 35,057,000.

Mr. Huang Jia Dong, the prior Chief Executive Officer and a prior director of the company, and Mr. Wong Kung Tok, formerly one of the Company’s significant shareholders, provide working capital loans to the Company from time to time during the normal course of its business. These loans amounted to RMB 35,057,000 and RMB 35,057,000 as of December 31, 2022 and 2021, respectively. These loans are interest free, unsecured and repayable on demand. Mr. Huang and Mr. Wong are brothers-in-law. The whole of this amount was held by discontinued operations.

As of December 31, 2022, the Company had a loan of US$167,000 (equivalent to RMB 1,160,000) (2021: US$167,000 (equivalent to RMB 1,160,000)) payable to Sound Treasure Limited, an affiliate of Mr. Huang Jia Dong and a shareholder of the Company. This loan is interest free, unsecured and repayable on demand.

As of December 31, 2022, the Company had a loan of US $20,000 (equivalent to RMB 131,000) (2021: US$20,000 (equivalent to RMB131,000)) payable to Alex Ng Man Shek, a director and corporate secretary of the Company. This loan is interest free, unsecured and repayable on demand.

During the year ended December 31, 2022, the Company incurred a total of RMB 2,847,000 in consultancy fees to Anhui Zhongjun Enterprise Management Co., Ltd. (“Anhui Zhongjun”), of which the whole amount were expensed during the year. During the year ended December 31, 2022, the Company received a total of RMB 2,635,000 in cash from Anhui Zhongjun for the provision of business management services. The Company completed all performance obligations pertaining to the RMB 2,635,000 received and recognized revenue of RMB 2,486,000, net of PRC value-added tax of RMB 149,000. The director of Anhui Zhongjun, Zhang Yonghong is also a director of the Company’s subsidiary, Chengdu Future Talented Management and Consulting Co., Ltd.

During the year ended December 31, 2021, the Company paid a total of RMB 8,840,000 in consultancy fees to Anhui Zhongjun Enterprise Management Co., Ltd. (“Anhui Zhongjun”); of the RMB 8,840,000 total consultancy fees, RMB 5,993,000 were expensed during the year. The remaining RMB 2,847,000 was recorded under prepayments under current assets as of December 31, 2021. During the year ended December 31, 2022, the Company expensed the remaining RMB 2,847,000 prepayment. During the year ended December 31, 2022, the Company received a total of RMB 2,486,000 from Anhui Zhongjun for the provision of business management services. The Company completed all performance obligations pertaining to the RMB 2,635,000 received and recognized revenue of RMB 2,486,000, net of PRC value-added tax of RMB 149,000. During the year ended December 31, 2021, the Company received a total of RMB 1,460,000 from Anhui Zhongjun for the provision of business management services. The Company completed all performance obligations pertaining to the RMB 1,460,000 received and recognized revenue of RMB 1,378,000, net of PRC value-added tax of RMB 82,000.

The director of Anhui Zhongjun, Zhang Yonghong, is also a director of the Company’s subsidiary, Chengdu Future Talented Management and Consulting Co., Ltd.

During the year ended December 31, 2021, the Company incurred a total of RMB 36,929,000 in cost of revenue to Lianjie (Hainan)Technology Co., Ltd. (“Lianjie”). The Company paid RMB 34,364,000 to Lianjie for the cost of revenue incurred. As of December 31, 2021, the Company had trade accounts payable of RMB nil due to Lianjie. Lin Yufeng, a director of the Company’s subsidiary, Hainan Kylin Cloud Services Technology Co., Ltd., was a significant shareholder of Lianjie from September 22, 2021 until November 19, 2021. Lin Yufeng was no longer a significant shareholder of Lianjie during the year ended December 31, 2022, and thus Lianjie was no longer a related party of the Company.

28. COMMITMENTS

(a) Operating lease commitments

The Company leases production factories, warehouses and employees’ hostel from unrelated parties under non-cancellable operating lease arrangements. The leases have varying terms and the total future minimum lease payments of the Company under non-cancellable operating leases are payable as follows:

SCHEDULE OF TOTAL FUTURE MINIMUM LEASE PAYMENTS

|  | As of December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |
Within one year |  |  | 328 |  |  |  | 13,404 |  |  |  | 13,431 |
After one year and within five years |  |  | 157 |  |  |  | 33,325 |  |  |  | 46,728 |
Operating lease commitments |  |  | 485 |  |  |  | 46,729 |  |  |  | 60,159 |

As of December 31, 2022, total operating lease liabilities payable of discontinued operations amounts of RMB 33,325,000 (Note 29).

F-47

The leases typically run for an initial period of three years, with an option to renew the lease when all terms are renegotiated. Lease payments are usually increased every three years to reflect market rentals. None of the leases includes contingent rentals.

(b) Capital commitments

The Company’s capital expenditures consist of expenditures on property, plant and equipment and capital contribution. Capital expenditures contracted for at the balance sheet date but not recognized in the financial statements are as follows:

SCHEDULE OF CAPITAL EXPENDITURES CONTRACTED FOR AT THE BALANCE SHEET DATE BUT NOT RECOGNIZED

|  | As of December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |
Contracted for capital commitment in respect of capital contribution to its wholly foreign owned subsidiary in the PRC: |  |  |  |  |  |  |  |  |  |  |  |
Chengdu Future |  |  | 30,000,000 |  |  |  | 30,000,000 |  |  |  | 30,000,000 |
Antelope Chengdu |  |  | 47,365,376 |  |  |  | 65,250,000 |  |  |  | 62,250,000 |
Hainan Antelope Holding |  |  | 63,726,000 |  |  |  | 63,726,000 |  |  |  | — |
Antelope Future (Yangpu) |  |  | 60,970,159 |  |  |  | 63,726,000 |  |  |  | — |
Antelope Investment (Hainan) |  |  | 50,000,000 |  |  |  | 50,000,000 |  |  |  | — |
Antelope Ruicheng Investment |  |  | 47,245,000 |  |  |  | 50,000,000 |  |  |  | — |
Hangzhou Kylin Cloud Service Technology |  |  | 4,500,000 |  |  |  | — |  |  |  | — |
Anhui Kylin Cloud Service Technology |  |  | 4,900,000 |  |  |  | — |  |  |  | — |
Contractual capital commitments |  |  | 4,900,000 |  |  |  | — |  |  |  | — |

29. ASSETS AND LIABILITIES OF DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE

Since the ceramic tiles manufacturing business of the Company has experienced significant hurdles due to the significant slowdown of the real estate sector and the impacts of COVID-19 in China, the Company plans to divest its ceramic tiles manufacturing business, which is conducted through the Company’s two subsidiaries, Jinjiang Hengda Ceramics Co., Ltd. and Jiangxi Hengdali Ceramic Materials Co., Ltd.

Jiangxi Hengdali Ceramics is wholly owned by Jinjiang Hengda Ceramics, which is a wholly owned subsidiary of Stand Best Creation Limited, a Hong Kong company (the “Target”). The Target is Stand Best Creation Limited, a wholly owned subsidiary of Success Winner Limited which is 100% owned by the Company (“the Disposition Group”).

On December 30, 2022, the Seller, the Target and New Stonehenge Limited, a British Virgin Islands exempt company which is not affiliate of the Company or any of its directors or officers, (the “Buyer”), entered into certain share purchase agreement (the “Disposition SPA”). Pursuant to the Disposition SPA, the Buyer agreed to purchase the Target, and in exchange the Buyer will issue a 5% unsecured promissory note to the Seller with principal amount of $8.5 million with a maturity date on the fourth anniversary of its issuance (the “Note”). Upon the closing of the transaction (the “Disposition”) contemplated by the Disposition SPA, the Buyer will become the sole shareholder of the Target and as a result, assume all assets and liabilities of the Target and subsidiaries owned or controlled by the Target.

The Closing of the Disposition is subject to the satisfaction or waiver of certain closing conditions including the receipt of a fairness opinion from an independent firm, approval of a majority of the Company’s shareholders, and all consents required to be obtained from or made with any governmental authorities.

The Company held an extraordinary meeting of shareholders at on February 21, 2023, 8:30 A.M. ET. at Junbing Industrial Area, Anhai, Jinjiang, Fujian, China. There were 5,678,430 ordinary shares voted, representing approximately 56.58% of the total 10,035,188 outstanding ordinary shares and therefore constituting a quorum of more than fifty percent (50%) of the shares outstanding and entitled to vote at the meeting as of the record date of January 5, 2023. The final voting results submitted to a vote of shareholders at the meeting were that the following constitutes the number of votes voted with respect to the proposal of the approval of the proposed sale of the Company’s subsidiaries (the “Disposition Transaction”), Stand Best Creation Limited, Jinjiang Hengda Ceramics Co., Ltd., and Jiangxi Hengdali Ceramic Materials Co., Ltd. to New Stonehenge Limited, a business company incorporated in the British Virgin Islands with limited liability, in exchange for an unsecured promissory note with a principal amount of US$8.5 million, which will be mature in four years after its issuance. Accordingly, the Disposition Transaction has been approved.

Assets and liabilities of the Disposal Group were classified as “Assets classified as held for sale” and “Liabilities directly associated with assets classified as held for sale” respectively in accordance with IFRS 5 as at December 31, 2022.

F-48

SCHEDULE OF ASSETS AND LIABILITIES OF DISPOSAL GROUP

|  | As of December 31, 2022 |
|  | RMB’000 |
ASSETS CLASSIFIED AS HELD FOR SALE |  |  |  |
Right-of-use assets, net |  |  | 30,937 |
Inventories, net |  |  | 28,749 |
Trade receivables, net |  |  | 11,683 |
Other receivables and prepayments |  |  | 3,000 |
Cash and bank balances |  |  | 306 |
Total assets of the Disposal Group held for sale |  |  | 74,675 |

|  | As of December 31, 2022 |
|  | RMB’000 |
LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS CLASSIFIED AS HELD FOR SALE |  |  |  |
Accrued liabilities and other payables |  |  | 19,197 |
Amounts owed to related parties |  |  | 35,057 |
Lease liabilities |  |  | 33,325 |
Taxes payable |  |  | 951 |
Total liabilities of the Disposal Group directly associated with assets classified as held for sale |  |  | 88,530 |

Discontinued operations

Upon the classification of the assets and liabilities of the Disposal Group as ‘Assets classified as held for sale’ and ‘Liabilities directly associated with assets classified as held for sale’ respectively, the Disposal Group is reported in the current period as a discontinued operations. Financial information relating to the discontinued operations for the year is set out below.

The financial performance and cash flow information presented are for the years ended December 31, 2022, 2021 and 2022.

SCHEDULE OF FINANCIAL PERFORMANCE AND CASH FLOW INFORMATION

|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | Years ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
|  |  | RMB’000 |  |  |  | RMB’000 |  |  |  | RMB’000 |
Financial performance |  |  |  |  |  |  |  |  |  |  |  |
Net sales |  |  | 37,696 |  |  |  | 144,743 |  |  |  | 182,989 |
Cost of goods sold |  |  | 41,245 |  |  |  | 83,436 |  |  |  | 209,705 |
Gross profit (loss) |  |  | (3,549 | ) |  |  | 61,307 |  |  |  | (26,716 | )
Other income |  |  | 14,244 |  |  |  | 9,388 |  |  |  | 14,531 |
Selling and distribution expenses |  |  | (5,913 | ) |  |  | (6,298 | ) |  |  | (9,356 | )
Administrative expenses |  |  | (51,297 | ) |  |  | (131,867 | ) |  |  | (168,622 | )
Finance costs |  |  | (1,479 | ) |  |  | (2,115 | ) |  |  | (2,673 | )
Other expenses |  |  | - |  |  |  | (90 | ) |  |  | - |
Loss before taxation |  |  | (47,994 | ) |  |  | (69,675 | ) |  |  | (192,836 | )
Income tax expense |  |  | - |  |  |  | - |  |  |  | - |
Loss for the year from discontinued operations |  |  | (47,994 | ) |  |  | (69,675 | ) |  |  | (192,836 | )
Total comprehensive loss from discontinued operations |  |  | (47,994 | ) |  |  | (69,675 | ) |  |  | (192,836 | )
Cash flow information |  |  |  |  |  |  |  |  |  |  |  |
Net cash generated from operating activities from discontinued operations |  |  | 4,982 |  |  |  | 3,314 |  |  |  | 4,400 |
Net cash used in investing activities from discontinued operations |  |  | - |  |  |  | - |  |  |  | - |
Net cash used in financing activities from discontinued operations |  |  | (14,303 | ) |  |  | (14,303 | ) |  |  | (14,136 | )
Net (decrease) increase in cash and cash equivalents from discontinued operations |  |  | (9,321 | ) |  |  | (10,989 | ) |  |  | (9,736 | )

30. FINANCIAL RISK MANAGEMENT

The Company’s overall financial risk management program seeks to minimize potential adverse effects of financial performance of the Company. Management has in place processes and procedures to monitor the Company’s risk exposures while balancing the costs associated with such monitoring and management against the costs of risk occurrence. The Company’s risk management policies are reviewed periodically for changes in market conditions and the Company’s operations.

The Company is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks included credit risk, liquidity risk, interest rate risk, foreign currency risk and market price risk.

Except as disclosed in (d), the Company does not hold or issue derivative financial instruments for trading purposes or to hedge against fluctuations, if any, in interest rates and foreign exchange rates.

(a) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company’s exposure to credit risk arises primarily from bank balances and trade receivables. For trade receivables, the Company adopts the policy of dealing only with customers of appropriate credit history to mitigate credit risk. For other financial assets, the Company adopts the policy of dealing only with high credit quality counterparties.

As the Company does not hold any collateral, the maximum exposure to credit risk for each class of financial assets is the carrying amount of that class of financial assets presented on the consolidated statements of financial position.

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Cash and bank balances

The Company’s bank deposits are placed with reputable banks in the PRC, Hong Kong and the United States, which management believes are of high credit quality. The Company performs periodic evaluations of the relative credit standing of these financial institutions.

Trade receivables

The Company’s objective is to seek continual growth while minimizing losses incurred due to increased credit risk exposure.

The Company’s exposure to credit risks is influenced mainly by the individual characteristics of each customer. The Company typically gives the existing customers credit terms of approximately 120 days to 150 days. In deciding whether credit shall be extended, the Company will take into consideration factors such as the relationship with the customer, its payment history and credit worthiness. In relation to new customers, the sales and marketing department will prepare credit proposals for approval by the Chief Executive Officer.

The Company performs ongoing credit evaluations of its customers’ financial condition and requires no collateral from its customers. The provision for impairment loss for doubtful debts is based upon a review of the expected collectability of all trade and other receivables.

The Company’s concentration of credit risk by geographical location is wholly in the PRC as of December 31, 2022 and 2021. Further details of the Company’s concentration of credit risk are set out in Note 16.

(b) Liquidity risk

The Company’s policy is to regularly monitor current and expected liquidity requirements and its compliance with loan covenants to ensure that it maintains a sufficient amount of cash and adequate committed lines of funding from major financial institutions to meet its liquidity requirements in the short and longer term.

The following table details the Company’s remaining contractual maturities for its financial liabilities. The table has been drawn up based on undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows. To the extent that interest flows are at a floating rate, the undiscounted amount is calculated based on interest rate at the end of the reporting periods:

SCHEDULE OF COMPANY REMAINING CONTRACTUAL MATURITIES FOR ITS FINANCIAL LIABILITIES

|  | As of December 31, 2022 |
|  |  |  |  | More than 1 |  |  | Total contractual |  |  |  |
|  |  |  |  | year but less |  |  | undiscounted |  |  | Carrying |
|  | Within 1 year |  |  | than 5 years |  |  | cash flow |  |  | amount |
|  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |
Trade payables |  |  | 3,079 |  |  |  | — |  |  |  | 3,079 |  |  |  | 3,079 |
Amounts owed to related parties |  |  | 1,291 |  |  |  | — |  |  |  | 1,291 |  |  |  | 1,291 |
Note payable |  |  | — |  |  |  | 8,775 |  |  |  | 8,775 |  |  |  | 8,775 |
Lease liabilities |  |  | 349 |  |  |  | 146 |  |  |  | 495 |  |  |  | 495 |
Total |  |  | 4,719 |  |  |  | 8,921 |  |  |  | 13,640 |  |  |  | 13,640 |

|  | As of December 31, 2021 |
|  |  |  |  | More than 1 |  |  | Total contractual |  |  |  |
|  |  |  |  | year but less |  |  | undiscounted |  |  | Carrying |
|  | Within 1 year |  |  | than 5 years |  |  | cash flow |  |  | amount |
|  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |
Trade payables |  |  | 6,290 |  |  |  | — |  |  |  | 6,290 |  |  |  | 6,290 |
Amounts owed to related parties |  |  | 36,348 |  |  |  | — |  |  |  | 36,348 |  |  |  | 36,348 |
Lease liabilities |  |  | 14,883 |  |  |  | 34,565 |  |  |  | 49,448 |  |  |  | 49,448 |
Total |  |  | 57,521 |  |  |  | 34,565 |  |  |  | 92,086 |  |  |  | 92,086 |

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(c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Company’s financial instruments will fluctuate because of changes in market interest rates.

The Company’s exposure to interest rate risk arises primarily from the Company’s interest-bearing bank deposits and borrowings.

The Company is exposed to fair value interest rate risk in relation to its fixed-rate bank borrowings. Bank borrowings subject to fixed interest rates are contractually repriced at intervals of 12 months. The Company currently does not have an interest rate hedging policy. However, the management monitors interest rate exposure and will consider other necessary actions when significant interest rate exposure is anticipated.

The Company is also exposed to cash flow interest rate risk related to bank balances and cash held at financial institutions carried at the prevailing market rates and variable-rate bank borrowings.

At December 31, 2022 and 2021, the company had no variable-rate risk.

(d) Foreign currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. Currency risk arises when transactions are denominated in foreign currencies.

The Company is mainly exposed to foreign exchange risk arising from future commercial transactions, recognized assets and liabilities denominated in currencies other than the functional currency of the Company entities to which they relate. The Company’s operations are primarily conducted in the PRC. All the sales and purchases transactions are denominated in RMB. As such, the operations are not exposed to exchange rate fluctuation.

As of December 31, 2022 and 2021, nearly all of the Company’s monetary assets and monetary liabilities were denominated in RMB except certain bank balances (Note 18) were denominated in US dollars and HKD.

Sensitivity analysis

The Company’s foreign currency risk is mainly concentrated on the fluctuation of US$ and HK$. The following table details the Company’s sensitivity to a 4% increase and decrease in RMB against the relevant foreign currencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the years end for a 4% change. On this basis, if RMB strengthens against foreign currencies by 4%, the Company’s loss before taxation for the year would decrease by the following amount, and vice versa.

SUMMARY OF LOSS BEFORE TAXATION

|  | As of December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |
Loss before taxation |  |  | 39 |  |  |  | 895 |  |  |  | 421 |

The sensitivity analysis has been determined assuming that the change in foreign exchange rates had occurred at the end of the reporting period and had been applied to re-measure those financial instruments held by the Company which expose the Company to foreign currency risk at the end of the reporting period. The stated changes represent management’s assessment of reasonably possible changes in foreign exchange rates over the period until the end of next annual reporting period. The analysis is performed on the same basis for 2022, 2021 and 2020.

In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the year end exposure at the end of the reporting period does not reflect the exposure during the year.

(e) Fair value measurements

| (i) | Financial instruments carried at fair value

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Fair value hierarchy

The following table presents the fair value of the Company’s financial instruments measured at the end of the reporting period on a recurring basis, categorized into the three-level fair value hierarchy as defined in IFRS 13 Fair value measurement. The level into which a fair value measurement is classified is determined with reference to the observability and significance of the inputs used in the valuation technique as follows:

| ● | Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

| ● | Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices)

| ● | Level 3: inputs for the assets or liability that are not based on observable market data (that is, unobservable inputs). The Company’s directors are responsible to determine the appropriate valuation techniques and inputs for fair value measurements.

There were no transfers between instrument levels during the years ended December 31, 2022 and 2021.

As of December 31, 2022 and 2021 there were no other financial instruments measured on a recurring basis.

| (ii) | Financial assets and liabilities measured at other than fair value

The carrying amounts of the Company’s other financial instruments carried at cost or amortized cost approximate their fair values as of December 31, 2022 and 2021.

31. CAPITAL MANAGEMENT

The Company’s objectives when managing capital are:

| (i) | To safeguard the Company’s ability to continue as a going concern and to be able to service its debts when they are due;

| (ii) | To maintain an optimal capital structure so as to maximize shareholder value; and

| (iii) | To maintain a strong credit rating and healthy capital ratios in order to support the Company’s stability and growth.

The Company actively and regularly reviews and manages its capital structure to ensure optimal shareholder returns, taking into consideration the future capital requirements of the Company and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. The Company manages its common shares and stock options as capital.

The Company is not subject to externally imposed capital requirements, except for, as disclosed in Note 25(a), the Company’s PRC subsidiaries are required by the Foreign Enterprise Law of the PRC to contribute to and maintain a non-distributable statutory reserve fund whose utilization is subject to approval by the Board of Directors. This externally imposed capital requirement has been complied with by the PRC subsidiaries for the years ended December 31, 2022, 2021 and 2020.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, increase share capital, obtain new borrowings or sell assets to reduce debt.

There were no changes in the Company’s overall approach to capital management during the report periods.

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The capital structure of the Company consists of debts (which include borrowings, less cash and cash equivalents) and equity attributable to shareholders of the Company (comprising issued capital and reserves). The Company monitors capital on the basis of the debt to capital ratio, which is calculated as net debts divided by equity attributable to shareholders of the Company.

SCHEDULE OF CAPITAL STRUCTURE

|  | As of December 31, |
|  | 2022 |  |  | 2021 |
|  | RMB’000 |  |  | RMB’000 |
Interest-bearing bank borrowings |  |  | — |  |  |  | — |
Note payable |  |  | 8,775 |  |  |  | — |
Amounts owed to related parties |  |  | 1,291 |  |  |  | 36,348 |
Total debts |  |  | 10,066 |  |  |  | 36,348 |
Less: Cash and cash equivalents (excluding restricted bank balances) |  |  | (3,936 | ) |  |  | (27,880 | )
Net debts |  |  | 6,130 |  |  |  | 8,548 |
Equity attributable to shareholders of the Company |  |  | 1,047 |  |  |  | 61,943 |
Gearing ratio |  |  | 585 | % |  |  | 13.8 | %

32. SUBSEQUENT EVENTS

The Company has evaluated all events that have occurred subsequent to December 31, 2022 through the date that the consolidated financial statements were issued. Management has concluded that the following material subsequent events required disclosure in the consolidated financial statements.

On December 30, 2022, the Company (the “Seller”), the Target (includes Stand Best, Hengda and Hengdali) and New Stonehenge Limited, a British Virgin Islands exempt company which is not affiliate of the Company or any of its directors or officers, (the “Buyer”), entered into certain share purchase agreement (the “Disposition SPA”). Pursuant to the Disposition SPA, the Buyer agreed to purchase the Target for $8.5 million, and in exchange the Buyer will issue a 5% unsecured promissory note to the Seller with principal amount of $8.5 million with a maturity date on the fourth anniversary of its issuance (the “Note”). The Note has an interest rate of five percent (5%) per annum from the Effective Date until the same is paid in full. All interest calculations shall be simple interest and shall be computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day months and shall be payable in accordance with the terms of this Note. Upon the closing of the transaction (the “Disposition”) contemplated by the Disposition SPA, the Buyer will become the sole shareholder of the Target and as a result, assume all assets and liabilities of the Target and subsidiaries owned or controlled by the Target. The Closing of the Disposition is subject to the satisfaction or waiver of certain closing conditions including the receipt of a fairness opinion from an independent firm, approval of a majority of the Company’s shareholders, and all consents required to be obtained from or made with any governmental authorities. The disposition was approved during the extraordinary meeting of shareholders held on February 21, 2023. The disposition was consummated on April 28, 2023.

During the same shareholder meeting, the shareholders also approved the alteration of the authorized issued share capital of the Company from US$4,800,000 divided into 200,000,000 ordinary shares with a par value of US$0.024 each, to (i) 250,000,000 ordinary shares re- designated as (a) 200,000,000 Class A ordinary shares with no par value each, and (b) 50,000,000 Class B ordinary shares with no par value each, and (ii) 50,000,000 preferred shares with no par value each.

On January 10, 2023, the Company entered into a certain securities purchase agreement (the “SPA”) with Mr. Weilai (Will) Zhang, the Chief Executive Officer of the Company, Mr. Ishak Han, a director of the Company, and another sophisticated purchaser (collectively, the “Purchasers”), pursuant to which the Company agreed to sell 1,625,000 ordinary shares, (the “Shares”) par value $0.024 per share (the “Ordinary Shares”), at a per share purchase price of $0.80 (the “Offering”). This Offering was unanimously approved by the disinterested directors and the board of directors of the Company. The gross proceeds to the Company from this Offering are $1.3 million, before deducting any fees or expenses. The Company plans to use the net proceeds from this Offering for the expansion of its social ecommerce business and the general corporate purpose. The Offering closed on January 12, 2023.

On January 13, 2023, the Company entered into a certain securities purchase agreement (the “SPA”) with a certain purchaser (collectively, the “Purchasers”), pursuant to which the Company agreed to sell 1,234,568 ordinary shares, (the “Shares”) par value $0.024 per share (the “Ordinary Shares”), at a per share purchase price of $0.81 (the “Offering”), the closing price of the Ordinary Shares on the Nasdaq Capital Market as of January 10, 2023. The gross proceeds to the Company from this Offering are approximately $1 million, before deducting any fees or expenses. The Company plans to use the net proceeds from this Offering for the expansion of its social ecommerce business and the general corporate purpose.

On March 30, 2023, the Company entered into a certain securities purchase agreement (the “SPA”) with five sophisticated investors (collectively, the “Purchasers”), pursuant to which the Company agreed to sell 5,681,820 Class A ordinary shares, (the “Shares”), no par value (the “Ordinary Shares”), at a per share purchase price of $0.88 (the “Offering”). Upon closing of this offering, these two beneficial owners of the Purchasers will have approximately 15.15% of the total voting power of the Company, and the Company’s CEO and Chairman, Weilai (Will) Zhang, will have about 52.13% of the total voting power of the Company. The gross proceeds to the Company from this Offering are approximately $5 million, before deducting any fees or expenses. The Company has issued the Shares on April 12, 2023 and the Offering was closed on the same day as all closing conditions were satisfied. The Company plans to use the net proceeds from this Offering for the general corporate purpose.

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