Amended Annual and Transition Report (foreign Private Issuer) (20-f/a)

Share Name	Share Symbol	Market	Type
JX Luxventure Ltd	NASDAQ:JXJT	NASDAQ	Common Stock

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	-0.02	-1.60%	1.23	1.20	1.29	1.27	1.2001	1.26	18,714	22:00:00

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F/A

(Amendment No. 1)

(Mark One)

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

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

For the fiscal year ended December 31, 2022

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

For the transition period from ___________ to ___________

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

Date of event requiring this shell company report:

Commission file number: 001-35715

JX Luxventure limited

(Exact Name of Registrant as Specified in Its Charter)

Not Applicable

(Translation of Registrant’s Name Into English)

Republic of the Marshall Islands

(Jurisdiction of Incorporation or Organization)

Bin Hai Da Dao No. 270

Lang Qin Wan Guo Ji Du Jia Cun Zong He Lou

Xiu Ying District

Haikou City, Hainan Province 570100

People’s Republic of China

(Address of Principal Executive Offices)

Ms. Sun Lei, Chief Executive Officer

Bin Hai Da Dao No. 270

Lang Qin Wan Guo Ji Du Jia Cun Zong He Lou

Xiu Ying District

Haikou City, Hainan Province 570100

People’s Republic of China

Tel: + (86) 595 8889 6198

Fax: (86) 595 8850 5328

(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
Common Stock, $0.0001 par value		JXJT		NASDAQ Capital 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 (December 31, 2022): 6,063,192.

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 ☒

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer, “accelerated filer,” and “emerging growth company” 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. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. 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 ☒

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Not Applicable

Explanatory Note

This Amendment No. 1 to the annual report on Form 20-F of JX Luxventure Limited (the “Company,” “we,” “our,” or “us”) amends the Company’s annual report on Form 20-F for the fiscal year ended December 31, 2022 (the “Original 20-F”), which was filed with the U.S. Securities and Exchange Commission on May 12, 2023. The Company is filing this Amendment No. 1 solely to furnish the Interactive Data File disclosure as Exhibit 101 in accordance with Rule 405 of Regulation S-T, which was not included in the Original 20-F. Exhibit 101 includes information about the Company in eXtensible Business Reporting Language (XBRL).

This Amendment No. 1 consists solely of the cover page, this explanatory note, the signature page, and Exhibit 101. The remainder of the Original 20-F is unchanged and has therefore been omitted. No changes have occurred since the filing of the Original 20-F. Accordingly, this Amendment No. 1 should be read in conjunction with the Original 20-F.

PART III

ITEM 19. EXHIBITS

101.INS*		Inline XBRL Instance Document.
101.SCH*		Inline XBRL Taxonomy Extension Schema Document.
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*	Filed herewith.

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F/A and that it has duly caused and authorized the undersigned to sign Amendment No. 1 to the annual report on Form 20-F on its behalf.

Date: May 15, 2023	JX Luxventure Limited

	/s/ Sun Lei
	Sun Lei
	Interim Chief Financial Officer

JX Luxventure Limited

Consolidated Financial Statements

For the years ended December 31, 2022, 2021, and 2020

(Stated in US dollars)

CONTENTS

		PAGES
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		F-2

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS		F-6

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION		F-7

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY		F-8

CONSOLIDATED STATEMENTS OF CASH FLOWS		F-9

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS		F-10 - F-47

F-1

Report of Independent Registered Public Accounting Firm

To the shareholders and board of directors of JX Luxventure Limited.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of JX Luxventure Limited (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operation and comprehensive loss, stockholders’ equity, and cash flows, for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial positions of the Company as of December 31, 2022 and 2021, and the results of its operation and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. 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 audits 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 Matter

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

F-2

Revenue Recognition

As described in Note 7 and Note 8 to the financial statements, the company shifted to tourism industry through acquisition of Flower Crown and disposition of menswear business. Compared with last year, revenue from Tourism industry increased by 53% from 51.8 million to 79.1 million this year. For it’s tourism business, the Company determines itself as principal and recognizes revenue for the gross proceeds received from customers.

Significant judgment is exercised by the Company in determining itself as principal and recognize revenue for the gross proceeds received from customers, includes the following:

●

The Company controls the ticket before transferring of the ticket (the right) to the customer (the online platform), because the Company need to secure the seat from the airline by making a full payment to the airline before obtaining a contract with a customer.

●

The Company has the ability to direct the use of the ticket and obtains the remaining benefits or taking the loss from the ticket by reselling the ticket or using the ticket itself.

●

The Company’s responsibility is to make sure passengers can take the flight as their wishes.

●

The Company also has inventory risk because the Company makes full payment to the airlines to secure the right before obtaining a contract with the customer to purchase the ticket.

●

Other than the air ticket itself, the Company also provide financing or guarantee function to the customer, which are not provided by the airline.

Given these factors and due to the volume of transactions, the related audit effort in evaluating management’s judgments in determining itself as principal and recognize revenue for the gross proceeds received from customers were extensive and required a high degree of auditor judgment.

Our principal audit procedures related to the Company’s revenue recognition included the following:

●

We tested the timing of the Company making a full payment of airline tickets recorded in system to determine if the company purchased the ticket before transferring the ticket (the flight) to the customer.

●

We evaluated management’s significant accounting policies related to these tickets selling for reasonableness.

●

We tested a sample of flight information in sales report and compared to publicly available information to determine the authenticity of the transaction.

●

We tested the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the financial statements.

/s/ Onestop Assurance PAC

We have served as the Company’s auditor since 2022.

Singapore

May 12, 2023

PCAOB ID number: 6732

F-3

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To:	The Board of Directors and Stockholders of
	KBS Fashion Group Limited

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial position of KBS Fashion Group Limited (the Company) as of December 31, 2020 and 2019, and the related consolidated statements of comprehensive loss, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2020, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s 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.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the 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-4

Impairment Assessment of Trade Receivables

As described in Notes 4 and 26, the Company extends unsecured credit to its customers. The Company recognizes a loss allowance on outstanding trade receivables based on lifetime ECLs at each reporting date. The assessment of loss allowance requires significant judgement. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. The audit engagement team performed extended procedures, which includes, among others, obtaining an understanding of the management’s assessment process, evaluating the relevant inputs and factors used during the process, and testing the reasonableness of the loss allowance.

Impairment Assessment of Non-Financial Assets

As described in Notes 4 and 6, the Company is required to test certain non-financial assets for impairment based on recoverability. The recoverable amount is determined based on the cash-generating-unit (CGU) to which the asset belongs. For each reporting period, management reviews the recoverable amount using discounted cash flows and determine if impairment is required. The assessment of the impairment requires significant judgement. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. The audit engagement team performed extended procedures, which includes, among others, obtaining an understanding of the management’s assessment process, evaluating the reasonableness of the relevant inputs and factors used in calculating the projections, and testing the accuracy of the assessment output.

/s/ WWC, P.C.

WWC, P.C.

Certified Public Accountants

We have served as the Company’s auditor from 2016 to 2021.

San Mateo, California

May 17, 2021

F-5

JX Luxventure limited

Consolidated Statements of Comprehensive Loss

For the years ended December 31, 2022, 2021, 2020

(Stated in U.S. Dollars)

			Year ended December 31,
	Notes		2022			2021			2020
Revenue		8		79,874,727			54,040,948			1,335,374
Cost of sales		9		(78,410,244	)		(53,193,237	)		(1,168,808	)
Gross profit				1,464,483			847,711			166,566

Other income		10		16,636			34,793			3,122
Other losses		11		(98,650	)		(17,325	)		-
Distribution and selling expenses		12		(721,388	)		(1,353,843	)		-
Administrative expenses		13		(56,043,741	)		(6,858,210	)		(1,164,981	)
(Loss)/profit from operations				(55,382,660	)		(7,346,874	)		(995,293	)

Finance costs		14		-			-			-

(Loss)/profit before tax				(55,382,660	)		(7,346,874	)		(995,293	)

Income tax income/(expense)		15		(621	)		(5,495	)		-
Loss before discontinued operations		16		(55,383,281	)		(7,352,369	)		(995,293	)
Discontinued operation:
Discontinued operation loss				(8,915,414	)		(29,863,114	)		(4,672,124	)
Loss on disposal of discontinued operation				(9,193,736	)		-			-
Loss for the year				(73,492,431	)		(37,215,483	)		(5,667,417	)
Other comprehensive loss
- currency translation differences				(402,573	)		1,438,756			3,641,747
Total comprehensive loss for the year				(73,895,004	)		(35,776,727	)		(2,025,670	)

Loss per share of common stock attributable to the Company
- Basic		19		(43.7	)		(82.3	)		(20.9	)
- Diluted		19		(43.7	)		(82.3	)		(20.9	)
Weighted average shares outstanding:
- Basic		19		1,681,547			452,345			271,253
- Diluted		19		1,681,547			452,345			271,253

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

F-6

JX Luxventure limited

Consolidated Statements of Financial Position

As at December 31, 2022, and 2021

(Stated in U.S. Dollars)

			As of December 31,
	Notes		2022			2021
Non-current assets
Property, plant and equipment-net		20		2,789,704			3,798,612
Investment property-net		20		-			7,364,527
Prepayments and premiums under operating leases		21		-			2,324,695
Land use rights		24		-			380,091
Long-term receivable		22		7,000,000			-
				9,789,704			13,867,925
Current assets
Inventories		25		444,551			1,163,896
Trade receivables		26		-			7,736,851
Other receivables and prepayments		26		5,501,106			2,328,122
Prepayments and premiums under operating leases		21		-			82,714
Cash and cash equivalents		27		520,916			12,914,914
				6,466,573			24,226,497
Total assets				16,256,277			38,094,422

Current liabilities
Short term bank loans		30		-			1,180,656
Trade and other payables		28		1,319,076			5,355,123
Due to related parties		29		2,611,097			467,568
Contract liabilities				-			218,734
Income tax payable				212			-
				3,930,385			7,222,081

Total liabilities				3,930,385			7,222,081

Equity
Share capital		32		6,063			590
Series A equity interest with preferential rights				1,240,000			1,240,000
Series C equity interest with preferential rights				1,500,000			1,500,000
Series D equity interest with preferential rights				3,120,000			3,120,000
Share premium		32		77,959,554			24,719,794
Other reserve		33		6,269,108			184,272
Statutory surplus reserve		33		-			6,084,836
Retained profits / (accumulated deficit)		33		(77,451,517	)		(3,959,086	)
Foreign currency translation reserve		33		(317,316	)		(2,018,065	)
				12,325,892			30,872,341
Total liabilities and equity				16,256,277			38,094,422

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

F-7

JX Luxventure limited

Consolidated Statements of Changes in Equity

For the years ended December 31, 2022, 2021, 2020

(Stated in U.S. Dollars)

	Share capital		Preferred A equity interest			Preferred C equity interest		Preferred D equity interest			Share premium		Other reserve			Statutory surplus reserve			Retained earnings			Foreign currency translation reserve			Total equity
	Note 32		Note 32			Note 32		Note 32			Note 32		Note 33			Note 33			Note 33			Note 33
Balance at December 31, 2019		259		-			-		-			9,199,779		184,272			6,084,836			46,073,808			(7,098,568	)		54,444,386
Shares issued for stock based compensation		56		-			-		-			1,332,698		-			-			-			-			1,332,754
Shares issued for acquisition of subsidiary		26		-			-		-			780,166		-			-			-			-			780,192
Loss for the year		-		-			-		-			-		-			-			(5,667,417	)		-			(5,667,417	)
Other comprehensive loss for the year		-		-			-		-			-		-			-			-			3,641,747			3,641,747
Balance at December 31, 2020		341		-			-		-			11,312,643		184,272			6,084,836			40,406,391			(3,456,821	)		54,531,662
Shares issued for stock based compensation		130		-			-		-			4,407,724		-			-			-			-			4,407,854
Shares issued for shareholders’ loan		67		-			-		-			809,485		-			-			-			-			809,552
Preferred shares issued				1,500,000			1,500,000		3,900,000					-			-			-			-			6,900,000
Preferred shares converted into common stock		52		(260,000	)				(780,000	)		1,039,948		-			-			-			-			-
Declared dividend of right												7,149,994		-			-			(7,149,994	)					-
Loss for the year		-		-			-		-			-		-			-			(37,215,483	)		-			(37,215,483	)
Other comprehensive loss for the year		-		-			-		-			-		-			-			-			1,438,756			1,438,756
Balance at December 31, 2021	$	590	$	1,240,000		$	1,500,000	$	3,120,000		$	24,719,794		184,272			6,084,836			(3,959,085	)		(2,018,065	)		30,872,341
Shares issued for stock based compensation		5,473		-			-		-			53,239,760		-			-			-			-			53,245,233
Disposal of subsidiaries		-		-			-		-			-		6,084,836	)		(6,084,836	)		-			2,103,322			2,103,322
Loss for the year		-		-			-		-			-		-			-			(73,492,431	)					(73,492,431	)
Other comprehensive loss for the year		-		-			-		-			-		-			-			-			(402,573	)		(402,573	)

Balance at December 31, 2022	$	6,063	$	1,240,000		$	1,500,000	$	3,120,000		$	77,959,554		6,269,108			-			(77,451,517	)		(317,316	)		12,325,892

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

F-8

JX Luxventure limited

Consolidated Statements of Cash Flows

For the years ended December 31, 2022, 2021, 2020

(Stated in U.S. Dollars)

	Year ended December 31,
	2022			2021			2020
OPERATING ACTIVITIES
Loss for the year		(73,492,431	)		(37,215,483	)		(5,667,417	)
Adjustments for:
Share-based compensation		53,245,233			4,407,853			700,250
Finance cost		-			58,726			62,383
Interest income		(22	)		(33,717	)		(54,544	)
Depreciation of property, plant and equipment & investment property		729,393			757,516			771,130
Amortization of intangible assets		7,477			14,958			13,980
Amortization of prepayments and premiums paid under operating leases		66,748			81,474			94,699
Provision/ (reversal) of inventory obsolescence		204,392			1,283			(42,884	)
Bad debt provision of trade receivables		4,991,808			6,076,620			2,334,410
Loss/(gain) on disposal of property, plant and equipment		402			97,378			45,807
Provision of impairment loss in property, plant and equipment & investment property		-			2,944,979			-
loss on disposal of subsidiary		9,193,736			(30,642	)		-
Operating cash flows before movements in working capital		(5,053,264	)		(22,839,055	)		(1,742,186	)

(Increase)/ decrease in trade and other receivables		(545,788	)		(3,284,084	)		(2,492,940	)
(Increase)/ decrease in inventories		438,849			547,593			(267,472	)
Prepayments and premiums paid under operating leases		(3,267	)		(3,411	)		210,901
Increase/ (decrease) in trade and other payables		262,510			515,003			(579,948	)
Increase/ (decrease) in income tax payable		(56,451	)		(175,469	)		(92,321	)
(Increase)/ decrease in deferred tax assets		-			17,463,604			(1,556,824	)
NET CASH USED IN OPERATING ACTIVITIES		(4,957,411	)		(7,775,819	)		(6,520,790	)

INVESTING ACTIVITIES
Interest received		21			33,717			54,544
Cash from acquisition of subsidiaries		-			-			561,424
Cash increase/ (decrease) due to disposal of a subsidiary		(9,442,759	)		6,612			-
Proceeds on disposal of property, plant and equipment		-			5,400			15,704
Purchase of property, plant and equipment		(1,008	)		(3,324,900	)		(24,198	)
NET CASH FROM INVESTING ACTIVITIES		(9,443,746	)		(3,279,171	)		607,474

FINANCING ACTIVITIES
Interest paid		-			(58,726	)		(62,383	)
New bank loans raised		-			-			2,173,882
Repayment of borrowings		-			-			(2,173,882	)
Advance from related party		2,220,098			117,697			909,237
Preferred stock subscription		-			6,900,000			-
NET CASH FROM FINANCING ACTIVITIES		2,220,098			6,958,971			846,854

NET DECREASE IN CASH AND CASH EQUIVALENTS		(12,181,059	)		(4,096,019	)		(5,066,462	)
Effects of currency translation		(212,939	)		389,643			1,067,274
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		12,914,914			16,621,290			20,620,478
CASH AND CASH EQUIVALENTS AT END OF YEAR		520,916			12,914,914			16,621,290

Cash flows of discontinued operation are presented in Note 17.

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

F-9

JX Luxventure limited

Notes to Financial Statements

GENERAL INFORMATION

On January 26, 2012, Acquisition Investments Corp (“Company”) was organized as a blank check company pursuant to the laws of the Republic of the Marshall Islands for the purpose of acquiring through a merger, capital stock exchange, asset acquisition, stock purchase, or similar acquisition transaction, one or more operating businesses or assets.

On March 24, 2014, the Company entered into a Share Exchange Agreement and Plan of Liquidation (the “Agreement”) among KBS International Holdings, Inc. (“KBS”), a Nevada corporation, Hongri International Holdings Ltd (“Hongri”), a company organized under the laws of the British Virgin Islands, and Cheung So Wa and Chan Sun Keung, the principal shareholders of KBS.

On August 1, 2014, the share exchange was completed. The acquisition was accounted for as a reverse merger and recapitalization where the Company, the legal acquirer is the accounting acquiree, and KBS, the legal acquiree, was the accounting acquirer.

Description of Subsidiaries:

Hongri International Holdings Limited (the “Hongri”), formerly known as Wah Ying International Investment Inc., was incorporated in the British Virgin Islands (the “BVI”) on July 8, 2008 as a limited liability company with authorized share capital of $50,000, divided into 50,000 common shares with $1 par value. Up through December 31, 2010, 10,000 common shares had been issued at par. On January 27, 2011, the Company issued an additional 10,000 common shares for cash consideration at $77 per share. The principal activity of the Company is investment holding. Hongri a directly wholly owned subsidiary of the Company.

France Cock (China) Limited (“France Cock”) was incorporated in Hong Kong on September 21, 2005 as a limited liability company with authorized capital of HK$10,000, divided into 10,000 common shares with par value of HK$1. The capital has been fully paid up. The principal activity of France Cock is the holding of intellectual property rights such as trademarks. France Cock owns the Company’s trademarks, including “KBS” and “Kabiniao”. France Cock is a directly wholly owned subsidiary of Hongri.

Roller Rome Limited (“Roller Rome”) was incorporated in the BVI on March 28, 2006 as a limited liability company with authorized share capital of $50,000, divided into 50,000 common shares with par value of $1. The principal activity of Roller Rome is the provision of design and development services for sports apparel. Roller Rome is a directly wholly owned subsidiary of Hongri.

Vast Billion Investment Limited (“Vast Billion”) was incorporated in Hong Kong on November 25, 2010 as a limited liability company with authorized share capital of HK$10,000 divided into 10,000 ordinary shares with HK$1par value. One ordinary share has been issued at par. Vast Billion is an investment holding company, and is a directly wholly owned subsidiary of Hongri.

Hongri (Fujian) Sports Goods Co. Ltd. (“Hongri Fujian”) was established in the People’s Republic of China (the “PRC”) on November 17, 2005 with a registered and paid up capital of RMB 5,000,000. On March 24, 2011, Hongri Fujian increased registered capital from RMB 70,000,000 to RMB75,000,000. As of September 30, 2011, the paid up capital was RMB 39,551,860. Hongri Fujian is engaged in the design, manufacture, marketing, and sale of apparel in the PRC. Hongri Fujian is a directly wholly owned subsidiary of Vast Billion.

Anhui Kai Xin Apparel Company Limited (“Anhui Kai Xin”) was established in the PRC on March 16, 2011 with a registered and paid up capital of RMB 1,000,000. Anhui Kai Xin is a wholly owned subsidiary of Hongri Fujian. Anhui Kai Xin provides contracting manufacturing services for companies in the sports apparel business.

On October 19, 2022, the Company sold Hongri International Holding Limited to third party and from thereon, Hongri, France Cock, Roller Rome, Vast Billion, Hongri Fujian, Anhui Kai Xin are no longer the subsidiaries of the Company.

F-10

Flower Crown Holding is a company incorporated on August 7, 2020 in the Cayman Islands. It has 50,000 shares issued and outstanding with a par value of $1. It is wholly owned by KBSF Fashion Group Limited.

Flower Crown (China) Holding Group Co., Limited (“Flower Crown HK”) was incorporated in Hong Kong on May 24, 2018. It has a total of 10,000 shares issued and outstanding with a par value of $1. It is wholly owned by Flower Crown Holding.

Kim Hyun Technology (Tianjin) Co., Ltd. (“Kim Hyun Tianjin”) was incorporated on July 23, 2020 in the PRC, as a wholly foreign-owned enterprise. Kim Hyun Tianjin is 100% owned by Flower Crown HK. The total investment is RMB10,000,000, the registered capital is RMB10,000,000 and the present shareholder shall pay up the registered capital prior to July 21, 2050. Kim Hyun Tianjin provides consulting in connection with information technology.

Jin Xuan (Hainan) Holding Co., Ltd (“JX Hainan”) was incorporated in November 11, 2021. It has a registered capital of USD30,000,000. It is 100% owned by Flower Crow HK. Its business scope ranges from import & export to manufacturing.

Jin Xuan Luxury Tourism (Hainan) Digital Technology Co., Ltd. (“Jin Xuan Luxury Tourism”) was incorporated in the PRC on August 4, 2016. It is 100% owned by JX Hainan . It has a registered capital of RMB20,000,000 and present shareholder shall pay up the registered capital prior to August 4, 2046. It operates Luxventure social platform and on-line activities.

Beijing Heyang International Travel Service Co., Ltd. (“Heyang Travel”) was incorporated in the PRC on March 29, 2018. It is 100% owned by Jin Xuan Luxury Tourism. It has a registered capital of RMB5,000,000 and the shareholder shall pay up the registered capital prior to August 1, 2060. Heyang Travel engages in tourism business and selling carrier services.

GROUP ORGANIZATION AND BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS

Effective December 13, 2021, the Company reorganized its corporate subsidiary structure in the PRC under Flower Crown Holding. As a result of the Flower Crown Holding’s China subsidiaries restructuring, the Company no longer operated those entities through a VIE structure and became the indirect sole shareholder of JX Hainan Digital and Beijing Heyang.

The Group structure as at the reporting date is as follows:

F-11

APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS”)

For the year ended December 31, 2022 the Company has consistently adopted all the new and revised standards, amendments and interpretations (collectively IFRSs) issued by the International Accounting Standards Board (“IASB”) and the IFRS Interpretations Committee (formerly known as “International Financial Reporting Interpretations Committee” (“IFRIC”)) of the IASB that are effective for financial year beginning on January 1, 2022 in the preparation of the consolidated financial statements throughout the year.

For the year ended December 31, 2022, the following new and revised standards, amendments or interpretations that have become effective during the reporting period.

●

IFRS Accounting Taxonomy 2021—Update 1 Disclosure of Accounting Policies and Definition of Accounting Estimates

	●	IFRS Accounting Taxonomy 2021—Update 2 Technology Update

	●	IFRS Accounting Taxonomy 2021—Update 3 Initial Application of IFRS 17 and IFRS 9—Comparative Information

The adoption of the above new and revised standards had no significant financial effect on these financial statements.

The following new standards and amendments to standards have not come into effect for the financial year beginning January 1, 2022, and have not been early adopted by the Company in preparing these consolidated financial statements. None of these new standards and amendments to standards is expected to have a significant effect on the consolidated financial statements of the Company.

●

Lease Liability in a Sale and Leaseback Amendments to IFRS 16

●

Non-current Liabilities with Covenants

SIGNIFCANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis and in accordance with IFRS as issued by the IASB. The principal accounting policies are set out below.

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

F-12

Foreign currencies

Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”).

The Group conducts its business predominately in the PRC and hence its functional currency is the Renminbi (RMB).

Translation from RMB to USD found place at the following rates:

	Period end rates	Average rates
December 31, 2020	USD 1.00= RMB 6.5277	USD 1.00=RMB 6.9001
December 31, 2021	USD 1.00= RMB 6.3524	USD 1.00=RMB 6.4491
December 31, 2022	USD 1.00= RMB 6.8987	USD 1.00=RMB 6.7347

Translation from HKD to USD found place at the following rates:

	Period end rates	Average rates
December 31, 2020	USD 1.00= HKD 7.7525	USD 1.00=HKD 7.7558
December 31, 2021	USD 1.00= HKD 7.7991	USD 1.00=HKD 7.7731
December 31, 2022	USD 1.00= HKD 7.7970	USD 1.00=HKD 7.8305

The results and financial positions in functional currency are translated into the presentation currency, USD, of the Company as follows:

(1)

Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

(2)

Income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions);

(3)

Share equity, share premium and dividends are translated at historical exchange rates; and

(4)

All resulting exchange differences are recognized in foreign currency translation reserve, a separate component of equity.

All financial information presented in USD has been rounded to the nearest dollar, except when otherwise indicated.

Segment reporting

Operating segments, and the amounts of each segment item reported in the financial statements, are identified from the financial information provided regularly to the Group’s most senior executive management for the purposes of allocating resources to, and assessing the performance of, the Group’s various lines of business and geographical locations.

Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services, the nature of production processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria. The Group’s five segments are wholesale, retail, contract manufacturing, tourism service and cross-border e-commerce.

F-13

Revenue recognition

Revenue from contracts with customers

Revenue from contracts with customers is recognized when control of goods or services is transferred to the customers at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

When the consideration in a contract includes a variable amount, the amount of consideration is estimated to which the Company will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved. Currently, the Company’s contracts do not include such variable amount.

When the contract contains a financing component which provides the customer a significant benefit of financing the transfer of goods or services to the customer for more than one year, revenue is measured at the present value of the amount receivable, discounted using the discount rate that would be reflected in a separate financing transaction between the Company and the customer at contract inception. When the contract contains a financing component which provides the Company a significant financial benefit for more than one year, revenue recognized under the contract includes the interest expense accreted on the contract liability under the effective interest method. For a contract where the period between the payment by the customer and the transfer of the promised goods or services is one year or less, the transaction price is not adjusted for the effects of a significant financing component, using the practical expedient in IFRS 15. Currently, the Company’s contract with its customers do not include financial benefit for more than one year.

Nature and timing of satisfaction of performance obligations for each of the revenue streams are as follows:

Revenue from the sale of goods

Performance obligation is satisfied at the point in time when control of the asset is transferred to the customer, generally on delivery and acceptance of the goods. The Company presents revenues from such transactions on a gross basis in the consolidated statements of comprehensive loss, as the Company acts as a principal to take inventory risks of these goods.

Revenue from the sale of packaged group tour service

Performance obligation is satisfied when the tour service is completed, generally when the tour group successfully returned from the tour destination to the place of origination. The Company presents revenues from such transactions on a gross basis in the consolidated statements of comprehensive loss, as the Company acts as a principal to provide a package of tourism services and take a full obligation to provide such services even if the suppliers are not able to deliver service.

F-14

Revenue from reselling of air-ticket

The Company is a reseller of air-ticket, it provides value add services to its customers including guaranteed flight replacement and other financial benefits. The revenue is recognized when performance obligation has been satisfied, which could be significantly after the ticket sale. The Company recognizes gross revenue with an expense from the cost of purchasing from the supplier.

Other income

Interest income is recognized on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.

Rental income is recognized on a time proportion basis over the lease terms.

Dividend income is recognized when the shareholders’ right to receive payment has been established, it is probable that the economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

Value added tax (VAT)

Current standard Output VAT in effect is 13% and 6% of product sales and taxable services revenue, respectively, according to existing tax laws. The remaining balance of output VAT, after subtracting the deductible input VAT of the period, is VAT payable.

Type of revenue	Standard VAT rate in effect for revenues
Product sales		13	%
Services rendered		6	%

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognized in profit or loss in the period in which they are incurred.

F-15

Retirement benefit costs

Pursuant to the relevant regulations of the PRC government, the Group’s subsidiaries located in the PRC participate in a local municipal government retirement benefits scheme (the “Scheme”), whereby they contribute a prescribed percentage of the basic salaries of their employees to the Scheme to fund their retirement benefits. Once the Scheme has been funded via contributions by the Group’s participating subsidiaries, the local municipal government takes responsibility for the retirement benefits obligations of all existing and future retired employees of those subsidiaries located in the PRC; accordingly, the only obligation of the Group with respect to the Scheme is to pay the on-going required contributions as long as the employees maintain employment with the Group. There are no provisions under the Scheme whereby forfeited contributions may be used to reduce future contributions. These plans are considered defined contribution plans. The Group has no legal or constructive obligations to pay further contributions after its payment of the fixed contributions into the pension schemes. Contributions to pension schemes are recognized as an expense in the period in which the related service is performed.

Taxation

The tax expense for the period comprises current and deferred tax. Tax is recognized in the income statement, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case the tax is also recognized in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Group operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

F-16

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

Store pre-opening cost

Store pre-opening cost was the start-up activity costs incurred prior to opening a new store, mainly including leasing, leasehold improvements, payroll and supplies. The accounting policies for leasing and leasehold improvements were as below. Other store pre-opening costs were directly charged to expenses when occurred.

Leasing

IFRS 16 Leases requires lessees to recognize assets and liabilities for most leases based on a ‘right-of-use model’ which reflects that, at the commencement date, a lessee has a financial obligation to make lease payments to the lessor for its right to use the underlying asset during the lease term. The lessor conveys that right to use the underlying asset at lease commencement, which is the time when it makes the underlying asset available for use by the lessee.

IFRS 16 defines a lease term as the noncancellable period for which the lessee has the right to use an underlying asset including optional periods when an entity is reasonably certain to exercise an option to extend (or not to terminate) a lease.

Under IFRS 16 lessees may also elect not to recognize assets and liabilities for leases with a lease term of 12 months or less. In such cases a lessee recognizes the lease payments in profit or loss on a straight-line basis over the lease term. The exemption is required to be applied by class of underlying assets. Lessees can also make an election for leases for which the underlying asset is of low value. This election can be made on a lease-by-lease basis. For leases where the Group is the lessee, the lease term is either cancelable or no longer than 12 months, so the Group has elected not to record the leased assets.

Lessor accounting under IFRS 16 is substantially unchanged from IAS 17. Lessors continue to classify leases as either operating or finance leases using similar principles as in IAS 17. IFRS 16 did not have any significant impact on leases where the Group is the lessor.

F-17

Leasehold improvements

Leasehold improvements, principally comprising costs of office buildings and shops renovation, are held for administrative and selling purposes. Leasehold improvements are initially measured at cost and amortized systematically over its useful life.

Property, plant and equipment

Property, plant and equipment (“PPE”) including buildings held for use in the production or supply of goods or services, or for administrative purposes other than construction in progress are stated at cost less subsequent accumulated depreciation and accumulated impairment losses.

Depreciation is provided to write off the cost of items of property, plant and equipment other than construction in progress over their estimated useful lives and after taking into account of their estimated residual value, using the straight-line method.

Construction in progress includes property, plant and equipment in the course of construction for production or for its own use purposes. Construction in progress is carried at cost less any recognized impairment loss. Construction in progress is classified to the appropriate category of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in profit or loss in the period in which the item is de-recognized.

Investment properties

Investment properties are land and buildings which are owned or held under a leasehold interest to earn rental income and/or for capital appreciation. These include land and buildings held for a currently undetermined future use. Such properties are stated at cost less accumulated depreciation and any impairment losses.

Any gains or losses on the retirement or disposal of an investment property are recognized in the income statement in the year of the retirement or disposal.

Depreciation is calculated on the straight-line basis to depreciate the cost of each item of investment properties over the estimated useful life of 20 years.

The Group as lessor

Rental income from operating leases is recognized in profit or loss on a straight-line basis over the term of the relevant lease.

F-18

Land use rights

Land use rights are stated at cost less accumulated amortization and accumulated impairment losses. Cost represents consideration paid for the rights to use the land on which various plants and buildings are situated for periods varying from 20 to 50 years.

Amortization of land use rights is calculated on a straight-line basis over the period of the land use rights.

Inventories

Inventories, comprising of raw materials and merchandise inventories, are stated at the lower of cost and net realizable value. Costs of inventories are determined using the weighted average method. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Share-based compensation expenses

All share-based awards granted to employees, which are common shares, are measured at fair value on shares issuance date, and are recognized as an employee benefits expense, with a corresponding increase in equity. Share-based compensation expenses are recognized over the period during which the employees provide the relevant services.

Financial instruments – investments and other financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair value through other comprehensive income, and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient of not adjusting the effect of a significant financing component, the Group initially measures a financial asset at its fair value, plus in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15 in accordance with the policies set out for “Revenue recognition”.

In order for a financial asset to be classified and measured at amortized cost or fair value through other comprehensive income, it needs to give rise to cash flows that are solely payments of principal and interest (“SPPI”) on the principal amount outstanding.

The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

All regular way purchases and sales of financial assets are recognized on the trade date, that is, the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

F-19

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at amortized cost (debt instruments)

The Group measures financial assets at amortized cost if both of the following conditions are met:

●

The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows.

●

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

Financial assets at amortized cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognized in the income statement when the asset is derecognized, modified or impaired.

Financial assets at fair value through other comprehensive income (debt instruments)

The Group measures debt instruments at fair value through other comprehensive income if both of the following conditions are met:

●

The financial asset is held within a business model with the objective of both holding to collect contractual cash flows and selling.

●

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

For debt instruments at fair value through other comprehensive income, interest income, foreign exchange revaluation and impairment losses or reversals are recognized in the income statement and computed in the same manner as for financial assets measured at amortized cost. The remaining fair value changes are recognized in other comprehensive income. Upon derecognition, the cumulative fair value change recognized in other comprehensive income is recycled to the income statement.

Financial assets at fair value through other comprehensive income (equity investments)

Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity investments designated at fair value through other comprehensive income when they meet the definition of equity under HKAS 32 Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis.

Gains and losses on these financial assets are never recycled to the income statement. Dividends are recognized as other income in the income statement when the right of payment has been established, it is probable that the economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in other comprehensive income. Equity investments designated at fair value through other comprehensive income are not subject to impairment assessment.

F-20

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortized cost or at fair value through other comprehensive income, as described above, debt instruments may be designated at fair value through profit or loss on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.

Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognized in the income statement. This category includes derivative financial instruments and structured bank deposits.

A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host and accounted for as a separate derivative if the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. Embedded derivatives are measured at fair value with changes in fair value recognized in the income statement. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss category.

A derivative embedded within a hybrid contract containing a financial asset host is not accounted for separately. The financial asset host together with the embedded derivative is required to be classified in its entirety as a financial asset at fair value through profit or loss.

Financial instruments – impairment of financial assets

The Group recognizes an allowance for ECLs for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group 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.

General approach

ECLs are recognized in two stages. 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 Group assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Group 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.

F-21

The Group considers a financial asset in default when contractual payments are 120 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Debt instruments at fair value through other comprehensive income and 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 Group applies the practical expedient of not adjusting the effect of a significant financing component, the Group applies the simplified approach in calculating ECLs. Under the simplified approach, the Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

For trade receivables that contain a significant financing component and lease receivables, the Group chooses as its accounting policy to adopt the simplified approach in calculating ECLs with policies as described above.

Financial instruments – derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Group’s consolidated statement of financial position) when:

●

the rights to receive cash flows from the asset have expired; or

●

the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the Group continues to recognize the transferred asset to the extent of the Group’s continuing involvement. In that case, the Group also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original amount of the asset and the maximum amount of consideration that the Group could be required to repay.

F-22

Financial instruments – financial liabilities

Initial recognition and measurement

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings, net of directly attributable transaction costs. The Group’s financial liabilities include trade payables, other payables, financial liabilities included in accruals and interest-bearing bank borrowings.

Subsequent measurement

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognized in the income statement when the liabilities are derecognized as well as through the effective interest rate amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortization is included in finance costs in the income statement.

Financial instruments – derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled, or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognized in the income statement.

Financial instruments – offsetting financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

Capital and Reserves

Share capital represents the nominal value of shares that have been issued by the Group. Share capital is determined using the nominal value of shares that have been issued.

Retained profits include all current and prior period results as determined in the combined statement of comprehensive income.

Foreign currency translation reserve arising on the translation are included in the currency translation reserve.

In accordance with the relevant laws and regulations of PRC, the subsidiaries of the Group established in PRC are required to transfer 10% of its annual statutory net profit (after offsetting any prior years’ losses) to the statutory reserve. When the balance of such reserve reaches 50% of the subsidiary’s share capital, any further transfer of its annual statutory net profit is optional. Such reserve may be used to offset accumulated losses or to increase the registered capital of the subsidiary subject to the approval of the relevant authorities. However, except for offsetting prior years’ losses, such statutory reserve must be maintained at a minimum of 25% of the share capital after such usage. The statutory reserves are not available for dividend distribution to the shareholders.

All transactions with owners of the Group are recorded separately within equity.

Earnings/(loss) per share

Basic earnings per share (“EPS”) are computed by dividing income attributable to holders of common shares by the weighted average number of common shares outstanding during the year. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares. Potential dilutive securities are excluded from the calculation of diluted EPS in loss periods as their effect would be anti-dilutive.

The preparation of financial statements in conformity with IFRS requires management to exercise judgment in the process of applying the Group’s accounting policies and requires the use of accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and reported amount of revenue and expenses during the reporting period. The following estimates that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are disclosed below.

F-23

SIGNIFICANT MANAGEMENT JUDGEMENT IN APPLYING ACCOUNTING POLICIES

Allowance for Bad and Doubtful debts

Allowances for bad and doubtful debts are based on an assessment of the recoverability of trade and other receivables. Allowances are applied to trade and other receivables where events or changes in circumstances indicate that the balances may not be collectible. The identification of bad and doubtful debts requires the use of judgment and estimates, where the expected outcome is different from the original estimate, such difference will impact carrying value of trade and other receivables and doubtful debt expenses in the period in which such estimate has been charged.

Impairment Losses

Impairment losses are based on an assessment of the investment or long-lived assets’ ability to generate future cash flows when there is evidence that these assets may be impaired. The calculation of the amount of impairment loss are based on estimates made by management when applying broad accounting principles governing the accounting for these assets. The determination of these estimates requires judgment by management. The final outcome may differ from the original estimates made by management, which may impact the carrying value of the assets which management has determined to be impaired and charged to the Company’s profit loss during the period.

Provisions

Provisions for legal claims, service warranties and make good obligations are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are not recognized for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognized as interest expense.

Income Tax

The Group has exposure to income taxes in numerous jurisdictions. Significant judgment is involved in determining the Group’s 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 Group recognizes liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognized, such differences will impact the income tax and differed tax provisions in the period in which such determination is made. The carrying amount of the Group’s income tax payable as at December 31, 2022 and 2021 amounted to $212 and zero respectively.

F-24

KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, which are described in Note 4, management is required to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. 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.

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets within the next financial year.

Depreciation of building, machinery and equipment

As described in Note 4, the Group reviews the estimated useful lives and residual values of property, plant and equipment at the end of each reporting period. The cost of building, machinery and equipment is depreciated on a straight-line basis over the assets’ estimated useful lives. Management estimates the useful lives of these buildings, machinery and equipment to be within 5 to 20 years. These are the common life expectancies applied in the same industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

Impairment of non-financial assets

Property, plant and equipment are tested for impairment whenever there is any objective evidence or indication that these assets may be impaired.

For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the cash-generating-unit (“CGU”) to which the asset belongs.

If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.

The difference between the carrying amount and recoverable amount is recognized as an impairment loss in the income statement, unless the asset is carried at revalued amount, in which case, such impairment loss is treated as a revaluation decrease.

An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. The carrying amount of this asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.

A reversal of impairment loss for an asset other than goodwill is recognized in the income statement, unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase.

During the years ended December 31, 2022, 2021, and 2020, the Company recognized impairment losses of $nil, $nil, and $nil, respectively, for its prepayments for acquisition of land use rights. During the years ended December 31, 2022, 2021, and 2020, the Company recognized impairment losses of $nil, $nil, and $nil, respectively, for its related prepayments for construction on such land. The impairment reflects the current reduction in the value of the investment as a result of the delay in time to complete the construction projects and delay in procurement of legal certificates that would lead to the assets being put into service that would give rise to expected future profitability which at December 31, 2020, has been temporarily postponed beyond the next operating period. The impairment losses charged to the prepayments has brought the carrying values to their respective recoverable amount in its fair value less costs to sell.

F-25

During the years ended December 31, 2022, 2021, and 2020, the Company recognized impairment losses of $nil, $ nil, and $nil, respectively, for a part of its factory plant in Anhui that is not currently in use. The impairment reflects the current reduction in the value of the carrying cost as a result of the company’s evaluation of the recoverability of its investment. The impairment losses charged to the factory plant has brought the carrying values to their respective recoverable amount in its fair value less costs to sell.

For the prepayment for acquisition of land use rights, the Company provided an estimate of its fair value based on the market value substitution rule. The estimated fair value belongs to Level 2 of the fair value hierarchy because the input is determined through quoted prices of similar assets without an actively quoted market. Using the market approach, the Company compares the price of the land use right that the Company intended to acquire with the price of similar land use rights in the same geographical area, adjusted by factors such as price index, frequency of actual transactions conducted, environmental conditions, etc. Significant assumptions used in this estimation include the ability to legally obtain such land use rights, the usage of land as industrial use, the date of transaction at year end, etc. As a result, the Company provided an estimate in the amount of $5,154,034. Finally, the fair value is reduced by estimated costs to sell which include, but not limited to, legal costs, stamp duty, similar transaction tax, etc. in the amount of $379,971. The net value is then compared to the carrying value, and the difference is recorded as impairment loss in the amount of $1,317,295 in 2015. In 2016, since there was no progress in regards to the acquisition of land use rights, the Company provided further impairment to bring the carrying value down to $0 as management is unable to assert the recoverability of such asset.

For the prepayment for construction, the Company provided an estimate of its fair value based on the time value approach. The estimated fair value belongs to Level 3 of the fair value hierarchy because the input is not easily observable. Using this approach, the Company calculates the time value of money of the amount prepaid based on the Company’s weighted average cost of capital (“WACC”) in order to arrive at its fair value. The Company uses this approach to determine its recoverable amount because such prepayments are not readily resalable, and the ability to realize this amount is contingent upon the Company’s ability to successfully acquire the land use right as mentioned above. Significant assumptions used in this estimation include using the WACC, which is comprised of the Company’s metrics of return of equity, return of debt, the relevant weights of the returns of equity and debt, and tax rate, in determining the fair value. As a result, as at December 31, 2015, the Company provided an estimate in the amount of $7,160,523. Since this asset is not resalable, the company estimated costs to sell for this asset in the amount of $0. The net value is then compared to the carrying value, and the difference is recorded as impairment loss in the amount of $1,248,039 in 2015. In 2017, since there was no progress in regards to the construction, the Company provided further impairment to bring the carrying value down to $0 as management is unable to assert the recoverability of such asset.

For the factory plant, the Company provided an estimate of its fair value based on the time value approach. The estimated fair value belongs to Level 3 of the fair value hierarchy because the input is not easily observable. Using this approach, the Company calculates the time value of money of the amount recoverable based on the Company’s weighted average cost of capital (“WACC”) in order to arrive at its fair value. The Company uses this approach to determine its recoverable amount because a part of the factory plant is not readily resalable. Significant assumptions used in this estimation include using the WACC, which is comprised of the Company’s metrics of return of equity, return of debt, the relevant weights of the returns of equity and debt, and tax rate, in determining the fair value. As a result, as at December 31, 2018, the Company recorded as impairment loss in the amount of $13,311,557 in 2018, which brings the carrying value of the part of the factory plant not in use down to $0 as management is unable to assert the recoverability of such asset.

During the year ended December 31, 2021, the Company recognized impairment loss of $2,673,131 and $48,859 for Investment property and property, plants and buildings, respectively. The Company further recognized impairment loss of $ 222,989 for the two land use rights which the two properties were built on. The impairment reflects the current reduction in the value of the carrying cost as a result of the company’s evaluation of the recoverability of its investment. The impairment losses charged to the two pieces of properties and land use rights has brought the carrying values to their respective recoverable amount in its fair value less costs to sell.

F-26

SEGMENT REPORTING

Management currently identifies the Group’s three sales models as operating segments, which are tourism products, technology and cross board merchandise. Apart from the above two business segments, two segments were discontinued in 2022, which are wholesale and retail of menswear and subcontracting of menswear. The segment presentation is in accordance with management’s expectation of future business developments. These operating segments are monitored and strategic decisions are made on the basis of segmental gross margins.

	Tourism products						Technology						Cross- board merchandise						Consolidated
	For the year ended						For the year ended						For the year ended						For the year ended
	December 31,						December 31,						December 31,						December 31,
By business	2022		2021		2020		2022		2021		2020		2022		2021		2020		2022			2021			2020
Sales to external customers		79,092,342		51,818,166		991,929		782,302		-		-		83		2,222,782		343,445		79,874,727			54,040,948			1,335,374
Segment revenue		79,092,342		51,818,166		991,929		782,302		-		-		83		2,222,782		343,445		79,874,727			54,040,948			1,335,374
Segment gross margins		704,391		541,889		96,578		760,028		-		-		64		305,822		69,988		1,464,483			847,711			166,566
Reconciling items				-		-				-		-		-		-		-		(56,847,143	)		(8,194,585	)		(1,161,859	)
Loss before tax		-		-		-		-		-		-		-		-		-		(55,382,660	)		(7,346,874	)		(995,293	)
Income tax income/(expense)		-		-		-		-		-		-		-		-		-		(621	)		(5,495	)		-
Loss for the continuing business		-		-		-		-		-		-		-		-		-		(55,383,281	)		(7,352,369	)		(995,293	)
Discontinued operation		-		-		-		-		-		-		-		-		-		(18,109,150	)		(29,863,116	)		(4,672,124	)
Loss for the year		-		-		-		-		-		-		-		-		-		(73,492,431	)		(37,215,483	)		(5,667,417	)

	As of December 31, 2022
	Wholesale and Retail		Subcontracting		Tourism products		cross-board merchandise and technology		Unallocated		Consolidated
Current assets		-		-		369,770		2,792,929		303,874		3,466,573
Non-current assets		-		-		1,310		2,788,394		10,000,000		12,789,704
Total assets		-		-		371,080		5,581,323		10,303,874		16,256,277

Current liabilities		-		-		711,992		899,130		2,319,263		3,930,385
Total liabilities		-		-		711,992		899,130		2,319,263		3,930,385

	As of December 31, 2021
	Wholesale and Retail		Subcontracting		Tourism products		cross-board merchandise		Unallocated			Consolidated
Current assets		18,640,119		2,610,448		450,129		2,809,431		(283,630	)		24,226,497
Non-current assets		2,410,407		8,111,375		674		3,345,469		-			13,867,925
Total assets		21,050,526		10,721,823		450,803		6,154,900		(283,630	)		38,094,422

Current liabilities		3,384,019		1,481,508		303,749		424,534		1,628,272			7,222,082
Total liabilities		3,384,019		1,481,508		303,749		424,534		1,628,272			7,222,082

F-27

Geographical information

The Group’s operations are located in the PRC and all of the Group’s revenue is derived from sales to customers in the PRC. Hence, no analysis by geographical area of operations is provided.

Information about major customers

Major distributors that make up 10% or more of revenue are as below:

	Year ended December 31,
	2022		2021		2020
Customer A		74,340,429		41,767,780		-
Customer B		*		9,439,831		-
Customer C		*		*		991,928
Total revenue		79,874,727		54,040,948		1,335,374

The revenue of this customer is not over 10% of total revenue of the Company.

Information about major suppliers

Major suppliers that make up 10% or more of purchases are as below:

	Year ended December 31,
	2022		2021		2020
Supplier A		-		-		354,710
Supplier B		-		-		483,879
Supplier C		-		9,586,155		-
Supplier D		10,562,686		15,551,014		-
Supplier E		15,496,731		-		-

Total purchase		78,902,955		53,168,205		1,430,207

REVENUE

	Year ended December 31,
	2022		2021		2020
Travel service		79,092,342		51,818,166		991,929
Technology		782,302		-		-
Cross-board products		83		2,222,782		343,445
Total		79,874,727		54,040,948		1,335,374

Revenues are recognized at a point in time and denominated only in USD.

F-28

COST OF REVENUE

Cost of revenue for our cross-board business comprise the cost of products purchased and surcharges on purchase cost. Cost of revenue for our travel services comprise the cost of air-tickets brought from airline or the cost of services provided from local travel firms or persons.

Cost of sales for our retail and wholesale of garment business comprises of purchasing materials, labor costs for personnel employed in production, depreciation of non-current assets used for production purpose, outsourced manufacturing cost, taxes and surcharges, and water and electricity.

The following table shows a breakdown of cost of sales of all business for the periods presented for each category:

	Year ended December 31,
	2022			2021		2020
Changes in inventories of finished goods and work in progress		(494,357	)		83,112		(261,691	)
Materials consumed in production					-		-
Purchases of finished goods		201,734			1,808,963		1,430,208
Outsourced service cost		78,701,221			51,276,130		-
Taxes and surcharges *		1,646			25,032		291
		78,410,244			53,193,237		1,168,808

Tax and surcharges are mainly Urban Maintenance and Construction Tax (7% of Valued Added Tax payment amount), Extra Charges of Education Fund (3% of Valued Added Tax payment amount) and Local Surcharge for Education Fund (2% of Valued Added Tax payment amount).

10.

OTHER INCOME

	Year ended December 31,
	2022		2021		2020
Government grant		1,592		-		-
Interest income on bank deposits		21		4		199
Other		15,023		34,789		2,923
		16,636		34,793		3,122

11.

OTHER LOSSES

	Year ended December 31,
	2022			2021			2020
Bad debt provision of trade receivables		(53,991	)		-			-
Impairment of long-lived assets		(39,778	)		(12,500	)		-
Others		(4,881	)		(4,825	)		-
		(98,650	)		(17,325	)		-

F-29

12.

DISTRIBUTION AND SELLING EXPENSES

	Year ended December 31,
	2022		2021		2020
Outsourced service fee		403,458		1,212,403		-
Advertisement		-		140,704		-
Others		317,930		736		-
		721,388		1,353,843		-

13.

ADMINISTRATIVE EXPENSE

	Year ended December 31,
	2022		2021		2020
Labor		53,550,086		3,155,246		832,534
Audit fee		247,782		200,000		114,400
Professional and other service fee		969,072		2,666,804		74,252
Design fee		-		-		2,039
Depreciation and amortization charges		299,547		21,603		-
Decoration		133,502		155,665		30,275
Rental		4,661		65,724		-
Travelling and entertainment		89,272		203,634		22,242
Others		749,819		389,534		89,239
		56,043,741		6,858,210		1,164,981

14.

FINANCE COSTS

	Year ended December 31,
	2022		2021		2020
Interest expenses on bank borrowings
wholly repayable within one year		-		-		-

As the bank loans were disposed along with the discontinued operation in 2022, the interest expenses in connection with the bank loans are reclassified as discontinued operations.

15.

INCOME TAX (INCOME)/ EXPENSE

	Year ended December 31,
	2022		2021		2020
PRC enterprises income tax:
Current tax		621		5,495		-
Deferred tax		-		-		-
		621		5,495		-

Jin Xuan Luxury Tourism, Flower Crown China and Heyang Travel are located in PRC and subject to the applicable enterprise income tax rate of 25%.

KBS Fashion Group Limited was incorporated in the Marshall Island, and, under the current laws of the Marshall Island, is not subject to income taxes.

F-30

Flower Crown Holding was incorporated in the Cayman Islands, and, under the current laws of the Cayman Islands, is not subject to income taxes.

The tax charge for the Company can be divided into non-PRC entities and PRC entities. As for the non-PRC entities, all the entities are expense center and not subject to any tax and also no deferred tax assets are considered. The loss for the non-PRC for the year ended December 31, 2022 is $4,386,002. PRC entities are operating entities and may be subject to income tax and deferred tax are considered. In 2022, menswear business was disposed and the temporary difference and deferred tax were reversed accordingly.

The following is the analysis of the deferred tax balances for financial reporting purposes:

	2022						2021					2020
	Temporary difference			Deferred tax assets			Temporary difference		Deferred tax assets			Temporary difference			Deferred tax assets
Beginning of the year		78,622,365			-			63,509,644		16,960,839			59,616,758			14,330,463
Bad Debt provisions charged to profit or loss		-			-			6,064,120		1,516,030			(2,334,410	)		583,603
Inventory provision charged to profit or loss		-			-			1,283		321			-			-
Impairment charged to profit or loss		-			-			2,944,979		736,245			-			-
Tax loss carried forward		1,687,686			421,922			6,102,339		1,529,706			6,227,296			1,556,824
Allowance					(421,922	)				(21,245,906	)		-			-
Reverse		(75,924,049	)		-
Effect of translation		-			-			-		502,765			-			489,949
End of the year		4,386,002			-			78,622,365		-			63,509,644			16,960,839

16.

(LOSS)/PROFIT FOR THE YEAR (continuing business)

Profit for the year has been arrived at after charging:

	Year ended December 31,
	2022		2021		2020
Cost of inventories recognized as expenses		78,408,598		53,168,205		1,168,517
Taxes and surcharges		1,646		25,032		291
		78,410,244		53,193,237		1,168,808

Depreciation of property, plant and equipment		299,547		21,932		-
Amortization of land use rights and trademarks		-		-		-
Amortization of prepayments and premiums under operating leases		-		-		-
Provision (Reversal) of inventory obsolescence		39,778		-		-
Provision of bad debt allowance		53,991		-		-
Provision of impairment loss in property		-		-		-
		393,316		21,932		-

F-31

17.

DISCONTINUED OPERATIONS

On October 19, 2022, the Company entered into a stock purchase agreement with a Purchaser and closed the transaction pursuant to the terms of the Stock Purchase Agreement, resulting in the Company’s sale of 20,000 shares of common stock (the “Shares”) in Hongri International Holding Limited (“Hongri”), constituting all of the issued and outstanding capital stock in Hongri, in consideration for $10,000,000.

The subsidiary was sold on October 19, 2022 with effect from November 1, 2022 and is reported in the current period as a discontinued operation. Financial information relating to the discontinued operation for the period to the date of disposal is set out below.

Financial performance and cash flow information

	Year ended December 31,
	2022			2021			2020
Revenue		1,887,410			4,960,693			9,540,775
Cost of revenue		(2,183,080	)		(4,228,577	)		(7,208,923	)
Expenses		(3,486,626	)		(4,353,466	)		(6,533,339	)
Other income/expenses - net		(5,133,118	)		(8,778,160	)		(2,027,461	)
Profit before tax		(8,915,414	)		(12,399,510	)		(6,228,948	)
Income tax		-			(17,463,604	)		1,556,824
Profit after tax		(8,915,414	)		(29,863,114	)		(4,672,124	)
								-
Net cash from operating activities		(2,733,104	)		(3,872,380	)		(5,901,544	)
Net cash from investing activities		-			(1,926	)		(8,494	)
Net cash from financing activities		-			-			-

Net cash decrease of disposed subsidiaries		(2,733,104	)		(3,874,306	)		(5,910,038	)

Details of sale of the subsidiary

Fair value of the consideration	10,000,000
Net asset of the disposed asset	(15,166,042	)
Loss on sale before reclassification of foreign currency translation reserve	(5,166,042	)
Reclassification of foreign currency translation reserve	(4,027,694	)
Loss on disposal of discontinued operations	(9,193,736	)

Carrying amount of the investment cost of the disposed assets:

Cash	8,695,890
Trade receivables	2,335,650
Other current assets	97,966
Investment property-net	6,390,022
Other long-term assets	2,890,967
Total assets	20,410,495

Short-term loan	(1,087,154	)
Tax payables	(2,775,363	)
Other liabilities	(1,381,936	)
Total liabilities	(5,244,453	)

Net assets	15,166,042

F-32

18.

DIRECTORS’ EMOLUMENTS

The emoluments paid or payable to the directors of the Company were as follows:

	Year ended December 31,
	2022		2021		2020
Salaries
Yan Keyan		-		597,669		306,466
Sun Lei		1,470,000		772,000		-
Li Huidan		228,000		772,000		-
Mu Ruifeng		228,000		-		-
Jin Yan		228,000		-		-
Lixia Tu		-		-		237,880
John Sano		-		-		10,350
Themis Kalapotharakos		-		-		82,800
Matthew Los		-		-		82,800
Zhongmin Zhang		-		-		10,350
Yuet Mei Chan		-		-		10,350
		2,154,000		2,141,669		740,996
Social Welfare
Yan Keyan		-		1,242		432
		-		1,242		432

19.

LOSS PER SHARE

	For the years ended December 31,
	2022			2021			2020
Basic Loss Per Share Numerator
Profit for the year attributable to owners of the Company	$	(73,492,431	)	$	(37,215,483	)	$	(5,667,417	)

Diluted Loss Per Share Numerator
Profit for the year attributable to owners of the Company	$	(73,492,431	)	$	(37,215,483	)	$	(5,667,417	)

Basic Loss Per Share Denominator
Original shares:		5,899,893			3,408,646			2,591,299
Additions from actual events:
- Issuance of common stock, weighted		10,915,573			1,115,699			121,229
Basic weighted average shares outstanding		16,815,466			4,524,345			2,712,528

Diluted Loss Per Share Denominator
Basic weighted average shares outstanding		16,815,466			4,524,345			2,712,528
Dilutive shares: Potential additions from dilutive events:
- Exercise of investor warrants*
Diluted Weighted Average Shares Outstanding:		16,815,466			4,524,345			2,712,528

Loss Per Share**
- Basic	$	(43.7	)	$	(82.3	)	$	(20.9	)
- Diluted	$	(43.7	)	$	(82.3	)	$	(20.9	)
Weighted Average Shares Outstanding**
- Basic		1,681,547			452,345			271,253
- Diluted		1,681,547			452,345			271,253

There were no potential dilutive additions to diluted weighted shares outstanding as a result of the loss during the periods presented.

**	The Company took a 1:10 reverse stock split on April 26, 2023, as a result, the basic and diluted shares and per share number for all years presented here are adjusted retrospectively.

F-33

20.

PROPERTY, PLANT AND EQUIPMENT

Owner-occupied Property

	Plant			Machinery			Office equipment			Motor vehicles			Furniture and fixtures			Leasehold improvements- factories and offices			Leasehold improvements- shops			Total
COST
At December 31, 2020		7,191,993			45,324			137,150			33,800			160,979			896,680			269,029			8,734,955
Additions		2,311,212						11,332			999,829			2,526									3,324,899
Disposals					(45,876	)		(20,638	)		(34,211	)		(1,591	)		(907,602	)		(272,306	)		(1,282,224	)
Reclassification to investment property		(5,487,395	)		-			-			-			-			-			-			(5,487,395	)
Translation adjustment		150,063			552			3,642			15,632			4,455			10,922			3,277			188,543
At December 31, 2021		4,165,873			-			131,486			1,015,050			166,369			-			-			5,478,778

Additions		-			-			-			-			1,008			-			-			1,008
Disposals		(1,716,185	)		-			(118,285	)		-			(156,406	)		-			-			(1,990,876	)
Translation adjustment		(289,116	)		-			(7,601	)		(80,387	)		(9,481	)		-			-			(386,585	)
At December 31, 2022		2,160,573			-			5,600			934,663			1,489			-			-			3,102,326
DEPRECIATION AND IMPAIRMENT
At December 31, 2020		(4,459,340	)		(45,324	)		(135,065	)		(30,609	)		(159,973	)		(798,006	)		(269,029	)		(5,897,346	)
Provided for the year		(186,439	)		-			(773	)		(20,856	)		(57	)		(9,118	)		-			(217,243	)
Eliminated upon disposal of assets		-			45,876			18,171			30,982			1,263			816,842			272,305			1,185,439
Depreciation reclassified to investment property		1,602,628			-			-			-			-			-			-			1,602,628
Impairment reclassified to investment property		1,792,237			-			-			-			-			-			-			1,792,237
Impairment		(48,859	)		-			-			-			-			-			-			(48,859	)
Translation adjustment		(74,928	)		(552	)		(3,462	)		(691	)		(4,395	)		(9,718	)		(3,276	)		(97,022	)
At December 31, 2021		(1,374,701	)		-			(121,129	)		(21,174	)		(163,162	)		-			-			(1,680,166	)
Provided for the year		(70,084	)		-			(1,817	)		(227,388	)		(258	)		-			-			(299,547	)
Disposal of subsidiaries		1,296,658			-			113,591			-			153,845			-			-			1,564,095
Translation adjustment		79,710			-			6,935			7,083			9,270			-			-			102,998
At December 31, 2022		(68,418	)		-			(2,419	)		(241,479	)		(304	)		-			-			(312,622	)

CARRYING AMOUNT
At December 31, 2021		2,791,172			-			10,357			993,876			3,207			-			-			3,798,612
At December 31, 2022		2,092,155			-			3,181			693,184			1,185			-			-			2,789,704

F-34

Depreciation is provided on straight-line basis for all property, plant and equipment over their estimated useful lives of the assets as follows:

	Useful life	Residual Value
Plant	30 years	5%
Machinery	5 years	10%
Office equipment	3 years	5%
Motor vehicles	4 years	5%
Furniture and fixtures	3 years	5%
Leasehold improvements-factories and offices	Shorter of estimated useful life of 5 years or lease term	10%
Leasehold improvements-shops	Shorter of estimated useful life of 5 years or lease term	Nil
Distributor shops’ furniture and fixtures	1.5 years	Nil

Plant and building include buildings owned by the Company are set out below:

Location	Description		Gross area (m²)
Jinxi Town, Longshan Road, Taihu City, Anhui Province, the PRC		Dormitory		8,573
Jinxi Town, Longshan Road, Taihu City, Anhui Province, the PRC		Factory		22,292
8-101 Bojingwan Beiyuan, Hexi District, Tianjing, the PRC		Office		242

The first two buildings were disposed along with the menswear business in 2022.

Investment Properties

As at December 31, 2021, fair value approximated carry amounts, being the initial cost to acquire these investment properties.

COST	2021
Opening balance at 1 January		24,118,655
Acquisitions		-
Capitalized subsequent expenditure		-
Classified as held for sale or disposals		-
Transfer (to)/from inventories and owner-occupied property		5,487,395
Translation adjustment		748,918
Closing balance at 31 December		30,354,968

DEPRECIATION AND IMPAIRMENT	2021
Opening balance at 1 January		(15,844,460	)
Provided for the year		(540,273	)
Eliminated upon disposal of assets		-
Impairment for the year		(2,673,131	)
Transfer to/(from) inventories and owner-occupied property		(3,394,864	)
Translation adjustment		(537,712	)
Closing balance at 31 December		(22,990,440	)

F-35

CARRYING AMOUNT		2021
Closing balance at 31 December			7,364,527

21.

PREPAYMENTS AND PREMIUMS UNDER OPERATING LEASES

	Amount
At January 1, 2021		2,419,900
additions for the year		3,411
charge for the year		(81,474	)
translation adjustment		65,572
At December 31, 2021		2,407,409
additions for the year		-
charge for the year		-
disposed		2,407,409
At December 31, 2022		-

Analyzed for reporting purposes as:

	As at December 31,
	2022		2021
Current asset		-		82,714
Non-current asset		-		2,324,695
		-		2,407,409

22.

LONG TERM RECEIVABLE

The Purchaser issued to the Company a 5% promissory note in the principal amount of $10,000,000, in payment of the Purchase Price (the “Note”). The Note is payable in four installments, on the following dates and in the following amounts: (a) $1,000,000, together with an accrued interest, is payable on or before November 19, 2022; (b) $2,000,000, together with an accrued interest, is payable on or before April 19, 2023; (c) $3,000,000, together with an accrued interest, is payable on or before April 19, 2024, and (d) the remaining $4,000,000, together with an accrued interest, is payable on or before October 19, 2024. As the 5% interest rate is very close to the market rate, the management assessed the fair value of the note receivable is $10 million as of December 31, 2022.

Analyzed for reporting purposes as:

	As at December 31,
	2022		2021
Current portion		3,000,000		-
Non-current portion		7,000,000		-
Total receivable		10,000,000		-

As of April 24, 2023, the first two instalments of the principal amount $3,000,000 have been collected.

23.

PREPAYMENT FOR ACQUISITION OF LAND USE RIGHT

On September 2, 2010, Hongri Fujian entered into an agreement with a third party, Taihu Weiqi Sports Apparel Co., Ltd., to acquire a land use right in relation to the development of factories in Anhui Kaixin for a total consideration of $6,340,456. As of December 31, 2015, the transaction has not been completed yet due to disputes between the original owner of the land and the government regarding the compensation for vacating the premises. In relation to this dispute, the Company expected that the project would be delayed or, in the worst case, be terminated. Accordingly, the Company provided a provision of impairment loss against the carrying value for such prepayment. The detail estimation of such provision is explained in note 6.

The assets were disposed along with the menswear business in 2022, no more assets as of December 31, 2022.

F-36

24.

LAND USE RIGHTS

	Amount
COST
At January 1, 2021		734,990
additions for the year		-
translation adjustment		20,277
At December 31, 2021		755,267
additions for the year		-
Disposed due to discontinued operation		(755,267	)
At December 31, 2022		-

AMORTIZATION
At January 1, 2021		(130,020	)
charge for the year		(14,958	)
impairment		(222,989	)
translation adjustment		(7,209	)
At December 31, 2021		(375,176	)
charge for the year		-
Disposed due to discontinued operation		375,176
At December 31, 2022		-

CARRYING AMOUNTS
At December 31, 2021		380,091
At December 31, 2022		-

The amounts represent the prepayment of rentals for land use right (industrial use) situated in the PRC. The land use rights have the term of 50 years.

25.

INVENTORIES

	As at December 31,
	2022			2021
Raw materials		-			773,180
Merchandised goods		483,384			392,018
Provision for obsolete inventories		(38,833	)		(1,302	)
		444,551			1,163,896

26.

TRADE RECEIVABLES, OTHER RECEIVABLES AND PREPAYMENTS

	As at December 31,
	2022			2021
Trade receivables		37,487			18,952,763
Bad debt provision for trade receivables		(37,487	)		(11,215,912	)
		-			7,736,851

	As at December 31,
	2022		2021
Other receivables		318,643		344,437
Long-term receivable to be collected within 1 year		3,000,000		-
Prepayments		2,182,463		1,983,685
		5,501,106		2,328,122

The fair value of trade and other receivables have not been disclosed as, due to their short duration, management considers the carrying amounts recognized in the consolidated statements of financial position to be reasonable approximation of their fair values.

Prepayments include advances to suppliers, prepaid expenses and prepaid income tax.

F-37

Before accepting any new customer, the Group assesses the potential customer’s credit quality and defined credit limits by customer. Limits attributed to customers are reviewed once a year. The aging analysis of trade receivables is as follows:

	As at December 31,
	2022		2021
Current		-		2,629,433
Past due for less than 4 months		-		1,411,252
Past due for more than 4 months		37,487		14,912,078
		37,487		18,952,763

The provision for doubtful debts is recorded using a provision account unless the Group is satisfied that recovery is remote, in which case the unrecovered loss is written off against trade receivables and the provision for doubtful debts directly. The Group does not hold any collateral over these balances.

The movement in the provision for doubtful debts during the year is as follows:

	2022			2021
As at January 1		11,215,912			4,923,646
Provision provided in the year		37,487			6,076,620
Reverse due to disposal of subsidiaries		(11,215,912	)
Translation adjustment		-			215,646
As at December 31		37,487			11,215,912

27.

CASH AND CASH EQUIVALENTS

	As at December 31,
	2022		2021
Cash on hand		-		9,470
Bank deposits		243,530		12,905,444
Other monetary funds		277,386		-
		520,916		12,914,914

	As at December 31,
	2022		2021
Renminbi		520,883		12,914,834
Hong Kong Dollars		33		80
United States Dollars		-		-
		520,916		12,914,914

Cash and cash equivalents comprise cash held by the Group and short-term deposits with an original maturity of three months or less. Bank deposits as at December 31, 2022 carry interest at market rates which ranged from 0.30% to 0.40% (2020: 0.30%-0.40%) per annum. Majority of our cash is deposited with financial institution in the PRC. Remittance of funds out of the PRC is subject to the exchange restrictions imposed by the PRC government.

F-38

28.

TRADE AND OTHER PAYABLES

	As at December 31,
	2022		2021
Trade payables		670,965		297,033
Employee benefits payable		15,925		148,232
Accrual and other payables		632,186		1,811,262
Subtotal financial liabilities		1,319,076		2,256,527
Other taxes payable		-		3,098,596
		1,319,076		5,355,123

The fair value of trade and other payables have not been disclosed as, due to their short duration, management considers the carrying amounts recognized in the consolidated statements of financial position to be reasonable approximation of their fair values.

Trade payables comprise amounts outstanding for trade purchase. The average credit period is 30 days from the time when the services are rendered by or goods received from suppliers. The aging analysis of trade payables is as follows:

	As at December 31,
	2022		2021
Current		-		294,938
Past due for less than 4 months		431,202		2,046
Past due for over 4 months		239,763		49
		670,965		297,033

The Company was granted a credit term of 30 days. The balances past due were mainly for the Company’s high bargaining power.

29.

RELATED PARTIES PAYABLE

(1)

Nature of relationship with related parties

Name		Relationship with the Group
Yan, Keyan		EX-chairman of the Board of Directors and interim Chief Financial Officer
Sun, Lei		Chief Executive Officer and Co-chairman of the Board of Directors
Li Huidan		Co-Chairman of the Board of Directors
Mu Ruifeng		Director
Jin Yan		Director

(2)

Significant balances between the Group and the above related parties:

			As at December 31,
Name	Nature		2022		2021
Yan, Keyan		Borrowing of funds		-		36,697
Li, Huidan				2,122,697
Sun, Lei		Borrowing of funds		488,400		430,871
				2,611,097		467,568

F-39

Related parties payables were unsecured, non-interest bearing and repayment on demand.

(3) Significant related parties transactions between the Group and the above related parties:

During 2022, the Company issued 1,000,000 shares to Sun Lei for her compensation.

During 2022, the Company issued 300,000 shares to 3 Directors for their compensation as below:

Name	Shares issued		Value
Mu Ruifeng		100,000	$	228,000
Jin Yan		100,000		228,000
Li Huidan		100,000		228,000
		300,000	$	684,000

30.

SHORT-TERM BANK LOANS

	As at December 31,
	2022		2021
Secured bank borrowings		-		1,180,656
Carrying amount repayable within 1 year		-		1,180,656

31.

RIGHTS

On March 12, 2021, the Company announced the authorization and declaration of a dividend distribution of one right for each outstanding share of common stock, par value $0.0001 per share, of the Company to stockholders of record as of the close of business on March 31, 2021. Each Right will entitle the holder to purchase, for the Exercise Price of $50, 0.00667 of a share of Preferred Stock having economic and other terms similar to that of one share of Common Stock. This portion of a share of Preferred Stock is intended to give the stockholder approximately the same dividend, voting and liquidation rights as would one share of Common Stock, and should approximate the value of one share of Common Stock.

If an Acquiring Person obtains beneficial ownership of 15 percent or more of the Common Stock, then each Right will entitle the holder thereof to purchase, for the Exercise Price, a number of shares of Common Stock (or, in certain circumstances, cash, property or other securities of the Company) having a then-current market value of twice the Exercise Price. All Rights that are or, under certain circumstances specified in the Rights Agreement, were beneficially owned by an Acquiring Person or certain of its transferees will be void.

In general, if anyone acquires 15% or more of the common stock of the Company, the Rights will give rights holders, other than the Acquiring Person, to buy common stock at lower price to significantly dilute the Acquiring Person. The Board adopted the Rights Agreement to protect stockholders from coercive or otherwise unfair takeover tactics. In general terms, it works by imposing a significant penalty upon any person or group that acquires 15 percent or more of the shares of Common Stock without the approval of the Board. As a result, the overall effect of the Rights Agreement and the issuance of the Rights may be to render more difficult or discourage a merger, tender or exchange offer or other business combination involving the Company that is not approved by the Board.

As of December 31, 2022, there are 4,233,272 rights issued and outstanding. The number of the rights since issued has not been changed.

F-40

The Company classified the Rights as permanent equity in the consolidated balance sheets because they are convertible to preferred B share which are further convertible to common stock of the Company. The Preferred Shares are recorded initially at fair value, net of issuance costs.

The fair value of the rights was determined using a Black-Scholes model. This model requires the input of highly subjective assumptions, including price volatility of the underlying stock. Changes in the subjective input assumptions can materially affect the estimate of fair value of the rights and the Company’s results of operations could be impacted. This model is dependent upon several variables such as the instrument’s expected term, expected strike price, expected risk-free interest rate over the expected instrument term, the expected dividend yield rate over the expected instrument term, and the expected volatility of the Company’s stock price over the expected term. The expected term represents the period of time that the instruments granted are expected to be outstanding. The expected strike price is based upon a weighted average probability analysis of the strike price changes expected during the term as a result of the down round protection. The risk-free rates are based on U.S. Treasury securities with similar maturities as the expected terms of the options at the date of valuation. Expected dividend yield is based on historical trends. The Company measures volatility using the volatility rates of market index.

The inputs to the model were as follows:

	December 31, 2021
Exercise price		50
Dividend yield		-
Risk-free rate		1.54	%
Expected term (in years)		10
Expected volatility		79.68	%

32.

SHARE CAPITAL AND SHARE PREMIUM

The details of the Group’s share capital are as follows:

	Number of shares		Share capital		Share premium
Shares outstanding as December 31, 2020		3,408,646		341		11,312,643
Issuance of shares		2,491,247		249		6,257,155
Issuance of rights		-		-		7,149,995
Shares outstanding as December 31, 2021		5,899,893		590		24,719,793
Issuance of shares		54,733,443		5,473		53,239,760
Shares outstanding as December 31, 2022		60,633,336		6,063		72,959,554

	Number of shares		Share capital		Share premium
Authorized Common shares of US$0.0001 as at December 31, 2022		150,000,000	$	15,000	$	-
Issue and fully paid common shares of US$0.0001 as at December 31, 2020		3,408,646		341	$	11,312,643
Issue and fully paid common shares of US$0.0001 as at December 31, 2021		5,899,893		590	$	24,719,794
Issue and fully paid common shares of US$0.0001 as at December 31, 2022		60,633,336		6,063	$	72,959,554

Preferred Stock

The Company is authorized to issue 5,000,000 preferred shares with a par value of $0.0001 per share with such designation, rights and preferences as may be determined by the Company’s board of directors.

On April 8, 2021, the Company issued 1,500,000 shares of our newly-designated Series A Convertible Preferred Stock to a single investor for total subscription proceeds of $1,500,000. Each Series A Convertible Preferred Stock features a stated value of $1.00 and is convertible to 1 share of our common stock at any time after 6 months from the date of issue. All shares of common stock issuable upon conversion of the Series A Preferred Stock are subject to a two-year lock-up agreement running from the initial closing of the financing.

F-41

On September 1, 2021, the Company issued 150,000 shares of our newly-designated Series C Convertible Preferred Stock to Sun Lei, our Chief Executive Officer for total subscription proceeds of $1,500,000 of a private offering. A Series C Convertible Preferred Stock features a stated value of $10.00 and is convertible to shares of our common stock on a 1 do 5 basis at any time after 6 months from the date of issue. Series C Convertible Preferred Stock votes together without common stock on an as-if-converted basis, which is not exercisable for one year, has no special dividend rights, and ranks equally to our common stock with respect to rights upon liquidation. All shares of common stock issuable upon conversion of the Series C Preferred Stock are subject to a one-year lock-up agreement running from the initial closing of the financing.

On November 1, 2021, the “Company closed the private placement offering (the “Offering”) of its newly-designated Series D Convertible Preferred Stock, par value $0.0001 per share (“Series D Convertible Preferred Stock”), in which the Company issued 100,000 shares of Series D Convertible Preferred Stock (the “Shares”) for the total gross proceeds of $3,900,000. As stated in the Certificate of Designation, shares of Series D Convertible Preferred Stock vote together with holders of shares of common stock, par value $0.0001 per share (the “Common Stock”) of the Company on an as-if-converted basis; have no special dividend right, ranks equal to the Common Stock with respect to rights upon liquidation and are convertible into shares of Common Stock on a 1 do 13 basis at any time following the issuance.

Holders of Series A, C and D Convertible Preferred Stock converted certain preferred stock to common stock during 2021. Following table shows the changes of the preferred stock during 2021:

	Preferred A						Preferred C				Preferred D
	shares			Amount $			Shares		Amount $		Shares			Amount $
At December 31, 2020		-			-			-		-		-			-
New issued during the year		1,500,000			1,500,000			150,000		1,500,000		100,000			3,900,000
Converted to common stock		(260,000	)		(260,000	)		-		-		(20,000	)		(780,000	)
At December 31, 2021		1,240,000			1,240,000			150,000		1,500,000		80,000			3,120,000
Changes		-			-			-		-		-			-
At December 31, 2022		1,240,000			1,240,000			150,000		1,500,000		80,000			3,120,000

The Company classified all Preferred Shares as permanent equity in the consolidated balance sheets because they are not redeemable and convertible to common stock of the Company. The Preferred Shares are recorded initially at fair value, net of issuance costs.

Common Stock

The Company is authorized to issue 150,000,000 shares of common stock with a par value of $0.0001 per share.

On February 12, 2021, the Company granted an aggregate of 674,626 shares of common stock to Mr. Yan Keyan, Co-Chairman of the Board to repurchase his loan to the Company with value of $809,551.

On March 4, 2021, the Company issued 150,000 shares to employee for service to the Company.

On June 4, 2021, the Company issued 16,621 shares for a legal service to the Company.

On September 7, 2021, the Company issued 650,000 registered shares of common stock pursuant to Equity Incentive Plan to the executive officers, directors and certain employees as compensations for their services.

On October 1, 2021, the Company issued 360,000 shares to employees for their services to the Company.

On December 8, 2021, the Company issued 120,000 shares to employees for their compensation.

F-42

On October 19, 2021 and November 15, 2021, the Company issued 260,000 shares each for Preferred A shares and Preferred D shares conversion, respectively.

During 2021, all common shares were issued to employees, Directors and executives for their compensations and there is no vesting period. The fair value was determined based on the market price on the date of grant. All compensations are recorded as general and administrative expenses with a corresponding increase in equity.

On April 19 and 21, 2022, the Company issued 520,000 shares each to employees for their services to the Company.

On May 6, 2022, the Company issued 200,000 shares to an employee for his compensation.

On May 6, 2022, the Company issued 500,000 shares to three board members in leu of their compensation.

On May 16, 2022, the Company issued 3,400,000 shares to employees for their compensation.

On May 26, 2022, the Company issued 1,000,000 shares to Sun Lei for her compensation.

From June to September 2022, the Company issued 8,800,000 shares to employees and cancelled 6,519 shares for their compensation.

From November to December 2022, the Company issued 39,999,962 shares to employees for their compensation.

During 2022, all common shares were issued to employees, Directors and executives for their compensations and there is no vesting period. The fair value was determined based on the market price on the date of grant. All compensations are recorded as general and administrative expenses with a corresponding increase in equity.

33.

RESERVE

Statutory surplus reserve

As stipulated by the relevant laws and regulations applicable to China’s foreign investment enterprises, the Company’s PRC subsidiaries are required to maintain a statutory surplus reserve which is non-distributable. Appropriations to such reserve are made out of net profit after tax of the statutory financial statements of the PRC subsidiaries at the amounts determined by their respective boards of directors annually up to 50% of authorized capital, but must not be less than 10% of the net profit after tax.

The statutory surplus reserve can be used for making up losses of the group entities in Mainland China, if any. The statutory surplus reserve may also be used to increase capital or to meet unexpected or future losses. The statutory surplus reserve is non-distributable other than upon liquidation.

The statutory surplus reserve of the Group amounts to nil and $6,084,836 at December 31, 2022 and 2021, respectively. The statutory surplus reserve of the Group as at December 31, 2021 is related to Hongri Fujian and Anhui Kaixin, which were both disposed in 2022.

F-43

Revaluation reserve

Revaluation reserve as of December 31, 2022 and 2021 are nil and $184,272, respectively. The balance as of December 31, 2021 is comprised of the surplus or deficit arising from the revaluation of the Company’s fixed assets of Hongri Fujian and Anhui Kaixin, which were both disposed in 2022.

Retained profits/ (accumulated deficits)

The retained profits/(accumulated deficits) comprise the cumulative net gains and losses recognized in the Company’s income statement.

Foreign currency translation reserve (other comprehensive income)

Foreign currency translation reserve represents the foreign currency translation difference arising from the translation of the financial statements of companies within the Group from their functional currency to the Group’s presentation currency.

34.

RISK MANAGEMENT AND FAIR VALUES

Capital risk

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximizing the return to owners through the optimization of the debt and equity balance. The Group’s overall strategy remains unchanged during the year.

The capital structure of the Group consisted of borrowings net of bank balances and cash, and equity attributable to owners of the Company comprising issued share capital and various reserves.

The directors of the Company review the capital structure regularly. As part of this review, the Group considers the cost of capital and the risks associated with each class of capital, and will balance its overall capital through the payment of dividends, new share issues as well as the issue of new debt or the redemption of existing debt.

The Group monitors capital using the Gearing Ratio, which is net debt divided by total equity. Net debt represents borrowings less cash and cash equivalents. The Company met its objective by minoring borrowing activities.

The Company and its subsidiaries are not subject to externally imposed capital requirements.

	December 31, 2022			December 31, 2021
Total borrowing		-			1,180,656
Less: cash and cash equivalents		(520,916	)		(12,914,914	)
Net debt		(520,916	)		(11,734,258	)
Total equity		12,325,892			30,872,341
Total capital		11,804,976			19,138,083
Gearing ratio		(1	)%		(38	)%

F-44

Financial risk

Financial risk management objectives and policies

The Group’s major financial instruments include trade and other receivables, related parties receivables, cash and cash equivalents, trade and other payables, related parties payables and short-term loans. Details of these financial instruments are disclosed in the respective notes. The risks associated with these financial instruments include credit risk, market risk (interest rate risk and currency risk) and liquidity risk. The policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

Market risk

(i)

Foreign currency risk

While our reporting currency is the U.S. dollar, substantially all of our consolidated revenues and consolidated costs and expenses are denominated in RMB. Substantially all of our assets are denominated in RMB. As a result, we are exposed to foreign exchange risk as our revenues and results of operations may be affected by fluctuations in the exchange rate between the U.S. dollar and the RMB. If the RMB depreciates against the U.S. dollar, the value of our RMB revenues, earnings and assets as expressed in our U.S. dollar financial statements will decline. Assets and liabilities are translated at exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates and equity is translated at historical exchange rates. Any resulting translation adjustments are not included in determining net income but are included in determining other comprehensive income, a component of equity. As of December 31, 2022, our accumulated other comprehensive loss was $(0.06) million. We have not entered into any hedging transactions in an effort to reduce our exposure to foreign exchange risk.

(ii)

Interest rate risk

We deposit surplus funds with Chinese banks earning daily interest. We do not invest in any instruments for trading purposes. Most of our outstanding debt instruments carry fixed rates of interest. Our operations generally are not directly sensitive to fluctuations in interest rates and we currently do not have any long-term debt outstanding. Management monitors the banks’ prime rates in conjunction with our cash requirements to determine the appropriate level of debt balances relative to other sources of funds. We have not entered into any hedging transactions in an effort to reduce our exposure to interest rate risk.

Credit risk

As at December 31, 2022, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure to perform an obligation by the counterparties is arising from the carrying amount of the respective recognized financial assets as stated in the consolidated statement of financial position.

In order to minimize the credit risk, the management of the Group has delegated a team responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at the end of each reporting period to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the directors of the Group consider that the Group’s credit risk is significantly reduced.

The Group’s exposure to credit risk on receivables in influenced mainly by the individual characteristics of each customer therefore concentrations of credit risk primarily arise when the Group has significant exposure to individual customers. In order to minimize the credit risk, management continuously monitors the level of exposure to ensure that follow-up actions and/or corrective actions are taken promptly to lower the risk exposure or to recover overdue balances.

F-45

Liquidity risk

In the management of the liquidity risk, the Group monitors and maintains a level of cash and bank balances deemed adequate by the management to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. The management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

Liquidity tables

The following tables detail the Group’s remaining contractual maturity for its non-derivative financial liabilities as at December 31, 2022 based on agreed repayment terms. The tables have been drawn up based on undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The tables include both interest and principal cash flows.

As at December 31, 2022

	Within 1 year		Over 1 year		Total
Short-term bank loans and related interests		-		-		-
Trade and other payables		1,319,288		-		1,319,288
Related parties payables		2,611,097		-		2,611,097
Total		3,930,385		-		3,930,385

As at December 31, 2021

	Within 1 year		Over 1 year		Total
Short-term bank loans and related interests		1,180,656		-		1,180,656
Trade and other payables		5,355,123		-		5,355,123
Related parties payables		467,568		-		467,568
Total		7,003,347		-		7,003,347

Fair value

The fair value of financial assets and financial liabilities is determined in accordance with generally accepted pricing models based on discounted cash flow analysis.

The following table presents the fair value of the Group’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 valuations: Fair value measured using only Level 1 inputs i.e. unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2 valuations: Fair value measured using Level 2 inputs i.e. observable inputs which fail to meet Level 1, and not using significant unobservable inputs. Unobservable inputs are inputs for which market data are not available.

Level 3 valuations: Fair value measured using significant unobservable inputs.

F-46

During the years ended December 31, 2022 and 2021, there were no transfers between Level 1 and Level 2, or transfers into or out of Level 3. The Group’s policy is to recognize transfers between levels of fair value hierarchy as at the end of the reporting period in which they occur.

Valuation techniques and inputs used in Level 2 fair value measurements

The fair value of financial assets in Level 2 is determined by the model as disclosed in note 31.

The directors of the Company consider that the carrying amounts of financial assets and financial liabilities recorded at amortized cost approximate their fair values.

35.

COMMITMENTS AND CONTINGENCIES

(1)

The Company had the following capital commitments in respect of the construction of plant and equipment which were contracted but not provided for in the financial statements:

	As at December 31, 2022		As at December 31, 2021
Contracted and authorized, in RMB		-		440,851,273
Contracted and authorized, in USD		-		69,399,168

(2)

As of December 31, 2022, the Company guaranteed a loan to a third party with maximum liability exposure of US$652,297.

36.

EVENTS AFTER THE BALANCE SHEET

Effective on April 26, 2023, the Company’s Common Stock began trading on the Nasdaq Capital Market (“Nasdaq”) on a one-for-ten (1-for-10) reverse-split basis under the current symbol “JXJT” but with a new CUSIP number. The EPS figures showed in the financial statements are calculated based on the number of shares after reverse-split.

* * * * *

F-47

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