Our audited and unaudited financial statements are stated in United States Dollars and are prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP").





Overview




We conduct our operations through our two consolidated subsidiaries, Hainan
Cangbao Tianxia Cultural Relic Co., Ltd. ("Hainan Cangbao") and Cangbao Tianxia
(Shanghai) Cultural Relic Co.,Ltd.("Shanghai Cangbao"). These two subsidiaries
were incorporated on May 30, 2018 and June 28, 2019 respectively, in PRC, as
domestic Chinese limited liability corporations.



We commenced our operations in March 2019, and we intend to make a cultural
service platform dedicated to creating industry standards for art investment and
creating a model of online art exchanges and transactions, which allows
collectors, artists, art dealers and owners to access a much larger art trading
market, allowing them to engage with a wide range of collectibles or artwork
investors.



Currently we facilitate trading by individual customers of all kinds of
collectibles, artworks and commodities on our online platforms, which create two
source of income: (1) membership fee income by offering different service
packages for members; (2) transaction commission, charging from both the buyer
and the seller a commission based on the artwork trading amount upon
successfully facilitating artworks transaction.

Cang Bao Tian Xia International Art Trade Center, Inc. has administrative offices located at Unit 609, Shengda Plaza, No. 61 Guoxing Ave Meilan District, Haikou, Hainan Province, China 570203.

The Company's fiscal year end is June 30.





Recent Developments



Early in January, 2020, we launched a new application, which enables our
customers to communicate and list artworks to trade. We are currently working
with a third-party technology company to design a tablet, which will have
multiple built-in applications to facilitate membership enrollment and artworks
trade. The tablet is now generating advertisement revenue for the Company.




Critical Accounting Policies




Management's discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with US GAAP. Our financial statements reflect the
selection and application of accounting policies that require management to make
significant estimates and judgments. We believe the following critical
accounting policies used in the preparation of our financial statements require
significant judgments and estimates. For additional information relating to
these and other accounting policies, see Note 2 to our financial statements
included elsewhere in this report.



Basis of Presentation

Our financial statements are prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP.





Going Concern




The accompanying unaudited condensed consolidated financial statements have been
prepared assuming that the Company will continue as a going concern; however,
the Company has incurred a net loss of $4,154,500 for the nine months ended
March 31, 2021. As of March 31, 2021, the Company had an accumulated deficit of
$28,659,486, working capital deficit of $9,722,469.

The Company plans to continue its expansion and investments, which will require continued improvements in revenue and net income.





Results of Operations

Results of Operations for the three months ended March 31, 2021 and 2020





The following table sets forth key components of Company's results of operations
for the three months ended March 31, 2021 and 2020. The discussion following the
table addresses these results.



                                           For Three Months Ended
                                                 March 31,
                                            2021            2020         Fluctuation          %
Net revenues                            $   (727,957 )       490,345       (1,218,302 )       (248.5 )%
Cost of revenues                              11,697        (478,926 )        490,623          102.4 %
Gross margin                                (739,654 )       969,271       (1,708,925 )       (176.3 )%

Operating expenses                         1,028,992        (490,604 )      1,519,596          309.7 %
Loss (income) from operations             (1,768,646 )     1,459,875      

(3,228,521 )       (221.2 )%
Interest income                               21,145                           21,145            N/A
Interest expense                                   -          (3,556 )         (3,556 )         (100 )%

Other income (expense)                           121         (35,489 )         35,610          100.3 %
Provision for income taxes expense                25          (6,289 )     

    6,314          100.4 %
Net (loss) income                         (1,747,405 )     1,427,119       (3,174,524 )       (222.4 )%




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Revenues. For the three months ended March 31,2021 and 2020, we had revenue of
$(727,957) and $490,345 respectively, representing a decrease of $1,218,302 or
248.5%, which were derived from service package sales for the members and the
sales and leasing income from multimedia tablets. The significant decrease in
revenue was due to there were adjustments of revenue for the prior periods for
the three months ended March 31, 2021.



Cost of Revenue. For the three months ended March 31, 2021 and 2020, we had cost
of revenue of $11,697 and $(478,926) respectively, representing an increase of
$490,623 or 102.4%. The cost of revenue represents costs of maintaining our
platform such as network service artwork merchandise and souvenirs sent to
members and cost of multimedia tablets. The increase in cost was mainly due to
the Company has adjustment in the prior period.



Gross Margin. We generated gross profit of $(739,654) and $969,271 for the three
months ended March 31, 2021 and 2020, with a gross margin of 101.6% and 197.7%
respectively.



Operating expenses.  The total operating expenses was $1,028,992 and $(490,604)
for the three months ended March 31, 2021 and 2020, representing a increase of
$1,519,596 or 309.7%. The increase was mainly due to market expansion.

(Loss) income from Operations. For the three months ended March 31, 2021 and 2020, we had (loss) income from operations of $(1,768,646) and $1,459,875 respectively, representing a decrease in loss of $3,228,521 or 221.2 %.





Net (loss) income. For the three months ended March 31, 2021 and 2020, we had
net (loss) income of $(1,747,405) and $1,427,119 respectively, representing a
decrease of $3,174,524 or 222.4%. The decrease in net loss was mainly due to the
decrease in sales revenues.

Results of Operations for the nine months ended March 31, 2021 and 2020





The following table sets forth key components of Company's results of operations
for the nine months ended March 31, 2021 and 2020. The discussion following the
table addresses these results.



                                           For Nine Months Ended
                                                 March 31,
                                            2021            2020         Fluctuation          %
Net revenues                            $    578,845       2,406,047       (1,827,202 )        (75.9 )%
Cost of revenues                             624,119         835,080         (210,961 )        (25.3 )%
Gross margin                                 (45,274 )     1,570,967       (1,616,241 )       (102.9 )%

Operating expenses                         4,134,199       2,255,795        1,878,404           83.3 %
Loss (income) from operations             (4,179,473 )      (684,828 )    

(3,494,645 )        510.3 %
Interest income                               23,412           1,582           21,830        1,379.9 %
Interest expense                                   -             (92 )             92         (100.0 )%
Other income (expense)                         3,359         (35,238 )         38,597          109.5 %

Provision for income taxes expense             1,798           2,748       

     (950 )         34.6 %
Net loss                                  (4,154,500 )      (721,324 )     (3,433,176 )        476.0 %





Revenues. For the nine months ended March 31,2021 and 2020, we had revenue of
$578,845 and $2,406,047 respectively, representing a decrease of $1,827,202 or
75.9%, which were derived from service package sales for the members and the
sales and leasing income from multimedia tablets. The significant decrease in
revenue was due to the decrease in demand for our multimedia tablets for the
nine months ended March 31, 2021.



Cost of Revenue. For the nine months ended March 31, 2021 and 2020, we had cost
of revenue of $624,119 and $835,080 respectively, representing a decrease of
$210,961, or 25.3%. The cost of revenue represents costs of maintaining our
platform such as network service artwork merchandise and souvenirs sent to
members and cost of multimedia tablets. The decrease in cost was the result

of
the decrease in revenue.

Gross Margin. We generated gross profit of negative of $45,274 and $1,570,967 for the nine months ended March 31, 2021 and 2020, with a gross margin of negative of 7.8% and 65.3% respectively.





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Operating expenses.  The total operating expenses was $4,134,199 and $2,255,795
for the nine months ended March 31, 2021 and 2020, representing an increase of
$1,878,404 or 83.3%. The increase was mainly due to market expansion.



Loss from Operations. For the nine months ended March 31, 2021 and 2020, we had
loss from operations of $4,179,473 and $684,828 respectively, representing an
increase in loss of $3,494,645 or 510.3%.



Net loss. For the nine months ended March 31, 2021 and 2020, we had net loss of
$4,179,473 and $721,324 respectively, representing an increase of $3,433,176, or
476.0%. The increase in net loss was mainly due to the decrease in sales
revenues.

Liquidity and Capital Resources

Working Capital Deficit. As of March 31, 2021 and June 30, 2020, the Company a working capital deficit of $(9,722,469) and a working capital surplus of $28,690, respectively.

Cash Flows. The following is a summary of the Company's cash flows from operating, investing and financing activities:





                                                             Nine Months       Nine Months
                                                                Ended             Ended
                                                              March 31,         March 31,
                                                                 2021             2020

Net cash provided by (used in) operating activities $ 3,732,093

   $  (1,450,932 )
Net cash provided by investing activities                          12,657

12,291


Net cash provided by financing activities                          25,590

8,702


Effect of exchange rate change on cash                            415,016           (12,432 )
Net change in cash and cash equivalents                      $  4,185,356
  $  (1,442,371 )




Operating Activities.



Net cash provided by operating activities was approximately $3.7 million for the
nine months ended March 31, 2021, as compared to approximately $1.5 million net
cash used in operating activities for the nine months ended March 31, 2020. Net
cash provided by operating activities was mainly due to the decrease of
approximately $5.2 million accounts payable, the increase of approximately $4.4
million of prepayments, and the increase of approximately $18.4 million of
customer deposits, and the increase of approximately $1.2 million of
inventories.



Investing Activities.




There are no investing activities for the nine months ended March 31, 2021. Net
cash provided by investing activities was $12,657 for the nine months ended
March 31, 2021. Net cash provided by investing activities mainly reflect
disposal of intangible assets of $ 12,657, offset by purchases of intangible
assets of $0.



Financing Activities.



Net cash provided by financing activities was $25,590 and $8,702 for the nine
months ended March 31, 2021 and 2020, respectively, both of which referred to
the proceeds from related parties.

Off-Balance Sheet Arrangements

As of March 31, 2021 and June 30, 2020, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934.

Contractual Obligations and Commitments

As of March 31, 2021 and June 30, 2020, we did not have any contractual obligations.

Critical Accounting Policies





Our significant accounting policies are described in the notes to our financial
statements for the nine months ended March 31, 2021 and 2020, and are included
elsewhere in this report.



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