This discussion summarizes the significant factors affecting the operating
results, financial condition, liquidity and cash flows of the Company for the
fiscal years ended June 30, 2021 and 2020. The discussion and analysis that
follows should be read together with our financial statements and the notes to
the financial statements included elsewhere in this Annual Report on Form 10-K.
Except for historical information, the matters discussed in this section are
forward looking statements that involve risks and uncertainties and are based
upon judgments concerning various factors that are beyond the Company's control.
Consequently, and because forward-looking statements are inherently subject to
risks and uncertainties, the actual results and outcomes may differ materially
from the results and outcomes discussed in the forward-looking statements. You
are urged to carefully review and consider the various disclosures made by

us in
this report.



Business Development



On July 27, 2020 (the "Closing Date"), we entered into a Share Exchange
Agreement (the "Exchange Agreement") by and among (i) the Company, (ii) Zhi Yuan
Limited, a Cayman Islands company ("Cayman Company"), and (iii) the three
beneficial shareholders of Cayman Company (each, a "Cayman Company Shareholder"
and collectively, the "Cayman Company Shareholders"). Pursuant to the Exchange
Agreement, we issued to the Cayman Company Shareholders an aggregate of
75,000,000 shares of Cang Bao common stock, representing approximately 67.98% of
Cang Bao's total issued and outstanding common stock (the "Share Exchange").



As a result of the Share Exchange, Cayman Company became our wholly owned
subsidiary and we are its public holding company. After giving effect to the
Share Exchange, the Company acquired 100% of the assets and operations of Cayman
Company and its subsidiaries, the business and operations of which now
constitutes our primary business and operations. After giving effect to the
Share Exchange, we own 100% of the issued and outstanding shares of capital
stock of Cayman Company. Cayman Company is a holding company that owns Cangyun
(Hong Kong) Limited ("Hong Kong Company"), which in turn owns and controls
Shanghai Cangyun Management Consulting Co., Ltd. ("Management Consulting"),
which has entered into contractual agreements to control Hainan Cangbao Tianxia
Cultural Relic Co., Ltd. ("Hainan") and Cangbao Tianxia (Shanghai) Cultural
Relic Co., Ltd. ("Tianxia Cultural Relic," and together with Hainan, the "Target
Companies" or "VIEs").



The Company now operates an online and offline cultural exchange service
platform, through which we are dedicated to create industry standards for art
investment and to create 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.

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

The Company's fiscal year end is June 30.





  13

Critical accounting policies and estimates


Our condensed consolidated financial statements are prepared in accordance with
GAAP. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during
the reporting period. We continually evaluate our estimates and judgments, our
commitments to strategic alliance partners and the timing of the achievement of
collaboration milestones. We base our estimates and judgments on historical
experience and other factors that we believe to be reasonable under the
circumstances. All estimates, whether or not deemed critical, affect reported
amounts of assets, liabilities, revenues and expenses, as well as disclosures of
contingent assets and liabilities. These estimates and judgments are also based
on historical experience and other factors that are believed to be reasonable
under the circumstances. Materially different results can occur as circumstances
change and additional information becomes known, even for estimates and
judgments that are not deemed critical.



Going Concern



The accompanying audited 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 $8,445,157 for the year ended June 30, 2021. As of
June 30, 2021, the Company had an accumulated deficit of $33,499,423, working
capital deficit of $17,113,370.

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





Results of Operations

Results of Operations for the year ended June 30, 2021 and 2020





The following table sets forth key components of Company's results of operations
for the year ended June 30, 2021 and 2020. The discussion following the table
addresses these results.



                                                 For the year Ended
                                                      June 30,
                                               2021              2020           Fluctuation          %
Net revenues                               $   1,303,486         7,153,948       (5,850,462)        (81.8) %
Cost of revenues                               1,730,812         4,005,174       (2,274,362)        (56.8) %
Gross margin                                   (427,326)         3,184,774       (3,576,100)       (113.6) %
Operating expenses                             7,681,231         5,039,882         2,641,349          52.4 %
Loss from operations                         (8,108,557)       (1,891,108)       (6,217,449)         328.8 %
Interest income                                    7,699             7,929             (230)         (2.9) %
Interest expense                                      -                  -                 -             -

Other income (expense)                         (342,487)          (64,139)         (278,348)         434.0 %
Provision for income taxes expense                 1,812            12,696 

        (10,884)          85.7 %
Net loss                                     (8,445,157)       (1,960,014)       (6,485,143)         330.9 %




Revenues. For the year ended June 30, 2021 and 2020, we had revenue of
$1,303,486 and $7,153,948 respectively, representing a decrease of $5,850,462 or
81.8%, 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 decrease in revenue from service package in 2021.



Cost of Revenue. For the year ended June 30, 2021 and 2020, we had cost of
revenue of $1,730,812 and $4,005,174 respectively, representing an decrease of
$2,274,362 or 56.8%. The cost of revenue represents costs of maintaining our
platform such as network service artwork merchandise and gifts sent to members
and cost of multimedia tablets. The decrease in cost was in line with the
decrease in revenue.

Gross Margin. We generated gross profit of $(427,326) and $ 3,184,774 for the year ended June 30, 2021 and 2020, with a gross margin of (32.8)% and 44.0% respectively.

Operating expenses. The total operating expenses was $7,681,231 and $5,039,882 for the year ended June 30, 2021 and 2020, representing an increase of $2,641,349 or 52.4%. The increase was mainly due to market expansion.

Loss from Operations. For the year ended June 30, 2021 and 2020, we had loss from operations of $8,108,557 and $1,891,108 respectively, representing an increase in loss of $6,217,449 or 328.8%.

Net loss. For the year ended June 30, 2021 and 2020, we had net loss of $8,445,157 and $1,960,014 respectively, representing a decrease of $6,485,143 or 330.9%. The increase in net loss was mainly due to the decrease in sales revenues.





  14

Liquidity and Capital Resources

Working Capital Deficit. As of June 30, 2021 and 2020, the Company a working capital deficit of $ (17,113,370) and $ (4,739,357), respectively.

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





                                                                                  For the year
                                                       For the year ended             ended
                                                            June 30,                June 30,
                                                              2021                    2020

Net cash  used in operating activities                $       (1,595,879 )        $    (1,567 )
Net cash  used in (provided by) investing
activities                                                      (163,156 )             11,654
Net cash provided by financing activities                         33,748               78,671
Effect of exchange rate change on cash                           215,197             (438,545 )
Net decrease in cash and cash equivalents             $       (1,510,090 )
      $  (349,787 )




Operating Activities.



Net cash used in operating activities was approximately $1.6 million for the
year ended June 30, 2021, as compared to approximately $1,567 net cash used in
operating activities for the year ended June 30, 2020. Net cash used in
operating activities for the year ended June 30, 2021 was mainly due to the
decrease of approximately $6.2 million accounts payable, the decrease of
approximately $3.6 million of accounts receivables, the increase of
approximately $6.6 million of prepayments, and the increase of approximately
$16.7 million of customer deposits, and the increase of approximately $1.1
million of other receivable - related party.



Net cash used in operating activities for the year ended June 30, 2020 was
mainly due to the increase of approximately $7.8 million accounts payable, the
increase of approximately $3.4 million of accounts receivables, the increase of
approximately $1.1 million of prepayments, and the decrease of approximately
$1.2 million of other payables and accrued liabilities.



Investing Activities.

Net cash used in investing activities was $163,156 for the year ended June 30, 2021. Net cash used in investing activities mainly reflect disposal of intangible assets of $12,812, offset by purchases of equipment of $175,968.





Net cash provided by investing activities was $11,654 for the year ended June
30, 2020. Net cash provided by investing activities mainly reflect disposal of
intangible assets of $5,155, offset by purchases of equipment of $16,809.



Financing Activities.

Net cash provided by financing activities was $33,748 and $78,671 for the year ended June 30, 2021 and 2020, respectively, both of which referred to the proceeds from related parties.

Off-Balance Sheet Arrangements

As of June 30, 2021 and 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 June 30, 2021 and 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 year ended June 30, 2021 and 2020, and are included elsewhere
in this report.

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