UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, ~~2019~~2020

¨	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ___________ to ___________
	Commission File No. 001-34864

TGS International Ltd.

(Exact Name of Registrant as Specified in its Charter)

Nevada		N/A
(State or Other Jurisdiction of Incorporation)		(I.R.S. Employer Identification Number)

~~Suite~~Room ~~1023~~20, 108/F., ~~Ocean~~Woon ~~Centre~~Lee Commercial Building

57-9 ~~Canton~~Austin RdAve., Tsim Sha Tsui

Kowloon, Hong Kong

(Address of principal executive offices) (zip code)

(852)2116-3863

(Registrant’s telephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		TGSI		OTC Markets – Pink Sheets

Securities registered under Section 12(g) of the Exchange Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ ☐ No x ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨☐ No x☒

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 ☒ x 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-K (ss.229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x☒ Yes ¨☐ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference Part III of this Form 10-K or any amendment to this Form 10-K. ¨☐

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

Large accelerated filer ¨☐ Accelerated filer ¨☐ Non-accelerated filer ¨☒ Smaller reporting company x☒ Emerging Growth company ¨☐

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

Indicate by check mark whether the registrant ishas filed a ~~shell~~report ~~company~~on ~~(as~~and ~~defined~~attestation into ~~Rule~~its ~~12b-2~~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. Yes ¨ ☐ No x ☒

~~The~~Indicate ~~aggregate market value of the voting and non-voting common equity held~~ by ~~non-affiliates~~check ofmark ~~the~~whether ~~registrant, based upon~~ the ~~average bid and asked price of the~~ registrant’s ~~common~~is ~~stock~~a onshell ~~June~~company ~~28,~~(as ~~2019,~~defined ~~the~~in ~~last~~Rule ~~business~~12b-2 ~~day~~ of the ~~Company’s~~Act). ~~second~~Yes ~~fiscal~~☐ No ~~quarter, was $4,101,839.~~ ☒

AsThe aggregate market value of ~~March~~the ~~20,~~voting ~~2020~~and non-voting common equity held by non-affiliates of the registrant, based upon the ~~number~~average ofbid ~~shares~~and ~~outstanding~~asked price of the registrant’s common stock on June 30, 2020, the last business day of the Company’s second fiscal quarter, was 14$5,~~858~~394,~~328~~040.

As of March 19, 2021, the number of shares outstanding of the registrant’s common stock was 14,962,298.

DOCUMENTS INCORPORATED BY REFERENCE

None.

INDEX

		Page
PART I
Item 1.	Business	34
Item 1A.	Risk Factors	1011
Item 1B.	Unresolved Staff Comments	1415
Item 2.	Properties	1415
Item 3.	Legal Proceedings	1415
Item 4.	Mine and Safety Disclosure	1415
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	1516
Item 6.	Selected Financial Data	1516
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1617
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	1920
Item 8.	Financial Statements and Supplementary Data	1920
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	3941
Item 9A.	Controls and Procedures	3941
Item 9B.	Other Information	3941
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	3942
Item 11.	Executive Compensation	4145
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	4346
Item 13.	Certain Relationships and Related Transactions, and Director Independence	4447
Item 14.	Principal Accountant Fees and Services	4448
PART IV
Item 15.	Exhibits and Financial Statement Schedules	4549
Item 16	Form 10-K Summary	4549
	SIGNATURES	4650

2 Table of Contents

FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K (the “Report”) and other reports (collectively the “Filings”) filed by the registrant from time to time with the Securities and Exchange Commission (the “SEC”) contain or may contain forward looking statements and information that are based upon beliefs of, and information currently available to, the registrant’s management as well as estimates and assumptions made by the registrant’s management. When used in the filings the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan” or the negative of these terms and similar expressions as they relate to the registrant or the registrant’s management identify forward looking statements. Such statements reflect the current view of the registrant with respect to future events and are subject to risks, uncertainties, assumptions and other factors (including the risks contained in the section of this Report entitled “Risk Factors”) relating to the registrant’s industry, the registrant’s operations and results of operations and any businesses that may be acquired by the registrant. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

Although the registrant believes that the expectations reflected in the forward looking statements are reasonable, the registrant cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, the registrant does not intend to update any of the forward-looking statements to conform these statements to actual results. The following discussion should be read in conjunction with the registrant’s financial statements and the related notes thereto included in this Report.

In this Report, “we,” “our,” “us,” “TGS International Ltd.” or the “Company” sometimes refers collectively to TGS International Ltd. and its subsidiaries and affiliated companies.

Table of Contents

PART I

Item 1. Business

General Overview

The Company was established on December 1, 2016 in Nevada, USA. On September 14, 2018, the Company and Arcus Mining Holdings Limited (“Arcus”) entered into a Share Exchange Agreement, dated September 14, 2018 (the “Share Exchange Agreement”), with Chi Kin Loo, Billion Plus Limited, First Fortune Investment Limited, Great Win Limited and Master Value Holdings Limited (the “Selling Stockholders”), pursuant to which the Selling Stockholders agreed to sell all of their ordinary shares of Arcus to the Company in exchange for an aggregate of 7,000,000 shares of common stock of the Company. Arcus, through its wholly owned subsidiaries, is engaged in the exploration, mining, processing and sale of fluorite in Mongolia.

Arcus currently owns three fluorite projects through its subsidiaries. Its official mining licenses in Mongolia are shown below:

Details of Three Fluorite Projects transferred to the Company by Arcus

Mining Project	Fluorite Reserves	Covered Area	License No.	Expiration Date	Current Status
Altan Ovoo (Mine A)	To be explored	39.35 hectares (97.24 acres)	MV-009918	December 29, 2034	In exploration stage. Trial production has been in place since 2019.
Oosmonskogo 1 (Mine B)	To be explored	98.37 hectares (243.08 acres)	MV-016819	April 28, 2041	In exploration stage since 2015. Trial production has been in place since 2018.
Oosmonskogo 2 (Mine C)	To be explored	300.96 hectares (743.69 acres)	MV-017305	April 23, 2043	Ready for exploration.

According to the staged exploration results, there are abundant resources as well as a large potential to expand the resource base of the mines, laying a solid foundation for the sustainable development of the Company.

3Arcus ~~Table~~strives to create more value through efficiency in mining. The initial expected annual production capacity of ~~Contents~~fluorite (“CaF2”) for 2021 and 2022 is described below:

Arcus strives to create more value through efficiency in mining. The initial expected annual production capacity of fluorite (“CaF2”) for 2020 and 2021 is described below:

*Type*	Metallurgical Grade		Acid Grade
CaF₂ Content	40%	80% to 90%	97%
Estimated Capacity in 2021	35,000 tons	8,000 tons	10,000 tons
Estimated Capacity in 2022	40,000 tons	8,000 tons	9,000 tons
Final Product	Granule	Granule/Powder	Powder

Type	Metallurgical Grade		Acid Grade
CaF2 Content	50%	80% to 90%	97%
Estimated Capacity in 2020	30,000 tons	6,000 tons	22,000 tons
Estimated Capacity in 2021	35,000 tons	6,000 tons	12,000 tons
Final Product	Granule	Granule/Powder	Powder

Arcus intends to start producing 97% Acid Grade powder products and further increase the production of the metallurgical grade products in third quarter of 2021.

Arcus intends to start producing 97% Acid Grade powder products and further increase the production of the metallurgical grade products in 2020.

Nevertheless, there are several areas where Arcus expects to outperform the market:

	·	Abundant fluorite resources for a long-term sustainable business; and

	·	Experience in mine construction, mining and marketing of fluorite.

In summary, the Company intends to make full use of Mongolia’s fluorite resource advantages and market under the guidance of our experienced management team.

Table of Contents

Arcus Company Background

The founders and the management of Arcus have extensive experience in the mining industry in Africa, China, Russia and Mongolia. Their industrial experience includes exploration, mining and mineral investment. With extensive experience in the manufacture and sale of fluorite and related products, Arcus believes the Company will be able to produce the raw material needed for various high standard industrial products, including the manufacture of acid grade fluorite, metallurgical grade fluorite and more.

To meet ever-changing demands from customers, Arcus established a management team comprised of several experienced persons in the industry, as well as financial and marketing experts from international and local markets. The mines use advanced production equipment to produce high-quality products for the market.

In 2014, the Mongolian Parliament waived several restrictions on issuing new minerals exploration licenses and introduced a series of new regulations to encourage foreign investments in the Mongolian mining sector. Arcus is well positioned to take advantage of new opportunities in this promising business environment.

4 Table of Contents

Arcus Company Structure

Arcus indirectly holds three fluorite projects in Mongolia through its wholly owned subsidiaries incorporated in Hong Kong, namely Best Metro (Hong Kong) Limited, China Aim (Hong Kong) Limited, which in turn wholly own Mongolian based fluorite mining companies Khan Shashir LLC (“Khan Shashir”), Shek Hung Gold LLC (“Shek Hung”) respectively. Arcus Hong Kong Limited wholly own the PRC based Best Metro Import & Export Trading (Inner Mongolia) Limited as a trading arm.

The demand for metallurgical grade fluorite in China and other Asian countries currently exceeds supply, and current market conditions are expected to continue for the foreseeable future, creating excellent opportunities for the Company. Inherent uncertainties in the mining industry as well as the changing legal and political environment in Mongolia potentially bring additional business risks, as detailed under “Risk Factors” below.

Shek Hung currently owns a project called Altan Ovoo, while Khan Shashir owns the mines Oosmonskogo 1 and Oosmonskogo 2.

Table of Contents

Mining Licenses

The three fluorite projects in Mongolia are Altan Ovoo (“Mine A”), Oosmonskogo 1 (“Mine B”) and Oosmonskogo 2 (“Mine C”).

The three projects have all been issued official mining licenses. The mining licenses allow the right to conduct mining activities throughout the license areas and to construct structures within the license areas that are related to its mining activities.

Mine A is located in Uulbayan soum, Sukhbaatar province, 530 kilometers (“km”) from Ulaanbaatar, the capital of Mongolia. Mine A’s mining license, reference number MV-009918, is valid until December 29, 2034. Mine A covers an area of 39.35 hectares (97.24 acres).

Mine B is located in the Bayan-Ovoo soum, Khentii province, 440 km from Ulaanbaatar. Mine B’s license, reference number MV-016819, is valid until April 28, 2041. Mine B covers an area of 98.37 hectares (243.08 acres).

Mine C is adjacent to Mine B. Mine C’s license, reference number MV-017305, is valid until April 23, 2043. Mine C covers an area of 300.96 hectares (743.69 acres).

56 Table of Contents

The location map of Mines A, B and C are shown below:

Resources and Reserves

After years of exploration, a significant potential for high grade fluorite resources for Mine A and Mine B has been positively demonstrated.

The historic exploration of Mine A and Mine B can be divided into three phrases:

	·	An investigation conducted by the former Soviet Union governmental agencies in the last century;
	·	An investigation conducted by an independent consultant from the United States in 2012; and
	·	An investigation conducted by SRK Consulting in 2014, a leading mining consulting services provider.

Arcus’ own geological team will continue to search for other resources through continued exploration in the areas surrounding existing deposits.

Mine A

Phase 1: Investigation conducted by former Soviet Union government agencies in 1980’s

The former Soviet Union politically governed Mongolia between 1925 and 1991. Its governmental agencies performed the first systematic exploration on Mine A between 1985 and 1987. Only one vein was located, east-trending with a strike length of 600 to 700 meters. The major work performed included drilling and digging six trenches three to four meters deep along the vein.

Phase 2: Investigation conducted by an independent surveyor in 2012

Since the date of the report by the Soviet Union governmental agencies, 27 new holes were drilled (2,916 m) underneath the trenches excavated in the 1980s to investigate the resource in Mine A. Most holes were drilled vertically or at an angle of 60° to the north, as the vein dips approximately 45° to the south.

Phase 3: Investigation conducted by SRK Consulting

Considering the advice from the independent explorer on the possibility of re-drilling some core holes to increase output of Mine A and Mine B, Arcus formally engaged SRK Consulting to perform a formal survey on both mines.

In late 2014, a specialist from SRK Consulting visited both Mine A and Mine B. SRK Consulting collected 43 extra drill core samples in Mine A during its visit. The finding by SRK Consulting is at a better grade with an average CaF₂of 34%.

6 Table of Contents

Mine B

Phase 1: Investigation conducted by former Soviet Union government agencies in 1930s to 1950s

Former Soviet Union governmental agencies performed the first systemic exploration on Mine B in 1937 and continued until approximately 1950. The main vein located was north-striking. It was traced by trenching and defined to be at least 400 meters in length in the 1940’s.

Major work performed in Phase 1 included:

	1.	Over 160 trenches dug along the vein surface, which are now mostly deteriorated;
	2.	Over 35 vertical drill holes; and
	3.	A 35-meter underground tunnel along the main vein zone.

Phase 2: Investigation conducted by an independent surveyor in 2012

The Company has drilled 9 vertical core holes with an aggregate length of 877 meters in 2011 to update information on Mine B. Based on the samples obtained from the 9 vertical core holes drilled and assays of 4 drill hole cores in the Soviet Union period.

Phase 3: Investigation conducted by SRK Consulting

During the site visit to Mine B, the specialist consultant from SRK Consulting observed that most of the fluorite ores in Mine B have a grade of more than 90% CaF₂ and could be used for ornamental and lapidary purposes.

Based on the samples taken by SRK Consulting, the average grade of CaF₂ is 67%.

Table of Contents

Mine C

No exploration or resource estimate has been done on Mine C, but initial surface investigations suggest that the resource of Mine B may extend onto the license of Mine C.

Future development

The Company is planning to continue with a second round of exploration in Mine A and Mine B and start a first round of exploration in Mine C. The primary objective would be to gain a better understanding of the geological structure to assist in mine planning and to upgrade the identified inferred resource to the indicated resource category.

According to SRK Consulting, the drill holes in Mine A do not provide consistent coverage of all areas. Therefore, another round of exploration would allow a more detailed understanding of the resource allocation and help upgrade much of the inferred resource into the indicated resource category. Full feasibility studies for Mine A and Mine B will be prepared once it’s the right time. These feasibility studies will be conducted by external specialist consultants together with Arcus’ experienced team.

Mine C is adjacent to Mine B, and given the large cover area of Mine C, we are optimistic regarding the resources of Mine C. Based on preliminary estimates by the geologists, it is possible that the resource of Mine C could be greater than that of Mine B. Conducting a thorough exploration of the resource will allow better planning on mining Mine C and ensure sustainability of the Company’s growth.

Operations

Both Mine A and Mine B were in the exploration stage in ~~2019~~2020. Revenue generated during the year ~~were~~was $~~101~~753,~~222~~694 by Mine A and ~~$181,635~~nil by Mine B. We expected to further extend the operation of Mine A and Mine B in the ~~second~~third quarter of ~~2020~~2021.

There are two types of products available from Mine B, metallurgical and acid grade fluorite. Metallurgical grade fluorite is sold mainly to steel manufacturers for use as flux in steel production. Acid grade fluorite which is used to manufacture hydrofluoric acid, a feedstock for many different chemical processes. At the moment, there is only metallurgical grade fluorite available from Mine A.

The Company ran trial productions at Mine A ~~and Mine B~~ in ~~2019~~2020. Below is the summary of revenue for ~~2019~~2020 from the trial productions.

Type of Finished Products	Grade Mined	Quantities (In tons)		Mining Recovery			Average Price (USD)
Metallurgical Fluorite	Concentration 32% - 50%		457,~~418~~247		95	%		2213.9117
Metallurgical Fluorite	Concentration 65%		2,221		95	%		81.78

7 Table of Contents

Workflow of Operations

The operation at Mine A and Mine B of the Company involves several steps as shown below:

Table of Contents

Mine Preparation

Preparing a mine involves investigation, exploration, evaluation and the construction of necessary infrastructures and utilities facilities, among other tasks.

Both Mine A and Mine B are now equipped with the necessary facilities, but the infrastructure in Mine B is more comprehensive. The basic facilities information of Mine A and Mine B is shown below:

	Mine A	Mine B
Water Resources	Drilled water wells	Drilled water wells
Electricity Resources	Local wind turbine generators	Bayan-Ovoo soum electrical power grid
Mining Method	Open pit mining	Underground mining
Shafts	Not applicable	4 in production

Water Resources

It is probable that there is sufficient water from drilled wells for mining and processing operations in Mine A and Mine B. Several such wells have been completed at both Mine A and Mine B. All the water will be recycled, but in the dry climate, evaporation is high.

Electricity Resources

Mine B is currently connected to the Bayan-Ovoo soum electrical power grid. Power generation in Mine A is currently supported by a set of wind turbines. Both Mine A and Mine B have sufficient power to meet daily usage, and each has two sets of contingent diesel generators.

Infrastructures

At Mine B, the construction of offices, living quarters and explosive stores has been completed. Of the four shafts built in Mine B, one shaft and the other shaft has been excavated with a 150 meter long and 180 meter long development drive in the fluorite ore respectively. There was no vertical development in ~~2019~~2020. Construction on excavating an underground tunnel to connect the four shafts iswas completed in 2019.

Mining activities are halted for the winter break, which takes place between January and March every year. Since mining activities are conducted underground, which is more dependent on the weather condition, the winter break for the mining activities is one month longer than the winter break for the production line. We have adopted open-pit mining at Mine A which is different from Mine B. Although mining activities are subject to weather, open-pit mining is more flexible ~~so we decided to suspend the mining activities at Mine A in mid-February instead of late November 2019 as we did with Mine B~~. Production of both Mine A and Mine B is to be continued after the winter break. ~~and~~Mine B is expected to commence inafter the ~~second~~gate ~~quarter~~ of ~~2020~~Mongolia open.

Mine A is planned as an open pit mine because the mineralization outcrops on the surface are relatively easy to begin mining. Four temporary offices and storage containers have been set up at Mine A. Since the resource in Mine A is large, management plans to develop Mine A in stages. Mining of the open pit has been commenced in 2019, while the deeper ores will be subjected to further exploration.

Mine A is originally planned to produce fluorite powder. However, in order to cope with our business development, the management decided to put the construction of refinery at Mine A on hold for now. Once it is the suitable time for further expanding our business, the management may resume the plan of the construction of refinery at Mine A.

8 Table of Contents

Mining

A strategic open pit exploration at Mine A has been started insince 2019. The refinery operations described below apply only to Mine B but can serve as a general reference regarding the future production of Mine A. Starting from year 2019, we have outsourced the mining activities to subcontractors.

Refining

The Company will not outsource its core fluorite processing to third parties but rather work together with the strategic partners. Major fluorite processing of metallurgical grade fluorite includes gravity separation, which refines the fluorite granules, followed by sorting the granules by sizes in accordance with a customer’s needs.

The major machines employed in Mine B are the shakers and the jiggers. A jigger is a vertical container where a pulsing action divides ores into different layers according to their densities. When sorted by a shaker, ore is placed on a horizontal water surface, and the shaker applies longitudinal forces. As ores of different densities respond to longitudinal forces, they are sorted accordingly. Both shakers and jiggers are common tools in conducting gravity selection, but jiggers mainly divide coarse ores into different size groups (30 mm - 80 mm) and shakers mainly refine smaller ores (3 mm – 10 mm or 1 mm – 3 mm).

Sales and Marketing

From 2015 throughout ~~2019~~2020, the mines have still been in exploration stage so the Company decided to sell metallurgical grade fluorite within the territory of Mongolia to avoid incurring cross-border freight and transportation. The Company would like to further expand its production in the ~~second~~third quarter of ~~2020~~2021. Some of the ultimate target customers include foreign steel manufacturers.

Customers

The Company intends to develop a pool of customers to reduce its distribution risk. The Company’s targeted customer base is set forth below:

	·	Korean steel manufacturers;

	·	Chinese steel manufacturers;

	·	Other foreign steel manufacturers (e.g., Japanese, Indian, American, etc.);

	·	Online sales platforms;

	·	Fluorochemical companies, mainly in China due to large demand;

	·	Chinese and other foreign aluminum manufacturers.

Table of Contents

The Market for Fluorite in Mongolia

Fluorite and its Applications

Fluorite, commercially termed as fluorspar, is a transparent halide mineral of various colors, composed primarily of calcium fluoride (CaF₂). Fluorite is the dominant source for the chemical element fluorine. Due to its unique chemical properties, fluorine is largely irreplaceable in its use. The major applications of fluorite and the corresponding requirement of content percentage are summarized below:

Most of the world demand for fluorite is for acid-grade fluorite, which is used to manufacture hydrofluoric acid, a feedstock for many different chemical processes. The second greatest demand is for metallurgical grade fluorite, used as flux in steel and aluminum production. A small portion is produced as ceramic grade fluorite for the manufacture of ceramics and enamels due to the high content percentage requirement.

9 Table of Contents

Competition

There are a number of listed companies that are primarily focused on mining fluorite. We have presented them in the table set forth below.

Comparable company	Mexichem	China King Resources	Do-Fluoride
Country	Mexico	China	China
Exchange Listed	Mexico	Shanghai	Shenzhen
Location of fluorite deposit	Mexico	China	China

Patents, Trademarks, Licenses, Franchises, Concessions and Royalty Agreements

Licenses

The three projects owned by the Company all hold official mining licenses from the Mineral Resources and Petroleum Authority of Mongolia. The mining licenses allow the holder the right to conduct mining activities throughout the license areas and to construct structures within the license areas that are related to its mining activities.

Mine A is located in Uulbayan soum, Sukhbaatar province, 530 kilometers from Ulaanbaatar, the capital of Mongolia. Mine A’s mining license, reference number MV-009918, is valid until December 29, 2034. Mine A covers an area of 39.35 hectares (97.24 acres).

Mine B is located in the Bayan-Ovoo soum, Khentii province, 440 kilometers from Ulaanbaatar. Mine B’s license, reference number MV-016819, is valid until April 28, 2041. Mine B covers an area of 98.37 hectares (243.08 acres).

Mine C is adjacent to Mine B. Mine C’s license, reference number MV-017305, is valid until April 23, 2043. Mine C covers an area of 300.96 hectares (743.69 acres).

Government Approval and Regulation of the Company’s Principal Products or Services

The Mineral Law of Mongolia governs our operations. The Company endeavors to ensure the safe and lawful operation of its facilities in its operations and the distribution of its products and believes it is in compliance in all material respects with applicable laws and regulations.

Employees

The Company currently has approximately ~~100~~40 employees.

Principal Executive Offices

Our principal executive office is located at ~~Suite~~Room ~~1023~~20, 108/F., ~~Ocean~~Woon ~~Centre~~Lee Commercial Building, 57-9 ~~Canton~~Austin RdAve., Tsim Sha Tsui, Kowloon, Hong Kong.

Table of Contents

Item 1A. Risk Factors

Risks Related to our Business

Our limited operating history makes it difficult to evaluate our future prospects and results of operations.

The Company is in the process of developing its mines and bringing its fluorite products to the market. Accordingly, we have a limited operating history. You should consider our future prospects in light of the risks and uncertainties experienced by early stage companies in evolving geographical areas such as Mongolia. Some of these risks and uncertainties relate to our ability to:

	·	offer products of sufficient quality to attract and retain a larger customer base;

	·	attract additional customers and increase spending per customer;

	·	increase awareness of our products and continue to develop customer loyalty;

	·	respond to competitive market conditions;

	·	respond to changes in our regulatory environment;

	·	maintain effective control of our costs and expenses;

	·	raise sufficient capital to sustain and expand our business; and

	·	attract, retain and motivate qualified personnel.

If we are unsuccessful in addressing any of these risks and uncertainties, our business may be materially and adversely affected.

10 Table of Contents

Our operating results may fluctuate, which makes our results difficult to predict and could cause our results to fall short of expectations.

Our operating results may fluctuate as a result of a number of factors, many outside of our control. As a result, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our future performance. Our quarterly, year-to-date and annual expenses as a percentage of our revenues may differ significantly from our historical or projected rates. Our operating results in future quarters may fall below expectations. Any of these events could cause our stock price to fall. Each of the risk factors listed in this section and the following factors may affect our operating results:

	·	Our ability to continue to attract customers;

	·	Our ability to generate revenue from the products we offer;

	·	The amount and timing of operating costs and capital expenditures related to the maintenance and expansion of our businesses; and

	·	Our focus on long-term goals over short-term results.

Because our business is changing and evolving, our historical operating results may not be useful to you in predicting our future operating results.

Our business operations may be adversely affected by present or future governmental regulations or political changes.

Mongolia, the country where the Company’s mines are situated, is currently undergoing rapid development. Our operations may be affected by changes to Mongolian regulation of the mining sector or changing levels of political involvement in mining.

The Mongolian Parliament passed an amendment to the Minerals Law on July 1, 2014 to ease certain restrictions on the mining industry and also to give some incentives to foreign mining companies and investors. These changes have clarified many areas of the law and settled issues around government interests in mines of national or strategic importance. These changes have brought potential benefits to the Company. Visits paid by Chinese president Xi Jinping to Mongolia have indicated Chinese support for strengthening cooperation between Mongolian and Chinese entities in the future. Corresponding lobbying by the Chinese government may help ensure that the Mongolian government respects the rights of foreign mining companies investing in Mongolia.

Our business operations may be adversely affected by the recent COVID-19

~~Due~~An ~~to the current~~ outbreak of ~~novel~~respiratory ~~coronavirus~~illness ~~that~~caused ~~was~~by ~~first~~COVID-19 ~~reported~~in ~~from~~late ~~Wuhan, China, on December 31,~~ 2019 and ~~since~~has ~~then,~~been ~~the~~expanding ~~government~~globally. ofThe ~~Mongolia~~Mongolian government officially announced ~~on January 31, 2020~~ that it will close all ports of entry from and into China with immediate effect ~~until~~since ~~March~~January 231, 2020. ~~However,~~ The ~~Embassy~~above ofmeasure ~~the~~has ~~PRC~~been inextended ~~Mongolia~~more ~~further~~than ~~announced~~ten ontimes ~~February~~throughout ~~19,~~ 2020 ~~that all ports of entry from~~ and ~~into~~prolonged ~~China will be closed~~ until ~~March~~April 30, ~~2020~~2021. WeNone ~~expect that such temporary closures might result in a delay in the resumption~~ of our ~~exploratory work and production in the newly set up refinery at Mine A and Mine B respectively. However, we have started the preparation work for arranging working visas for the~~ Chinese workers incould ~~advance~~enter ~~and~~into ~~will~~Mongolia ~~hire~~during ~~more~~2020 ~~Mongolian~~which ~~workers~~resulted in ~~case~~large-scale ~~all~~suspension ~~ports~~ of ~~entry~~mining ~~from and into China are not open before we resume our~~ work, especially at ~~both~~ Mine ~~A and Mine~~ B ~~so as to minimize the effect of the delay~~.

~~Taking~~The ~~the recent worldwide outbreak and development of the~~ COVID-19 ~~into~~pandemic ~~account,~~has ~~the~~impacted ~~management worried~~ the ~~development~~global ofeconomy ~~2020~~and ~~but~~created wesignificant ~~have~~volatility ~~been~~and ~~strictly~~disruption ~~prudent~~of ~~towards~~financial ~~the epidemic~~markets. We ~~will~~expect ~~keep tracking~~ the ~~measures~~COVID-19 ofpandemic ~~different governments, especially the Chinese and Mongolian Government, are going~~ to ~~implement~~have soa tomaterial ~~determine~~adverse ~~what~~impact ~~the Company will do in order to minimize the negative effect of the COVID-19~~ on our business. ~~The management will strengthen all necessary measures~~ and ~~make~~financial ~~special arrangement so to protect our workers from the COVID-19 after the winter break as well as sticking to our expected~~ performance ~~in 2020~~.

If our business does not generate sufficient cash flows from operating activities, we may not be able to cover our expenses, grow our business, respond to competitive challenges or fund our other liquidity and capital needs, which would harm our business.

The full extent of the COVID-19 pandemic’s impact on our business. The results of operations depends on future developments that are uncertain and unpredictable, including the duration and spread of the pandemic, its impact on capital and financial markets and any new information that may emerge concerning the severity of the virus, its spread to other regions as well as the actions taken to contain it, among others. Therefore, we cannot reasonably estimate the full extent of COVID-19 on our business and results of operations.

Table of Contents

Deviations between inferred resources and actual mineable resources may have an adverse effect on the Company’s results.

Actual mine output usually deviates to a certain extent when compared to the inferred resource, as every estimation model is based on certain assumptions made in the calculation. In order to enhance estimation accuracy and maximize output quantity and quality, the Company engaged SRK Consulting, a leading mining consultant company, to conduct a detailed resource and reserve assessment. However, there can be no assurance as to the accuracy of SRK Consulting’s estimate.

Adverse weather conditions may limit the periods during which the Company may conduct its operations or may cause a disruption in its utilities or the delivery of its products to its customers.

Due to the severe weather in Mongolia during the winter, we have scheduled a regular winter break between January and March for mining activities and processing every year. However, it is possible that severe weather conditions may occur outside their normal range in some years, which would hinder the Company’s mining and production operations and require the extension of the scheduled winter break. Severe weather may also cause a disruption in the Company’s essential utilities. Although the production lines will be roofed to minimize the impact of severe weather and the Company will maintain a backstock of ore to reduce the chances of production suspension from interruptions in mining, there can be no assurance that these measures will be adequate to compensate for the effects of especially severe weather. As a further precaution, we will also maintain a sufficient inventory level in our Baganuur warehouse to secure a continuous supply to customers during the winter, but there can be no assurance that our rail and trucking transportation methods will not be disrupted by weather events.

We may suffer losses resulting from industry-related accidents.

Despite the safety precautions taken by the Company in its mining operations, there can be no assurance that we will not suffer losses resulting from industry-related accidents. To minimize the occurrence of industrial incidents, we regularly monitor mine site construction in order to identify and implement practical protective measures.

11 Table of Contents

We may not be successful in implementing important strategic initiatives, which may have a material adverse impact on our business and financial results.

There is no assurance that we will be able to implement important strategic initiatives in accordance with our expectations, which may result in a material adverse impact on our business and financial results. These strategic initiatives are designed to drive long-term stockholder value and improve our results of operations.

We face significant competition, and if we do not compete successfully against new and existing competitors, we may lose our market share, and our profitability may be adversely affected.

Increased competition could reduce our profitability and result in a loss of market share. Some of our existing and potential competitors may have competitive advantages, such as significantly greater financial, marketing or other resources, and may successfully mimic and adopt our business models. We cannot assure you that we will be able to successfully compete against new or existing competitors.

Failure to manage our growth could strain our management, operational and other resources, which could materially and adversely affect our business and prospects.

We intend to expand our operations and plan to expand as rapidly as possible. The continued growth of our business will result in, substantial demand on our management, operational and other resources. In particular, the management of our growth will require, among other things:

	·	increased sales and sales support activities;

	·	improved administrative and operational systems;

	·	enhancements to our information technology system;

	·	stringent cost controls and sufficient working capital;

	·	strengthening of financial and management controls; and

	·	hiring and training of new personnel.

As we continue this effort, we may incur substantial costs and expend substantial resources. We may not be able to manage our current or future operations effectively and efficiently or compete effectively in new markets we enter. If we are not able to manage our growth successfully, our business and prospects would be materially and adversely affected.

Attracting skilled personnel are essential to growing our business.

We face competition for attracting skilled personnel. If we fail to attract and retain qualified personnel to meet current and future needs, this could slow our ability to grow our business, which could result in a decrease in market share.

Table of Contents

We may need additional capital and we may not be able to obtain it at acceptable terms, or at all, which could adversely affect our liquidity and financial position.

We may need additional cash resources due to changed business conditions or other future developments. If these sources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity.

Our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including:

	·	investors’ perception of, and demand for, our securities;

	·	conditions of the U.S. and other capital markets in which we may seek to raise funds;

	·	our future results of operations, financial condition and cash flow;

	·	Mongolian governmental regulation; and

	·	economic, political and other conditions in Mongolia.

We do not have a majority of independent directors serving on our ~~board~~Board of ~~directors~~Directors, which could present the potential for conflicts of interest.

We do not have a majority of independent directors serving on our ~~board~~Board of ~~directors~~Directors. In the absence of a majority of independent directors, our executive officers could establish policies and enter into transactions without independent review and approval thereof. This could present the potential for a conflict of interest between us and our stockholders, generally, and the controlling officers, stockholders or directors. However, we are going to invite different professionals as our independent directors gradually. ~~An independent director was added in April 2019.~~

12 Table of Contents

We have limited insurance coverage.

The insurance industry in China is still at an early stage of development. Insurance companies in China offer limited insurance products. We have determined that the risks of disruption or liability from our business, the loss or damage to our property, including our facilities, equipment and office furniture, the cost of insuring for these risks, and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance. As a result, we do not have any business liability, disruption, litigation or property insurance coverage for our operations in China except for insurance on some company owned vehicles. Any uninsured occurrence of loss or damage to property, or litigation or business disruption may result in the incurrence of substantial costs and the diversion of resources, which could have an adverse effect on our operating results.

Similarly, although it has been 80 years since the introduction of insurance in Mongolia, the penetration of insurance is still low and its development is still immature which the insurance industry is still yet to be up to international standard. As a result, we do not have any business liability, disruption, litigation or property insurance coverage for our operations in Mongolia except for insurance on some company owned vehicles. Any uninsured occurrence of loss or damage to property, or litigation or business disruption may result in the incurrence of substantial costs and the diversion of resources, which could have an adverse effect on our operating results.

If13 weTable ~~are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the restatement~~ of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on the market price for shares of our common stock.Contents

~~Effective~~If ~~internal~~we ~~controls~~ are ~~necessary~~unable ~~for us~~ to ~~provide~~maintain ~~reliable~~appropriate internal financial ~~reports~~reporting controls and ~~effectively~~procedures, ~~prevent~~it ~~fraud.~~could Wecause ~~maintain~~us ato ~~system~~fail ofto ~~internal~~meet ~~control~~our ~~over financial~~ reporting, ~~which is defined as a process designed by~~obligations, orresult ~~under~~in the ~~supervision~~restatement of, our ~~principal executive officer and principal~~ financial ~~officer~~statements, orharm ~~persons~~our ~~performing~~operating ~~similar functions~~results, ~~and~~subject ~~effected~~us byto ~~our~~regulatory ~~board~~scrutiny ofand ~~directors~~sanction, ~~management~~cause ~~and~~investors ~~other personnel,~~ to ~~provide~~lose ~~reasonable~~confidence ~~assurance~~in ~~regarding~~our ~~the~~reported ~~reliability of~~ financial ~~reporting~~information and ~~the~~have ~~preparation~~a ofnegative ~~financial~~effect ~~statements~~on ~~for~~the ~~external~~market ~~purposes~~price infor ~~accordance~~shares ~~with~~of ~~generally~~our ~~accepted~~common ~~accounting principles~~stock.

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. We maintain a system of internal control over financial reporting, which is defined as a process designed by, or under the supervision of, our principal executive officer and principal financial officer, or persons performing similar functions, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

As a public company, we have significant additional requirements for enhanced financial reporting and internal controls. We are required to document and test our internal control procedures in order to satisfy the requirements of SOX 404, which requires annual management assessments of the effectiveness of our internal controls over financial reporting and a report by our independent registered public accounting firm addressing these assessments. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company.

We cannot assure you that we will not, in the future, identify areas requiring improvement in our internal control over financial reporting. We cannot assure you that the measures we will take to remediate any areas in need of improvement will be successful or that we will implement and maintain adequate controls over our financial processes and reporting in the future as we continue our growth. If we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on the market price for shares of our common stock.

Lack of experienced officers of publicly-traded companies may hinder our ability to comply with Sarbanes-Oxley Act.

It may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal controls and other finance staff or consultants in order to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with the Sarbanes-Oxley Act’s internal controls requirements, we may not be able to obtain the independent auditor certifications that Sarbanes-Oxley Act requires publicly-traded companies to obtain.

We incur increased costs as a result of being a public company.

As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act, as well as new rules subsequently implemented by the SEC, has required changes in corporate governance practices of public companies. We expect these new rules and regulations to increase our legal, accounting and financial compliance costs and to make certain corporate activities more time-consuming and costly. In addition, we incur additional costs associated with our public company reporting requirements. We are currently evaluating and monitoring developments with respect to these new rules, and we cannot predict or estimate that there is a high probability of additional costs we may incur or the timing of such costs.

1314 Table of Contents

Risks Relating to Our Securities

There may not be sufficient liquidity in the market for our securities in order for investors to sell their securities.

There is currently only a limited public market for our common stock, which is listed on the Over-the-Counter (“OTC”) Pink Sheets, and there can be no assurance that a trading market will develop further or be maintained in the future.

The market price of our common stock may be volatile.

The market price of our common stock has been and will likely continue to be highly volatile, as is the stock market in general, and the market for OTC Pink Sheet quoted stocks in particular. Some of the factors that may materially affect the market price of our common stock are beyond our control, such as changes in financial estimates by industry and securities analysts, conditions or trends in the industry in which we operate or sales of our common stock. These factors may materially adversely affect the market price of our common stock, regardless of our performance. In addition, the public stock markets have experienced extreme price and trading volume volatility. This volatility has significantly affected the market prices of securities of many companies for reasons frequently unrelated to the operating performance of the specific companies. These broad market fluctuations may adversely affect the market price of our common stock.

Our common stock may be considered a “penny stock” and may be difficult to sell.

The SEC has adopted regulations which generally define a “penny stock” to be an equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock is less than $5.00 per share and, therefore, it may be designated as a “penny stock” according to SEC rules. This designation requires any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect the ability of investors to sell their shares.

The market for penny stocks has experienced numerous frauds and abuses, which could adversely impact investors in our stock.

OTC Pink Sheet securities are frequent targets of fraud or market manipulation, both because of their generally low prices and because OTC Pink Sheet reporting requirements are less stringent than those of the stock exchanges or NASDAQ.

Patterns of fraud and abuse include:

	·	Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;

	·	Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;

	·	“Boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;

	·	Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and

	·	Wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

Our management is aware of the abuses that have occurred historically in the penny stock market.

We have not paid dividends in the past and do not expect to pay dividends in the foreseeable future and any return on investment may be limited to the value of our stock.

We have never paid any cash dividends on our common stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future and any return on investment may be limited to the value of our stock. We plan to retain any future earnings to finance growth.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The Company’s corporate headquarters is located at ~~Suite~~Room ~~1023~~20, 108/F., ~~Ocean~~Woon ~~Centre~~Lee Commercial Building, 57-9 ~~Canton~~Austin RdAve., Tsim Sha Tsui, Kowloon, Hong Kong. We believe that our existing mining and processing facilities in Mongolia, which are described above, are well maintained and in good operating condition, and will be sufficient for our production goals for the next year.

Item 3. Legal Proceedings

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

Item 4. Mine and Safety Disclosure

Not applicable.

1415 Table of Contents

PART II

Market Information

Our common stock is currently traded on the OTC Pink Sheets under the trading symbol “TGSI”. There is a limited trading market in our securities.

Our transfer agent is VStock Transfer, LLC, 18 Lafayette Place, Woodmere, NY, 11598, telephone: (212) 828-8436, fax: (646) 536-3179.

Holders

As of March 2019, ~~2020~~2021, there were 3588 holders of record of our common stock and 14,~~858~~962,~~328~~298 shares of our common stock were issued and outstanding.

Dividends

We have not declared or paid any cash dividends since inception. We intend to retain future earnings, if any, for use in the operation and expansion of our business and do not intend to pay any cash dividends in the foreseeable future. There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends.

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

In ~~2019~~2020, there were four convertible bond agreements entered into between the Company, ~~issued~~Arcus and third party investors. All of the four bonds matured in 2020 and were settled by issuing 92,275 common shares at a ~~subscription~~price ~~package~~stated (in the ~~“Second~~respective ~~Subscription~~agreements, ~~Package”)~~representing loans of upHK$2.6 tomillion and interest expenses of HK$~~825~~5,~~000~~521, ~~consisting~~for a total of ~~330~~HK$2,~~000~~605,521 ~~common~~(equivalent ~~shares~~to ~~and~~$334,027). 66In November 2019,~~000~~ ~~warrants~~one ~~exercisable~~convertible atbond agreement was signed including a HK$31.005 tomillion ~~purchase~~(equivalent ~~common~~to ~~shares~~$192,308) ~~within~~loan ~~three~~bearing ~~years~~interest ~~from~~of ~~the~~5% ~~respective~~per ~~issuance~~annum ~~dates,~~for tosix ~~accredited investors~~months. The ~~Company~~convertible ~~also~~bond ~~issued~~was ~~the~~originally ~~placement~~matured ~~agent~~on 33May 25,~~000~~ ~~common~~2020 ~~shares~~with at a conversion price of $3.7060 per ~~common~~ share. ~~for~~In ~~services~~May ~~rendered~~2020, the Company signed an extension letter with the bondholder to extend the maturity date from May 25, 2020 to September 30, 2020. In September 2020, the Company signed an extension letter with the bondholder to further extend the maturity date from September 30, 2020 to April 30, 2021.

In 2019, there were four convertible bond agreements entered into between the Company, Arcus and third party investors. Three of the bonds matured in 2019 and were settled by issuing 141,782 common shares at a price stated in the respective agreements, representing loans of HK$4 million and interest expenses of HK$8,333, for a total of HK$4,008,333 (equivalent to US$513,888). In November 2019, one convertible bond agreement was signed including a HK$1.5 million (equivalent to US$192,308) loan bearing interest of 5% per annum for six months. The convertible bond will mature on May 25, 2020 with a conversion price of $3.60 per share.

The shares issued in connection with the transactions were issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant Section 4(a)(2) of the Securities Act and Regulation S promulgated thereunder.

Equity Compensation Plans

We do not have in effect any compensation plans under which our equity securities are authorized for issuance and we do not have any outstanding stock options.

Purchases of Equity Securities by the Company

We did not purchase any of our shares of common stock or other securities during the fiscal year ended December 31, ~~2019~~2020.

Item 6. Selected Financial Data

As a “smaller reporting company”, we are not required to provide the information required by this Item.

1516 Table of Contents

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

FORWARD LOOKING STATEMENTS

This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our audited financial statements are stated in United States Dollars ($) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes to the consolidated financial statements included elsewhere in this Form 10-K. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this annual report.

In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to the common stock in our capital stock.

As used in this annual report, the terms “we”, “us”, “our” or the “Company” mean TGS International Ltd., a Nevada corporation, and our subsidiaries, unless otherwise indicated.

General Overview

TGS International Ltd. was established on December 1, 2016 in Nevada, USA. On September 14, 2018, TGS International Ltd. and Arcus entered into a Share Exchange Agreement, dated September 14, 2018, with Chi Kin Loo, Billion Plus Limited, First Fortune Investment Limited, Great Win Limited and Master Value Holdings Limited, pursuant to which the Selling Stockholders agreed to sell all of their ordinary shares of Arcus to the Company in exchange for an aggregate of 7,000,000 shares of common stock of TGS International Ltd.

We are a mining company focused on both fluorite mining operations in Mongolia (3 mines in total, Mining license numbers: MV-016819, MV-017305 and MV-009918) and sales of fluorite across Mongolia and China. During 2015 to 2017, we were setting up infrastructure at Mine B and appointed SRK Consulting China Limited for resource exploration for Mine A and Mine B. The ~~only~~trial production at Mine A and Mine B started in 2019 and 2018 respectively and ~~has~~have been ongoing since that time.

InThe ~~2019,~~global ~~there~~COVID-19 ~~were~~situation ashows ~~few~~no ~~unpredictable~~sign ~~events,~~of ~~including~~improvement ~~delay~~ in ~~exploratory~~most ~~work~~countries atand ~~Mine~~regions. BWe ~~due~~expect tothat the ~~tightened~~global ~~working~~economy ~~visa~~will ~~application~~take ~~procedure~~a byconsiderably ~~the~~long ~~Mongolian~~time ~~Government,~~to ~~delay~~stabilize inand ~~explosives~~recover ~~delivery~~from ~~due to~~ the ~~temporary~~ongoing ~~suspension~~pandemic ofas the ~~only~~situation ~~two~~remains ~~explosive~~very ~~factories~~volatile inand ~~Mongolia,~~uncertain. ~~which~~Although ~~have~~COVID-19 ~~brought~~vaccines ~~about~~are ~~significant~~now ~~postponement~~available, ofno ~~our~~side ~~exploratory~~effects ~~work.~~and ~~Therefore,~~100% ~~the~~success ~~production~~rate ~~forecast~~are ~~for 2019 was~~ not ~~reached.~~guaranteed ~~Nonetheless,~~at ~~the~~this ~~management~~point ~~has~~and ~~devoted all their effort to minimize any impact on~~ the ~~Company.~~World ~~For~~Health ~~instance,~~Organization ~~workers~~and ~~were~~health ~~instructed~~experts tohave ~~work~~advised onthat ~~the foundation of the refinery and other on~~COVID-~~site~~19 ~~infrastructures~~will ~~until~~not ~~the~~be ~~explosives~~eradicated ~~arrived~~without ateffective ~~our~~treatment ~~mine~~and vaccination.

WeMany ~~have~~countries ~~suspended~~around the ~~work~~world athave ~~Mine~~imposed Btravel ~~since~~restrictions ~~November~~in 25response to the outbreak of COVID-19, ~~2019~~including ~~due~~Mongolia. toThe Mongolian Government has implemented the ~~annual~~measure ~~winter~~of ~~break~~closing all ports of entry from and ~~expect~~into China, effective until April 30, 2021. Continuously evolving government responses to ~~resume~~the ~~our~~pandemic ~~work~~may increate ~~early~~challenges ~~April~~for ~~2020~~us. For example, ~~depending~~the onMongolian Government has extended the ~~weather~~measure of closing ports since early 2020, and ~~overall~~has ~~situation~~not changed their stance after reviewing more than ten times. ~~All~~It ~~workers~~is ~~working~~difficult atto ~~Mine~~predict Bif ~~were~~the ~~sent~~Mongolian ~~home~~Government will further extend the ~~same~~measures ~~day~~in place. ~~Right~~Our ~~before~~Chinese ~~the~~workers ~~winter~~are ~~break~~not allowed to enter into Mongolia, ~~there~~which ~~were~~has 2led to no activity at Mine B. Furthermore,~~221~~ ~~tons~~with oflimited ~~output~~operation income which is generated mainly from Mine BA, is compounded with the high expenses in our three offices: the ~~last~~Hong ~~quarter~~Kong ofheadquarters, ~~2019.~~the Erenhot office in China and the Mongolian office.

~~Although~~The ~~open~~Company ~~pit mining~~ is ~~adopted~~always atready ~~Mine~~and A,prepared asfor the ~~weather~~ports ~~has~~to ~~become~~reopen ~~more frigid, we have put the exploratory work at Mine A on hold since mid~~-~~February~~ ~~2020~~our tooffice ~~make~~in ~~sure~~Ulaanbaatar ~~the~~has ~~workers~~liaised ~~are~~with ~~safe and sound. The output in~~ the ~~last~~relevant ~~quarter~~government ofdepartments ~~2019 is 4,418 tons. We would like~~ to ~~take~~prepare ~~advantage~~visa ofapplications ~~adopting~~for ~~open~~our ~~pit~~Chinese ~~mining~~workers, atin ~~Mine~~case Aworkers soare asallowed to ~~resume~~enter ~~the~~into ~~exploratory work earlier once the winter break comes to an end and boost the production, presumably in early April 2020~~Mongolia.

The construction of the refinery at Mine B was almost completed in late November 2019~~. However~~, while the last step of power supply upgrade at Mine B is still inunderway. ~~progress~~We ~~and~~expect ~~we hope~~ to get ~~it done in early April 2020 to put~~ the ~~refinery~~power ~~into~~supply ~~use~~upgraded asin ~~early~~2021 asonce ~~possible.~~our ~~This~~Chinese isworkers aare ~~strategic~~allowed ~~cooperation~~to ~~with~~enter ~~Yantai~~into ~~Fulin Mining Machinery Co~~Mongolia., ~~Ltd~~The ~~(“Fulin”)~~entire ~~which~~refinery ~~provided~~could ~~construction~~be ~~funds~~put ~~in advance~~ to ~~the~~trial ~~construction~~once ~~and~~it ~~installation~~is ~~of the refinery~~ready. ~~We expect that the production and the sales would have a certain increase in 2020 as well as the profits. During 2019~~Nonetheless, wekeeping ~~have~~workers ~~upgraded~~safe ~~the~~is ~~infrastructures~~ at ~~Mine B as well as building~~ the ~~refinery~~top atof ~~Mine~~our Bpriority. ~~The~~Paramount ~~cost,~~importance ~~therefore,~~will ~~was~~be ~~unavoidably~~given ~~much~~to ~~larger than~~ the ~~last~~health ~~year’s. With the experienced engineers~~ and ~~construction~~safety ~~teams~~of ~~provided~~all byof ~~Fulin,~~ our ~~strategic partner~~workers, weeven ~~could~~if ~~get~~ the ~~construction~~Mongolian ofGovernment ~~the~~lifts ~~refinery completed in merely six months. The refinery is basically ready. Once we get~~ the ~~power~~above ~~supply upgrade done in April 2020, the entire refinery could be put into trial in late April or early May 2020~~measures.

AsIn ~~what~~this weunprecedented ~~have~~time, ~~known~~COVID-19 ~~that~~has transformed the ~~operation~~world ofsince ~~the~~earlier ~~refinery~~2020, ~~and~~affecting ~~the~~every ~~production~~corner ~~line~~of issociety ~~straightforward~~ and ~~simple~~shaking ~~with~~the ~~approximately~~global 3economy. ~~steps~~The –global ~~breaking~~economy ~~apart~~has ~~and~~been ~~grinding,~~dramatically ~~flotation~~impacted ~~separation,~~by ~~and drying out~~ the ~~acid~~COVID-19 ~~grade~~pandemic ~~fluorite,~~which ~~the~~continues ~~end product. We expect~~ to ~~increase~~have ~~manpower~~a toprofound ~~accelerate~~impact ~~the~~on ~~exploration~~our atoperations ~~Mine~~and Bmarkets byaround the ~~end~~world. ofDespite the ~~second~~unpredictable ~~quarter~~nature of ~~2020~~the topandemic, ~~escalate~~our ~~production.~~response ~~The~~has ~~fluorite~~remained ~~with~~strong ~~higher~~– ~~grading~~the ~~could~~management behas ~~sold~~been endeavoring to ~~the~~do ~~market~~their ~~directly~~best ~~while~~to minimize the ~~fluorite~~negative ~~with~~impact ~~lower~~on ~~grading~~our ~~could~~operations beand ~~used~~trial asproduction. ~~the~~We ~~raw~~have ~~materials~~worked ~~for~~extremely ~~producing~~hard ~~acid~~and ~~grade~~tried ~~fluorite.~~every ~~The~~single ~~management~~possible ~~are~~way ~~confident~~to inkeep the ~~overall~~Company’s ~~development~~operations ~~and~~running ~~sales~~in ofthese ~~the~~most ~~Company~~challenging circumstances.

~~Mine~~On CSeptember is still intact and we have not had any development there because we would like to prioritize and focus the use of our resources for the development of Mine A and Mine B. Once we have sufficient resources22, ~~we would start exploring and developing Mine C~~2020, ~~for~~two ~~example~~directors, ~~getting~~Mr. ~~SRK~~Shaowei ~~Consulting~~DENG ~~China~~and ~~Limited~~Miss ~~for~~Ka ~~resource~~Yi ~~exploration as the first step~~POON, toresigned ~~maximize~~from the ~~value~~Company offor ~~the~~personal ~~Company~~reasons.

16On ~~Table~~December 10, 2020, Mr. Chi Kin LOO was appointed as a director of ~~Contents~~the Company.

~~There~~17 ~~were~~Table ~~a total~~ of four convertible bond agreements entered into between the Company, a subsidiary of the Company, Arcus Mining Holdings Limited (“Arcus”), and third party investors during 2019. On August 30 2019, a convertible bond agreement was entered into between the Company, Arcus and a third party investor including a HK$1 million (equivalent to US$128,205) loan bearing interest of 2.5% per annum for one month. The convertible bond matured and was converted into 34,722 shares of the Company’s common stock on September 29, 2019 with a conversion price of $3.70 per share. Contents

OnThere ~~October~~were ~~25,~~a ~~2019,~~total aof four convertible bond ~~agreement~~agreements ~~was~~ entered into between the Company, ~~Arcus and~~ a ~~third~~subsidiary ~~party investor including a HK$2 million (equivalent to US$256,410) loan bearing interest~~ of ~~2.5% per annum for one month. The convertible bond matured and was converted into 71,373 shares of~~ the Company’s, ~~common~~Arcus ~~stock~~Mining onHoldings ~~November~~Limited 27(“Arcus”), ~~2019~~and ~~with~~third aparty ~~conversion~~investors ~~price~~during ~~of $3~~2020.60 ~~per share.~~

On ~~November~~January 42, ~~2019~~2020, a convertible bond agreement was entered into between the Company, Arcus and a third party investor. ~~including~~On aFebruary ~~HK$~~1, ~~million (equivalent to US$128~~2020,~~205)~~ ~~loan~~the ~~bearing~~convertible ~~interest~~bond ofmatured ~~2.5%~~and ~~per~~was ~~annum~~settled ~~for~~by ~~one~~issuing ~~month.~~53,236 ~~The~~common ~~convertible~~shares ~~bond~~at ~~matured~~a ~~and~~price ~~was~~of ~~converted~~$3.62 ~~into~~per ~~35,687~~share ~~shares~~representing loans of ~~the~~HK$1.5 ~~Company’s~~million ~~common~~and ~~stock~~interest onexpenses ~~December~~of HK$3,185, ~~2019~~for ~~with~~ a ~~conversion~~total ~~price~~ of HK$~~3.60~~1,503,185 ~~per~~(equivalent ~~share~~to $192,708).

On ~~November~~January 2614, ~~2019~~2020, a convertible bond agreement was entered into between the Company, Arcus and a third party investor. ~~including~~On aFebruary ~~HK$1.5~~13, ~~million~~2020, ~~(equivalent~~the toconvertible ~~US$192,308)~~bond ~~loan,~~matured ~~bearing~~and ~~interest~~was ofsettled 5%by ~~per~~issuing ~~annum~~14,196 ~~for~~common ~~six~~shares ~~months.~~at ~~The~~a ~~convertible~~price ~~bond~~of ~~will~~$3.62 ~~mature~~per onshare ~~May~~representing 25loans of HK$400,000 ~~2020~~and ~~with~~interest aexpenses ~~conversion~~of ~~price~~HK$849, for a total of HK$~~3.60~~400,849 ~~per~~(equivalent ~~share~~to $51,389).

AsOn ofFebruary ~~December 31~~24, ~~2019~~2020, a ~~loan~~convertible ofbond ~~$132,423~~agreement was ~~borrowed~~entered ~~from~~into anbetween ~~unrelated~~the Company, Arcus and a third party investor. ~~The~~On ~~loan~~March is25, ~~unsecured~~2020, ~~has~~the noconvertible ~~collateral~~bond ormatured ~~guarantee~~ and ~~carries~~was ~~interest~~settled by issuing 7,098 common shares at 11a price of $3.~~61%~~62 per ~~annum~~share representing loans of HK$200,000 and ~~repayable~~interest onexpenses ~~December~~of 31HK$425, ~~2029~~for a total of HK$200,425 (equivalent to $25,695).

~~Subsequent~~On toFebruary ~~the year ended December 31~~29, ~~2019~~2020, ~~there~~a ~~were four~~ convertible bond ~~agreements~~agreement was entered into between the Company, Arcus and a third party ~~investors~~investor. On ~~January~~March 230, 2020, athe convertible bond ~~agreement~~matured and was ~~signed~~settled ~~including~~by aissuing ~~HK$1.5~~17,745 ~~million~~common ~~(equivalent~~shares toat ~~US$192,308)~~a ~~loan~~price ~~bearing interest~~ of 2$3.5%62 per ~~annum~~share ~~for~~representing ~~one~~loans ~~month.~~of ~~The~~HK$500,000 ~~convertible bond matured~~ and ~~was~~interest ~~converted~~expenses ~~into 53,236 shares~~ of ~~the Company’s common stock on February~~ HK$1,062, ~~2020~~for ~~with~~ a ~~conversion~~total ~~price~~ of HK$~~3.62~~501,062 ~~per~~(equivalent ~~share.~~to $64,235).

On ~~January~~April 1420, 2020, athe ~~convertible~~Company ~~bond~~issued ~~agreement~~25,641 ~~was~~common ~~signed~~shares ~~including~~at a ~~HK$400,000~~price ~~(equivalent to US$51,282) loan bearing interest~~ of 2$4.5%00 per ~~annum~~share ~~for~~to ~~one~~settle ~~month. The convertible bond matured and was converted into 14,196 shares of~~ the ~~Company’s~~amount ~~common~~due ~~stock~~to ~~on February 13, 2020 with~~ a ~~conversion~~stockholder ~~price~~ of HK$~~3.62~~800,000 ~~per~~(equivalent ~~share.~~to $102,564).

On ~~February~~September 2414, 2020, athe ~~convertible~~Company ~~bond~~issued ~~agreement~~39,677 ~~was~~common ~~signed~~shares ~~including~~at a ~~HK$200,000~~price ~~(equivalent to US$25,641) loan bearing interest~~ of 2$4.5%00 per ~~annum~~share ~~for~~to ~~one~~settle ~~month.~~the ~~The~~amount ~~convertible~~due ~~bond~~to ~~will mature on March 25, 2020 with~~ a ~~conversion~~stockholder ~~price~~ of HK$~~3.62~~1,237,941 ~~per~~(equivalent ~~share.~~to $158,710).

On ~~February~~December 2921, 2020, athe ~~convertible~~Company ~~bond~~issued ~~agreement~~13,809 ~~was~~common ~~signed~~shares ~~including~~at a ~~HK$500,000~~price ~~(equivalent to US$64,103) loan bearing interest~~ of 2$4.5%00 per ~~annum~~share ~~for~~to ~~one~~settle ~~month.~~the ~~The~~amount ~~convertible~~due ~~bond~~to ~~will~~a ~~mature~~director onof ~~March 30~~HK$430,855 ~~2020~~(equivalent ~~with~~to ~~a conversion price of~~ $355,238).~~62 per share.~~

Apart from the exploration and infrastructure work at ~~Mine~~the Amine ~~and Mine B~~sites, the Company might consider further fund raising activities through the capital markets and from stockholders with the aim of speeding up the development of the Company.

Results of Operations

Comparison of Years Ended December 31, ~~2019~~2020 and December 31, ~~2018~~2019

Revenue

Revenue consisted mainly of ~~fluorspar~~fluorite products generated from production at ~~our~~Mine ~~mines~~A. In ~~2019~~2020, we had total revenue of $~~282~~753,~~857~~694, as compared to revenue of $~~274~~282,~~238~~857 during ~~2018~~2019. The percentage of such ~~increase~~increment was approximately 3166% as a result of the ~~increase~~adoption of open-pit mining at Mine A. This method is more flexible to cope with weather conditions. Although revenue in ~~average~~Mine ~~price~~A increased in 2020, nil revenue was generated from Mine B as a result of ~~metallurgical~~the ~~fluorite~~closure of Mongolia since January 31, 2020 due to COVID-19.

Commission income

Commission income was recognized when the Company purchased minerals from suppliers and received payments from the customers on selling minerals. The Company has been determined as an agent for the ultimate customers in these transactions and the revenue is recorded net of the related fulfillment costs as commission income. The Company had commission income of $393,566 in 2018 and nil commission income in 2019.

Cost of goods sold

Cost of goods sold included raw material costs. The total cost of goods sold decreased from $10,544 in 2018 to nil in 2019. The significant decrease was mainly due to no raw material costs in 2019.

Exploration cost

Exploration costs are expensed as incurred and included labor and benefits, construction service fee, mining overhead, including food, supplies, utilities and lubricants related to mine exploration. Exploration costs ~~increased~~decreased significantly from $~~421~~737,~~508~~248 in ~~2018~~2019 to $~~737~~467,~~248~~745 in ~~2019~~2020. The percentage of such ~~increment~~decrease was approximately 7537% and was mainly ~~due~~because toof ~~our~~the ~~focus~~decrease onin ~~the~~ mining ~~infrastructure~~overheads ~~project~~and ~~resulted~~utilities incost ~~the~~as ~~increase~~no ofoperating ~~construction~~activities ~~service~~were ~~fee,~~carried ~~mining~~out ~~supplies~~in ~~and~~Mine ~~utilities~~B ~~during~~in ~~the year~~2020.

Selling and distribution cost

Selling and distribution costs included transportation and handling costs related to the movement of finished goods from mines to customer designated locations, security fee, royalty and custom tax. Selling and distribution costs ~~increased~~decreased ~~significantly~~slightly from $56105,~~697~~279 in ~~2018~~2019 to $~~105~~102,~~279~~715 in ~~2019~~2020. The percentage of such ~~increment~~decrease was approximately 862% and was mainly due to the net effect of the increase in ~~royalty~~tax paid to the Mongolian Government and ~~custom~~the ~~tax.~~decrease in transportation costs.

17 Table of Contents

Administrative expenses

Administrative expenses included salaries and benefits, consulting, audit, tax, legal, insurance, rent, ~~and~~ utilities, net foreign exchange losses and other general operating expenses.

Administrative expenses ~~increased~~decreased significantly from $1,~~342~~645,~~830~~900 in ~~2018~~2019 to $1,~~645~~252,~~900~~925 in ~~2019~~2020. The percentage of such ~~increment~~decrease was approximately 2324% and iswas mainly due to ~~the~~ commission expenses related to subscription package in 2019, but nil was incurred in 2020, and also the net effect of the increase in net foreign exchange losses, and the decrease in staff salaries, entertainment, legal and ~~increase~~professional offees, ~~rental~~travelling ~~expense~~and byother ~~additional~~general ~~staff~~operating ~~accommodation~~expenses in ~~2019~~2020.

Other income

Other income ~~increased~~decreased significantly from $34195,~~083~~576 in ~~2018~~2019 to $~~195~~31,~~576~~958 in ~~2019~~2020. The percentage of such ~~increment~~decrease was approximately ~~474~~84% as a result of the net effect of a waiver of consultancy fee ~~in 2019~~ and a write back of receipt in advance due to the dissolution of our customer in 2019, but nil in 2020, and the increase of subsidies received from Hong Kong and Mongolian Governments in 2020 resulting from the outbreak of COVID-19 so as to ease the effects impacted on the corporation’s business.

Interest expenses

Interest expenses mainly included other loan interest, related party loan interest and bond interest arising from convertible bonds.

Interest expenses ~~decreased~~increased from $8376,~~548~~824 in ~~2018~~2019 to $76124,~~824~~040 in ~~2019~~2020. The percentage of such ~~reduction~~increment was approximately 861% asand awas ~~result~~mainly ofdue to the net ~~repayment~~effect of ~~related~~the ~~party~~increase ~~loans~~in amortization of ~~HK$3~~non-cash ~~million~~interest ~~(equivalent~~expenses and bond discount related to ~~US$382,945),~~the inconvertible ~~which~~bonds ~~HK$2~~and ~~million~~non-current ~~(equivalent~~loan tointerest ~~US$255,297)~~and ~~was~~the ~~settled~~decrease byin ~~issuance~~related ofparty ~~shares~~loans ~~and~~interest ~~HK$1~~as ~~million~~a ~~(equivalent~~result toof ~~US$127,648)~~repayment ~~was~~of ~~settled~~related byparty ~~cash~~loans in 2019.

Net loss

As a result of the factors described above, we had a net loss of $21,~~115~~218,~~716~~463 for the year ended December 31, ~~2019~~2020 as compared to a net loss of $12,~~241~~115,~~452~~716 for the year ended December 31, ~~2018~~2019. The net loss ~~resulted~~decreased mainly resulted from the ~~decrease~~increase in ~~the~~revenue ~~commission income~~ and ~~increase~~decrease in cost on mining infrastructure project. This was within our management expectation since our mine is still under trial production and we expect to further increase the productions and revenue in ~~2020~~2021.

Table of Contents

Liquidity and Capital Resources

Cash and cash equivalents are short-term, highly liquid investments with original maturities of three months or less. As of December 31, ~~2019~~2020 and ~~2018~~2019, the Company’s cash was $~~106~~69,~~850~~401 and $98106,~~121~~850, respectively. There were no cash equivalents.

Factors affecting our liquidity include (i) net cash used in operating activities that consists of (a) cash required to fund the mining sites operating activities and continued expansion of our mining sites and (b) our working capital needs, which include advanced payments for several mining supplies and repair and maintenance, payment of our operating expenses; and (ii) net cash used in investing activities that consists of the investments in purchasing new and additional property, plant and equipment for mining sites. To date, we have financed our liquidity needs primarily through advances from stockholders, proceeds from related parties and unrelated party loans, proceeds from issuance of common stock and the proceeds from issuance of convertible bonds.

We expect to continue to make capital expenditures to keep pace with the expansion of the production and scale of operations of our mining sites, which we expect to fund in part with the proceeds from issuance of convertible bonds and other loans in the future. We expect that the proceeds from the above and our existing cash and cash equivalents will be used to fund working capital and for capital expenditures and other general corporate purposes, such as partnering arrangements, or reduction of debt obligations. However, there can be no assurance that we will be able obtain financing, if at all or upon terms that will be acceptable to us.

Cash Flows

As of December 31, ~~2019~~2020, we had $~~106~~69,~~850~~401 in cash and cash equivalents, compared to $98106,~~121~~850 on December 31, ~~2018~~2019.

Net cash used in operating activities

Our net cash used in operating activities ~~increased~~decreased to $1,~~228~~070,~~886~~424 in ~~2019~~2020 from $~~888~~1,~~079~~228,886 in ~~2018~~2019. Net cash used in operating activities for the year ended December 31, ~~2019~~2020 primarily reflected our net loss of $21,~~115~~218,~~716~~463 and the add-back of non-cash items, mainly consisting of depreciation of property, plant and equipment of $5148,~~898~~884, ~~stock~~loss ~~compensation~~on ~~expenses~~disposal of property, plant and equipment of $~~122~~4,~~100~~089, amortization of non-cash interest expenses and bond discount related to convertible bonds of $1321,~~732~~059, exchange difference of $~~246~~327,~~346~~779, ~~and deduct of~~ non-cash ~~items,~~interest ~~mainly~~expenses ~~consisting~~related ofto ~~write~~other ~~back~~loans of ~~receipt in advance of~~ $~~160~~17,~~542~~603 and ~~waiver of consultancy fee of $34,556, and~~ changes in operating assets and liabilities primarily consisting of an increase in accounts receivable of $60727,~~314~~979, an increase of other receivables of $~~394~~68,~~560~~596, an increase of deposits and prepayments of $5648,~~795~~607, decrease in accrued charges of $40125,~~022~~594 and offset by an increase of trade and other payables of $1648,~~196~~012,~~364~~ ~~and~~an increase in income tax payable of $23,212, an increase in provision for asset retirement obligations of $3,~~179~~300 and an increase in provision for exploration asset compensation of $24,877.

Net cash used in investing activities

Our net cash used in investing activities ~~increased~~decreased to $~~976~~55,~~818~~416 in ~~2019~~2020 from $38976,~~379~~818 in ~~2018~~2019. This was mainly due to a decrease of acquisition of property, plant and equipment at mine sites.

Net cash provided by financing activities

Our net cash provided by financing activities ~~increased~~decreased to $21,~~216~~092,~~864~~060 in ~~2019~~2020 from $~~989~~2,~~312~~216,864 in ~~2018~~2019. This was mainly ~~the~~due ~~result~~to ofa ~~advances~~decrease ~~from~~of ~~stockholders~~proceeds ~~and directors, proceed~~ from unrelated party loan, issuance of common stock and convertible bonds ~~in 2019~~.

18 Table of Contents

Future Financings

We anticipate continuing to rely on related party and unrelated party loans, convertible bonds or equity sales of our common stock in order to continue to fund our business operations. We believe this will enable us to meet our cash needs for the next 12 months. Issuances of additional shares will result in dilution to our existing stockholders. Importantly, there is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing (whether from related parties or otherwise) to fund our planned business activities.

Except for the convertible bonds and loans from others, we presently do not have any other arrangements or commitments for additional financing for the expansion of our operations, and no potential lines of credit or sources of financing are currently available for the purpose of proceeding with our plan of operations.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, and capital expenditures or capital resources that are material to stockholders.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. The critical accounting policies we employ in the preparation of our consolidated financial statements are those which involve impairment of long-lived assets, intangible assets and income taxes.

Table of Contents

Below, we discuss these policies further, as well as the estimates and judgments involved. We believe that our other policies either do not generally require us to make estimates and judgments that are as difficult or as subjective, or it is less likely that they would have a material impact on our reported results of operations for a given period. For a discussion of all our significant accounting policies, see Note 2 to the consolidated financial statements included elsewhere in this Annual Report.

Impairment of Long-Lived Assets and Intangible Assets

Long-lived assets held and used by the Company and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company evaluates recoverability of assets to be held and used by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the asset. If such assets are considered to be impaired, the impairment loss is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets calculated using a discounted future cash flows analysis.

Income Taxes

The Company complies with ASC 740 which prescribes a recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Only tax positions that meet the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized upon adoption of ASC 740. The Company’s accounting policy is to treat interest and penalties as a component of income taxes.

Amounts in the consolidated financial statements related to income taxes are calculated using the principles of ASC 740 and ASU 2013-11 “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” ASC 740 requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the temporary differences between the financial reporting bases and the tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Future tax benefits, such as net operating loss carry forwards, are recognized as deferred tax assets. Recognized deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized.

Going Concern

The Company incurred an operating loss of $21,~~115~~218,~~716~~463 for the year ended December 31, ~~2019~~2020, and as of that date, the Company’s current liabilities exceeded its current assets by $1,~~555~~262,~~450~~026. Notwithstanding the operating loss incurred for the year ended December 31, ~~2019~~2020 and the net current liabilities as of December 31, ~~2019~~2020, the accompanying consolidated financial statements have been prepared on a going concern basis. Since the Company is currently in the exploration stage, it is still in the capital investing period. The Company’s business forecast indicates that the Company will have positive cash inflow after the commencement of formal production in ~~2021~~2022. Management believes the Company will have sufficient working capital to meet its financing requirements for the next 12 months based on the financial support of certain stockholders, issuance of new convertible bonds, proceeds from unrelated party loans and upon their experience and their assessment of the Company’s projected performance, production ability and product market.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 8. Financial Statements and Supplementary Data

Our Consolidated Financial Statements, together with the report of our independent registered public accounting firm, begin on page 2021 of this Annual Report and are incorporated herein by reference.

1920 Table of Contents

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of TGS International Ltd.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of TGS International Ltd. and subsidiaries (collectively, the “"Company”") as of December 31, ~~2019~~2020 and ~~2018~~2019, ~~and~~ the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, ~~2019~~2020, and the related notes (collectively referred to as the “"consolidated financial statements”"). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, ~~2019~~2020 and ~~2018~~2019, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, ~~2019~~2020, in conformity with accounting principles generally accepted in the United States of America.

Material Uncertainty related to Going Concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered an operating loss of $21,~~115~~218,~~716~~463 for the year ended December 31, ~~2019~~2020, and as of that date, the Company’s current liabilities exceeded its current assets by $1,~~555~~262,~~450~~026, which raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

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

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated 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 consolidated 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 consolidated 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 consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

~~/s/~~Critical ~~Moore~~Audit ~~Stephens CPA Limited~~Matters

The critical audit matters communicated below are matters arising from the current-period audit of the consolidated financial statements that were communicated or required to be communicated to the Board of Directors and that (1) relate to accounts or disclosures that are material to the consolidated 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 consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Table of Contents

Impairment assessment of property, plant and equipment (“PPE”)

Critical Audit Matter Description

As described in Notes 2 and 3 to the consolidated financial statements, management reviews and evaluates the net carrying amount of property, plant and equipment for impairment upon the occurrence of events or changes in circumstances that indicate that the related carrying amounts may not be recoverable. The test for recoverability is based on undiscounted future cash flows that will be generated from operations at each mining site. The total PPE balance was $2,307,570 as of December 31, 2020. Management performed a carrying amount analysis and concluded the undiscounted cash flows and estimated value of the PPE exceeded their carrying amounts and an impairment was not recognized. The carrying amount analysis is sensitive to the assumptions used including quantities of recoverable minerals, expected fluorite prices, production levels and operating cost of production and capital, based upon the projected remaining future fluorite production from each mining site.

We identified PPE as a critical audit matter because of the significant estimates and assumptions management makes in developing the undiscounted cash flows. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to forecast quantities of recoverable minerals, expected fluorite prices, production levels and operating costs of production and capital of each mining site.

How the Critical Audit Matter Was Addressed in the Audit

Our primary procedures related to address this critical audit matter included:-

·	We evaluated the reasonableness of management’s assumptions by comparing the forecasts to historical results, internal communications to management and the Board of Directors, and publicly available information about the industry.

Impairment assessment of intangible assets – acquired mining rights (“acquired mining rights”)

Critical Audit Matter Description

As described in Notes 2 and 4 to the consolidated financial statements, management reviews and evaluates the net carrying amount of acquired mining rights for impairment upon the occurrence of events or changes in circumstances that indicate that the related carrying amounts may not be recoverable. The test for recoverability is based on an estimate of fair values of acquired mining rights. The Company utilized a third-party valuation specialist to assess the fair value of acquired mining rights using the discounted cash flow model and the income approach. The determination of the fair value requires management to make significant estimates and assumptions related to forecasts of quantities of recoverable minerals, expected fluorite prices, production levels and operating costs of production and capital, based upon the projected remaining future fluorite production from each mining site and discount rate. The total acquired mining rights balance was $1,097,362 as of December 31, 2020. Based on the third-party valuation specialist’s report, the fair value exceeded its carrying amounts as of the measurement date and, therefore, no impairment was recognized. The fair value is sensitive to changes in forecasts of quantities of recoverable minerals, expected fluorite prices, production levels and operating cost of production and capital as well as discount rate.

We identified acquired mining rights as a critical audit matter because of the significant estimates and assumptions management makes in estimating its fair value. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to forecasts quantities of recoverable minerals, expected fluorite prices, production levels and operating costs of production and capital as well as discount rate.

How the Critical Audit Matter Was Addressed in the Audit

Our primary procedures related to address this critical audit matter included:-

·	We evaluated the independence and skills, knowledge, and expertise qualifications of the third-party valuation specialist engaged by the Company.

·	We evaluated the reasonableness of management’s assumptions by comparing the forecasts to historical results, internal communications to management and the Board of Directors, and forecasted information included in the fair value measurement reported by the third-party valuation specialist.

·	We evaluated the reasonableness of the Company’s calculation of fair value by:

	–	Assessing the appropriateness of the valuation methodology used to determine the company-specific risk premiums in calculating the discount rate.

	–	Testing the source information underlying the determination of the discount rate and the mathematical accuracy of the calculation.

	–	Evaluating the reasonableness of the estimated fluorite price through comparison to publicly available information about the industry.

/s/Moore Stephens CPA Limited

Certified Public Accountants

We have served as the Company’'s auditor since 2015.

Hong Kong

March 2019, ~~2020~~2021

20 Table of Contents

TGS International Ltd. Consolidated Balance Sheets as of December 31, 2019 and December 31, 2018

	Note		December 31, 2019			December 31, 2018
Assets
Current assets
Cash and cash equivalents			$	106,850		$	98,121
Other receivables				459,846			68,963
Prepayments and deposits				197,995			141,522
Accounts receivable				58,825			-
Total current assets				823,516			308,606
Non-current assets
Property, plant and equipment		3		2,406,368			1,557,622
Intangible assets		4		1,097,362			1,097,362
Right-of-use assets		5		189,456			-
Total assets			$	4,516,702		$	2,963,590
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable			$	9,769		$	-
Accrued charges				228,283			301,413
Other payables		7		1,304,355			237,167
Lease liabilities		5		189,456			-
Amount due to a director		14(d)		73,950			73,560
Loans from related persons		14(a)		385,158			766,246
Convertible bond payable, net		8		187,995			-
Total current liabilities				2,378,966			1,378,386
Non-current liabilities
Amounts due to stockholders		14(c)		872,968			398,208
Amount due to a director		14(d)		45,045			-
Other loan		9		132,423			-
Provision for asset retirement obligations		10		33,443			31,383
Provision for exploration asset compensation		11		98,742			102,127
Total liabilities				3,561,587			1,910,104
Commitments				-			-
Stockholders’ equity
Capital Stock
-Preferred stock, $0.0001 par value; 100,000,000 shares authorized, nil issued and outstanding				-			-
-Common stock, $0.0001 par value; 200,000,000 shares authorized, 14,790,896 shares issued and outstanding as of December31, 2019 and 14,165,000 shares issued and outstanding as of December31, 2018		12		1,479			1,417
Additional paid in capital				10,824,927			8,937,243
Accumulated deficit				(9,733,167	)		(7,617,451	)
Accumulated other comprehensive loss				(138,124	)		(267,723	)
Total stockholders’ equity				955,115			1,053,486
Total liabilities and stockholders’ equity			$	4,516,702		$	2,963,590

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

21 Table of Contents

TGS International Ltd. Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2019 and 2018

			Years ended December 31,
	Note		2019			2018
Revenue		13	$	282,857		$	274,238
Commission income		13		-			393,566
Cost, expenses and other:
Cost of goods sold				-			(10,554	)
Exploration				(737,248	)		(421,508	)
Selling and distribution				(105,279	)		(56,697	)
Depreciation of factory equipment				(28,898	)		(28,202	)
Administrative				(1,645,900	)		(1,342,830	)
Loss from operations				(2,234,468	)		(1,191,987	)
Other income				195,576			34,083
Interest expense				(76,824	)		(83,548	)
Loss before provision for income taxes				(2,115,716	)		(1,241,452	)
Income taxes		6		-			-
Net loss				(2,115,716	)		(1,241,452	)
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments				129,599			(39,328	)
Comprehensive loss			$	(1,986,117	)	$	(1,280,780	)
Net loss per share:		15
Basic and Diluted net loss per share			$	(0.15	)	$	(0.26	)
Weighted average number of common shares outstanding:
Basic and diluted				14,532,189			4,736,382

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

Table of Contents

TGS International Ltd. Consolidated ~~Statements~~Balance ofSheets ~~Changes~~as inof ~~Stockholders’~~December ~~Equity~~31, ~~for~~2020 ~~the~~and ~~years ended~~ December 31, 2019 ~~and 2018~~

									Additional						Accumulated other
	Note		December 31, 2020			December 31, 2019
			Common Stock						Paid-in			Accumulated			comprehensive
Assets
	Note		Shares			Amount			Capital			deficit			loss			Total
Current assets
Balance as of December 31, 2017				791		$	791		$	(691	)	$	(6,375,999	)	$	(228,395	)	$	(6,604,294	)
Cash and cash equivalents			$	69,401		$	106,850
Issuance of common stock		14(c)		6,999,209			6,999,209			1,849,501			-			-			8,848,710
Other receivables				532,943			459,846
Adjustment due to the reverse merger		1		7,030,000			(6,998,597	)		6,998,597			-			-			-
Prepayments and deposits				205,169			197,995
Cancellation of shares		1		(30,000	)		(3	)		3			-			-			-
Accounts receivable				787,023			58,825
Proceeds from issuance of shares and warrants		12		165,000			17			89,833			-			-			89,850
Total current assets				1,594,536			823,516
Net loss				-			-			-			(1,241,452	)		-			(1,241,452	)
Non-current assets
Foreign currency translation adjustments				-			-			-			-			(39,328	)		(39,328	)
Property, plant and equipment		3		2,307,570			2,406,368
Balance as of December 31, 2018				14,165,000		$	1,417		$	8,937,243		$	(7,617,451	)	$	(267,723	)	$	1,053,486
Intangible assets		4		1,097,362			1,097,362
Proceeds from issuance of common stock		12		625,896			62			1,887,684			-			-			1,887,746
Right-of-use assets		5		-			189,456
Net loss				-			-						(2,115,716	)		-			(2,115,716	)
Deposit				50,299			-
Foreign currency translation adjustments				-			-						-			129,599			129,599
Total assets			$	5,049,767		$	4,516,702
Balance as of December 31, 2019				14,790,896		$	1,479		$	10,824,927		$	(9,733,167	)	$	(138,124	)	$	955,115
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable			$	457,824		$	9,769
Accrued charges				123,241			228,283
Other payables		7		1,568,875			1,304,355
Lease liabilities		5		-			189,456
Income tax payable				22,951			-
Amount due to a director		14(d)		77,964			73,950
Loan from a related person		14(a)		386,916			385,158
Convertible bond payable, net		8		190,954			187,995
Other loan		9		27,837			-
Total current liabilities				2,856,562			2,378,966
Non-current liabilities
Amounts due to stockholders		14(c)		376,246			872,968
Amounts due to directors		14(d)		951,569			45,045
Other loan		9		147,326			132,423
Provision for asset retirement obligations		10		35,350			33,443
Provision for exploration asset compensation		11		119,336			98,742
Total liabilities				4,486,389			3,561,587
Commitments				-			-
Stockholders’ equity
Capital Stock
-Preferred stock, $0.0001 par value; 100,000,000 shares authorized, nil issued and outstanding				-			-
-Common stock, $0.0001 par value; 200,000,000 shares authorized, 14,962,298 shares issued and outstanding as of December 31, 2020 and 14,790,896 shares issued and outstanding as of December 31, 2019		12		1,496			1,479
Additional paid in capital				11,483,220			10,824,927
Accumulated deficit				(10,951,630	)		(9,733,167	)
Accumulated other comprehensive income/(loss)				30,292			(138,124	)
Total stockholders’ equity				563,378			955,115
Total liabilities and stockholders’ equity			$	5,049,767		$	4,516,702

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

Table of Contents

TGS International Ltd. Consolidated Statements of ~~Cash~~Operations ~~Flows~~and Comprehensive Loss for the years ended December 31, ~~2019~~2020 and ~~2018~~2019

			Year ended December 31,
			Years ended December 31,
	Note		~~2019~~2020			~~2018~~2019
Cash flows from operating activities
Revenue		13	$	753,694		$	282,857
Net loss			$	(2,115,716	)	$	(1,241,452	)
Cost, expenses and other:
Adjustments to reconcile net loss to net cash used in operating activities:-
Exploration				(467,745	)		(737,248	)
Depreciation of property, plant and equipment		3		51,898			52,149
Selling and distribution				(102,715	)		(105,279	)
Loss on disposal of property, plant and equipment				-			1,018
Depreciation of factory equipment				(33,478	)		(28,898	)
Net foreign exchange losses				246,346			30,369
Administrative				(1,252,925	)		(1,645,900	)
Stock compensation expenses		12		122,100			37,350
Loss from operations				(1,103,169	)		(2,234,468	)
Waiver of consultancy fee				(34,556	)		(5,311	)
Other income				31,958			195,576
Write back of receipt in advance				(160,542	)		-
Interest expense				(124,040	)		(76,824	)
Amortization of right-of-use asset		5		206,643			-
Loss before provision for income taxes				(1,195,251	)		(2,115,716	)
Amortization of non-cash interest expenses and bond discount related to convertible bonds				13,732			-
Income taxes		6		(23,212	)		-
Written off of deposit paid				-			10,856
Net loss				(1,218,463	)		(2,115,716	)
Over-provision of prior year service fee				-			(28,661	)
Other comprehensive income, net of tax:
Changes in assets and liabilities:-
Foreign currency translation adjustments				168,416			129,599
Accounts receivable				(60,314	)		-
Comprehensive loss			$	(1,050,047	)	$	(1,986,117	)
Other receivables				(394,560	)		5,551
Net loss per share:		15
Prepayments and deposits				(56,795	)		6,874
Basic and Diluted net loss per share			$	(0.08	)	$	(0.15	)
Accrued charges				(40,022	)		96,881
Weighted average number of common shares outstanding:
Accounts and other payables				1,196,364			142,889
Basic and diluted				14,900,748			14,532,189
Lease liabilities				(206,643	)		-
Provision for asset retirement obligations				3,179			3,408
Net cash used in operating activities				(1,228,886	)		(888,079	)
Cash flows from investing activities
Proceeds from the sale of property plant and equipment				-			4,026
Acquisition of property, plant and equipment				(976,818	)		(42,405	)
Net cash used in investing activities				(976,818	)		(38,379	)
Cash flows from financing activities
Advances from stockholders				517,329			478,958
Net advances from directors				165,392			-
Repayment of loans from related persons				(127,648	)		-
Proceed from issuance of common stock				825,000			-
Proceed from new loan – related person				-			510,354
Proceed from new loan – other				131,663			-
Proceed from issuance of convertible bonds				705,128			-
Net cash provided by financing activities				2,216,864			989,312
Net increase in cash and cash equivalents				11,160			62,854
Effect of exchange rate changes on cash and cash equivalents				(2,431	)		(3,676	)
Cash and cash equivalents, beginning of year				98,121			38,943
Cash and cash equivalents, end of year			$	106,850		$	98,121
Supplemental disclosures:-
Interest paid			$	66,377		$	37,851
Income tax paid			$	-		$	-
Cash paid for amounts included in measurement of lease liabilities			$	206,643		$	-
Non-cash investing and financing transactions:-
Cancellation of shares			$	-		$	3
Capitalization of advances from stockholder		14(c)	$	-		$	8,848,710
Capitalization of advances from a director		14(d)	$	121,133		$	-
Capitalization of loans from related persons		12	$	289,578		$	-
Recognition of Beneficial Conversion Feature (“BCF”) discount at inception of convertible bond		8	$	16,047		$	-
Conversion of convertible bond and accrued interest into common stock		8	$	513,888		$	-
Stock compensation expenses		12	$	122,100		$	37,350
Right-of-use assets obtained in exchange for lease obligations			$	369,874		$	-

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

Table of Contents

TGS International Ltd. ~~Notes~~Consolidated toStatements ~~Consolidated~~of ~~Financial~~Changes ~~Statements~~in Stockholders’ Equity for the years ended December 31, ~~2019~~2020 and ~~2018~~2019

							Additional					Accumulated other
			Common Stock				Paid-in		Accumulated			comprehensive
	Note		Shares		Amount		Capital		deficit			(loss)/income			Total
Balance as of December 31, 2018				14,165,000	$	1,417	$	8,937,243	$	(7,617,451	)	$	(267,723	)	$	1,053,486

Proceeds from issuance of common stock		12		625,896		62		1,887,684		-			-			1,887,746

Net loss				-		-		-		(2,115,716	)		-			(2,115,716	)

Foreign currency translation adjustments				-		-		-		-			129,599			129,599

Balance as of December 31, 2019				14,790,896	$	1,479	$	10,824,927	$	(9,733,167	)	$	(138,124	)	$	955,115

Proceeds from issuance of common stock		12		171,402		17		658,293		-			-			658,310

Net loss				-		-		-		(1,218,463	)		-			(1,218,463	)

Foreign currency translation adjustments				-		-		-		-			168,416			168,416

Balance as of December 31, 2020				14,962,298	$	1,496	$	11,483,220	$	(10,951,630	)	$	30,292		$	563,378

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

Table of Contents

TGS International Ltd.

Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019

			Year ended December 31,
	Note		2020			2019

Cash flows from operating activities
Net loss			$	(1,218,463	)	$	(2,115,716	)

Adjustments to reconcile net loss to net cash used in operating activities:-
Depreciation of property, plant and equipment		3		48,884			51,898
Loss on disposal of property, plant and equipment				4,089			-
Net foreign exchange losses				327,779			246,346
Stock compensation expenses		12		-			122,100
Waiver of consultancy fee				-			(34,556	)
Write back of receipt in advance				-			(160,542	)
Amortization of right-of-use asset		5		202,357			206,643
Amortization of non-cash interest expenses and bond discount related to convertible bonds				21,059			13,732
Non-cash interest expenses related to other loans				17,603			-

Changes in assets and liabilities:-
Accounts receivable				(727,979	)		(60,314	)
Other receivables				(68,596	)		(394,560	)
Prepayments and deposits				(48,607	)		(56,795	)
Accrued charges				(125,594	)		(40,022	)
Accounts and other payables				648,012			1,196,364
Income tax payable				23,212			-
Lease liabilities				(202,357	)		(206,643	)
Provision for asset retirement obligations				3,300			3,179
Provision for exploration asset compensation				24,877			-
Net cash used in operating activities				(1,070,424	)		(1,228,886	)

Cash flows from investing activities
Proceeds from the sale of property, plant and equipment				1,065			-
Acquisition of property, plant and equipment				(56,481	)		(976,818	)
Net cash used in investing activities				(55,416	)		(976,818	)

Cash flows from financing activities
Advances from stockholders				726,362			517,329
Repayment to stockholders				(20,156	)		-
Advances from directors				139,819			165,392
Repayment to a director				(112,938	)		-
Repayment of loan from a related person				-			(127,648	)
Proceeds from issuance of common stock				-			825,000
Proceeds from new loan – other				25,641			131,663
Proceeds from issuance of convertible bonds				333,332			705,128
Net cash provided by financing activities				1,092,060			2,216,864
Net (decrease)/increase in cash and cash equivalents				(33,780	)		11,160
Effect of exchange rate changes on cash and cash equivalents				(3,669	)		(2,431	)
Cash and cash equivalents, beginning of year				106,850			98,121
Cash and cash equivalents, end of year			$	69,401		$	106,850

Supplemental disclosures:-
Interest paid			$	54,148		$	66,377
Income tax paid			$	-		$	-
Cash paid for amounts included in measurement of lease liabilities		5	$	202,357		$	206,643

Non-cash investing and financing transactions:-
Capitalization of advances from stockholders		14(c)	$	261,274		$	-
Capitalization of advances from a director		14(d)	$	55,238		$	121,133
Capitalization of loans from related persons		12	$	-		$	289,578
Recognition of Beneficial Conversion Feature (“BCF”) discount at inception of convertible bond		8	$	7,771		$	16,047
Conversion of convertible bond and accrued interest into common stock		8	$	334,027		$	513,888
Stock compensation expenses		12	$	-		$	122,100
Right-of-use assets obtained in exchange for lease obligations			$	-		$	369,874

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

Table of Contents

TGS International Ltd.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN

TGS International Ltd. (“TGS”, “the Company”) was incorporated in the state of Nevada, United States on December 1, 2016. On September 14, 2018, the Company entered into a Share Exchange Agreement with Arcus Mining Holdings Limited (“Arcus”) and Chi Kin Loo, Billion Plus Limited, First Fortune Investment Limited, Great Win Limited and Master Value Holdings Limited (the “Selling Stockholders”), pursuant to which the Selling Stockholders agreed to sell all of their ordinary shares of Arcus to the Company in exchange for an aggregate of 7,000,000 shares of common stock of the Company. Arcus, which was incorporated in the Republic of Seychelles on June 17, 2014, and its subsidiaries are engaged in fluorite mining operations in Mongolia, including the processing and sales of fluorite products. Up to December 31, ~~2019~~2020 and the date of this report, the Company owns three mining rights in Mongolia (Mining license numbers: MV-016819, MV-017305 and MV-009918). ~~During~~For the year ended December 31, ~~2019~~2020, the Company ~~did~~has ~~not~~adopted ~~commence~~open-pit ~~regular~~ mining ~~operations~~at ~~except for a trial production which was conducted in~~ Mine A ~~and Mine B,~~ which ~~are~~is located in ~~Uulbayan soum~~Uulbayansoum, Sukhbaatar province (Mining license number: MV-009918). Due to COVID-19, the Mongolian Government has closed all ports of entry from and into China since early 2020. The Company could not perform any exploration work at Mine B which is located in Bayan-Ovoo soum, Khentii province (Mining license number: MV-016819), ~~respectively~~during 2020.

Reverse merger

On September 14, 2018, the Company and Arcus entered into a Share Exchange Agreement, dated September 14, 2018 with the Selling Stockholders, pursuant to which the Selling Stockholders agreed to sell all of their ordinary shares of Arcus to the Company in exchange for an aggregate of 7,000,000 shares of common stock of the Company. The merger closed on September 14, 2018 and resulted in the following:

Immediately prior to the Share Exchange, 6,500,000 shares of our outstanding common stock were cancelled and retired. A further 30,000 shares were cancelled after the Share Exchange.

As a result of the transactions described above, the Company became the record and beneficial owner of 100% of the share capital of Arcus and therefore owns 100% of the share capital of its subsidiaries.

As a result of the Share Exchange, the cancellation of 6,530,000 shares and the issuance of 7,000,000 shares, the Company had 14,000,000 shares of common stock issued and outstanding on September 14, 2018.

The transaction is accounted for as a “reverse acquisition”, with Arcus being treated as the accounting acquirer for financial reporting purposes. The historical consolidated financial statements include the operations of the accounting acquirer and its subsidiaries for all periods presented.

Going Concern

The Company incurred an operating loss of $21,~~115~~218,~~716~~463 for the year ended December 31, ~~2019~~2020, and as of that date, the Company’s current liabilities exceeded its current assets by $1,~~555~~262,~~450~~026. Notwithstanding the operating loss incurred for the year ended December 31, ~~2019~~2020 and the net current liabilities as of December 31, ~~2019~~2020, the accompanying consolidated financial statements have been prepared on a going concern basis. Since the Company is currently in the exploration stage, it is still in the capital investing period. Management has prepared a business cash flow forecast and it indicates that the Company will have positive cash inflow after the commencement of formal production in ~~2021~~2022. Management believes the Company will have sufficient working capital to meet its financing requirements for the next 12 months based on the financial support of certain stockholders, issuance of new convertible bonds, proceeds from unrelated party loans and upon their experience and their assessment of the Company’s projected performance, production ability and product market.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

These consolidated financial statements include the accounts of the Company, TGS, and all of the wholly owned subsidiaries of TGS. All intercompany balances have been eliminated in consolidation.

Use of estimates in the preparation of consolidated financial statements

The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. Although these estimates are based on management’s best assessment of the current business environment, actual results may be different from those estimates. The significant estimates and assumptions that affect the consolidated financial statements include, but are not limited to, deferred tax valuation allowances, income-tax uncertainties, assumptions used to determine the incremental borrowing rate to calculate lease liabilities and right-of-use (“ROU”) assets, depreciation and amortization periods, recoverability of long-lived assets including intangible assets, valuation of warrant equity, and valuation and impairment losses on mining rights and valuation of asset retirement obligations and exploration asset compensation.

2527 Table of Contents

TGS International Ltd. Notes to Consolidated Financial Statements December 31, ~~2019~~2020 and ~~2018~~2019

Concentration and credit risks

Financial instruments that subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable.

All of the Company’s cash and cash equivalents are held at financial institutions that management believes to be of high credit quality. The Company has not experienced any losses on cash and cash equivalents to date. The Company does not require collateral or other securities to support financial instruments that are subject to credit risk.

The Company operates principally in the People’s Republic of China (“PRC”) (including Hong Kong) and Mongolia and grants credit to its customers in these geographic regions. Although the PRC is economically stable, it is always possible that unanticipated events in foreign countries could disrupt the Company’s operations.

As of December 31, ~~2019~~2020 and ~~2018~~2019, the Company had credit risk exposure of uninsured cash and deposits with maturities of less than one year in banks of $9625,~~495~~625 and $~~116~~96,~~744~~495, respectively.

The net sales to customers representing at least 10% of net total sales are as follows:

	Year ended December 31, 2019
	Year ended December 31, 2020
	Amount		%
Customer A	$	40700,~~907~~762		1593
Customer B		60,314		21
Customer C		181,636		64
	$	282,857		100

	Year ended December 31, 2018
	Year ended December 31, 2019
	Amount		%
Customer D	$	261,159		39
Customer B	$	40,907		15
Customer E		393,566		59
Customer C		60,314		21
	$	654,725		98
Customer D		181,636		64
	$	282,857		100

The following customers had balances of at least 10% of the total accounts receivable as follows:

	Year ended December 31, 2020
	Amount		%

Customer A	$	681,503		87
Customer C		105,520		13
	$	787,023		100

	Year ended December 31, 2019
	Amount		%

Customer C	$	58,825		100

Table of Contents

TGS International Ltd.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

Accounts receivable

Accounts receivable are recorded at the invoiced amount, net of allowances for doubtful accounts. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. Bad debt expense is included in administrative expenses.

The Company recognizes an allowance for doubtful receivables to ensure accounts and other receivables are not overstated due to uncollectibility. Allowance for doubtful receivables is maintained for all customers based on a variety of factors, including the length of time the receivables are past due, significant one-time events and historical experience. An additional allowance for individual accounts is recorded when the Company becomes aware of customers’ or other debtors’ inability to meet their financial obligations, such as bankruptcy filings or deterioration in the customer’s or other debtor’s operating results or financial position. If circumstances related to customers or debtors change, estimates of the recoverability of receivables will be further adjusted. Accounts receivable are written off when deemed uncollectible. As of December 31, ~~2019~~2020 and ~~2018~~2019, there were no allowance of accounts receivable.

Cash and cash equivalents

Cash and cash equivalents are short-term, highly liquid investments with original maturities of three months or less. As of December 31, ~~2019~~2020 and ~~2018~~2019, the Company’s cash amounted to $~~106~~69,~~850~~401 and $98106,~~121~~850, respectively, and there were no cash equivalents.

Intangible assets

Intangible assets consist of acquired mining rights and are initially measured at fair value as at the date of acquisition. Following the initial recognition, intangible assets are stated at cost less accumulated amortization and impairment losses.

Intangible assets are amortized on the units-of-production method utilizing only proven and probable fluorite reserves in the depletion base.

26 Table of Contents

TGS International Ltd. Notes to Consolidated Financial Statements December 31, 2019 and 2018

Property, plant and equipment

	(i)	Property, plant and equipment are stated at cost less accumulated depreciation. Buildings are depreciated on a straight-line basis over 15 to 40 years, representing the shorter of the remaining term of the mining right or the expected useful life to the Company.

	(ii)	Other categories of property, plant and equipment are recorded at cost and depreciated to their estimated residual values using the straight-line method over their estimated useful lives, as follows:

· Leasehold improvements: 5 years or, ~~the~~if shorter, of the remaining term of the lease · Furniture and equipment: 3 to 10 years · Motor vehicles: 3 to 10 years · Factory equipment: 3 to 10 years · Mineral properties: Unit-of-production

(iii)

Normal repairs and maintenance are charged to operating expenses as incurred, while costs incurred that extend the useful life of an asset, improve the safety of our operations, or improve operating efficiency are capitalized.

Impairment of long-lived assets

The Company reviews and evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the assets. An impairment loss is measured and recorded based on discounted estimated future cash flows or upon an estimate of fair value that may be received in an exchange transaction. Future cash flows are estimated based on quantities of recoverable minerals, expected ~~fluorspar~~fluorite prices, production levels and operating costs of production and capital, based upon the projected remaining future ~~fluorspar~~fluorite production from each mining site. Existing proven and probable reserves and value beyond proven and probable reserves, including mineralization that is not part of the measured, indicated or inferred resource base, are included when determining the fair value of mine site reporting units at acquisition and, subsequently, in determining whether the assets are impaired. The term “recoverable minerals” refers to the estimated amount of ~~fluorspar~~fluorite that will be obtained after taking into account losses during processing and treatment. In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups. The Company’s estimates of future cash flows are based on numerous assumptions and it is possible that actual future cash flows will be significantly different than the estimates, as actual future quantities of recoverable minerals, ~~fluorspar~~fluorite prices, production levels and operating costs of production and capital are each subject to significant risks and uncertainties. As of December 31, ~~2019~~2020 and ~~2018~~2019, there was no impairment of long-lived assets.

Income taxes

Deferred income taxes are provided using the asset and liability method in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 740, “Income Taxes”. Under this method, deferred income taxes are recognized for all significant temporary differences at enacted rates and classified as a non-current asset or liability. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all, the deferred tax assets will not be realized.

FASB ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides accounting guidance on de-recognition, classification, interest and penalties, accounting in years, disclosure and transition. Interest and penalties from tax assessments, if any, are included in income taxes in the statements of operations and comprehensive income.

A tax position must be more likely than not of being sustained in order to be recognized in the consolidated financial statements. As of December 31, ~~2019~~2020 and ~~2018~~2019, the Company did not have any uncertain tax positions or accrued interest and penalties related to uncertain tax positions. The Company does not expect to have a material change to its income tax provisions in the next year.

Table of Contents

TGS International Ltd.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

Restoration and remediation costs (Asset retirement obligations)

In Mongolia, the mining laws and regulations require the Company to reclaim the surface areas and restore underground water quality for its mine projects to the pre-existing mine area average quality after completion of the mining activities.

Future reclamation and remediation costs, which include extraction equipment removal and environmental remediation, are accrued at the end of each period based on management’s best estimate of the costs expected to be incurred for each project. Such estimates consider the costs of future surface and groundwater activities, current regulations, actual expenses incurred, and technology and industry standards.

In accordance with FASB ASC 410, “Asset Retirement and Environmental Obligations”, the Company capitalizes the measured fair value of asset retirement obligations to mineral properties. The asset retirement obligations are accreted to an undiscounted value until the time at which they are expected to be settled. The accretion expense is charged to earnings and the actual retirement costs are recorded against the asset retirement obligations when incurred. Any difference between the recorded asset retirement obligations and the actual retirement costs incurred will be recorded as a gain or loss in the period of settlement.

On a regular basis, the Company reviews the assumptions used to estimate the expected cash flows required to settle the asset retirement obligations, including changes in estimated probabilities, amounts and timing of the settlement of the asset retirement obligations, as well as changes in any regulatory or legal obligations for each of its mineral projects. Changes in any one or more of these assumptions may cause revision of asset retirement obligations for the corresponding assets.

27 Table of Contents

TGS International Ltd. Notes to Consolidated Financial Statements December 31, 2019 and 2018

Revenue recognition

On January 1, 2018, the Company adopted FASB ASC 606, “Revenue from Contracts with Customers”, applying the modified retrospective method. The adoption did not result in a material adjustment to the accumulated deficit as of January 1, 2018.

The Company recognizes revenue in accordance with ASC 606 when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

The Company has two kinds of revenue, sales of fluorite and commission income.

The Company recognizes revenue when it satisfies a performance obligation in accordance with the provisions of a customer order or contract. This is achieved when control of the product has been transferred to the customer, which is generally determined when title, ownership, and risk of loss pass to the customer, all of which occurs upon shipment or delivery of the product. In determining when and how much revenue is recognized from contracts with customers, the Company performs the following five-step analysis: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the Company satisfies a performance obligation. The sales of the Company’s products to its customers represent a single performance obligation for which revenue is recognized at a point in time. Based on the foregoing, no significant judgment is required to determine when control of a product has been transferred to a customer.

When another party is involved in providing goods or services to a customer, the Company must determine whether the obligation is to provide the specified good or service itself (i.e., the Company is the principal in the transaction) or to arrange for that good or service to be provided by the other party (i.e., the Company is an agent in the transaction). When the Company is responsible for satisfying a performance obligation, based on the ability to control the product or service provided, the Company is considered as a principal and revenue is recognized for the gross amount of consideration. When the other party is primarily responsible for satisfying a performance obligation, the Company is considered as an agent and revenue is recognized in the amount of any fee or commission to which the Company is entitled. The Company purchase minerals from suppliers and receive payments from the customers on selling certain goods. The Company has been determined as an agent for the ultimate customers in these transactions and the revenue is recorded net of the related fulfillment costs as commission income.

The Company measures revenue based on the consideration it expects to be entitled to receive in exchange for its products. The standard terms and conditions of customer orders and contracts does not provide its customers with the right of return (except for quality), price protection, rebates or discounts. All sales are based on firm customer orders with fixed terms and conditions, which generally cannot be modified.

See note 13 regarding the Company’s revenue disaggregated by reporting segment.

Provision for exploration asset compensation

The Government of Mongolia issued a policy that requires all mining companies to pay compensation to the Government if the exploration work on their mining license area was funded by the Government. The compensation amount for the exploration work done has been estimated by the Mineral Resources and Petroleum Authority of Mongolia.

The provision for exploration expenditure is calculated as the discounted net present value of estimated future net cash outflows of the reclamation and closure costs.

Cost of goods sold

Cost of goods sold included raw material costs.

Exploration costs

Exploration costs are expensed as incurred. Costs to identify new mineral resources and to evaluate potential resources are considered exploration costs.

Selling and distribution costs

Selling and distribution costs included transportation and handling costs related to the movement of finished goods from mines to customer designated locations, security fee, royalty and custom tax.

28 Table of Contents

TGS International Ltd. Notes to Consolidated Financial Statements December 31, 2019 and 2018

Administrative expenses

Administrative expenses include salaries and benefits, consulting, audit, tax, legal, insurance, rent, ~~and~~ utilities, net foreign exchange losses, and other general operating expenses.

Shipping and ~~Handling~~handling ~~Costs~~costs

Shipping and handling costs are expensed as incurred.

Table of Contents

TGS International Ltd.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

Foreign currency transactions and translations

These consolidated financial statements are presented in United States dollars (“USD”), which is different from TGS subsidiaries’ functional currencies. The functional currency of the subsidiaries in Mongolia, Khan Shashir LLC and Shek Hung Gold LLC, is the Mongolian Tugrik (“MNT”). The functional currency of the subsidiary in the People’s Republic of China (“PRC”), Best Metro Import & Export Trading (Inner Mongolia) Limited is the Chinese Renminbi (“RMB”), while the functional currency of all other subsidiaries is the Hong Kong dollar (“HKD”).

The functional currency of TGS is the USD. The financial statements of foreign subsidiaries where HKD, MNT and RMB are the functional currencies and which have transactions denominated in non-HKD/MNT/RMB currencies are translated into HKD/MNT/RMB at the exchange rates existing on that date. The translation of local currencies into HKD/MNT/RMB creates transaction adjustments which are included in administrative expenses in the accompanying consolidated statements of operations and comprehensive ~~income~~loss. The amounts of foreign currency translation were ($327,779) and ($246,346) for the years ended December 31, 2020 and 2019, respectively.

The financial statements of TGS’s foreign subsidiaries, where non-USD currencies are the functional currencies, are translated into USD using exchange rates in effect at period end for assets and liabilities and average exchange rates during each reporting period for the statement of operations. Adjustments resulting from translation of these financial statements are reflected as a separate component of stockholders’ deficit.

Comprehensive loss

Comprehensive loss is defined as all changes in equity/(deficit), exclusive of transactions with stockholders, such as capital investments. Comprehensive loss includes net loss and changes in certain assets and liabilities that are reported directly in equity.

Basic and Diluted Loss per Share

The Company computes loss per share in accordance with FASB ASC 260, “Earnings per Share” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common stock equivalents outstanding during the period. Dilutive loss per share excludes all common stock equivalents if their effect is anti-dilutive.

As of December 31, ~~2019~~2020, the Company had warrants and convertible bonds outstanding which could potentially dilute basic loss per share in the future, but were excluded from the computation of diluted net loss per share, as their effect would have been anti-dilutive due to the net losses.

Fair value measurement

The Company complies with FASB ASC 820, “Fair Value Measurements”, which clarifies the definition of fair value, prescribes methods for measuring fair value and establishes a fair value hierarchy to classify the inputs used in measuring fair value.

Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:-

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

Financial instruments are measured as follows:-

The ~~carrying~~notional amounts of ~~cash~~financial assets and ~~cash~~financial ~~equivalents,~~liabilities ~~accounts~~with ~~receivable,~~a ~~other~~maturity ~~receivables,~~of ~~deposits,~~less ~~accounts~~than ~~payable,~~one ~~accrued~~year ~~charges,~~are ~~other~~assumed ~~payables, loans from related persons, convertible bonds, other loan, amount due~~ to ~~directors and amounts due to stockholders,~~ approximate their fair values ~~due to the short term nature of these instruments~~.

29The ~~Table~~fair value of ~~Contents~~balances with related parties have not been determined as the timing of the expected cash flows of these balances cannot be reasonably determined because of the relationship.

TGS International Ltd. Notes to Consolidated Financial Statements December 31, 2019 and 2018

Conversion Option – Convertible bonds

The Company accounts for convertible bond in accordance with the guidelines established by ASC 470-20, “Debt with Conversion and Other Options”. The Company separates the convertible bond into liability and equity components. The Beneficial Conversion Feature ("BCF") of a convertible bond, which is the equity component and recorded as additional paid-in capital, is normally characterized as the convertible portion or feature of certain bonds payable that provide a rate of conversion that is below market value or in-the-money when issued. The Company records a BCF related to the issuance of a convertible bond when issued.

To determine the effective conversion price, the Company first allocates the proceeds received to the convertible instrument, and then uses those allocated proceeds to determine the effective conversion price. The intrinsic value of the conversion option should be measured using the effective conversion price for the convertible instrument on the proceeds allocated to that instrument.

The accounting for a BCF requires that the BCF be recognized by allocating the intrinsic value of the conversion option to additional paid in capital, resulting in a discount to the convertible instrument. This discount should be accreted from the date on which the BCF is first recognized through the earliest conversion date for instruments that do not have a stated redemption date.

The discount is amortized to interest expense over the expected term of the convertible bonds using the effective interest method.

Warrants

ASC 815-40, “Contracts in Entity’s Own Equity”, requires freestanding contracts that are settled in a company’s own stock, including common stock warrants, to be designated as an equity instrument, asset or a liability. Under the provisions of ASC 815-40, a contract designated as an asset or a liability must be carried at fair value on a company’s balance sheet, with any changes in fair value recorded in the Company’s results of operations. A contract designated as an equity instrument must be included within equity, and no fair value adjustments are required from period to period.

Table of Contents

TGS International Ltd.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

Lease

The Company determines if an arrangement is a lease at inception of the contract. Leases are recorded in "Right-of-use ("ROU") assets" and "lease liabilities" in the Company's consolidated balance sheets.

ROU assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. For leases in which the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate based on the information available at commencement date for determining the present value of lease payments. Lease term includes the effects of options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating lease arrangements is recognized on a straight-line basis over the lease term.

On January 1, 2019, the date of initial application, the Company adopted, “Leases” (Topic 842), using the modified retrospective method. The modified retrospective method provides a method of recognizing those leases which had not expired as of the date of adoption of January 1, 2019. The prior period consolidated financial statements have not been retrospectively adjusted and continues to be reported under Topic 840.

The Company elected the practical expedient permitted under the transition guidance under Topic 842, which amongst other matters, allowed the Company (i) not to apply the recognition requirements to short-term leases (leases with a lease term of 12 months or less), (ii) not to reassess whether any expired or existing contracts are or contain leases, (iii) not to reassess the lease classification for any expired or existing leases, and (iv) not to reassess initial direct costs for any existing leases.

The adoption resulted in the recognition of ROU assets of $369,874 and lease liabilities of $369,874 for operating leases as of January 1, 2019. The adoption had no impact on opening balance of accumulated deficit. Refer to note 5 to the consolidated financial statements for details.

The Company reviews ROU assets for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable.

Recent changes in accounting standards

Pending Adoption as at year end

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (~~Topic~~ASC 326): Measurement of Credit Losses on Financial Instruments”. In November 2018, FASB issued ASU No. 2018-19, “Codification Improvements to ~~Topic~~ASC 326, Financial Instruments-Credit Losses”, which amends the scope and transition requirements of ASU 2016-13. ~~Topic~~ASC 326 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. ~~Topic~~ASC 326 will originally become effective for the Company beginning January 1, 2020, with early adoption permitted, on a modified retrospective approach. As a smaller reporting company, the effective date for the Company has been delayed until fiscal years beginning after December 15, 2022, in accordance with ASU 2019-10, although early adoption is still permitted. This standard is not expected to have a material impact to the Company’s consolidated financial statements after evaluation.

30In ~~Table~~December 2019, the FASB issued ASU 2019-12, “Income Taxes (ASC 740): Simplifying the Accounting for Income Taxes”. The amendments in this ASU simplify the accounting for income taxes, eliminates certain exceptions to the general principles in ASC 740 and clarifies certain aspects of ~~Contents~~the current guidance to improve consistent application among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021 and interim periods within annual periods beginning after December 15, 2022, though early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued. This standard is not expected to have a material impact to the Company’s consolidated financial statements after evaluation.

~~TGS~~In ~~International~~August ~~Ltd~~2020, the FASB issued No. ~~Notes~~ASU to2020-06, “Debt ~~Consolidated~~with ~~Financial~~Conversion ~~Statements~~and Other Options (ASC 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (ASC 815-40)”. This ASU simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 3115, ~~2019~~2023, ~~and~~including ~~2018~~interim periods within those fiscal years. Early adoption is permitted no earlier than the fiscal year beginning after December 15, 2020. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

Recent changes in accounting standards (continued)

Pending Adoption as at year end (continued)

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The objective of ASU 2018-13 is to improve the effectiveness of disclosures in the notes to the financial statements by removing, modifying, and adding certain fair value disclosure requirements to facilitate clear communication of the information required by generally accepted accounting principles. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 with early adoption permitted upon issuance of this ASU. This standard is not expected to have a material impact to the Company’s consolidated financial statements after evaluation.

In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. This Update states a private company (reporting entity) may elect not to apply VIE guidance to legal entities under common control (including common control leasing arrangements) if both the parent and the legal entity being evaluated for consolidation are not public business entities. This Update also states indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. This is consistent with how indirect interests held through related parties under common control are considered for determining whether a reporting entity must consolidate a VIE. For the Company, this Update is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. All entities are required to apply the amendments in this Update retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. Early adoption is permitted. The adoption of ASU 2018-17 is not expected to have a material impact on the consolidated financial statements of the Company.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes, eliminates certain exceptions to the general principles in Topic 740 and clarifies certain aspects of the current guidance to improve consistent application among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021 and interim periods within annual periods beginning after December 15, 2022, though early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued. This standard is not expected to have a material impact to the Company’s consolidated financial statements after evaluation.

The Company has implemented all new accounting pronouncements that are in effect and that could impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued, but are not yet effective, that might have a material impact on the consolidated financial statements of the Company.

NOTE 3 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment include the following:-

	December 31, 2019			December 31, 2018
	December 31, 2020			December 31, 2019
Buildings	$	~~159~~152,~~364~~902		$	~~164~~159,~~223~~364
Leasehold improvements		~~120,524~~-			~~119~~120,~~887~~524
Furniture, fixture and equipment		6667,~~582~~770			~~176~~66,~~883~~582
Motor vehicles		~~338~~314,~~320~~776			~~245~~338,~~217~~320
Factory equipment		~~230~~216,~~290~~801			23230,~~936~~290
Mineral properties		1,~~375~~322,~~608~~125			1,~~276~~375,~~766~~608
Less: accumulated depreciation		(~~522~~431,~~609~~378	)		(~~481~~522,~~672~~609	)
		1,768,079			1,525,240
		1,642,996			1,768,079
Construction in progress		~~638~~664,~~289~~574			32638,~~382~~289
Total property, plant and equipment	$	2,~~406~~307,~~368~~570		$	12,~~557~~406,~~622~~368

Construction in progress is mainly related to a power station under construction and stall cables to be used during the construction of the shaft at the mine sites. During the years ended December 31, ~~2019~~2020 and ~~2018~~2019, depreciation expenses charged to the consolidated statements of operations amounted to $5148,~~898~~884 ($2315,~~000~~406 to administrative expenses and $2833,~~898~~478 to depreciation of factory equipment) and $5251,~~149~~898 ($23,~~947~~000 to administrative expenses and $28,~~202~~898 to depreciation of factory equipment), respectively.

3132 Table of Contents

TGS International Ltd. Notes to Consolidated Financial Statements December 31, ~~2019~~2020 and ~~2018~~2019

NOTE 4 – INTANGIBLE ASSETS

Intangible assets consist of acquired mining rights.

As of December 31, ~~2019~~2020 and ~~2018~~2019, the Company owned three mining rights in Mongolia.

Cost
At December 31, 2019 and 2018	$	1,097,362
At December 31, 2020 and 2019	$	1,097,362
Accumulated amortization and impairment loss
At December 31, 2019 and 2018		-
At December 31, 2020 and 2019		-
Net book value
At December 31, 2020	$	1,097,362
At December 31, 2019	$	1,097,362
At December 31, 2018	$	1,097,362

As of December 31, ~~2019~~2020, future minimum amortization expenses in respect of intangible assets are as follows:

Year ending December 31,

2020	$	-
2021	$	-
2021		85,330
2022		70,304
2022		85,632
2023		75,991
2023		91,474
2024		80,854
2024		97,377
2025		81,848
Thereafter		~~737~~788,~~549~~365
	$	1,097,362

NOTE 5 – LEASING ARRANGEMENT

The Company leases certain office and warehouse spaces under operating leases in Hong Kong and Mongolia. Operating lease assets and obligations are reflected within right-of-use asset, and current lease liability respectively, on the ~~Consolidated~~consolidated ~~Balance~~balance ~~Sheet~~sheet.

The discount rate implicit within the leases is generally not determinable and therefore the Company determines the discount rate based on its incremental borrowing rate. The incremental borrowing rate for the leases is determined based on lease term and currency in which lease payments are made, adjusted for impacts of collateral. The weighted average discount rate used to measure the operating lease liabilities asin of2020 ~~December~~and ~~31,~~ 2019 was 11%.

Balance Sheet as of December 31, 2019

	December 31, 2020		December 31, 2019
Assets
Right-of-use assets	$	-	$	189,456

Liabilities
Current portion of operating lease liabilities	$	-	$	189,456

Total lease liabilities	$	-	$	189,456

Assets
Right-of-use assets	$	189,456
Liabilities
Current portion of operating lease liabilities	$	189,456
Total lease liabilities	$	189,456

Table of Contents

32TGS ~~Table~~International ofLtd. ~~Contents~~Notes to Consolidated Financial Statements December 31, 2020 and 2019

TGS International Ltd. Notes to Consolidated Financial Statements December 31, 2019 and 2018

NOTE 5 – LEASING ARRANGEMENT (CONTINUED)

Maturity Analysis of Lease Liabilities:

~~December 31, 2020~~	$December 31, 2020	~~217,033~~		December 31, 2019
December 31, 2021		4,106
December 31, 2020	$	-		$	217,033
Total lease payments, undiscounted		221,139
December 31, 2021		13,284			4,106
Less short-term lease payments		(20,564	)
Total lease payments, undiscounted		13,284			221,139
Less amount of lease payment representing interest		(11,119	)
Less short-term lease payments		(13,284	)		(20,564	)
Total present value of lease payments		189,456
Less amount of lease payment representing interest		-			(11,119	)
Less: Current portion of operating leases liabilities		(189,456	)
Total present value of lease payments		-			189,456
Non-current operating leases liabilities	$	-
Less: Current portion of operating leases liabilities		-			(189,456	)
Non-current operating leases liabilities	$	-		$	-

Lease costs for all operating leases classified under ~~Topic~~ASC 842 for the ~~year~~years ended December 31, 2020 and 2019 ~~was~~were $202,357 and $206,643 respectively.

Lease cost for all operating leases classified under Topic 840 for the year ended December 31, 2018 was $225,126.

Supplemental cash flow and other information related to leases is as follows:

	December 31, 2019
	December 31, 2020			December 31, 2019
Total lease liabilities	$	~~189,456~~-		$	189,456
Cash payment for amounts included in the measurement of lease liabilities within operating cash flows	$	~~206~~202,~~643~~357		$	206,643
Weighted average remaining lease term (years)		~~0.97~~-			0.97
Weighted average discount rate		11	%		11	%

NOTE 6 – INCOME TAXES

The Company is subject to tax on an entity basis on income arising in or derived from the United States of America, Republic of Seychelles, Mongolia, PRC and Hong Kong.

United States Tax

The federal income tax rate in the United States is 21%. The Company is subject to income taxes in the United States of America for each of the years ended December 31, ~~2019~~2020 and ~~2018~~2019.

Seychelles Tax

The statutory tax rate in the Republic of Seychelles is 25% on the first 1 million Seychelles Rupee of taxable income and 33% on the remainder. The Company is subject to income taxes in the Republic of Seychelles for each of the years ended December 31, ~~2019~~2020 and ~~2018~~2019.

Hong Kong Tax

BMHK, AHK and CAHK are subject to Hong Kong profits tax at the rate of 16.5% on the assessable profits. No provision for Hong Kong profits tax has been made as these companies incurred a loss for each of the years ended December 31, ~~2019~~2020 and ~~2018~~2019.

Table of Contents

TGS International Ltd.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

NOTE 6 – INCOME TAXES (CONTINUED)

Mongolia Corporate Income Tax

KSS and SHG are registered and operate in Mongolia and are subject to Mongolia Corporate Income Tax at the rate of 10% on taxable income below MNT6 billion (2019: MNT3 billion), or ~~MNT300~~MNT600 million (2019: MNT300 billion) plus 25% on taxable income exceeding ~~MNT3~~MNT6 billion for the year ended December 31, 2020 (2019: MNT3 billon). Provision for Mongolia corporate income tax has been made for the year ended December 31, 2020 as SHG generated profits in the current year (2019: Nil). No provision for Mongolia corporate income tax has been made asfor ~~these~~KSS ~~companies~~as it incurred a loss for each of the years ended December 31, ~~2019~~2020 and ~~2018~~2019.

PRC Enterprise Income Tax

BMIM is subject to PRC Enterprise Income Tax at the statutory rate of 25%. No provision for PRC Enterprise Income Tax has been made as this company incurred a loss for each of the years ended December 31, ~~2019~~2020 and ~~2018~~2019.

The Company’s deferred tax assets and liabilities as of December 31, ~~2019~~2020 and ~~2018~~2019 are attributable to the following:

	As of
	December 31, 2019			December 31, 2018
	December 31, 2020			December 31, 2019
Tax loss carry forwards	$	~~301~~406,~~091~~048		$	~~287~~301,~~735~~091
Less: Valuation allowance		(~~301~~406,~~091~~048	)		(~~287~~301,~~735~~091	)
	$	-		$	-

33 Table of Contents

TGS International Ltd. Notes to Consolidated Financial Statements December 31, 2019 and 2018

NOTE 6 – INCOME TAXES (CONTINUED)

Changes in valuation allowance are as follows:

	As of
	December 31, 2019		December 31, 2018
	December 31, 2020		December 31, 2019
Beginning balance	$	~~287~~301,~~735~~091	$	~~212~~287,~~789~~735
Increase in valuation allowance		13100,~~011~~769		6613,~~756~~011
Exchange difference		~~345~~4,188		~~8,190~~345
Ending balance	$	~~301~~406,~~091~~048	$	~~287~~301,~~735~~091

As of December 31, ~~2019~~2020 and ~~2018~~2019, the Hong Kong subsidiaries have tax losses arising in Hong Kong of approximately $12,~~602~~165,~~522~~359 (~~2018~~2019: $1,~~592~~602,~~556~~522) that are available indefinitely for offsetting against ~~its~~their future taxable profits. The PRC subsidiary has tax losses arising in PRC of approximately $~~146~~195,~~700~~057 (~~2018~~2019: $99146,~~851~~700) that are available for offsetting against its future taxable profits, which expire between 2022-~~2024~~2025 and between 2022-~~2023~~2024, respectively. The Company had total accumulated tax losses amounting to approximately $12,~~749~~360,~~222~~416 and $1,~~692~~749,~~407~~222 (the tax effect thereon being approximately $~~301~~406,~~091~~048 and $~~287~~301,~~735~~091), respectively, subject to the final agreement by the relevant tax authorities, which may be carried forward and applied to reduce future taxable income which is earned in or derived from the jurisdictions in which the tax losses were incurred. Realization of deferred tax assets associated with tax ~~losses~~loss carry forwards is dependent upon generating sufficient taxable income prior to their expiration. A full valuation allowance is established against such tax losses at each balance sheet date since management believes it is more likely than not that such tax losses will not be utilized.

A reconciliation of the income tax expense to the amount computed by applying the statutory tax rate of 21% to the loss before income taxes in the consolidated statements of operations and comprehensive ~~income~~loss is as follows:-

	December 31, 2019			December 31, 2018
	December 31, 2020			December 31, 2019
Loss before income taxes	$	(21,~~115~~195,~~716~~251	)	$	(12,~~241~~115,~~452~~716	)
Tax loss at the statutory tax rate of 21%		(~~444~~251,~~300~~003	)		(~~260~~444,~~705~~300	)
Effect of different tax rates in other jurisdictions		(1230,~~910~~398	)		(912,~~921~~910	)
Non-deductible items		~~488~~210,~~717~~460			~~203~~488,~~873~~717
Non-taxable items		(445,~~518~~964	)		(344,518	)
Change in valuation allowance		13100,~~011~~769			6613,~~756~~011
Income tax expense	$	-		$	-
Tax effect of temporary differences not recognized		(652	)		-
Income tax expense	$	23,212		$	-

Table of Contents

TGS International Ltd.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

NOTE 7 – OTHER PAYABLES

	As of
	December 31, 2019		December 31, 2018
	December 31, 2020		December 31, 2019
Tax and social insurance payable	$	5386,~~087~~601	$	953,~~384~~087
Contract liabilities		~~289~~296,~~786~~657		~~215~~289,~~359~~786
Temporary receipts		~~720~~739,~~278~~948		-720,278
Other payables		~~241~~445,~~204~~669		12241,~~424~~204
	$	1,~~304~~568,~~355~~875	$	~~237~~1,~~167~~304,355

Contract liabilities are consideration received from the customers or billed in advance of providing goods or services promised in the future. The Company defers recognizing this consideration as revenue until it has satisfied the related performance obligation to the customer.

Temporary receipts represented the fund received from Yantai Fulin Mining Machinery Co., Ltd, a strategic partner of the Company, to build a refinery factory in Mongolia.

34 Table of Contents

TGS International Ltd. Notes to Consolidated Financial Statements December 31, 2019 and 2018

NOTE 8 – CONVERTIBLE BONDS

As of December 31, ~~2019~~2020 and ~~2018~~2019, the Company had the following convertible bond outstanding:

	As of
	December 31, 2019					December 31, 2018
	December 31, 2020					December 31, 2019
	Principal			Accrued Interest		Principal			Accrued Interest
November 2019 HK$1.5 million (equivalent to $192,308) convertible into common shares at $3.60 per share, 5% interest, due May 25, 2020	$	192,308		$	930	$	-		$	-
November 2019 HK$1.5 million (equivalent to $192,308) convertible into common shares at $3.60 per share, 5% interest, due April 30, 2021	$	192,308		$	10,564	$	192,308		$	930
Less: Bond discount		(41,~~313~~354	)		-		-(4,313	)		-
	$	~~187~~190,~~995~~954		$	~~930~~10,564	$	-187,995		$	-930

InFor the year ofended ~~2019~~December 31, 2020, four new convertible bond agreements were entered into between the Company, Arcus and third party investors. ~~Three~~All of ~~the~~them ~~bonds~~ matured induring ~~2019~~the year and were settled by issuing ~~141~~92,~~782~~275 common shares at a price stated in the respective agreements, representing loans of HK$42.6 million and interest expenses of HK$85,~~333~~521, for a total of HK$42,~~008~~605,~~333~~521 (equivalent to $~~513~~334,~~888~~027) (see note 12). In addition, the Company recognized a beneficial conversion feature discount to the bond of $107,~~705~~390 that iswas ~~being~~ amortized ~~over~~during the ~~life of the convertible bond using the effective interest method~~year. ~~For the year ended December 31~~Additionally, ~~2019,~~ the Company ~~amortized $10,705 of the discount and~~ recognized non-cash interest of $~~1,068~~695 toon ~~interest~~these ~~expenses~~bonds.

OnFor ~~November~~the 26year ended December 31, 2019, afour convertible bond ~~agreement~~agreements ~~was~~were ~~signed~~entered ~~including~~into abetween ~~HK$1.5~~the ~~million~~Company, ~~(equivalent~~Arcus toand ~~$192,308)~~third ~~loan~~party ~~bearing~~investors. ~~interest~~Three of 5%the ~~per~~bonds ~~annum~~matured ~~for~~in ~~six~~2019 ~~months.~~and ~~The~~were ~~convertible~~settled ~~bond~~by ~~will~~issuing ~~mature~~141,782 oncommon ~~May~~shares 25at a price stated in the respective agreements, ~~2020~~representing ~~with~~loans aof ~~conversion~~HK$4 ~~price~~million and interest expenses of HK$~~3.60~~8,333, ~~per~~for ~~share~~a total of HK$4,008,333 (equivalent to $513,888) (see note 12). In addition, the Company recognized a beneficial conversion feature discount to the bond of $510,~~342~~705 that iswas ~~being~~ amortized ~~over~~during ~~a six-month period using~~ the ~~effective~~preceding ~~interest method~~year. ~~For the year ended December 31~~Additionally, ~~2019,~~ the Company ~~amortized $1,029 of the discount and~~ recognized non-cash interest of $~~930~~1,068 ~~to interest expenses. The unamortized debt discount~~ on ~~the~~these ~~convertible bond as of December 31, 2019 was $4,313~~bonds.

~~NOTE~~On November 26, 2019, a convertible bond agreement was signed including a HK$1.5 million (equivalent to $192,308) loan bearing interest of 5% per annum for six months. The convertible bond originally matured on May 25, 2020 with a conversion price of $3.60 per share. In addition, the Company recognized a beneficial conversion feature discount to the bond of $5,342 that is being amortized over the period using the effective interest method. On May 11, 2020, the Company signed an extension letter with the bondholder to extend the maturity date from May 25, 2020 to September 30, 2020. Therefore, the Company recognized an additional beneficial conversion feature discount to the bond of $234 that is being amortized over the period using the effective interest method. On September 11, 2020, the Company signed an extension letter with the bondholder to further extend the maturity date from September 30, 2020 to April 30, 2021. Therefore, the Company further recognized an additional beneficial conversion feature discount to the bond of $147 that is being amortized over the period using the effective interest method. For the year ended December 31, 2020, the Company amortized $3,340 (2019: $1,029) of the discount and recognized non-cash interest of $9,634 –(2019: ~~OTHER~~$930) ~~LOAN~~to interest expenses. The unamortized debt discount on the convertible bond as of December 31, 2020 was $1,354 (2019: $4,313).

AsNOTE of9 ~~December~~– ~~31,~~OTHER ~~2019, a loan of $132,423 was borrowed from an unrelated party. The loan is unsecured, has no collateral or guarantee and carries interest at 11.61% per annum and repayable on December 31, 2029.~~LOANS

As of December 31, 2020 and December 31, 2019, a loan of $147,326 and $132,423 respectively was borrowed from an unrelated party. The loan is unsecured, has no collateral or guarantee and carries interest at 11.61% per annum and repayable on December 31, 2029.

As of December 31, 2020, a loan of HK$217,133 (equivalent to $27,837) was borrowed from an unrelated party. The loan is unsecured, has no collateral or guarantee and carries interest at 10% per annum and repayable on June 23, 2021.

Table of Contents

TGS International Ltd.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

NOTE 10 – PROVISION FOR ASSET RETIREMENT OBLIGATIONS

The Company’s asset retirement obligations relate to future remediation and decommissioning activities at the three fluorite mines.

At December 31, 2017	$	30,696
Additions		3,408
Exchange adjustments		(2,721	)
At December 31, 2018		31,383
Additions		63,~~081~~179
Exchange adjustments		(41,~~021~~119	)
At December 31, 2019	$	33,443
Additions		3,300
Exchange adjustments		(1,393	)
At December 31, 2020	$	35,350

NOTE 11 – PROVISION FOR EXPLORATION ASSET COMPENSATION

At December 31, 2017	$	111,239
Exchange adjustments		(9,112	)
At December 31, 2018		102,127
Exchange adjustments		(3,385	)
At December 31, 2019	$	98,742
Additions		24,877
Exchange adjustments		(4,283	)
At December 31, 2020	$	119,336

35 Table of Contents

TGS International Ltd. Notes to Consolidated Financial Statements December 31, 2019 and 2018

NOTE 12 – CAPITAL STOCK

OnFor ~~September~~the ~~14,~~year ~~2018~~ended December 31,2019, the Company ~~and~~issued ~~Arcus~~a ~~entered~~second ~~into~~subscription apackage ~~Share~~(the ~~Exchange~~“Second ~~Agreement,~~Subscription ~~dated~~Package”) ~~September~~of ~~14,~~up ~~2018~~to ~~with~~$825,000, ~~the~~consisting ~~Selling~~of ~~Stockholders~~330,000 ~~pursuant~~common toshares ~~which~~and ~~the~~66,000 ~~Selling~~warrants ~~Stockholders~~exercisable ~~agreed~~at $3.00 to ~~sell~~purchase ~~all~~common ofstock ~~their~~within ~~ordinary~~three ~~shares~~years offrom ~~Arcus~~the respective issuance dates, to ~~the~~accredited investors. The Company inalso ~~exchange~~issued ~~for~~to anthe ~~aggregate~~placement ofagent 733,000~~,000~~ common shares ofat ~~common~~a ~~stock~~price of ~~the Company~~$3.70 ~~The~~per ~~merger~~common ~~closed~~share onfor ~~September~~the ~~14,~~services ~~2018~~rendered ~~and~~(equivalent ~~resulted~~to in$122,100). ~~the following:~~

~~Immediately~~For ~~prior~~the toyear ~~the~~ended ~~Share~~December ~~Exchange~~31, 62019,~~500~~ there were four convertible bond agreements entered into between the Company,~~000~~ ~~shares~~Arcus and third party investors. Three of the ~~outstanding~~bonds ~~common~~matured ~~stock~~in ~~were~~2019 ~~cancelled~~ and ~~retired.~~were Asettled ~~further~~by 30issuing 141,~~000~~782 common shares ~~were~~at ~~cancelled~~a ~~after~~price stated in the ~~Share~~respective ~~Exchange~~agreements, representing loans of HK$4 million and interest expenses of HK$8,333, for a total of HK$4,008,333 (equivalent to $513,888).

On November 21, 2018, the Company completed the first subscription package (the “First Subscription Package”) of 150,000 common shares at a price of $0.35 per share with a warrants option to purchase an aggregate of 50,000 common shares. The warrants will be exercisable within three years from the date of the Company receiving fund from investors at an exercise price of $1.00 per common share. The Company also issued to the placement agent 15,000 common shares at a price of $2.49 per common share for the services rendered (equivalent to $37,350).

As a result of the Share Exchange and the First Subscription Package, the cancellation of 6,530,000 shares and the issuance of 7,165,000 shares, the Company had 14,165,000 shares of common stock issued and outstanding as of December 31, 2018.

For the year ended December 31, 2019, the Company issued a second subscription package (the “Second Subscription Package”) of up to $825,000, consisting of 330,000 common shares and 66,000 warrants exercisable at $3.00 to purchase common stock within three years from the respective issuance dates, to accredited investors. The Company also issued to the placement agent 33,000 common shares at a price of $3.70 per common share for the services rendered (equivalent to $122,100).

On May 15, 2019, the Company issued 88,018 common shares at a price of $3.29 per share to settle the loans from related persons of HK$2 million and accrued interest expenses of HK$258,709, for a total of HK$2,258,709 (equivalent to $289,578).

On August 30, 2019, a convertible bond agreement was entered into between the Company, Arcus and a third party investor. On September 29, 2019, the convertible bond matured and was settled by issuing 34,722 common shares at a price of $3.70 per share representing loans of HK$1 million and interest expenses of HK$2,083, for a total of HK$1,002,083 (equivalent to $128,472).

On September 29, 2019, the Company issued 33,096 common shares at a price of $3.66 per share to settle the amount due to a director of HK$944,832 (equivalent to $121,133).

OnFor ~~October~~the ~~25,~~year ~~2019,~~ended aDecember ~~convertible~~31, ~~bond agreement was entered into between the Company~~2020, ~~Arcus~~there ~~and~~were a ~~third~~total ~~party~~of ~~investor.~~four Onnew ~~November 27, 2019, the~~ convertible bond ~~matured~~agreements ~~and~~entered ~~was~~into ~~settled~~between bythe ~~issuing 71~~Company,~~373~~ ~~common shares at~~ a ~~price~~subsidiary of ~~$3.60~~the ~~per share representing loans of HK$2 million and interest expenses of HK$4~~Company,~~167,~~ ~~for~~Arcus aMining ~~total~~Holdings ofLimited ~~HK$2~~(“Arcus”),~~004,167~~ ~~(equivalent~~and tothird ~~$256,944)~~party investors.

On ~~November~~January 42, ~~2019~~2020, a convertible bond agreement was entered into between the Company, Arcus and a third party investor. On ~~December~~February 31, ~~2019~~2020, the convertible bond matured and was settled by issuing 3553,~~687~~236 common shares at a price of $3.6062 per share representing loans of HK$1.5 million and interest expenses of HK$23,~~083~~185, for a total of HK$1,~~002~~503,~~083~~185 (equivalent to $~~128~~192,~~472~~708).

On January 14, 2020, a convertible bond agreement was entered into between the Company, Arcus and a third party investor. On February 13, 2020, the convertible bond matured and was settled by issuing 14,196 common shares at a price of $3.62 per share representing loans of HK$400,000 and interest expenses of HK$849, for a total of HK$400,849 (equivalent to $51,389).

On February 24, 2020, a convertible bond agreement was entered into between the Company, Arcus and a third party investor. On March 25, 2020, the convertible bond matured and was settled by issuing 7,098 common shares at a price of $3.62 per share representing loans of HK$200,000 and interest expenses of HK$425, for a total of HK$200,425 (equivalent to $25,695).

On February 29, 2020, a convertible bond agreement was entered into between the Company, Arcus and a third party investor. On March 30, 2020, the convertible bond matured and was settled by issuing 17,745 common shares at a price of $3.62 per share representing loans of HK$500,000 and interest expenses of HK$1,062, for a total of HK$501,062 (equivalent to $64,235).

On April 20, 2020, the Company issued 25,641 common shares at a price of $4.00 per share to settle the amount due to a stockholder of HK$800,000 (equivalent to $102,564).

On September 14, 2020, the Company issued 39,677 common shares at a price of $4.00 per share to settle the amount due to a stockholder of HK$1,237,941 (equivalent to $158,710).

On December 21, 2020, the Company issued 13,809 common shares at a price of $4.00 per share to settle the amount due to a director of HK$430,855 (equivalent to $55,238).

Table of Contents

TGS International Ltd.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

NOTE 13 – REVENUE

	December 31, 2019		December 31, 2018
	December 31, 2020		December 31, 2019
Disaggregation of revenue:-
Revenue from contract with customers within the scope of ASC 606, types of goods and services
Sales of minerals – point in time	$	~~282~~753,~~857~~694	$	~~274~~282,~~238~~857
Commission income – point in time		-		393,566
	$	282,857	$	667,804

36 Table of Contents

TGS International Ltd. Notes to Consolidated Financial Statements December 31, 2019 and 2018

NOTE 14 – SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES

(a) ~~Loans~~Loan from a related ~~persons~~person As of December 31, 2020 and December 31, 2019, loan from a related person included HK$3 million (equivalent to $386,916 and $385,158 respectively) borrowed from the wife of one of the Company’s stockholders on May 21, 2018. The loan is unsecured, has no collateral or guarantee and carries interest at a monthly rate of 3.08% for the first month and a monthly rate of 1.08% for the rest of the term. The loan originally was due to be repaid on May 20, 2019, however, on April 24, 2019, the repayment date was extended to May 20, 2020. On April 28, 2020, the repayment date was extended to May 20, 2021, and the interest changed to be at a monthly rate of 2.08% for the first month and a monthly rate of 1.08% for the rest of the term.

As(b) ofInterest ~~December~~expense ~~31,~~paid ~~2019~~to ~~and~~related persons For the years ended December 31, ~~2018,~~2020 ~~loans~~and ~~from~~2019, ~~related~~interest ~~persons~~expense ~~included~~of HK$3420,000 ~~million~~ (equivalent to $~~385~~54,~~158~~148) and HK$4462,326 ~~million~~ (equivalent to $~~510~~59,~~830~~015), respectively ~~borrowed from the wife of one of the Company’s stockholders on May 21~~, 2018. The loan is unsecured, has no collateral or guarantee and carries interest at a monthly rate of 3.08% for the first month and a monthly rate of 1.08% for the rest of the term. The loan originally was ~~due~~paid to berelated ~~repaid on May 20, 2019, however, on April 24, 2019, the repayment date was extended to May 20, 2020~~persons. ~~The Company repaid HK$1 million (equivalent to $127,648) loan on April 24, 2019.~~

(c) Amounts due to stockholders As of December 31, ~~2018~~2020, ~~loans~~amounts ~~from~~due ~~related~~to ~~persons~~stockholders, ~~included~~Kwong aBun ~~HK$1~~Mak, ~~million~~Xianqin ~~(equivalent~~Pan toand Kwing Chun Chu, were $~~127~~376,~~708)~~246; ~~loan~~while ~~borrowed~~as ~~from~~of ~~the~~December ~~son~~31, of2019, ~~the~~amounts ~~CFO~~due ofto ~~TGS~~stockholders, onChi ~~October~~Kin 6Loo, ~~2016~~Kwong Bun Mak, Xianqin Pan and Tak Leung Ho, were $872,968. The ~~loan~~Company is ~~unsecured~~currently in the exploration stage, ~~has~~and nothe ~~collateral~~stockholders oradvanced ~~guarantee~~$349,387 ~~and~~working ~~carries~~capital ~~interest~~to meet the financing requirement in 2020. On April 20, 2020, the Company issued 25,641 common shares at 8%a price of $4.00 per ~~annum~~share to settle the amount due to a stockholder of HK$800,000 (equivalent to $102,564) (see note 12). ~~The~~On ~~loan~~September ~~was~~14, ~~fully~~2020, ~~repaid~~the byCompany ~~issuing~~issued 39,677 common ~~stock~~shares at a price of ~~TGS~~$4.00 onper ~~May~~share 15to settle the amount due to a stockholder of HK$1,237,941 ~~2019~~(equivalent to $158,710) (see note 12). Amounts due to stockholders are unsecured, interest-free and there are no fixed terms for repayment. The stockholders have agreed not to demand repayment within the next 12 months from the balance sheet date.

(d) Amount due to directors As of December 31, ~~2018~~2020 and 2019, ~~loans~~amount ~~from~~due ~~related~~to ~~persons~~a ~~included~~director, Tak Shing Eddie Wong, of HK$1604,500 ~~million~~(equivalent to $77,964) and HK$576,000 (equivalent to $~~127~~73,~~708~~950) ~~loans~~respectively. ~~borrowed~~The ~~from~~amount ~~the~~is ~~sisters~~unsecured, ofhas ~~one~~no ofcollateral ~~the~~or ~~stockholders~~guarantee ofand ~~TGS~~is interest-free. The amount was fully settled on ~~October~~March 313, ~~2016~~2021. ~~The~~As ~~loans~~of ~~are~~December ~~unsecured~~31, ~~have~~2019, noamount ~~collateral~~due orto ~~guarantee~~a ~~and~~director, ~~carry~~Sai ~~interest~~Kit atLeung, 8%was ~~per~~HK$350,855 ~~annum~~(equivalent to $45,045). ~~The~~During ~~loans~~the ~~were~~year, ~~fully~~he ~~repaid~~advanced byHK$80,000 ~~issuing~~(equivalent to $10,314) to the Company. On December 21, 2020, the Company issued 13,809 common ~~stock~~shares at a price of ~~TGS~~$4.00 onper ~~May~~share 15to settle the amount due to the director of HK$430,855 ~~2019~~(equivalent to $55,238) (see note 12). On December 10, 2020, Mr. Chi Kin Loo was appointed as a director of the Company. As of December 31, 2020, there was an amount due to the director of HK$7,378,106 (equivalent to $951,569). During the year, he advanced HK$3,024,000 (equivalent to $389,868) to the Company. This amount is unsecured, interest-free and there are no fixed terms for repayment. The director has agreed not to demand repayment within 12 months of the balance sheet date.

~~(b)~~38 ~~Interest~~Table ~~expense~~of ~~paid to related persons~~Contents

~~During~~TGS ~~the~~International ~~years~~Ltd. ~~ended~~Notes ~~December~~to ~~31,~~Consolidated ~~2019~~Financial ~~and~~Statements ~~2018,~~December ~~interest expense of HK$462~~31,~~326~~ ~~(equivalent~~2020 ~~to $59,015)~~ and ~~HK$581,264 (equivalent to $74,162), respectively, was paid to related persons.~~2019

On August 15, 2018, Arcus allotted and issued 884,871 ordinary shares of Arcus (equivalent to 6,999,209 shares of the Company; each share of Arcus was exchanged for 7.91 shares of the Company’s common stock) at $10 each to repay the debts to Mr. Loo Chi Kin with total amount, HK$69,410,892 (equivalent to $8,848,710), within the group.

As of December 31, 2019 and 2018, amounts due to stockholders, Chi Kin Loo, Kwong Bun Mak, Xianqin Pan and Tak Leung Ho, included $872,968 and $398,208 at December 31, 2019 and December 31, 2018 respectively. The Company is currently in the exploration stage, and the stockholders advanced $517,329 working capital to meet the financing requirement for the year of 2019. Amounts due to stockholders are unsecured, interest-free and there are no fixed terms for repayment. The stockholders have agreed not to demand for repayment within the next 12 months from the balance sheet date.

(d) Amount due to directors

As of December 31, 2019 and 2018, amount due to a director, Tak Shing Eddie Wong, of HK$576,000 (equivalent to $73,950) and HK$576,000 (equivalent to $73,560) respectively. The amount is unsecured, has no collateral or guarantee and is interest-free. The amount was fully repaid on March 13, 2020 and February 14, 2019, respectively.

During the year, the director, Sai Kit Leung advanced HK$1,295,687 (equivalent to $165,392) to the Company. On September 29, 2019, the Company issued 33,096 common shares at a price of $3.66 to settle the amount due to the director of HK$944,832 (equivalent to $121,133) (see note 12). As of December 31, 2019, there is an amount due to a director of HK$350,855 (equivalent to $45,045). This amount is unsecured, interest-free and there are no fixed terms for repayment. The director has agreed not to demand for repayment within 12 months of the balance sheet date.

NOTE 15 — NET LOSS PER SHARE

Loss per common share is presented under two formats: basic loss per common share and diluted loss per common share. Basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period, plus the potentially dilutive impact of common stock equivalents (e.g. stock options, warrants and convertible bonds). Dilutive common stock equivalents consist of the incremental common stock issuable upon exercise of stock options and warrants. The following table sets forth the computation of basic and diluted net loss per share:

	Years Ended
	December 31, 2019			December 31, 2018
	December 31, 2020			December 31, 2019
Numerator:
Net loss	$	(21,~~115~~218,~~716~~463	)	$	(12,~~241~~115,~~452~~716	)
Denominator:
Weighted-average common stock, basic		14,~~532~~900,~~189~~748			414,~~736~~532,~~382~~189
Dilutive effect of warrants		–			–
Dilutive effect of convertible bonds		–			–
Incremental dilutive shares		–			–
Weighted-average common stock, diluted		14,~~532~~900,~~189~~748			414,~~736~~532,~~382~~189
Net loss per share, basic and diluted	$	(0.1508	)	$	(0.2615	)

37Note: ~~Table~~During the year ended December 31, 2020 and 2019, the Company had warrants and convertible bond outstanding which could potentially be anti-dilutive in the future, but were excluded from the computation of ~~Contents~~diluted net loss per share, as their effect would have been anti-dilutive due to the net losses.

TGS International Ltd. Notes to Consolidated Financial Statements December 31, 2019 and 2018

NOTE 16 — WARRANT EQUITY

On November 21, 2018 (“Issuance Date”), the Company issued First Subscription Package of up to $52,500, consisting of 150,000 common shares and 50,000 warrants exercisable at $1.00 (the “Warrants”) to purchase common stock within three years from the Issuance Date, to accredited subscribers.

For the year ended December 31, 2019, the Company issued Second Subscription Package of up to $825,000, consisting of 330,000 common shares and 66,000 warrants exercisable at $3.00 to purchase common stock within three years from the respective issuance dates, to accredited subscribers.

The two investors in the First Subscription Package, which was completed on November 21, 2018, forfeited their rights to exercise the 25,000 warrant at $1.00 of their own accord.

The Company determined that these warrants are free standing financial instruments that are legally detachable and separately exercisable from the common stock included in the subscriptions. All of the Company’s outstanding warrants are considered to be indexed to the Company’s own stock and are therefore classified as equity under ASC 480. The warrants, in specified situations, provide for certain compensation remedies to a holder if the Company fails to timely deliver the shares underlying the warrants in accordance with the warrant terms.

As of December 31, 2019, the Company reviewed the valuation technique and inputs used to determine the fair value of the outstanding warrants. The Company engaged an outside valuation company to calculate the fair value of warrants based on the Binominal Option Pricing Model (“Binomial”).

Set out below are the major parameters adopted in the valuation:

Grant date	January to April 2019			~~February 2019~~			~~March 2019~~			~~April 2019~~
Stock price of the issuer at respective grant dates	$	3.50		$	~~3.50~~		$	~~3.50~~		$	~~3.50~~
Risk-free rate		14.01% to 14.27	%		~~14.01~~	%		~~13.99~~	%		~~14.27~~	%
Volatility		54.63% to 56.74	%		~~56.74~~	%		~~55.80~~	%		~~54.63~~	%
Dividend yield		0.00	%		~~0.00~~	%		~~0.00~~	%		~~0.00~~	%

The warrants outstanding and fair values at each of the respective valuation dates are summarized below:

Grant date	Warrants Outstanding			Fair Value per Share			Fair Value $
2018		50,000		$	0.07		$	3,490
2019		66,000			21.1191			~~139~~125,~~115~~900
Less: warrants forfeited		(50,000	)		(0.07	)		(3,490	)
As at December 31, 2019		66,000					$	139,115
As at December 31, 2019 and 2020		66,000					$	125,900

Table of Contents

TGS International Ltd.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

NOTE 17 – SUBSEQUENT EVENTS

~~Subsequent~~The Company was supposed to resume exploratory and construction work at Mine B in the ~~year~~early ~~ended~~second ~~December~~quarter ~~31,~~of ~~2019~~2020. However, ~~there~~the ~~were~~global ~~four~~COVID-19 ~~convertible~~outbreak ~~bond~~has ~~agreements~~resulted ~~entered~~in ~~into~~delays ~~between~~in the ~~Company,~~resumption ~~Arcus~~of ~~and~~work ~~third~~since ~~party~~the ~~investors~~Chinese workers cannot enter into Mongolia until April 30, 2021 at the earliest.

OnThe ~~January~~Company 2,is ~~2020,~~dependent aon ~~convertible~~its ~~bond~~workforce, ~~agreement~~mainly ~~was~~Chinese ~~signed~~workers, ~~including~~to aperform ~~HK$1~~the mining work.5 ~~million~~The ~~(equivalent~~closure toof ~~$192,308)~~borders ~~loan~~implemented ~~bearing~~by ~~interest~~the ofMongolian ~~2.5%~~Government ~~per~~has ~~annum~~impacted ~~for~~the ~~one~~Company’s ~~month.~~ability ~~The~~to ~~convertible~~deploy ~~bond~~its ~~matured~~workforce ~~and~~effectively. ~~converted~~While ~~into~~expected 53to be temporary,~~236~~ ~~shares~~prolonged ofworkforce ~~the~~disruptions ~~Company’s~~have ~~common~~negatively ~~stock~~impacted onsales ~~February~~in 1,Mine ~~2020~~B ~~with~~in afiscal ~~conversion~~year ~~price~~2020 ofand ~~$3.62~~the ~~per~~Company’s ~~share~~overall liquidity.

OnIf ~~January~~these ~~14,~~developments ~~2020,~~continue athroughout ~~convertible~~2021, ~~bond~~we ~~agreement~~expect ~~was~~very ~~signed~~limited ~~including~~sales aand ~~HK$400,000~~operations ~~(equivalent~~in toMine ~~$51,282)~~B ~~loan~~in ~~bearing~~2021 ~~interest~~as ~~of 2~~well.5% ~~per~~However, ~~annum~~the ~~for~~Mongolian ~~one~~office ~~month.~~has ~~The~~liaised ~~convertible~~with ~~bond~~the ~~matured~~relevant ~~and~~government ~~converted~~departments ~~into~~to ~~14,196~~prepare ~~shares~~visa ofapplications for the ~~Company’s~~Chinese ~~common~~workers, ~~stock~~in oncase ~~February~~workers ~~13,~~are ~~2020~~allowed ~~with~~to aenter ~~conversion~~into ~~price~~Mongolia ofsince ~~$3.62~~April ~~per~~30, ~~share~~2021.

OnGiven ~~February~~the ~~24,~~daily ~~2020,~~evolution aof ~~convertible~~the ~~bond~~COVID-19 ~~agreement~~outbreak ~~was~~and ~~signed~~the ~~including~~global aresponses ~~HK$200,000~~to ~~(equivalent~~curb toits ~~$25~~spread,~~641)~~ ~~loan~~the ~~bearing~~Company ~~interest~~is ofnot ~~2.5%~~able ~~per~~to ~~annum~~estimate ~~for~~the ~~one~~effects ~~month.~~of ~~The~~the ~~convertible~~COVID-19 ~~bond~~outbreak ~~will~~on ~~mature~~its onresults ~~March~~of 25operations, ~~2020~~financial ~~with~~condition, aor ~~conversion~~liquidity ~~price~~for ofthe ~~$3.62~~2021 ~~per~~fiscal ~~share~~year.

On40 ~~February~~Table ~~29, 2020, a convertible bond agreement was signed including a HK$500,000 (equivalent to $64,103) loan bearing interest~~ of ~~2.5% per annum for one month. The convertible bond will mature on March 30, 2020 with a conversion price of $3.62 per share.~~Contents

NOTE 18 – COMPARATIVE AMOUNTS

Certain comparative figures have been reclassified to conform with the current year's presentation and disclosures.

38 Table of Contents

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we carried out an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in SEC Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based on such evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, has concluded that our disclosure controls and procedures were effective as of December 31, ~~2019~~2020.

(b) Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process designed by, or under the supervision of, our president (our principal executive officer and our principal accounting officer and principal financial officer), to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures of our company are being made only in accordance with authorizations of management and directors of our company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not provide absolute assurance that a misstatement of our financial statements would be prevented or detected.

Further, the evaluation of the effectiveness of internal control over financial reporting was made as of a specific date, and continued effectiveness in future periods is subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has conducted, with the participation of our Chief Executive Officer and our Chief Financial Officer, an evaluation of the effectiveness of our internal control over financial reporting as of December 31, ~~2019~~2020 in accordance with the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control — Integrated Framework (2013). Based on this assessment, management concluded that as of December 31, ~~2019~~2020, our internal control over financial reporting was effective.

(c) Changes in Internal Controls over Financial Reporting

There have been no changes in our internal controls over financial reporting that occurred during the year ended December 31, ~~2019~~2020 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

Item 9B. Other Information

None.

Table of Contents

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Name	Age	Positions
Tak Shing Eddie Wong	5657	Chairman of the Board of Directors, Chief Executive Officer and President
Sai Kit Leung	6364	Chief Financial Officer and Secretary
Shaowei Deng	31	Director
Chi Kin Loo	52	Director
Ka Yi Poon	28	Director

Mr. Wong, 5657, has held numerous senior management positions with various Asian companies in different industries. He is currently the chief executive officer of Peak Strategy Management Co., Ltd., a Hong Kong company providing business general consultancy services. Since March 2014, Mr. Wong has been the chief consultant of Conpak Management Group, a Hong Kong company providing corporate consultancy services, and is responsible for advising on its various projects and overall development. Mr. Wong is also the chief strategy officer of Sinostar Securities Limited, a Hong Kong company offering securities trading services, and is responsible for overseeing its overall business development. Mr. Wong previously served as the chief executive officer of He Zheng Yuan Agriculture Group Limited, a PRC company focusing on agricultural trades and provision of food and beverage, from June 2016 to February 2018 and Mondo Vantaggio Pte. Ltd., a Singaporean company operating luxury multi-brand stores, from October 2014 to June 2016. Between April 2016 and December 2016, he was the chief financial officer of Happy Animation (Shenzhen) Co., Ltd., a PRC company focusing on amination and education related development. Mr. Wong holds a certificate in Hotel Business Program offered by Cartas Bianchi College of Careers. He is also a member of China Academy of Management Science and a qualified Senior Financial Planner certified by the PRC.

39Mr. ~~Table~~Leung, 64, has been the chief financial officer of ~~Contents~~Arcus Mining Holdings Limited since November 2015. Prior to joining Arcus Mining Holdings Limited, Mr. Leung had over 35 years of experience in the banking industry. In August 1975, Mr. Leung joined Nanyang Commercial Bank as a clerk. From March 1991 to August 2015, he served as the head of treasury of Nanyang Commercial Bank, and was responsible for treasury duties including cash and liquidity management, banking facilities arrangement, advising management on the treasury position of the business, short-term and long-term liquidity, preparing cash flow forecasts and performing financial modelling. Mr. Leung holds a Master Degree of Science in Financial Engineering from the City University of Hong Kong.

~~Item~~Chi Kin Loo, 52, is the major shareholder prior to his appointment as a director of the Board on December 10, 2020. ~~Directors~~Prior to joining the Company, ~~Executive~~Mr. ~~Officers~~Loo has been working in the financial industry for over 15 years, specialized in wealth management and ~~Corporate~~insurance. ~~Governance~~Since ~~(continued)~~2011, Mr. Loo has been a regional manager of FTLife Insurance Company Limited, a wholly-owned subsidiary of NWS Holdings Limited. In 2014, Mr. Loo was awarded the Distinguished Manager Award by the Life Underwriters Association of Hong Kong Ltd. From 2011 to 2014, Mr. Loo served as a director of Universal Mining Group Holdings Ltd. Mr. Loo has been granted license Type 1, 7 and 8 by the Hong Kong Securities and Investment Institute. Mr. Loo graduated from Buddhist Sum Heung Lam Memorial College in 1985.

~~Mr.~~42 ~~Leung,~~Table ~~63, has been the chief financial officer~~ of Arcus Mining Holdings Limited since November 2015. Prior to joining Arcus Mining Holdings Limited, Mr. Leung had over 35 years of experience in the banking industry. In August 1975, Mr. Leung joined Nanyang Commercial Bank as a clerk. From March 1991 to August 2015, he served as the head of treasury of Nanyang Commercial Bank, and was responsible for treasury duties including cash and liquidity management, banking facilities arrangement, advising management on the treasury position of the business, short-term and long-term liquidity, preparing cash flow forecasts and performing financial modelling. Mr. Leung holds a Master Degree of Science in Financial Engineering from the City University of Hong Kong.Contents

Mr. Shaowei Deng, age 31, serves as an independent director. He has been working in the financial industry since 2013 and has ample experience in both Hong Kong and PRC. Mr. Deng deals in and advises on securities (Type 1 and Type 4 HKSFC license holder respectively), deals in futures contracts (Type 2 HKSFC license holder) and participates in asset management activity (Type 9 HKSFC license holder). Mr. Deng was an investment manager of Hongta Security Company, a PRC company providing financial consultancy services, from July 2013 to August 2014 and was responsible for assisting in IPO projects. From August 2014 to May 2015, he served as the director of Dongguan Yuefang Trading Company, a PRC company specializing in tea trading, and was responsible for business development, financial management and product development. Mr. Deng has been the chairman of Dongguan Four Eyes Asset Management Limited, a PRC company providing professional wealth management consultancy services, since June 2015. He was responsible for advising high-net-worth clients on asset allocation and investment, as well as designing private equity products. Between December 2017 and June 2018, Mr. Deng was the representative of Orient Securities (Hong Kong) Limited, a Hong Kong company offering securities trading services, and was responsible for handling securities and futures contracts. Mr. Deng has been serving as an executive director of Deyu Family Office, a Hong Kong company providing family office services, since April 2017. He is responsible for building and maintaining relationship with the high-net-worth individual and corporate clients and overseeing its overall business development. He has been a senior manager of Aspenwood Capital Limited, a Hong Kong company offering securities trading services and asset management services, and is responsible for advising on securities trading and asset management. Mr. Deng holds a Master Degree of Science in Real Estate Investment and a Bachelor Degree of Art in Accounting and Finance from Cass Business School in London and Lancaster University in the UK respectively.Relationships

~~Miss~~No Kafamily Yirelationships ~~Poon,~~exist ~~age~~among ~~28,~~our ~~joined Arcus Mining Holdings Limited in January 2018 and serves as a non-independent director. Prior to joining Arcus Mining Holdings Limited~~directors, ~~she~~executive ~~was a business development officer of Conpak CPA Limited~~officers, aor ~~Hong~~persons ~~Kong~~nominated ~~company~~or ~~specializing~~chosen inby ~~providing~~us ~~audit and assurance services, and was responsible for business development from September 2014~~ to ~~September~~become ~~2017.~~directors ~~Miss~~or ~~Poon~~executive ~~holds a Bachelor Degree of Art in Business Administration (Hons) from Hong Kong Shue Yan University~~officers.

~~Family~~All ~~Relationships~~directors hold office until the next annual stockholders’ meeting or until their death, resignation, retirement, removal, disqualification, or until their successors have been elected and are qualified. Our officers serve at the will of the Board of Directors.

NoInvolvement ~~family~~in ~~relationships~~Certain ~~exist~~Legal ~~among our directors, executive officers, or persons nominated or chosen by us to become directors or executive officers.~~Proceedings

~~All~~To the best of our knowledge, none of our directors ~~hold~~or ~~office~~executive ~~until~~officers ~~the~~have ~~next~~been ~~annual~~convicted ~~stockholders’~~in ~~meeting~~a criminal proceeding, excluding traffic violations or ~~until~~similar ~~their~~misdemeanors, ~~death~~or has been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, ~~resignation~~decree or final order enjoining the person from future violations of, ~~retirement~~or prohibiting activities subject to, ~~removal~~federal or state securities laws, ~~disqualification~~or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or ~~until~~settlement. ~~their~~Except ~~successors~~as ~~have~~set ~~been~~forth ~~elected~~in our discussion below in “Certain Relationships and ~~are~~Related ~~qualified.~~Transactions,” ~~Our~~none of our directors, director nominees or executive officers ~~serve~~has atbeen ~~the~~involved ~~will~~in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the ~~Board~~rules and regulations of ~~Directors~~the SEC.

~~Involvement~~Other ~~in Certain Legal Proceedings~~Directorships

ToOur ~~the best of our knowledge, none of our~~ directors ordo ~~executive~~not ~~officers~~hold ~~have~~any ~~been~~other ~~convicted~~directorships in aany ~~criminal~~company ~~proceeding,~~with ~~excluding~~a ~~traffic~~class ~~violations~~of orsecurities ~~similar~~registered ~~misdemeanors,~~pursuant ~~or has been a party~~ to ~~any~~Section ~~judicial~~12 orof ~~administrative proceeding during~~ the ~~past~~Exchange ~~five~~Act ~~years that resulted in a judgment, decree~~ or ~~final order enjoining the person from future violations of, or prohibiting activities~~ subject to, ~~federal~~the orrequirements ~~state securities laws, or a finding~~ of ~~any~~section ~~violation~~15(d) of ~~federal~~such orAct ~~state securities laws, except for matters that were dismissed without sanction~~ or ~~settlement. Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors, director nominees or executive officers has been involved in~~ any ~~transactions~~company ~~with~~registered usas oran ~~any~~investment ofcompany ~~our~~under ~~directors, executive officers, affiliates or associates which are required to be disclosed pursuant to~~ the ~~rules~~Investment ~~and~~Company ~~regulations~~Act of ~~the SEC~~1940.

~~Other~~Board ~~Directorships~~of Directors and Director Nominees

~~Our~~The Board will consider candidates for directors doproposed ~~not~~by ~~hold~~security ~~any~~holders, ~~other~~although ~~directorships~~no informal procedures for submitting candidates have been adopted. Unless otherwise determined, at any ~~company~~time ~~with~~not less than ninety (90) days prior to the next annual Board meeting at which a ~~class~~slate of ~~securities~~director ~~registered~~nominees ~~pursuant~~is toadopted, ~~Section~~the 12Board will accept written submissions from proposed nominees that include the name, address and telephone number of the ~~Exchange~~proposed ~~Act~~nominee; ora ~~subject~~brief statement of the nominee’s qualifications to serve as a director; and a statement as to why the ~~requirements~~security holder submitting the proposed nominee believes that the nomination would be in the best interests of ~~section~~our ~~15(d)~~security holders. If the proposed nominee is not the same person as the security holder submitting the name of ~~such~~the ~~Act~~nominee, a letter from the nominee agreeing to the submission of his or ~~any~~her ~~company~~name ~~registered~~for asconsideration anshould ~~investment~~be ~~company~~provided ~~under~~at the ~~Investment~~time ~~Company~~of ~~Act~~submission. The letter should be accompanied by a résumé supporting the nominee’s qualifications to serve on the Board, as well as a list of ~~1940~~references.

The Board identifies director nominees through a combination of ~~Directors~~referrals from different people, including management, existing Board members and ~~Director~~security ~~Nominees~~holders. Once a candidate has been identified, the Board reviews the individual’s experience and background and may discuss the proposed nominee with the source of the recommendation. If the Board believes it to be appropriate, Board members may meet with the proposed nominee before making a final determination whether to include the proposed nominee as a member of the slate of director nominees submitted to security holders for election to the Board.

~~The~~Some ~~Board~~of will consider candidates for directors proposed by security holders, although no formal procedures for submitting candidates have been adopted. Unless otherwise determined, at any time not less than ninety (90) days prior to the ~~next~~factors ~~annual Board meeting at~~ which ~~a slate of director nominees is adopted,~~ the Board ~~will~~considers ~~accept~~when ~~written~~evaluating ~~submissions from~~ proposed nominees ~~that~~ include ~~the~~their ~~name,~~knowledge ~~address~~of and ~~telephone~~experience ~~number~~in ofbusiness ~~the~~matters, ~~proposed~~finance, ~~nominee;~~capital amarkets ~~brief~~and ~~statement~~mergers ~~of the nominee’s qualifications to serve as a director;~~ and ~~a statement as to why the security holder submitting the proposed nominee believes that the nomination would be in the best interests of our security holders~~acquisitions. IfThe ~~the~~Board ~~proposed~~may ~~nominee~~request isadditional ~~not~~information ~~the~~from ~~same~~each ~~person~~candidate asprior ~~the~~to ~~security~~reaching ~~holder~~a ~~submitting the name of the nominee~~determination, aand ~~letter~~it ~~from~~is ~~the~~under ~~nominee~~no ~~agreeing~~obligation to ~~the~~formally ~~submission~~respond ofto ~~his~~all orrecommendations, ~~her~~although ~~name~~as ~~for~~a ~~consideration~~matter ~~should be provided at the time~~ of ~~submission.~~practice, ~~The~~it ~~letter~~will ~~should~~endeavor ~~be accompanied by a résumé supporting the nominee’s qualifications~~ to ~~serve~~do ~~on the Board, as well as a list of references~~so.

~~The~~43 ~~Board~~Table ~~identifies director nominees through a combination~~ of referrals from different people, including management, existing Board members and security holders. Once a candidate has been identified, the Board reviews the individual’s experience and background and may discuss the proposed nominee with the source of the recommendation. If the Board believes it to be appropriate, Board members may meet with the proposed nominee before making a final determination whether to include the proposed nominee as a member of the slate of director nominees submitted to security holders for election to the Board.Contents

~~Some of the factors which the~~ Board ~~considers when evaluating proposed nominees include their knowledge of~~ and ~~experience~~Committee inMeetings business matters, finance, capital markets and mergers and acquisitions. The Board may request additional information from each candidate prior to reaching a determination, and it is under no obligation to formally respond to all recommendations, although as a matter of practice, it will endeavor to do so.

40Our ~~Table~~Board of ~~Contents~~Directors held no in person meetings during the year ended December 31, 2020. All proceedings of the Board of Directors were conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the Nevada General Corporate Law and our Bylaws, as valid and effective as if they had been passed at a meeting of the directors duly called and held.

~~Board~~For ~~and~~the ~~Committee~~year ~~Meetings~~ended December 31, 2020, there was no standing nominating committee or committee performing similar functions for our company. Mr. Wong participates in the consideration of director nominees.

~~Our~~Conflicts ~~Board~~ of Directors held no in person meetings during the year ended December 31, 2019. All proceedings of the Board of Directors were conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the Nevada General Corporate Law and our Bylaws, as valid and effective as if they had been passed at a meeting of the directors duly called and held. Interest

~~For~~Our ~~the~~directors ~~year~~are ~~ended~~not ~~December~~obligated 31to commit their full time and attention to our business and, ~~2019~~accordingly, ~~there~~they ~~was~~may noencounter ~~standing~~a ~~nominating~~conflict ~~committee~~of orinterest ~~committee~~in ~~performing~~allocating ~~similar~~their ~~functions~~time ~~for~~between our ~~company~~operations and those of other businesses. MrIn the course of their other business activities, they may become aware of investment and business opportunities which may be appropriate for presentation to us as well as other entities to which they owe a fiduciary duty. ~~Wong~~As ~~participates~~a inresult, ~~the~~they ~~consideration~~may have conflicts of ~~director~~interest ~~nominees~~in determining to which entity a particular business opportunity should be presented. They may also in the future become affiliated with entities, engaged in business activities similar to those we intend to conduct.

~~Conflicts~~In general, officers and directors of ~~Interest~~a corporation are required to present business opportunities to a corporation if:

~~Our~~· ~~directors~~the ~~are~~corporation ~~not~~could ~~obligated~~financially toundertake ~~commit~~the ~~their~~opportunity; ~~full~~· ~~time~~the ~~and~~opportunity ~~attention~~is towithin ~~our~~the ~~business~~corporation’s ~~and,~~line ~~accordingly, they may encounter a conflict~~ of ~~interest in allocating their time between our operations and those of other businesses. In the course of their other~~ business; ~~activities, they may become aware of investment~~ and ~~business~~· ~~opportunities~~it ~~which~~would ~~may~~ be ~~appropriate~~unfair ~~for presentation~~ to usthe ascorporation ~~well~~and asits ~~other~~stockholders ~~entities~~not to ~~which~~bring ~~they~~the ~~owe~~opportunity ato ~~fiduciary~~the ~~duty.~~attention ~~As a result, they may have conflicts~~ of ~~interest in determining to which entity a particular business opportunity should be presented. They may also in~~ the ~~future become affiliated with entities, engaged in business activities similar to those we intend to conduct~~corporation.

InWe ~~general~~plan to adopt a code of ethics that obligates our directors, officers and ~~directors~~employees to disclose potential conflicts of ainterest ~~corporation~~and ~~are~~prohibits ~~required~~those topersons ~~present~~from ~~business~~engaging ~~opportunities~~in tosuch atransactions ~~corporation~~without ~~if:~~our consent.

·Code ~~the corporation could financially undertake the opportunity; · the opportunity is within the corporation’s line~~ of ~~business; and · it would be unfair to the corporation and its stockholders not to bring the opportunity to the attention of the corporation.~~Ethics

We ~~plan~~have tonot ~~adopt~~adopted a code of ethics that ~~obligates~~applies to our ~~directors~~officers, ~~officers~~directors and employees. toWhen ~~disclose~~we ~~potential~~do ~~conflicts~~adopt ofa ~~interest~~code ~~and~~of ~~prohibits~~ethics, ~~those~~we ~~persons~~will ~~from~~disclose ~~engaging~~it in ~~such~~a ~~transactions~~Current ~~without~~Report ~~our~~on ~~consent~~Form 8-K.

~~Code~~Audit ofCommittee ~~Ethics~~

We ~~have~~do not ~~adopted~~currently ahave ~~code~~an ofaudit ~~ethics~~committee ~~that~~or ~~applies~~a tocommittee ~~our~~performing ~~officers,~~similar ~~directors and employees~~functions. ~~When~~The weBoard ~~do adopt a code~~ of ~~ethics,~~Directors weas ~~will~~a ~~disclose~~whole itparticipates in athe ~~Current~~review ~~Report~~of onfinancial ~~Form~~statements ~~8-K~~and disclosure.

~~Audit~~Section ~~Committee~~16(a) of the Securities Exchange Act of 1934

WeBased dosolely ~~not~~on ~~currently~~review ~~have~~of anthe ~~audit~~copies ~~committee~~of orsuch aforms ~~committee~~furnished ~~performing~~to ~~similar~~the ~~functions.~~Company, ~~The~~or ~~Board~~written ofrepresentations ~~Directors~~that asno areports ~~whole~~were ~~participates~~required, inthe Company believes that for the ~~review~~year ofended ~~financial~~December ~~statements~~31, 2020, our directors and ~~disclosure~~executive officers complied with Section 16(a) filing requirements applicable to them.

~~Section~~44 ~~16(a)~~Table of ~~the Securities Exchange Act of 1934~~Contents

Based solely on review of the copies of such forms furnished to the Company, or written representations that no reports were required, the Company believes that for the year ended December 31, 2019, our directors and executive officers complied with Section 16(a) filing requirements applicable to them.

Item 11. Executive Compensation

Executive Officer Compensation

Set forth below is information regarding the compensation paid during the years ended December 31, ~~2018~~2019 and ~~2019~~2020 to our principal executive officer and principal financial officer, who are collectively referred to as “named executive officers” elsewhere in this Annual Report.

Name and Principal Compensation	Year		Salary ($)		~~Salary ($)~~
Tak Shing Eddie Wong	2020	~~2019~~		122,994		~~121,777~~
Chairman of the Board of Directors, Chief Executive Officer and President	2019	~~2018~~		121,777		~~45,265~~
Sai Kit Leung	2020	~~2019~~	Nil		~~Nil~~
Chief Financial Officer and Secretary	2019	~~2018~~	Nil		~~Nil~~

41 Table of Contents

Employment Agreements

There are no employment contracts, compensatory plans or arrangements, including payments to be received from our Company with respect to any executive officer, that would result in payments to such person because of his or her resignation, retirement or other termination of employment with our Company, or its subsidiaries, any change in control, or a change in the person’s responsibilities following a change in control of our Company.

Options Grants During the Last Fiscal Year / Stock Option Plans

We do not currently have a stock option plan in favor of any director, officer, consultant or employee of our company. No individual grants of stock options, whether or not in tandem with stock appreciation rights known as SARs or freestanding SARs have been made to any executive officer or director during the last fiscal year; accordingly, no stock options have been granted or exercised by any of the officers or directors during our last fiscal year.

Aggregated Options Exercises in Last Fiscal Year

No individual grants of stock options, whether or not in tandem with stock appreciation rights known as SARs or freestanding SARs have been made to any executive officer or any director during our last fiscal year; accordingly, no stock options have been granted or exercised by any of the officers or directors since during our last fiscal year.

Long-Term Incentive Plans and Awards

We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance. No individual grants or agreements regarding future payouts under non-stock price-based plans have been made to any executive officer or any director or any employee or consultant since our inception; accordingly, no future payouts under non-stock price-based plans or agreements have been granted or entered into or exercised by any of the officers or directors or employees or consultants since we were founded.

Outstanding Equity Awards at Fiscal Year End

No equity awards were outstanding as of the year ended December 31, ~~2019~~2020.

Table of Contents

Director Compensation

Our directors are reimbursed for expenses incurred by them in connection with attending Board of Directors’ meetings. During the years ended December 31, ~~2018~~2019 and ~~2019~~2020, salary amounting $45121,~~265~~777 and $~~121~~122,~~777~~994 was paid to director, Tak Shing Eddie Wong, respectively. During the ~~year~~years ended December 31, 2019 and 2020, salary amounting $22,517 and $24,827 was paid to director, Ka Yi Poon, respectively. No compensation was paid to the other ~~director~~directors.

Name and Principal Compensation	Year	Salary ($)
Ka Yi Poon	2019		22,517
	2018	Nil
Shaowei Deng	2019	Nil
	2018	Nil

On September 22, 2020, two directors, Mr. Shaowei DENG and Miss Ka Yi POON, resigned from the Company for personal reasons.

Name and Principal Compensation	Year	Salary ($)

Chi Kin Loo	2020	Nil
	2019	Nil

Pension, Retirement or Similar Benefit Plans

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the ~~board~~Board of ~~directors~~Directors or a committee thereof.

Long-Term Incentive Plan Awards

We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.

Indebtedness of Directors, Senior Officers, Executive Officers and Other Management

None of our directors or executive officers or any associate or affiliate of our company during the last two fiscal years, is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.

42Item ~~Table~~12. Security Ownership of ~~Contents~~Certain Beneficial Owners and Management and Related Stockholder Matters

On March 2019, ~~2020~~2021, we had 14,~~858~~962,~~328~~298 shares of common stock and 66,000 warrants issued and outstanding. The following table sets forth certain information with respect to the beneficial ownership of our securities as of March 2019, ~~2020~~2021, for (i) each of our directors and executive officers; (ii) all of our directors and executive officers as a group; and (iii) each person who we know beneficially owns more than 5% of our common stock.

Beneficial ownership data in the table has been calculated based on Commission rules that require us to identify all securities that are exercisable or convertible into shares of our common stock within 60 days of March 2019, ~~2020~~2021 and treat the underlying stock as outstanding for the purpose of computing the percentage of ownership of the holder.

~~Except~~46 asTable ~~indicated below, the stockholders listed possess sole voting and investment power with respect to their shares. Unless otherwise noted, the principal address~~ of ~~each of the stockholders, directors and officers listed below is at Suite 1023, 10/F., Ocean Centre, 5 Canton Rd., Tsim Sha Tsui, Kowloon, Hong Kong.~~ Contents

Name of Beneficial Owner	Number of Shares of Common Stock Beneficially Owned		Percent of Class
5% Holders
Chi Kin Loo		7,252,194		48.81	%
Talent World Group Limited (1)		7,252,194		48.81	%
New Precision Global Limited (1)		7,252,194		48.81	%
Kwong Bun Mak		1,570,830		10.57	%
Brilliant New Ventures Limited (2)		1,570,830		10.57	%
Xianqin Pan		1,676,208		11.28	%
Empire Glory International Limited (3)		1,676,208		11.28	%
Tak Leung Ho		1,570,830		10.57	%
Virtue Success Global Limited (4)		1,570,830		10.57	%
Linfa Sun		1,156,344		7.78	%
Go Achiever International Limited (5)		1,156,344		7.78	%
Directors and Officers:
Tak Shing Eddie Wong		281,007		1.89	%
Sai Kit Leung		190,010		1.28	%
Ka Yi Poon		5,848		0.04	%
Directors and officers as a group (3 Individuals) (6)		476,865		3.21	%

Except as indicated below, the stockholders listed possess sole voting and investment power with respect to their shares. Unless otherwise noted, the principal address of each of the stockholders, directors and officers listed below is at Room 20, 8/F., Woon Lee Commercial Building, 7-9 Austin Ave., Tsim Sha Tsui, Kowloon, Hong Kong.

_________

Name of Beneficial Owner	Number of Shares of Common Stock Beneficially Owned		Percent of Class

5% Holders
Kwong Bun Mak		1,603,375		10.72	%
Brilliant New Ventures Limited (2)		1,603,375		10.72	%
Xianqin Pan		1,676,208		11.20	%
Empire Glory International Limited (3)		1,676,208		11.20	%
Tak Leung Ho		1,610,507		10.76	%
Virtue Success Global Limited (4)		1,610,507		10.76	%
Linfa Sun		1,156,344		7.73	%
Go Achiever International Limited (5)		1,156,344		7.73	%

Directors and Officers:
Tak Shing Eddie Wong		281,007		1.88	%
Sai Kit Leung		190,010		1.27	%
Chi Kin Loo		5,860,161		39.17	%
Talent World Group Limited (1)		5,860,161		39.17	%
New Precision Global Limited (1)		5,860,161		39.17	%

Directors and officers as a group (3 Individuals) (6)		6,331,178		42.32	%

(1)	Talent World Group Limited and New Precision Global Limited are controlled by Chi Kin Loo.
(2)	Brilliant New Ventures Limited is controlled by Kwong Bun Mak.
(3)	Empire Glory International Limited is controlled by Xianqin Pan.
(4)	Virtue Success Global Limited is controlled by Tak Leung Ho.
(5)	Go Achiever International Limited is controlled by Linfa Sun.
(6)	Represents common stock held by Tak Shing Eddie Wong, Sai Kit Leung and Ka Yi Poon.

_________

Changes in Control

(1)	Talent World Group Limited and New Precision Global Limited are controlled by Chi Kin Loo.
(2)	Brilliant New Ventures Limited is controlled by Kwong Bun Mak.
(3)	Empire Glory International Limited is controlled by Xianqin Pan.
(4)	Virtue Success Global Limited is controlled by Tak Leung Ho.
(5)	Go Achiever International Limited is controlled by Linfa Sun.
(6)	Represents common stock held by Tak Shing Eddie Wong, Sai Kit Leung and Chi Kin Loo.

~~There~~Changes ~~are no arrangements known to us, including any pledge by any person of our securities, the operation of which may at a subsequent date result~~ in ~~a change in control of the Company.~~Control

43There ~~Table~~are no arrangements known to us, including any pledge by any person of ~~Contents~~our securities, the operation of which may at a subsequent date result in a change in control of the Company.

As of December 31, ~~2019~~2020 and ~~December 31~~2019, ~~2018,~~loan ~~loans~~ from a related ~~persons~~person included a HK$3 million (equivalent to US$~~385~~386,~~158)~~916 and HK$~~4 million (equivalent to US$510~~385,~~830)~~158 respectively) ~~loan~~ borrowed from the wife of one of the Company’s stockholders on May 21, 2018. The loan is unsecured, has no collateral or guarantee and carries interest at a monthly rate of 3.08% for the first month and a monthly rate of 1.08% for the rest of the term. The loan originally was due to be repaid on May 20, 2019, however, on April 24, 2019, the repayment date was extended to May 20, 2020. ~~The~~On ~~Company~~April ~~repaid~~28, ~~HK$1~~2020, ~~million~~the ~~(equivalent~~repayment date was extended to ~~US$127~~May 20,~~648)~~ ~~loan~~2021, onand ~~April~~the ~~24,~~interest ~~2019~~changed to be at a monthly rate of 2.08% for the first month and a monthly rate of 1.08% for the rest of the term.

As47 ofTable ~~December 31, 2018, loans from related persons included a HK$1 million (equivalent to US$127,708) loan borrowed from the son~~ of ~~the CFO of TGS on October 6, 2016. The loan is unsecured, has no collateral or guarantee and carries interest at 8% per annum. The loan was fully repaid by issuing common stock of TGS on May 15, 2019.~~Contents

As of December 31, ~~2018~~2020, ~~loans~~amounts ~~from~~due ~~related~~to ~~persons~~stockholders, ~~included~~Kwong ~~HK$1~~Bun ~~million~~Mak, ~~(equivalent~~Xianqin toPan ~~US$127,708)~~and ~~loans~~Kwing ~~borrowed~~Chun ~~from~~Chu, ~~the~~were ~~sisters~~$376,246; ofwhile ~~one~~as of ~~the~~December ~~stockholders~~31, of2019, ~~TGS~~amounts ondue ~~October~~to 31stockholders, ~~2016.~~Chi ~~The~~Kin ~~loans are unsecured~~Loo, ~~have~~Kwong noBun ~~collateral~~Mak, orXianqin ~~guarantee~~Pan and ~~carry~~Tak ~~interest~~Leung atHo, 8%were ~~per annum~~$872,968. The ~~loans~~Company ~~were~~is ~~fully~~currently ~~repaid~~in bythe ~~issuing~~exploration ~~common~~stage, ~~stock~~and ofthe ~~TGS~~stockholders onadvanced ~~May 15~~$349,387 ~~2019~~working capital to meet the financing requirement in 2020.

AsOn ofApril ~~December~~20, 312020, ~~2019~~the ~~and~~Company ~~2018~~issued 25,641 ~~amounts~~common ~~due~~shares toat ~~stockholders,~~a ~~Chi~~price ~~Kin~~of ~~Loo,~~$4.00 ~~Kwong~~per ~~Bun~~share ~~Mak,~~to ~~Xianqin~~settle ~~Pan~~the ~~and~~amount ~~Tak~~due ~~Leung~~to ~~Ho,~~a ~~included~~stockholder of HK$~~872~~800,~~968~~000 ~~and~~(equivalent to $~~398~~102,~~208~~564). atOn ~~December~~September 3114, ~~2019 and December 31~~2020, ~~2018~~the ~~respectively. The~~ Company isissued ~~currently~~39,677 incommon ~~the~~shares ~~exploration~~at ~~stage,~~a ~~and~~price ~~the~~of ~~stockholders advanced~~ $~~517,329~~4.00 ~~working~~per ~~capital~~share to ~~meet~~settle the ~~financing~~amount ~~requirement~~due ~~for~~to ~~the~~a ~~year~~stockholder of ~~2019~~HK$1,237,941 (equivalent to $158,710). Amounts due to stockholders are unsecured, interest-free and there are no fixed terms for repayment. The stockholders have agreed not to demand ~~for~~ repayment within the next 12 months ~~for~~from the balance sheet date.

As of December 31, ~~2019~~2020 and ~~2018~~2019, amount due to a director, Tak Shing Eddie Wong, of HK$~~576~~604,~~000~~500 (equivalent to US$7377,~~950~~964) and HK$576,000 (equivalent to US$73,~~560~~950) respectively. The amount is unsecured, has no collateral or guarantee and is interest-free. The ~~amount~~amounts ~~was~~were fully ~~repaid~~settled on March 133, ~~2020 and February 14, 2019, respectively~~2021.

~~During~~As ~~the~~of ~~year~~December 31, ~~the~~2019, amount due to a director, Sai Kit Leung, ~~advanced~~of HK$1350,~~295~~855 (equivalent to $45,~~687~~045). During the year, he advanced HK$80,000 (equivalent to US$~~165~~10,~~392~~314) to the Company. On ~~September~~December 2921, ~~2019~~2020, the Company issued 3313,~~096~~809 common shares at a price of $34.6600 per share to settle the amount due to the director of HK$~~944~~430,~~832 (equivalent to US$121,133). As of December 31, 2019, there is an amount due to a director of HK$350,~~855 (equivalent to US$4555,~~045~~238). ~~This amount is unsecured, interest-free and there are no fixed terms for repayment. The director has agreed not to demand for repayment within 12 months of the balance sheet date.~~

On December 10, 2020, Mr. Chi Kin Loo was appointed as a director of the Company. As of December 31, 2020, there was an amount due to the director of HK$7,378,106 (equivalent to $951,569). During the year, he advanced HK$3,024,000 (equivalent to $389,868) to the Company. This amount is unsecured, interest-free and there are no fixed terms for repayment. The director has agreed not to demand repayment within 12 months of the balance sheet date.

Director Independence

We currently have ~~four~~three directors~~, one of which is independent~~. We do not have a standing audit, compensation or nominating committee, but our entire ~~board~~Board of ~~directors~~Directors’ acts in such capacities. We believe that our ~~board~~Board of ~~directors~~Directors is capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. The ~~board~~Board of ~~directors~~Directors of our company does not believe that it is necessary to have a standing audit, compensation or nominating committee because we believe that the functions of such committees can be adequately performed by the ~~board~~Board of ~~directors~~Directors. Additionally, we believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development.

Indemnification

Our Bylaws provide that we will indemnify our directors and officers to the fullest extent not prohibited by Nevada law.

The general effect of the foregoing is to indemnify a control person, officer or director from liability, thereby making us responsible for any expenses or damages incurred by such control person, officer or director in any action brought against them based on their conduct in such capacity, provided they did not engage in fraud or criminal activity.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or control persons pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Item 14. Principal Accountant Fees and Services

During the fiscal year ended December 31, 2018, the total fees billed by Moore Stephens CPA Limited for audit-related services was $148,063, for tax services was $0 and for all other services was $0.

During the fiscal year ended December 31, 2019, the total fees billed by Moore Stephens CPA Limited for audit-related services was $124,457, for tax services was $0 and for all other services was $0.

44During ~~Table~~the offiscal ~~Contents~~year ended December 31, 2020, the total fees billed by Moore Stephens CPA Limited for audit-related services was $89,500, for tax services was $0 and for all other services was $0.

Table of Contents

Part IV

Item 15. Exhibits and Financial Statement Schedules

Exhibit No.		Title of Document

2.1		Share Exchange Agreement, Dated September 14, 2018 (1)
3.1		Articles of Incorporation (2)
3.2		Bylaws (2)
10.1		Mining Licenses and English Translation (1)
21.1		List of Subsidiaries (1)
31.1*		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2*		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1*		Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
101*		XBRL Instance Document

___________

*	Filed herewith

(1) Incorporated herein by reference to the current report on Form 8-K filed on September 14, 2018.

(1)	Incorporated herein by reference to the current report on Form 8-K filed on September 14, 2018.
(2)	Incorporated by reference to our registration statement on Form S-1 filed on April 25, 2017.

(2) Incorporated by reference to our registration statement on Form S-1 filed on April 25, 2017.

Item 16. Form 10-K Summary

None.

4549 Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	TGS International Ltd.
Date: March 20, 2020	By:	/s/ Tak Shing Eddie Wong
Date: March 19, 2021	By:	/s/ Tak Shing Eddie Wong
		Tak Shing Eddie Wong
		President, Chief Executive Officer and Chairman of the Board of Directors
Date: March 20, 2020	By:	/s/ Sai Kit Leung
Date: March 19, 2021	By:	/s/ Sai Kit Leung
		Sai Kit Leung
		Chief Financial Officer and Secretary

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

Signature	Title	Date
/s/ Tak Shing Eddie Wong	President, Chief Executive Officer and Chairman of the Board of Directors	March 2019, ~~2020~~2021
Tak Shing Eddie Wong	(Principal Executive Officer)
/s/ Sai Kit Leung	Chief Financial Officer and Secretary	March 2019, ~~2020~~2021
Sai Kit Leung	(Principal Financial and Accounting Officer)
/s/ Shaowei Deng	Director	March 20, 2020
/s/ Chi Kin Loo	Director	March 19, 2021
Shaowei Deng
Chi Kin Loo
/s/ Ka Yi Poon	Director	March 20, 2020
Ka Yi Poon

4650

Filing Compare · TGS International Ltd.