This discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management's expectations. Factors that could cause such differences are discussed in "Special Note Regarding Forward-Looking Statements" and "Risk Factors."

Our forward-looking statements reflect our current views about future events, are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements.

Forward-looking statements include, but are not limited to, statements about:

· Substantial doubt as to our ability to continue as a going concern

· Changes in public and consumer tastes and preferences and industry trends could

reduce demand for our services and content offerings

· Our ability to maintain a professional reputation, adverse publicity concerning

us, one of our businesses, our clients or our key personnel

· Continued service of the members of our executive management and other key

employees

· Compliance with regulations may limit our operations and future acquisitions

· Reliance on technology, such as our information systems, to conduct our

business

· Failure to protect our technology against breakdowns and security breaches

could adversely affect our business

· Legislative, judicial, accounting, regulatory, political and economic risks and

conditions specific to international markets

· Inability to secure event venues or television stations to broadcast our shows

· Effects of the COVID-19 pandemic on our business, financial condition and

results of operations

· We may face disruptions of the systems and equipment utilized in our live


   events

We undertake no obligation to publicly update or revise any forward-looking statements, including any changes that might result from any facts, events, or circumstances after the date hereof that may bear upon forward-looking statements. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements.

The "Company", "we," "us," and "our," in this Management's Discussion and Analysis of Financial Condition and Plan of Operation refer to the combined business of (i) Rebel FC; (ii) Pure Heart; (iii) SCA Capital; (iv) Rebel Shanghai; and (v) Qingdao Quanyao.





Business Overview

The Company, through Rebel FC, organizes, promotes and hosts Mixed Martial Arts (MMA) events featuring top level athletic talent with assistance from contracted production crews. The Company also seeks to produce and distribute videos of its MMA events, through the internet, social media, and selling the rights to such videos to distribute to television stations. The Company seeks to promote MMA in China through hosting top quality matches, live TV broadcast and inspiring reality series that attract talented fighters from all over the world. MMA is unarmed combat involving the use of a combination of techniques from different disciplines of martial arts, including, without limitation, grappling, submission holds, kicking and striking. The styles of martial arts range from Brazilian Jiu-Jitsu, Judo, Karate, Boxing, Muay Thai, Wrestling, Jeet Kune Do, Taekwondo, Sanshou and various other forms of martial arts. Unlike boxing, where athletes can only strike with their fists and only above the belt, the fighters in MMA can use punches, kicks, elbows, knee strikes, takedowns and submissions to win a contest.

The Company has successfully hosted the most recent MMA event, Return of the Champion, on September 7, 2019 at Hongkou Indoor Stadium, Shanghai, China, with its online digital viewership of 21.75 million exceeding the average viewership of REBEL FC's two events in 2018 of 13 million (digital and broadcast viewership combined). In addition to the 21.75 million viewership from major online platforms such as Yizhibo, PP Sports, QiE Live, iQiyi, Gedoumi and Baidu Sports, the company also garnered a viewership of 3.7 million on TV stations such as Qinghai Satellite TV and Shenzhen TV 5 (Sports Health Channel). In all, Return of the Champion gathered 25.45 million viewership from both TV and digital platforms, an exponential increase from the average viewership of its two events in 2018.

On January 11, 2020, the Company successfully co-hosted Rebel FC X - The New Order with the First Southeast Asian MA promotion in Europe, at the Wings of Soviet Sports Hall near the iconic Red Square in Moscow, Russia.

The viewership of REBEL FC X - The New Order reached a grand total of 30.62 million, including 4.6 million on from Russia's Boxing TV and ACB TV and another 26.02 million from digital platforms such as China's Yizhibo Live, PP Sports, QiE Live, iQiyi and Weibo Combat. This is a noteworthy increase from the 25.45 million viewership amassed for REBEL FC 9 - Return of the Champion in China last year.

As of March 31, 2020, our accumulated deficit was $(21,019,573); our stockholders' deficit was $(3,705,275).





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Results of Operations

For the three months ended March 31, 2020 and March 31, 2019





Gross Revenues

The Company had revenues from operations of $326,313 in the three months ended March 31, 2020 compared to $nil in the three months ended March 31, 2019. The Company's revenue of $326,313 in the three months ended March 31, 2020 primarily came from sponsorship revenues generated by Quanyao for holding the event, Rebel FC X - The New Order with the First Southeast Asian MA promotion in Europe.

The Company's cost of revenue was $471,927 in the three months ended March 31, 2020, compared to $779 in the three months ended March 31, 2019. The cost of revenue mainly consisted of venue rental and related expenses, direct costs and fighter and official expenses.





Operating Expenses

Operating expenses for the three months ended March 31, 2020 and 2019 were $1,608,097 and $1,016,933, respectively. For the three months ended March 31, 2020, the operating expenses mainly consisted of payroll expenses of $152,208, legal and professional fees of $142,309, rental expenses of $19,679, depreciation and amortization expenses of $7,540, and expenses for professional services and compensations of $1,209,828. For the three months ended March 31, 2019, the operating expenses mainly consisted of payroll expenses of $274,880, legal and professional fees of $288,897, rental expenses of $29,568, depreciation and amortization expenses of $15,073, and expenses of new share issuance for services and compensations of $340,000. The increase in operating expenses was largely due to the increased expenses for professional services and compensations.





Net Loss

Net loss for the three months ended March 31, 2020 and 2019 were $1,818,081 and $6,873,673, respectively. Basic and diluted net loss per share for the three months ended March 31, 2020 and 2019 were $0.03 and $0.14, respectively.

The decrease of net loss for the three months ended March 31, 2020 compared to the three months ended March 31, 2019 was mainly due to the decreased of recognized loss from changes in fair value as a result of investment disposition.

Liquidity and Capital Resources

The Company's financial statements for the three months ended March 31, 2020 have been prepared on a going concern basis, which assumes that the Company will be able to meet its financial obligation, working capital and capital expenditures need as and when they fall due.

As of March 31, 2020, we had working capital deficiency of $3,826,271 as compared to working capital deficiency of $4,159,067 as of December 31, 2019.

Net cash used in operating activities for the three months ended March 31, 2020 was $540,642 as compared to $1,062,100 for the three months ended March 31, 2019. The decrease in net cash used in operating activities for the three months ended March 31, 2020 was primarily due to a decreased net loss generated in the period.

Net cash provided by financing activities for the three months ended March 31, 2020 was $574,062 as compared to $1,193,076 for the three months ended March 31, 2019. The cash provided by financing activities for the three months ended March 31, 2020 are mainly from issuing of common shares and advances from related parties.

As of March 31, 2020, our cash balance was $48,262 and our current liabilities exceed current assets by $3,826,271 which together with continued losses from operations raises substantial doubt about its ability to continue as a going concern. The Company's operating results for future periods are subject to uncertainties and it is uncertain if the management will be able to achieve profitability and continued growth for the foreseeable future. If the management is not able to increase revenue and manage operating expenses in line with revenue forecasts, the Company may not be able to achieve profitability.

Historically, the Company financed its operations through loans from investors and shareholders. The Company's actions to improve operation efficiency, cost reduction, and develop core cash-generating business include the following: seeking advances from the major shareholders, pursuing additional public and/or private issuance of securities, and looking for strategic business partners to optimize our operations.

We have considered whether there is substantial doubt about our ability to continue as a going concern due to (1) our recurring losses from operations, including approximately $1,818,081 net loss attributable to the our stockholders for the period ended March 31, 2020, (2) our accumulated deficit of approximately $21,019,573 as of March 31, 2020 and (3) the fact that we had negative operating cash flows of approximately $540,642 for the period ended March 31, 2020.

In evaluating if there is substantial doubt about our ability to continue as a going concern, we are trying to alleviate the going concern risk through (1) increasing cash generated from operations by controlling operating expenses and increasing more live events, (2) financing from domestic banks and other financial institutions, and (3) equity or debt financing. We have certain plans to mitigate these adverse conditions and to increase the liquidity of the Company.





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On an on-going basis, the Company also received and will continue to receive financial support commitments from the Company's related parties.

Our cash balance as of March 31, 2020 will not be sufficient to support our operations for the next 12 months after the date that the financial statements issued. We have several actions to implement as mentioned above. However, if we are unable to obtain the necessary additional capital on a timely basis and on acceptable terms, we will be unable to implement our current plans for expansion, repay debt obligations or respond to competitive market pressures, which will have negative influence upon our business, prospects, financial condition and results of operations.

The negative operating results of cash flow and working capital in the three months ended March 31, 2020 raise substantial doubt about our ability to continue as a going concern. Our continued operations are highly dependent upon our ability to increase revenues and if needed complete equity and/or debt financing.

We believe if we are unable to obtain our resources to fund operations, we may be required to delay, scale back or eliminate some or all of our planned operations, which may have a material adverse effect on our business, results of operations and ability to operate as a going concern.

Critical Accounting Policies and Estimates





Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at dates of the financial statements and the reported amounts of revenue and expenses during the periods. Actual results could differ from these estimates. Our significant estimates and assumptions include depreciation, allowance for trade receivables and prepayments, and the fair value of our stock, the discount rate for lease, stock-based compensation, debt discount and the valuation allowance relating to the Company's deferred tax assets/liabilities.

Recently Issued Accounting Pronouncements

Reference is made to the "Recent Accounting Pronouncements" in Note 2 to the unaudited condensed consolidated financial statements included in this Report for information related to new accounting pronouncement, none of which had a material impact on the company's unaudited condensed consolidated financial statements, and the future adoption of recently issued accounting pronouncements, which we do not expect will have a material impact on our consolidated financial statements.

Off-Balance Sheet Arrangements

As of March 31, 2020, we did not have any off-balance sheet arrangements.

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