FORTUNE VALLEY TREASURES, INC. Item 1.01 Entry into a Material Definitive Agreement.
The information contained in Item 2.01 below relating to the Original Agreement and Amendment described therein is incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
EQUITY INTEREST TRANSFER AGREEMENT
As previously disclosed on the Current Report on Form 8-K, on
Pursuant to the Original Agreement, QHDX agreed to purchase 90% of Xixingdao's
equity interest (the "Equity Transfer") from the Sellers in consideration of
shares of FVTI's common stock ("Issuable Shares"). The completion of the
registration of the Equity Transfer with local government authorities (the
"Closing") is subject to satisfaction of all the closing conditions (unless
waived), including, but not limited to, (a) completion of due diligence review
of Xixingdao to the satisfaction of QHDX, (b) completion of the initial draft of
the audited financial statements of Xixingdao for the fiscal year ended
According to the Original Agreement, the total number of Issuable Shares will be determined according to the following formula:
Number of Issuable Shares = A x 15 ÷ B ÷ C
For the purpose of the foregoing formula:
A = Audited net profit of Xixingdao during the period from
B = The average of the closing prices of FVTI's common stock for the 30 business days before the date the Issuable Shares are issued.
C = The central parity rate of Chinese Yuan against
Xixingdao and Sellers have agreed to achieve certain operation objectives of
Xixingdao, including a net profit of
To ensure the continuous operations of Xixingdao, the parties agreed that Xixingdao will retain their existing employees and will enter into non-competition and employment agreements with the management team of Xixingdao.
Pursuant to the Original Agreement, Xixingdao will establish a board of directors consisting of three individuals, two of which will be designated by QHDX and one by the Sellers, and appoint a person designated by the Sellers as general manager.
The parties further agreed that Xixingdao will not make any profit distribution within four years after the execution of the Original Agreement. In the event of a late payment of the consideration by QHDX or any delay in the registration of the Equity Transfer with local government caused by the Sellers, a daily penalty of 0.01% of the outstanding payment is assessed.
On
On
Number of Issuable Shares = X x 15 ÷ Y ÷ Z
For the purpose of the foregoing formula:
X =RMB 4 million
Y = The average of the closing prices of FVTI's common stock for the 30 business days before the date the Issuable Shares are issued.
Z = The central parity rate of Chinese Yuan against
In addition, parties have agreed that the Issuable Shares are to be held in an
escrow account and released within 30 days to the Sellers upon the satisfaction
of (a) a net profit of Xixingdao of
Number of Issuable Shares Subject to Repurchase = Total Number of Issuable
Shares x (1 - The Achieved Net Profit in RMB ÷
Parties have agreed to waive the operation objective of an increase in annual net profit of no less than 10% during its fiscal years between 2022 to 2025, which was contemplated in the Original Agreement.
On
DESCRIPTION OF BUSINESS
Overview
Xixingdao is a drinking water delivery company with an extensive city-wide
distribution network in
Xixingdao has a total of 13 full-time employees as of the date of this report. Its management team comprises of members with over 15 years of experience in delivery and logistics industries.
Xixingdao's headquarters are located in
Xixingdao has a registered trademark of "Shuiyijia," which is well recognized in
the
As the date of this report, Xixingdao is not a party to, and it is not aware of any threat of, any legal proceeding that, in the opinion of its management, is likely to have a material adverse effect on its business, financial condition or operations.
Regulations
Water delivery businesses are subject to the following laws and regulations:
Food Safety
According to the Food Safety Law of
According to the Food Safety Law and the Implementing Regulations of the Food
Safety Law, food safety standards are mandatory standards, other than food
safety standards, no food mandatory standard shall be formulated. The health
administrative department under the
The State encourages food producers to formulate corporate standards that are stricter than the national or local food safety standards. Such corporate standards apply to such producers and shall be reported to the health administrative department of the people's governments of provinces, autonomous regions and municipalities directly under the Central Government for filing. The health administrative departments of the people's governments at the provincial level or above shall promulgate on their respective websites the national and local food safety standards and corporate standards formulated and filed for inquiry and downloading by the public free of charge. . . .
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
The audited financial statements, including Balance Sheet as of
(b) Pro Forma Financial Information.
The unaudited Pro Forma Combined Financial Statements, including Balance Sheet and Statement of Operations and Comprehensive Loss, are filed as Exhibit 99.2 to this amendment.
The unaudited pro forma financial information is provided for informational purposes only and is not necessarily indicative of what the actual results of operations would have been had the transactions taken place on the assumed date; nor is it indicative of the future consolidated results of operations or financial position of the combined companies.
(d) Exhibits
The following exhibits are furnished herewith:
Exhibit Number Description
Audited Financial Statements of Xixingdao as of December 31 ,
99.1 2019
Reviewed Financial Statements of Xixingdao as of June 30 ,
99.2 2020
99.3 Unaudited Pro Forma Combined Financial Statements© Edgar Online, source
