KPEA 8-K/A
Kun Peng International Ltd. (KPEA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No.1
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 17, 2021
CX NETWORK GROUP, INC.
(Exact name of registrant as specified in its charter)
| Nevada | 333-169805 | 32-0538640 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
Room 1205, 1A Building, Shenzhen Software Industry Base, Xuefu Rd, Nanshan District, Shenzhen,
Guangdong Province, China, 518005
(Address of Principal Executive Offices)
Registrant’s telephone number: +86- 0755-26412816
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
EXPLANATORY NOTE
CX Network Group, Inc. (the “Company”) is furnishing this current report on Form 8-K/A (this “Amendment No. 1”) to provide more complete information relating to Items 1.01, 2.01, 3.02, 5.01, 5.02 concerning the Reverse Takeover described below. This Amendment No. 1 amends in its entirety the original filing.
TABLE OF CONTENTS
| Item No. | Description of Item | Page No. | ||
| Item 1.01 | Entry Into a Material Definitive Agreement | 3 | ||
| Item 2.01 | Completion of Acquisition or Disposition of Assets | 3 to 56 | ||
| Item 3.02 | Unregistered Sales of Equity Securities | 56 | ||
| Item 5.01 | Change in Control of Registrant | 56 | ||
| Item 5.02 | Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers | 56 | ||
| Item 9.01 | Financial Statements and Exhibits | 57 to 58 |
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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This report contains forward-looking statements. The forward-looking statements are contained principally in the sections entitled “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any historical results and future results, performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the factors described in the section captioned “Risk Factors” and the following factors:
| ● | Our independent registered auditors have expressed substantial doubt about our ability to continue as a going concern. | |
| ● | We may continue to incur losses in the future, and may not be able to return to profitability, which may cause the market price of our shares to decline. | |
| ● | Our business plan is based on a relatively new model that may not be successful and we may not successfully implement our business strategies. |
In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report and the documents that we reference and filed as exhibits to the report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.
USE OF CERTAIN DEFINED TERMS
In addition, unless the context otherwise requires and for the purposes of this report only, references to:
| ● | “we,” “us,” “our,” “CXN,” or “our company,” are to the combined business of CX Network Group, Inc, a Nevada corporation, and its subsidiaries and other consolidated entities; | |
| ● | “KP International” are to Kun Peng International Holding Limited, a British Virgins Island company and wholly-owned subsidiary of CX Network Group, Inc.; | |
| ● | “KP Industrial” are to Kunpeng (China) Industrial Development Company Limited, a Hong Kong company and wholly-owned subsidiary of KP International; | |
| ● | “King Eagle (China)” are to King Eagle (China) Co., Ltd., a PRC company and a subsidiary of KP Industrial and Guoxin Zhengye Enterprise Management Co., Ltd.; | |
| ● | “Guoxin Zhengye” are to Guoxin Zhengye Enterprise Management Co., Ltd., a PRC company and a 8% shareholder of King Eagle China; | |
| ● | “King Eagle (Tianjin)” are to King Eagle (Tianjin) Technology Co., Ltd., a PRC company and a variable interest entity; | |
| ● | “Hong Kong” refers to the Hong Kong Special Administrative Region of the People’s Republic of China; | |
| ● | “China” and “PRC” refer to the People’s Republic of China; | |
| ● | “Renminbi” and “RMB” refer to the legal currency of China; |
| ● | “U.S. dollars,” “dollars” and “$” refer to the legal currency of the United States; | |
| ● | “SEC” are to the U.S. Securities and Exchange Commission; | |
| ● | “Exchange Act” are to the Securities Exchange Act of 1934, as amended; and | |
| ● | “Securities Act” are to the Securities Act of 1933, as amended. |
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MARKET DATA AND FORECAST
Unless otherwise indicated, information in this current report on Form 8-K concerning economic conditions and our industry is based on information from independent industry analysts and publications, as well as our estimates. Except where otherwise noted, our estimates are derived from publicly available information released by third-party sources, as well as data from our internal research, and are based on such data and knowledge of our industry, which we believe to be reasonable. None of the independent industry publications used in this report was prepared on our or our affiliates’ behalf. We acknowledge our responsibility for all disclosures in this report, but caution readers that we have not independently verified the underlying information in such publications and reports.
This report also contains data related to the elderly care industry. These market data include estimates and projections that are based on a number of assumptions. If any one or more of the assumptions underlying the market data turn out to be incorrect, actual results may differ significantly from the projections.
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Item 1.01. Entry into a Material Definitive Agreement
The information contained in Item 2.01 below relating to the various agreements described therein is incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets
The Share Exchange with Kun Peng International Holding Limited
On May 17, 2021, we entered into a share exchange agreement (“Share Exchange Agreement”) with (i) Kun Peng International Holding Limited (“KP International”), a limited liability company incorporated in British Virgin Islands on April 20, 2021, and (ii) the five members of KP International to acquire all the issued and outstanding capital stock of KP International in exchange for the issuance to those members of an aggregate of 34,158,391 shares of our common stock (“Reverse Acquisition”). Pursuant to the terms of the Exchange Agreement, and as a condition to the completion of the transactions contemplated by the Share Exchange Agreement, the Company also agreed to enter into an agreement with Wenhai Xia (“the Stockholder”), to cancel an aggregate of 15,973,430 shares of the Company’s Common Stock owned by the Stockholder. The Reverse Acquisition was closed on May 17, 2021.
None of the KP International’s Stockholders is a U.S. Person (as that term is defined in Regulation S of the Securities Act of 1933) and KP International acquired our shares in the Reverse Merger outside of the United States.
In issuing these securities to KP International’s Stockholders, we relied upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) provided by Section 4(a)(2) of the Securities Act, which exempts transactions by an issuer not involving any public offering, and/or Regulation S promulgated by the U.S. Securities and Exchange Commission (the “SEC”). Among other things, the offer or sale was made in an offshore transaction and no directed selling efforts were made in the United States by the issuer, a distributor, any of their respective affiliates, or any person acting on behalf of any of the foregoing. In addition, each of the recipients of the shares certified that he/she/it is not a U.S. person and is not acquiring the securities for the account or benefit of any U.S. person and agreed to resell such securities only in accordance with the provisions of Regulation S, pursuant to registration under the Act, or pursuant to an available exemption from registration; and agreed not to engage in hedging transactions with regard to such securities unless in compliance with the Act.
Accounting Treatment; Change of Control
Pursuant to the “Reverse Acquisition,” and KP International is deemed to be the acquirer. Consequently, the assets and liabilities and the historical operations that will be reflected in the financial statements prior to the Business Combination will be those of KP International and its consolidated subsidiaries and will be recorded at the historical cost basis of KP International, and the consolidated financial statements after consummation of the Business Combination will include the assets and liabilities of KP International and its subsidiaries and VIE, historical operations of KP International and its subsidiaries and VIE, and operations of CX Network Group, Inc. from the Closing Date of the Reverse Acquisition.
Pursuant to the Business Combination, a change of control of CX Network Group, Inc. occurred as of the Closing Date. Except as described in this Report, no arrangements or understandings exist among present or former controlling shareholders with respect to the election of members of our Board and, to our knowledge, no other arrangements exist that might result in a change of control of the CX Network Group, Inc.
We continue to be a “smaller reporting company,” as defined under the Exchange Act, following the Reverse Acquisition.
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DESCRIPTION OF BUSINESS
Corporate History and Structure
CX Network Group, Inc.
We were initially incorporated in Nevada on July 25, 2005. On March 20, 2018, CX Network Group, Inc., a Nevada corporation, (previously known as “mLight Tech Inc.” or “MLGT”, a Florida corporation) (“CXKJ” or the “Company”), Chuangxiang Holdings Inc., a company organized under the laws of the Cayman Islands (“CX Cayman”), and Continent Investment Management Limited, a British Virgin Islands company (“Continent”), and Golden Fish Capital Investment Limited, a British Virgin Islands company (“Golden Fish”, together with “Continent”, the “CX Cayman Stockholders”) entered into a share exchange agreement (the “Share Exchange Agreement”), pursuant to which CXKJ acquired 100% of the issued and outstanding equity securities of CX Cayman in exchange for 5,350,000 shares of common stock, par value $0.0001 per share (the “Common Stock”) of CXKJ (the “Share Exchange”). As a result of the Share Exchange, CX Cayman became the Company’s wholly-owned subsidiary.
Immediately prior to entering into the Share Exchange Agreement with CX Cayman stockholders of CX Cayman, we were a shell company with no significant asset or operation. As a result of the Share Exchange, we operate through our PRC affiliated entity, namely Chuangxiang Network Technology (Shenzhen) Limited, located in Shenzhen, China. CX Cayman does not have any substantive operations other than holding CX HK, which in return holding CX Network, who controls Shenzhen CX through certain contractual arrangements.
Preceding our business combination with KP International, our business focused on development and operation of online dating and mobile gaming products either developed and operated by us, or developed by us but co-operated by third parties; or developed by third parties but co-operated by us.
On March 30, 2021, certain record of our shareholders (the “Sellers”), and certain investor (the “Purchaser”) entered into a Stock Purchase Agreement (the “SPA”), pursuant to which the Purchasers will acquire 16,683,334 shares of common stock, par value $0.0001 per share (the “Shares”), for an aggregate purchase price of $255,000, subject to satisfaction or waiver of the closing conditions set forth in the SPA
In connection with the SPA, on the same day, we entered into a spin-off agreement (the “Spin-Off Agreement”) with Chuangxiang Holdings Inc., a Cayman Islands corporation (“Spin-Off Subsidiary”), and Continent Investment Management Limited and Golden Fish Capital Investment Limited, (“Spin-Off Subsidiary buyers”). Pursuant to the Spin-Off Agreement, Spin-Off Subsidiary buyers will receive all of the issued and outstanding capital stock of Spin-Off Subsidiary at a purchase price of $1 at the closing. As a result, Spin-Off Subsidiary buyers will become the sole equity owner of Spin-Off Subsidiary and the Company will have no further interest in Spin-Off Subsidiary.
On May 17, 2021, we entered into the Share Cancellation Agreement with a stockholder, Wenhai Xia, to cancel an aggregate of 15,973,430 shares of the Company’s Common Stock owned by the Stockholder.
On May 17, 2021, we entered into the Share Exchange Agreement with KP International and holders of all outstanding capital stock of KP International, we acquired 100% of the outstanding capital stock of KP International, and in exchange, we issued to five former shareholders of KP International an aggregate of 34,158,391 shares of the Company’s common stock. As a result of the reverse acquisition closed on May 17, 2021, KP International became our wholly-owned subsidiary and the former shareholders of KP International became the holders of approximately 85% of our issued and outstanding capital stock on a fully diluted basis. For accounting purpose, the transaction with KP International was treated as a reserve acquisition, with KP International as the acquirer and CX Network as the acquired party. Unless the context suggests otherwise, when we refer in this report to business and financial information for periods prior to the consummation of the Reverse Acquisition, we are referring to the business and financial information of KP International and its subsidiaries and consolidated entities. As a result of the reverse acquisition, CX Network is engaged in the sale of health care and household products through its online platform in the PRC.
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Kun Peng International Holding Limited
Kun Peng International Holding Limited (“KP International”) was incorporated in the British Virgin Islands on April 20, 2021. KP International is a holding company and entered into a Bought and Sold Note with Kunpeng (China) Industrial Development Company Limited (“KP Industrial”), incorporated in Hong Kong on August 11, 2017, at a cash consideration of $0.129 (HK$1) on May 3, 2021. After the ownership transfer, it became a sole shareholder of KP Industrial.
On May 17, 2021, it entered into the Share Exchange Agreement with CX Network Group, Inc. and the members of KP International to acquire all the issued and outstanding capital of KP International in exchange for the issuance of CX Network Group Inc. to those members (“Reverse Acquisition”). After the Reverse Acquisition, KP International became a wholly-owned subsidiary of CX Network on May 17, 2021.
Kunpeng (China) Industrial Development Company Limited
Kunpeng (China) Industrial Development Company Limited (“KP Industrial”) was incorporated as a limited liability company in Hong Kong under the name of Jing Jin Ji Investment Group Co., Limited (“Jing Jin Ji”) on August 11, 2017. The share capital of KP Industrial is 10,000 ordinary shares at $1,292 (HKD10,000) and was wholly owned by an individual. On November 9, 2018, Jing Jin Ji changed its name to “Kunpeng (China) Industrial Development Company Limited” and filed a Certificate of Change of Name with the Hong Kong Company Registry on the same day. Although it was incorporated in 2017, it did not commence operations until July 2020 as it focused on exploring business opportunities in its initial phrase and developing our online mobile application, King Eagle Mall, through its subsidiary, King Eagle (China) Co., Ltd. It became a wholly owned subsidiary of KP International on May 3, 2021.
King Eagle (China) Co., Ltd.
King Eagle (China) Co., Ltd. (“King Eagle (China)”) was incorporated as a limited liability company in Beijing Economic Technological Development Zone in the People’s Republic of China (“the PRC”) on March 20, 2019 with a registered capital of approximately $15 million (RMB100 million). King Eagle (China) was a wholly owned subsidiary of KP Industrial at the time of establishment. KP Industrial transferred its approximately $2.2 million (RMB 15 million) or 15% to Guoxin Ruilian Group Co., Ltd., a limited liability company incorporated in Beijing, the PRC, on November 2, 2020.
On March 26, 2021, Guoxin Ruilian Group Co., Ltd entered into equity transfer agreements with KP Industrial and Guoxin Zhengye. Both Guoxin Ruilian Group Co., Ltd and Guoxin Zhengye are wholly owned by a common shareholder, Guoxin United Holdings Group Co., Ltd. Under the agreements, Guoxin Ruilian Group Co., Ltd agreed to transfer its 8% of its ownership in King Eagle (China) to Guoxin Zhengye and the remaining 7% ownership in King Eagle (China) to KP Industrial on April 20, 2021. After the transfer, KP Industrial and Guoxin Zhengye became the 92% and 8% shareholders of King Eagle (China), respectively.
Some of the business engaged in by King Eagle (Tianjin) is restricted or prohibited for foreign investment under PRC regulations. As such, King Eagle (China) has entered into the VIE Agreements with King Eagle (Tianjin) and their shareholders. We do not own any equity interests in King Eagle (Tianjin), but control and receive the economic benefits of their respective business operations through the VIE Agreements. The VIE Agreements enable us to provide King Eagle (Tianjin) with consulting services on an exclusive basis, in exchange for all of its annual profits, if any. In addition, we are able to appoint its senior executives and approve all matters requiring approval of its shareholders. The VIE Agreements are comprised of a Consulting Service Agreement, Business Operation Agreement, Proxy Agreement, Equity Disposal Agreement, and Equity Pledge Agreement which are described in further detail under “Contractual Arrangements” below.
Under current Chinese laws and regulations, we believe that the VIE Agreements are not subject to any government approval. The shareholders of King Eagle (Tianjin) were required to register with SAFE when they established offshore vehicles to hold KP International, and such SAFE registration was effected on May 14, 2021. These shareholders of King Eagle (Tianjin) will have to register their equity pledge arrangement as required under the Equity Pledge Agreement with King Eagle (China) (see “Contractual Arrangements” below).
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King Eagle (Tianjin) Technology Co., Ltd.
King Eagle (Tianjin) Technology Co., Ltd. (“King Eagle (Tianjin)”) was incorporated as a limited liability company in Tianjin Pilot Free Trade Zone in the People’s Republic of China on September 2, 2020 with a registered capital of approximately $1.5 million (RMB 10 million). It is owned by multiple individuals: Chengyuan Li, 51%, Jinjing Zhang, Wanfeng Hu, Cuilian Liu, Zhizhong Wang (each of them owns 6%), Zhandong Fan, Yanlu Li, Yuanyuan Zhang, Xiangyi Mao and Hui Teng (each of them owns 5%). Those shareholders also indirectly own KP International through two British Virgin Islands entities: Kunpeng Tech Limited and Kunpeng TJ Limited. Additionally, out of these stakeholders, four of them are the director and executives of KP International which include: Chenyuan Li, Director, Xiangyi Mao, Chief Executive Officer, Yuanyuan Zhang, Chief Financial Officer and Yanlu Li, Vice President.
The following diagram illustrates our corporate structure as of the date of this Report:
| (1) | Consulting Service Agreement |
| (2) | Business Operation Agreement |
| (3) | Proxy Agreement |
| (4) | Equity Disposal Agreement |
| (5) | Equity Pledge Agreement |
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Contractual Arrangements
While we do not have any equity interest in our consolidated affiliated entities, we have been and are expected to continue to be dependent on them to operate our business as long as there is limitation or prohibition in the interpretation and application by local governments of regulations concerning foreign investments in companies such as our consolidated affiliated entities. We rely on our consolidated affiliated entities to maintain or renew their respective qualifications, licenses or permits necessary for our business in China. We believe that under the VIE Agreements, we have substantial control over our consolidated affiliated entities and their respective shareholders to renew, revise or enter into new contractual arrangements prior to the expiration of the current arrangements on terms that would enable us to continue to operate our business in China after the expiration of the current arrangements, or pursuant to certain amendments and changes of the current applicable PRC laws, regulations and rules on terms that would enable us to continue to operate our business in China legally. While we currently do not anticipate any changes to PRC laws in the near future that may impact our ability to carry out our business in China, no assurances can be made in this regard. See “Risk Factors—Risks Related to Doing Business in China—Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and operations.” and “Risk Factors—Risks Related to Doing Business in China—Uncertainties with respect to the PRC legal system could adversely affect us.” For a detailed description of the risks associated with our corporate structure and the contractual arrangements that support our corporate structure, see “Risk Factors—Risks Related to Our Corporate Structure.”
The following is a summary of the VIE Agreements among King Eagle (China), King Eagle (Tianjiin), and their stockholders.
On May 15, 2021, King Eagle (China) Co., Ltd. (“King Eagle (China)”) and the shareholders of King Eagle (Tianjin) Technology Co., Ltd. (“King Eagle (Tianjin)”) entered into a series of contractual agreements for King Eagle (Tianjin) to qualify as variable interest entity or VIE (the “VIE Agreements”). The VIE Agreements are as follows:
Consulting Service Agreement
Pursuant to the terms of certain Exclusive Consulting Service Agreement dated May 15, 2021, between King Eagle (China) and King Eagle (Tianjin) (the “Consulting Service Agreement”), King Eagle (China) is the exclusive consulting service provider to King Eagle (Tianjin) to provide business-related software research and development services; design, installation, and testing services; network equipment support, upgrade, maintenance, monitor, and problem-solving services; employees technical training services; technology development and sublicensing services; public relations services; market investigation, research, and consultation services; short to medium term marketing plan-making services; compliance consultation services; marketing events and membership related activities organizing services; intellectual property permits; equipment and rental services; and business-related management consulting services. Pursuant to the Consulting Service Agreement, the service fee is the remaining amount after King Eagle (Tianjin)’s profit before tax in the corresponding year deducts King Eagle (Tianjin)’s losses, if any, in the previous year, the necessary costs, expenses, taxes, and fees incurred in the corresponding year, and the withdraws of the statutory provident fund. King Eagle (Tianjin)agreed not to transfer its rights and obligations under the Consulting Service Agreement to any third party without prior written consent from King Eagle (China). In addition, King Eagle (China) may transfer its rights and obligations under the Consulting Service Agreement to King Eagle (China)’s affiliates without King Eagle (Tianjin)’s consent, but King Eagle (China) shall notify King Eagle (Tianjin) of such transfer. This Agreement is valid for a term of 10 years subject to any extension requested by King Eagle (China) unless terminated by King Eagle (China) unilaterally prior to the expiration.
The foregoing summary of the Consulting Service Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the Consulting Service Agreement, which is filed as Exhibit 10.1 to this Form 8-K.
Business Operation Agreement
Pursuant to the terms of certain Business Operation Agreement dated on May 15, 2021, among King Eagle (China), King Eagle (Tianjin)and the shareholders of King Eagle (Tianjin) (the “Business Operation Agreement”), King Eagle (Tianjin) has agreed to subject the operations and management of its business to the control of King Eagle (China). According to the Business Operation Agreement, King Eagle (Tianjin) is not allowed to conduct any transactions that has substantial impact upon its operations, assets, rights, obligations and personnel without the King Eagle (China)’s written approval. The shareholders of King Eagle (Tianjin) and King Eagle (Tianjin) will take King Eagle (China) 's advice on appointment or dismissal of directors, employment of King Eagle (Tianjin)’s employees, regular operation, and financial management of King Eagle (Tianjin). The shareholders of King Eagle (Tianjin) have agreed to transfer any dividends, distributions or any other profits that they receive as the shareholders of King Eagle (Tianjin) to King Eagle (China) without consideration. The Business Operation Agreement is valid for a term of 10 years or longer upon the request of King Eagle (China) prior to the expiration thereof. The Business Operation Agreement might be terminated earlier by King Eagle (China) with a 30-day written notice.
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The foregoing summary of the Business Operation Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the Business Operation Agreement, which is filed as Exhibit 10.2 to this Form 8-K.
Proxy Agreement
Pursuant to the terms of the Proxy Agreement dated on May 15, 2021, among King Eagle (China), and the shareholders of King Eagle (Tianjin) (the “Proxy Agreement”), the shareholders of King Eagle (Tianjin) have entrusted their vote rights as King Eagle (Tianjin)’s shareholders to King Eagle (China) for the longest duration permitted by PRC law. The Proxy Agreement can be terminated by mutual consents of King Eagle (Tianjin) Shareholders and King Eagle (China) or upon a 30-day notice of King Eagle (China).
The foregoing summary of the Proxy Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the Proxy Agreement, which is filed as Exhibit 10.3 to this Form 8-K.
Equity Disposal Agreement
Pursuant to the terms of the Equity Disposal Agreement dated on May 15, 2021, among King Eagle (China), King Eagle (Tianjin), and the shareholders of King Eagle (Tianjin) (the “Equity Disposal Agreement”), the shareholders of King Eagle (Tianjin) granted King Eagle (China) or its designees an irrevocable and exclusive purchase option (the “Option”) to purchase King Eagle (Tianjin)’s all or partial equity interests and/or assets at the lowest purchase price permitted by PRC laws and regulations. The option is exercisable at any time at King Eagle (China)’s discretion in full or in part, to the extent permitted by PRC law. The shareholders of King Eagle (Tianjin) agreed to give King Eagle (Tianjin) the total amount of the exercise price as a gift, or in other methods upon King Eagle (China)’s written consent to transfer the exercise price to King Eagle (Tianjin). The Equity Disposal Agreement is valid for a term of 10 years or longer upon the request of King Eagle (China).
The foregoing summary of the Equity Disposal Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the Equity Disposal Agreement, which is filed as Exhibit 10.4 to this Form 8-K.
Equity Pledge Agreement
Pursuant to the terms of certain Equity Pledge Agreement dated on May 15, 2021, among King Eagle (China) and the shareholders of King Eagle (Tianjin) (the “Pledge Agreement”), the shareholders of King Eagle (Tianjin) pledged all of their equity interests in King Eagle (Tianjin)to King Eagle (China), including the proceeds thereof, to guarantee King Eagle (Tianjin)’s performance of its obligations under the Business Operation Agreement, the Consulting Service Agreement and Equity Disposal Agreement (each, a “Agreement”, collectively, the “Agreements”). If King Eagle (Tianjin) or its shareholders breach its respective contractual obligations under any Agreement, or cause to occur one of the events regards as an event of default under any Agreement, King Eagle (China), as pledgee, will be entitled to certain rights, including the right to dispose of the pledged equity interest in King Eagle (Tianjin). During the term of the Pledge Agreement, the pledged equity interests cannot be transferred without King Eagle (China)’s prior written consent. The Pledge Agreements is valid until all the obligations due under the Agreements have been fulfilled.
The foregoing summary of the Equity Pledge Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the Equity Pledge Agreement, which is filed as Exhibit 10.5 to this Form 8-K.
The principal executive office of our operations is located a Unit 2702, 27th Floor, Building T1, Han's Plaza, No. 2 Ronghua South Road, Beijing Economic and Technological Development Zone, Beijing, PRC. The information contained on our website is not incorporated by reference into this Current Report on Form 8-K.
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Our Business
A vast majority of people in the PRC are in a sub-healthy state and the number of chronic diseases increased significantly each year. Based on the governmental statistics on the healthiness of the people in the PRC, approximately:
70% of Chinese are at risk of death from overwork
76% of white-collar workers are in a sub-health state
23% of Chinese people have chronic diseases
120 million fatty liver patients
121 million people with diabetes
200 million people with dyslipidemia (including hyperlipidemia)
420 million hypertensive population
507 million overweight and obese people
One person has cancer in 10 seconds
One person has diabetes in 30 seconds
At least one person died of cardiovascular disease in 30 seconds
Chronic disease mortality accounted for 86%
22% of middle-aged and elderly deaths are due to cardiovascular and cerebrovascular diseases
A Fundamental Public Health Regulation of the PRC was passed in December 2019 which intended to promote the public health and hygiene awareness and improve the medical care system. The regulation particularly focuses on promoting preventive care measures, strengthening non-medical health nourishment, reducing the number of incidence of diseases and developing a healthy China 2030. An investment in preventive care measures can significantly lower the cost of medical care and treatment.
Since the global health issue and pandemic, people have increased their health and nutrition consciousness. King Eagle (China) believes preventive care is the most effective investment in health. Based on the statistics performed by Euromonitor, China Health Care Association, Prospective Industry Research Institute, the market size of health care products in China is as follows:
In the most recent years, e-commerce has developed rapidly in the PRC and management believes that we are in a new era of e-commerce with additional characteristics of sharing economy, offline support and social interaction evolving. We believe the rise of social e-commerce will positively impact the development of our health care business.
To promote the awareness of preventive care to the vast population of the people in the PRC, we serve intend to serve our customers through our mobile (King Eagle Mall) and physical (Smart Kiosk) platforms.
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King Eagle Mall
We developed and launched a mobile social e-commerce platform, King Eagle Mall, which promotes preventive health care products and services as our core business. It adopts the S2B2C business model and integrates many major health care products and services.
The three cores and six features that we are developing through the King Eagle Mall are:
Core 1: Integration of resources in the health care industry
| Feature 1 | Closed-loop supply chain | Compared with the traditional B2B and B2C marketing models, the mobile application, King Eagle Mall, has a more scientific marketing layout without stocking of inventory and capital investment. All the goods in demand are supported by upstream suppliers. Members can sell goods more flexibly, and the distribution of goods is promoted by the way of direct supply by manufacturers, which meets the needs of customers and promotes the increase in product sales. This complete closed-loop supply chain is more conducive to the rapid development of King Eagle (China) and enhance resource utilization. |
| Feature 2 | S2B2C model perfectly provides three-terminal users with the most intuitive service and use value. | S2B2C is an innovative e-commerce model that can drive much greater value innovation than traditional models. This kind of innovation is reflected in S (supplier) and B (platform) working together to provide C (customer) with more thorough services. In other words, S empowers B and supports B to conduct product and service transactions with C, while B and C pass on their needs to S, so that S can better serve B and C, satisfying a wider group and achieving a larger demand channel. |
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Core 2: Personal health management
| Feature 3 | Combined with Smart Kiosk to enhance personal care service dimensions | Through our physical platform, Smart Kiosk, we create profiles for each member to record personal health data, and rely on big data analysis to prompt all aspects of health-related clothing, food, housing, transportation, and other daily living styles. For example, based on the member’s personal health background and medical history, the kiosk analyzes the health condition of the member and suggests types of health supplements, food, health-related products or health checking tools, etc, that are suitable for the member. |
| Feature 4 | Connecting to health and wellness experience, improving service height. | Ecological + elderly care + healthy life style experience is an indispensable part of the health industry, and it is also a supply and demand gap that will inevitably appear in industrial development and economic development. For middle and high net worth groups, we provide different types of health and elderly life style experience environments. The Smart Kiosk APP provides full-cycle and full-view high-end services, so that there is a connection between health and living. |
Core 3: Wealth value
| Feature 5 | Sharing Wealth | Health itself is wealth. King Eagle Mall is not just a comprehensive consumer docking platform, it is also a new channel to provide wealth for upstream supply chain enterprises and terminal members. Through the integrated platform, King Eagle (China) shares healthy life style with its members and meets different health needs of different members. |
| Feature 6 | Quality of Life
|
To strengthen the concept of healthiness, King Eagle Mall will go deep into every corner of life in the future, providing members with more healthy choices in five aspects: clothing, food, home living, daily necessities and transportation, and guiding our members to lead a healthier and quality life. |
The products focus on health-related products and services. King Eagle Mall is designed to enable health-related products to be sold by us and by third partiess. King Eagle Mall’s products are divided into two sectors: self-operated products and selected products which promote preventive health care. Our teamscreens and examines products that are and will be offered both by us and affiliated merchants. Our major products include health care products such as dietary supplements, nutritional health foods, beauty cosmeceuticals, and other categories (for instance, milk powder, dried fruits) health foods for supporting the cardiovascular system, and bone joint health. We offer collagen peptides, probiotics and health foods for improving blood circulation and vein health, as well as household products which can promote and improve a healthier lifestyle of our members We receive customer orders and may arrange fulfillment with our merchants who are responsible for delivery arrangement or fulfill customer orders through our outsourced networks.
At the same time, we operate customer service centers with whom our members can directly communicate for any assistance related to product purchases, suggestions for health care products and services, and delivery logistics.
Smart Kiosk
We introduced “Smart Kiosk” with the support from the previous stakeholder of King Eagle (China), Guoxin Ruilian Group Co., Ltd (“Guoxin Ruilian”), wholly owned subsidiary of CITIC Group Corporation Ltd and a related party of Guoxin Zhengye. The construction of Smart kiosk was initiated and administered by Guoxin Ruilian Group Co., Ltd. After the completion of the construction of Smart Kiosk, Guoxin Ruilian Group Co., Ltd assigned its wholly-owned subsidiary, Guoxin Star Network Co., Ltd to cooperate with King Eagle (Tianjin) in development of Smart Kiosk. The Smart Kiosk is a physical platform which focuses on developing “small shop economy”. It is integrated with the King Eagle Mall which creates a “social, health and physical store” to provide people with a more professional and comprehensive preventive health care products and services. Smart Kiosk is a principal component of our business.
The smart service kiosk functions as a physical customer service center and community marketing for attracting customers, providing customer services, promoting our 500+ preventive health care and health related household products and introducing concepts of maintaining a healthy life. 5G internet connection is also available for our customers to connect to our online application, King Eagle Mall, so that our customers can access to King Eagle Mall and place orders of our products. We started the Smart Kiosk in Puyang City, Henan Province and Jingmen City, Hubei Province. As of March 31, 2021, we started establishing 50 Smart Kiosks in the City of Zhengzhou, in Henan Province, and in the City of Wuhan, in Hubei Province. In the future, we hope to deploy Smart Kiosks in 20 provinces across the PRC.
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On March 31, 2021, King Eagle (Tianjin) entered into an agreement with Guoxin Star Network Co., Ltd., and was granted the right to operate 50 Smart Kiosks for five years starting in April 2021. King Eagle (Tianjin) is also entitled to the profit sharing from the operation of the Smart Kiosks. The operation of the Smart Kiosks can be administered in one of the three models:
| ● | Operation by King Eagle (Tianjin): The operation of Smart Kiosk is solely administered by King Eagle (Tianjin). Advertising, product promotion, human resources, product display and sales strategies are planned, established and operated by King Eagle (Tianjin). Profit sharing from the operation of Smart Kiosk is allocated between King Eagle (Tianjin) and the party who purchases the right-of-use of Smart Kiosks based on the mutually agreed terms. |
| ● | Cooperative operation of health care and health related product suppliers: King Eagle (Tianjin) granted the right of use of Smart Kiosks to its product suppliers who sell their health care and health related household products on King Eagle Mall. The profit sharing is allocated between King Eagle (Tianjin) and those product suppliers based on the mutually agreed terms. |
| ● | Franchise operation: Members of King Eagle Mall are granted the right-of-use of Smart Kiosks to run the business with the training, advertising, sales and marketing strategies provided by King Eagle (Tianjin). Profit sharing is allocated between King Eagle (Tianjin) and the members based on the mutually agreed terms. |
Cooperation with Peking Union Lawke Center for Functional Medicine Co., Limited
Preventive health care focuses upon the relationship between genetics, environment, physiology, psychology, and lifestyle, to assist in addressing health and disease. Physical examinations assist in providing personalized solutions to eliminate the cause of the disease and treat and regulate functional changes, so to help patients overcome disease and lead healthier lives.
The partnership between King Eagle (China) and Peking Union Lawke Center for Functional Medicine Co., Limited, which was incorporated on September 2, 2013, focuses on health testing and consultation to help people take precautions before any diseases occur. The two parties jointly take "preventive treatment and preventive testing" as the core, based on user testing data in the King Eagle Mall, integrate global physician resources, and provide members and customers with integrated health conditioning, tracking management, high-level, personalized and convenient health and health care, testing, consulting and other services.
The two parties will work together to create a "social e-commerce + health + physical store" integration platform, using smart kiosks as the carrier to provide people with more professional and comprehensive health services. Functional medicine starts from the relationship between genetics, environment, physiology, psychology, and lifestyle, studying the decline of human function to pathological changes, and finally finding the root cause of the disease. Functional medicine offers comprehensive physical examinations and provides personalized solutions to the members to minimize their health risks and treat and regulate body functions.
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Sales and Marketing
We will and do engage in a variety of marketing activities intended to drive user traffic to our mobile application and give us the opportunity to introduce our products and services to prospective members. For our online mobile application, King Eagle Mall, we (i) pay various mobile app channels to broadcast our apps to raise awareness of our products and increase their ranking to attract new users, (ii) engage in self-promoting on social media, (iii) advertise our products via our cooperative public platforms, (iv) organize off-line experience events and activities; and (v) we enter into business alliance with various well-known regional and global health care product business partners and prestige health organizations such as Peking Union Lawke Center for Functional Medicine; (vi) we will provide health education on our official website: kp-china.com. With respect to our King Eagle Mall mobile application which we launched in September 2020, our marketing strategy focuses upon seeking well known network and platform providers to broadcast the products and services, improving the products and services to raise its ranking in app stores, and display advertising to increase the exposure to attract new users.
Our Customers
Our current and future customers mainly include individual members. As of March 31, 2021 and as of the date of this report, we had approximately 6,500 and 7,400 members, respectively.
Customer Service
Our call center and email support teams monitor our mobile applications as well as mobile application developed by other companies for fraudulent activity, assist members with billing questions, help members complete personal profiles and answer technical questions. Customer service representatives receive ongoing training in an effort to better personalize the experience for members and paying subscribers who call or email us and to capitalize on upselling opportunities.
Technology
Our internal product teams focused on the development and maintenance of products in addition to building and managing our software and hardware infrastructure. We intend to continue investing in the development of new products, such as mobile applications, and enhancing the efficiency and functionality of our existing products and infrastructure.
Our network infrastructure and operations are designed to deliver high levels of availability, performance, security and scalability in a cost-effective manner. We operate web and database servers co-located at a third-party data center facility in Beijing, PRC.
Our Competition
We operate in a highly competitive environment with minimal barriers to entry. We believe the primary competitive factors in creating a community on the Internet are functionality, brand recognition, reputation, critical mass of members, member affinity and loyalty, ease-of-use, quality of service and reliability. We compete with a number of large and small companies, including vertically integrated Internet portals and specialty-focused media companies that provide online and offline products and services to the online market we serve.
In 2019, the total size of China's social e-commerce market exceeded 2 trillion RMB, and the social e-commerce market based on the membership model was 363.26 billion RMB in 2019, accounting for about 18% of social e-commerce.
King Eagle (China)’s competitors mainly come from social e-commerce platforms, including Pinduoduo (based on the group buying model), Weimeng (providing services for micro-businesses),Taobao, JD, etc.
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We believe our ability to compete depends upon many factors both within and beyond our control, including the following:
| ● | the size and diversity of our member and paying subscriber bases; |
| ● | the timing and market acceptance of our apps, including the developments and enhancements to those apps and features relative to those offered by our competitors; |
| ● | customer service and support efforts; |
| ● | selling and marketing efforts; and |
| ● | our brand strength in the marketplace relative to our competitors. |
Competitive advantage
Experienced management:
King Eagle (China) acquired talents in developing its online and offline platforms, creating business models, marketing, managing, from multi-national corporations, public companies and prestige universities.
Cooperation with the well-known regional and global prestige health care products business partners and health care organizations:
We are cooperating with Peking Union Lawke Center for Functional Medicine for the launch of self-checking tools such as vitamin D level assessment, mucosal immune function assessment, food intestinal allergy testing. Peking Union Lawke Center for Functional Medicine has obtained international standards ISO15189 certification and is supported by other prestigious medical organizations such as Genova Diagnostics, Peking Union Medical College, Shanghai Jiaotong University, East China Institute of Life Science, Peking University, Institute of Microbiology, Tsinghua University Internet Industry Research Institute. Through the smart kiosk and our cooperation with Peking Union Lawke Center for Functional Medicine we provide people with more professional and comprehensive health services. The cooperation between King Eagle (China) and Peking Union Lawke Center for Functional Medicine will focus on health testing and consultation to help people take precautions before health problems occur, and to assist them in maintaining a healthy life. The two parties jointly take "preventive treatment and preventive testing" as the core, based on user testing data, integrate global physician resources, and provide members and customers with integrated health conditioning, tracking management, high-level, personalized and convenient health and health care, testing, consulting and other services.
Shared resources from our stakeholder:
Guoxin Ruilian Group Co., Ltd, a wholly-owned subsidiary of CITIC Group Corporation Ltd which was formed in 1979 and was formerly the China International Trust Investment Corporation, acquired a 15% ownership of King Eagle (China) on November 2, 2020. With the expertise, technology innovations and resources provided by Guoxin Ruilian Group., Ltd, we started our first Smart Kiosk project in Puyang City, Henan Province. We also started the construction of Smart Kiosks in Henan and Hubei Provinces. Guoxin Ruilian plans to invest approximately $71 million (RMB 500 million) in constructing 850 smart kiosks in Hubei province, and under the terms of our agreement with Guoxin Ruilian Group Co., Ltd. we have the right to select the location for and operate the Smart Kiosks opened in Hubei Province.
Government support:
A Fundamental Public Health Regulation of the PRC was passed in December 2019 which intended to promote the public health and hygiene awareness and improve the medical care system. The regulation particularly focuses on promoting preventive care measures, strengthening non-medical health nourishment, reducing the number of incidence of diseases and developing a healthy China 2030.
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The State Council has initiated Pilot Free Trade Zone Plan (“the Plan”) in Beijing, Hunan Province, Anhui and Zhejiang province on September 21, 2020. The Plan provides that the free trade zone area in Beijing is approximately 120 square kilometers and is divided into three major sections:
| ● | 31.85 square kilometers for technology innovation area |
This zoning includes 21.59 square kilometers of Zhongguancun Science City and 10.26 square kilometers of usable industrial space around Beijing Life Science Park. This area focuses on the development of a new generation of information technology, biology and health, science and technology services and other industries, a global venture capital center, and a pilot demonstration zone for scientific and technological system reform.
| ● | 48.34 square kilometers for International business service area |
This area includes 28.5 square kilometers of usable industrial space around Capital International Airport, 4.96 square kilometers of Beijing CBD, 2.96 square kilometers of Jinzhan International Cooperation Service Area, and 10.87 square kilometers of usable industrial space around the city's sub-central Canal Business District and Zhangjiawan Design Town. This zoning focuses on the development of digital trade, cultural trade, business conventions and exhibitions, medical and health, international delivery logistics and cross-border finance.
| ● | 39.49 square kilometers for high-end industrial area: |
This section includes 10.36 square kilometers of usable industrial space on the west side of Daxing International Airport and 27.83 square kilometers of Beijing Economic and Technological Development Zone. It focuses on the development of industries such as business services, international finance, cultural creativity, biotechnology, and general health care.
Since King Eagle (China) established its business in Beijing Free Trade Zone, the development of King Eagle (China) is supported by the facilities established by of the Plan as well as is entitled to lower customs and tax rate for its business which reduces the cost of its operations.
Our Intellectual Property
We rely on a combination of intellectual property rights, including trade secrets, copyrights, trademarks and domain names, as well as contractual restrictions to protect intellectual property and proprietary technology owned or used by us.
All of our employees have entered into standard employment agreements requiring them to keep confidential all information relating to our customers, methods, business and trade secrets during their terms of employment with us and thereafter and to assign to us their inventions, technologies and designs they develop during their term of employment with us.
We developed our online platform “King Eagle Mall”, of which we own the copyright. The software platform was placed in service in September 2020 and offers a variety of preventive health care products and services to our members. The platform provides upstream supply chain of the preventive health care products and downstream health care analysis and advices to our members.
We also developed our business trademarks. In order to protect our intellectual property rights, we have submitted applications to register our trademarks in the PRC , including without limitation the following:
| Trademark | ||||||
| Country/Area | Trademark | number | Classes | |||
| PRC |  | 50366519 | 43 | |||
| PRC |  | 50368216 | 9 | |||
| PRC |  | 50371272 | 16 | |||
| PRC |  | 50373087 | 37 | |||
| PRC |  | 50374965 | 9 | |||
| PRC |  | 50374979 | 16 | |||
| PRC |  | 50375007 | 37 | |||
| PRC |  | 50392663 | 43 |
We regard our patents and software copyrights important to our success and our competitive position.
We did not incur any research and development expenses from inception to date through September 30, 2020 and for the six months ended March 31, 2021.
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Regulations
Because all of our operating entities are located in the PRC, we are regulated by the national and local laws of the PRC. This section summarizes the major PRC regulations relating to our business.
Regulations Regarding Foreign Investment
The Catalogue of Industries for Encouraged Foreign Investment (2020 Edition)(the "Encouraging Catalogue") was jointly promulgated by the NDRC and the MOFCOM on 27 December 2020, and it came into effect on 27 January 2021. The Special Administrative Measures for Access of Foreign Investment (Negative List)(2020 Edition) (the"2020 Negative List") was jointly promulgated on 23 June 2020 and took effect on 23 July 2020. The Encouraging Catalogue and the 2020 Negative List categorizes the industries into three categories, including "encouraged", "restricted" and "prohibited". All industries that are not listed under one of "encouraged", "restricted" or "prohibited" categories are deemed to be "permitted". The Encouraging Catalogue and the 2020 Negative List are subject to review and update by the Chinese government from time to time.
Regulation Regarding Foreign Exchange Registration of Offshore Investment by PRC
Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or Circular 37, issued by SAFE and effective in July 4, 2014, regulates foreign exchange matters in relation to the use of special purpose vehicles, or SPVs, by PRC residents or entities to seek offshore investment and financing and conduct round trip investment in China.
Circular 37 and other SAFE rules require PRC residents, including both legal and natural persons, to register with the local banks before making capital contribution to any company outside of China (an “offshore SPV”) with onshore or offshore assets and equity interests legally owned by PRC residents. In addition, any PRC individual resident who is the stockholder of an offshore SPV is required to update its registration with the local banks with respect to that offshore SPV in connection with change of basic information of the offshore SPV such as its company name, business term, the shareholding by individual PRC resident, merger, division and with respect to the individual PRC resident in case of any increase or decrease of capital in the offshore SPV, transfer of shares or swap of shares by the individual PRC resident. Failure to comply with the required SAFE registration and updating requirements described above may result in restrictions being imposed on the foreign exchange activities of the PRC subsidiaries of such offshore SPV, including increasing the registered capital of, payment of dividends and other distributions to, and receiving capital injections from the offshore SPV. Failure to comply with Circular 37 may also subject the relevant PRC residents or the PRC subsidiaries of such offshore SPV to penalties under PRC foreign exchange administration regulations for evasion of applicable foreign exchange restrictions.
Regulations Regarding Foreign Exchange
Under the Foreign Currency Administration Rules promulgated in 1996 and revised in 1997 and 2008 and various regulations issued by SAFE and other relevant PRC government authorities, RMB is convertible into other currencies without prior approval from SAFE only to the extent of current account items, such as trade related receipts and payments, interest and dividends and after complying with certain procedural requirements. The conversion of RMB into other currencies and remittance of the converted foreign currency outside PRC for the purpose of capital account items, such as direct equity investments, loans and repatriation of investment, requires the prior approval from SAFE or its local office. Payments for transactions that take place within China must be made in RMB. Unless otherwise approved, PRC companies must repatriate foreign currency payments received from abroad. Foreign-invested enterprises may retain foreign exchange in accounts with designated foreign exchange banks subject to a cap set by SAFE or its local office. Unless otherwise approved, domestic enterprises must convert all of their foreign currency proceeds into RMB.
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On August 29, 2008, SAFE promulgated Circular 142 which regulates the conversion by a foreign-funded enterprise of foreign currency into RMB by restricting how the converted RMB may be used. In addition, SAFE promulgated Circular 45 on November 9, 2011 in order to clarify the application of Circular 142. Under Circular 142 and Circular 45, the RMB capital converted from foreign currency registered capital of a foreign-invested enterprise may only be used for purposes within the business scope approved by the applicable government authority and may not be used for equity investments within the PRC. In addition, SAFE strengthened its oversight of the flow and use of the RMB capital converted from foreign currency registered capital of foreign-invested enterprises. The use of such RMB capital may not be changed without SAFE’s approval, and such RMB capital may not in any case be used to repay RMB loans if the proceeds of such loans have not been used. Violations of Circular 142 and Circular 45 could result in severe penalties, such as heavy fines as set out in the relevant foreign exchange control regulations. On July 4, 2014, SAFE promulgated SAFE Circular 36, which launched a pilot reform of the administration of the settlement of the foreign exchange capitals of foreign-invested enterprises in certain designated areas from August 4, 2014. However, SAFE Circular 36 continues to prohibit foreign-invested enterprises from directly or indirectly using the Renminbi converted from their foreign exchange capitals for purposes beyond its business scope. On March 30, 2015, SAFE promulgated Circular 19, to expand the reform nationwide. Circular 19 came into force and replace both Circular 142 and Circular 36 on June 1, 2015. Circular 36 allows enterprises established within the pilot areas to use their foreign exchange capitals to make equity investment and removes certain other restrictions provided under Circular 142 for these enterprises. Circular 19 will remove those restrictions for all foreign-invested enterprises established in the PRC. However, both Circular 36 and Circular 19 continue to prohibit foreign-invested enterprises from, among other things, using the Renminbi fund converted from its foreign exchange capitals for expenditure beyond its business scope, providing entrusted loans or repaying loans between non-financial enterprises.
On June 9, 2016, SAFE promulgated Circular 16, which provides an integrated standard for converting foreign exchange under capital account items (including but not limited to foreign exchange capital and foreign debts) on a discretionary basis which applies to all enterprises registered in the PRC. The Circular 16 reiterates the principle that Renminbi converted from foreign currency-denominated capital of a company may not be directly or indirectly used for purposes beyond its business scope or prohibited by PRC laws or regulations, and such converted Renminbi shall not be provided as loans to its non-affiliated entities, except where it is expressly permitted in the business license.
Taxation
PRC Enterprise Income Tax
The PRC Enterprise Income Tax Law, or EIT Law, and its implementation rules provide that from January 1, 2008, a uniform income tax rate of 25% is applied equally to domestic enterprises as well as foreign investment enterprises.
The EIT Law and its implementation rules provide that a withholding tax at the rate of 10% is applicable to dividends and other distributions payable by a PRC resident enterprise to investors who are “non-resident enterprises” (that do not have an establishment or place of business in the PRC, or that have such establishment or place of business but the relevant dividend or other distribution is not effectively connected with the establishment or place of business). However, pursuant to the Arrangement between the Mainland and Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income effective on December 8, 2006, the withholding tax rate for dividends paid by a PRC resident enterprise is 5% if the Hong Kong enterprise is determined by the competent tax authority in the PRC to have satisfies the relevant conditions and requirements under the applicable laws ; otherwise, the dividend withholding tax rate is 10%. According to the Notice of the PRC State Administration of Taxation on Issues relating to the Administration of the Dividend Provision in Tax Treaties promulgated on February 20, 2009 and effective on the same day, the corporate recipient of dividends distributed by PRC enterprises must satisfy the direct ownership thresholds at all times during the 12 consecutive months preceding the receipt of the dividends. However, if a company is deemed to be a pass-through entity rather than a qualified owner of benefits, it cannot enjoy the favorable tax treatments provided in the tax arrangement. In addition, if transactions or arrangements are deemed by the relevant tax authorities to be entered into mainly for the purpose of enjoying favorable tax treatments under the tax arrangement, such favorable tax treatments may be subject to adjustment by the relevant tax authorities in the future.
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Business Tax and Value-added Tax
Pursuant to the Temporary Regulations on Business Tax, which were promulgated by the State Council on December 13, 1993 and effective on January 1, 1994, as amended on November 10, 2008 and effective January 1, 2009, any entity or individual conducting business in a service industry is generally required to pay business tax at the rate of 5% on the revenues generated from providing such services.
In March 2016, the Ministry of Finance and SAT jointly issued the Pilot Program of Replacing Business Tax with Value-Added Tax (“VAT”) in an All-round Manner, or Circular 36, effective from May 2016, according to which PRC tax authorities have started imposing VAT on revenues from various service sectors, including real estate, construction, financial services and insurance, as well as other lifestyle service sectors, replacing the business tax replacing the business tax that co-existed with VAT for over 20 years. According to Provisional Regulations on VAT of the PRC and its detailed rules for the Implementation, organizations and individuals engaging in the sale of goods or processing, repair and assembly services, the sale of services, intangible assets, immovables and importation of goods in the PRC shall be taxpayers of VAT, and shall pay VAT pursuant to these regulations.
Business license
Any company that conducts business in the PRC must have a business license that covers a particular type of work. Other than regular business licenses that we have already obtained, there is no special license or permit required for us to engage in the current businesses under PRC laws and regulations.
Any company that conducts business in the PRC must have a business license that covers the scope of the business in which such company is engaged. Following the Share Exchange, we conduct our business through our control of KP International. Each of King Eagle (China) and King Eagle (Tianjin) holds a business license that covers its present business.
The business license of King Eagle (China) was issued on April 20, 2021. The scope of registered business of King Eagle (China) includes technology development, technology promotion, technology transfer, technology consulting, technical services; real estate development; organizing cultural and artistic exchange activities (excluding performances); renting commercial houses; catering management; undertaking exhibition activities; literary creation; design, production, and agency, advertising; economic and trade consulting; business management consulting; corporate planning; conference services; photography services; etiquette services; translation services; product design; computer animation design; packaging and decoration design; computer graphic design and production; wholesale and retail daily necessities, computers, software and auxiliary equipment, stationery, handicrafts, electronic products; sales of medical equipment class I, medical equipment class II; goods import and export, technology import and export, agent import and export (involving quota license management, special regulations relevant national regulations); wholesale and retail food; road cargo transportation; sales of Class III medical devices.
The business license of King Eagle (Tianjin) was issued on April 16, 2021. The scope of registered business of King Eagle (Tianjin) includes (i)General items: technical services, technology development, technical consultation, technical exchanges, technology transfer, technology promotion; data processing services; software development; organizing cultural and artistic exchange activities; non-residential real estate leasing; conference and exhibition services; catering management; literary creation; advertising production; Advertising design and agency; advertising publishing (non-radio, television, newspaper publishing units); information consulting services (excluding licensing information consulting services); information technology consulting services; marketing planning; photographic expansion services; etiquette services; translation services ; Professional design services; camera and video production services; film production services; graphic design and production; daily necessities sales; Computer software, hardware and auxiliary equipment wholesale; computer software, hardware and auxiliary equipment retail; software sales; stationery retail; stationery wholesale; arts and crafts and collectibles wholesale (except ivory and its products); arts and crafts and collectibles retail ( (Except ivory and its products); electronic product sales; technology import and export; goods import and export; import and export agency; food business (sales of pre-packaged food); second-class medical device sales; first-class medical device sales; (ii) Licensed items: road cargo transportation (excluding dangerous goods); packaging and decoration printed matter printing; real estate development and operation; the first type of value-added telecommunications business; the second type of value-added telecommunications business; the production and operation of radio and television programs; third-class medical device operation.
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Dividend Distributions
Under applicable PRC regulations, FIEs in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a FIE in China is required to set aside at least 10% of its after-tax profit based on PRC accounting standards each year to its general reserves until the accumulative amount of such reserves reach 50% of its registered capital. These reserves are not distributable as cash dividends. The board of directors of a FIE has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, which may not be distributed to equity owners except in the event of liquidation.
After-tax profits/losses with respect to the payment of dividends out of accumulated profits and the annual appropriation of after-tax profits as calculated pursuant to PRC accounting standards and regulations do not result in significant differences as compared to after-tax earnings as presented in our financial statements. However, there are certain differences between PRC accounting standards and regulations and U.S. generally accepted accounting principles, arising from different treatment of items such as amortization of intangible assets and change in fair value of contingent consideration rising from business combinations.
In addition, under the EIT Law, the Notice of the State Administration of Taxation on Negotiated Reduction of Dividends and Interest Rates, which was issued on January 29, 2008, the Arrangement between the PRC and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion, which became effective on December 8, 2006, and the Announcement of the State Administration of Taxation on Issues Relating to “Beneficial Owner” in Tax Treaties, which became effective on April 1, 2018, dividends from our PRC operating subsidiaries paid to us through our Hong Kong subsidiary may be subject to a withholding tax at a rate of 10%, or at a rate of 5% if our Hong Kong subsidiary is considered a “beneficial owner” that is generally engaged in substantial business activities and entitled to treaty benefits under the Arrangement between the PRC and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion
Laws and Regulations Related to Employment and Labor Protection
On June 29, 2007, the National People’s Congress promulgated the Employment Contract Law of PRC (“Employment Contract Law”), which became effective as of January 1, 2008 and amended on December 28, 2012. The Employment Contract Law requires employers to provide written contracts to their employees, restricts the use of temporary workers and aims to give employees long-term job security.
Pursuant to the Employment Contract Law, employment contracts lawfully concluded prior to the implementation of the Employment Contract Law and continuing as of the date of its implementation shall continue to be performed. Where an employment relationship was established prior to the implementation of the Employment Contract Law but no written employment contract was concluded, a contract must be concluded within one month after its implementation.
On September 18, 2008, the State Council promulgated the Implementing Regulations for the PRC Employment Contract Law which came into effect immediately. These regulations interpret and supplement the provisions of the Employment Contract Law.
Our standard employment contract complies with the requirements of the Employment Contract Law and its implementing regulations. We have entered into written employment contracts with all of our employees.
Pursuant to the PRC Labor Law and the PRC Labor Contract Law, employers must execute written labor contracts with full-time employees. All employers must comply with local minimum wage standards. Violations of the PRC Labor Contract Law and the PRC Labor Law may result in the imposition of fines and other administrative and criminal liability in the case of serious violations.
In addition, according to the PRC Social Insurance Law and Administration Measures on Housing Fund, employers like our PRC subsidiaries in China must provide employees with welfare schemes covering pension insurance, unemployment insurance, maternity insurance, work-related injury insurance, medical insurance, and housing funds
Employees
Currently we have a total of 37 employees and all are full-time employees. The following table sets forth the number of our full-time employees by function.
| Function | Number of Employees | |
| IT | 7 | |
| Finance | 3 | |
| Sales and Marketing | 9 | |
| Human Resources | 3 | |
| Operations | 7 | |
| General and Administrative | 8 | |
| Total | 37 |
None of our employees belong to a union or are a party to any collective bargaining or similar agreement. We consider our relationships with our employees to be good.
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RISK FACTORS
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information contained in this report before deciding to invest in our common stock.
Risks Related to Our Business
The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its business plan.
The interim condensed consolidated financial statements and the audited consolidated financial statements of KP International included in this report include a paragraph that indicates that they were prepared assuming that we would continue as a going concern. As of March 31, 2021, KP International incurred a working capital deficit , $1,332,458 and a comprehensive loss of $653,063 and a positive operating cash flow of $389,620. As of September 30, 2020, KP International incurred a working capital deficit was $617,071, a comprehensive loss of $215,659 and a positive operating cash flow of $207,407. These conditions raise substantial doubt about the ability of the Company to continue as a going concern. The ability to continue as a going concern is dependent upon generating profitable operations in the future and/or obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due. Management is currently seeking additional funds, primarily through the issuance of equity securities for cash and loans from our offices and controlling stockholders to operate our business, and estimates that additional capital will be necessary to support our operations and growth.
We may continue to incur losses in the future, and may not be able to return to profitability, which may cause the market price of our shares to decline.
KP International incurred a net loss of $645,078 during the six months ended March 31, 2021 and $208,771 during the period from its inception through September 30, 2020. We have generated very limited revenue. Our current operations are small with a short history. We may be unable to achieve our performance targets, which will impact the Company’s operating results. Our ability to achieve profitability depends on the competitiveness of our products and services as well as our ability to control costs and to provide new products and services to meet the market demands and attract new customers. Due to the numerous risks and uncertainties associated with the development of our business, we cannot guarantee that we may be able to achieve profitability in the short-term or long-term. Management is currently seeking additional funds, primarily through the issuance of equity securities for cash and loans from our offices and controlling stockholders to operate our business, and estimates that additional capital will be necessary to support our operations and growth.
We have a limited operating history and face many of the risks and difficulties frequently encountered by development stage companies.
Our operating entity and VIE, King Eagle (China) and King Eagle (Tianjin) commenced their operations in March 2019 and September 2020, respectively. As a result of our limited operating history, our ability to accurately forecast our future operating results is limited and subject to a number of uncertainties. We have encountered, and will continue to encounter, risks and uncertainties frequently experienced by growing companies in rapidly changing industries, such as the risks and uncertainties described herein. If our assumptions regarding these risks and uncertainties (which we use to plan our business) are incorrect or changed due to changes in our markets, or if we do not address these risks and uncertainties successfully, our operating and financial results could differ materially from our expectations, and our business could suffer.
The market in which we participate is intensely competitive, and if we do not compete effectively, our operating results could be harmed.
The market for health care and household products and services is fragmented, rapidly evolving and highly competitive, with relatively low barriers to entry for certain applications and services. Some of our competitors may enjoy better competitive positions in certain geographical regions or user demographics that we currently serve or may serve in the future. We expect competition in the online personals business to continue to increase because there are no substantial barriers to entry. We believe our ability to compete depends upon many factors both within and beyond our control, including the following:
| ● | the size and diversity of our member and paying subscriber bases; |
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| ● | the timing and market acceptance of our apps, including the developments and enhancements to those apps and features relative to those offered by our competitors; |
| ● | customer service and support efforts; |
| ● | selling and marketing efforts; and |
| ● | our brand strength in the marketplace relative to our competitors. |
We compete with traditional health care and household product retailers. We also compete with a number of large and small companies, including internet portals and specialty-focused media companies that provide online and offline products and services to the markets we serve. Our principal mobile-based social e-commerce competitors include Pinduoduo (based on the group buying model), Weimeng (providing services for micro-businesses),Taobao, JD. Many of our current and potential competitors have longer operating histories, significantly greater financial, technical, marketing and other resources and larger customer bases than we do. These factors may allow our competitors to respond more quickly than we can to new or emerging technologies and changes in customer preferences. These competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies that may allow them to build larger member and paying subscriber bases than ours. Our competitors may develop products or services that are equal or superior to our products and services or that achieve greater market acceptance than our products and services. These activities could attract members and paying subscribers away from our websites and reduce our market share.
In addition, current and potential competitors are making, and are expected to continue to make, strategic acquisitions or establishing cooperatives and, in some cases, establishing exclusive relationships with significant companies or competitors to expand their businesses or to offer more comprehensive products and services. To the extent that these competitors or potential competitors establish exclusive relationships with major portals, search engines and Internet Service Providers, or ISPs, our ability to reach potential members through online advertising may be restricted. Any of these competitors could cause us difficulty in attracting and retaining members and converting members into paying subscribers and could jeopardize our existing affiliate program and relationships with portals, search engines, ISPs and other online properties.
If we fail to stay current with new technologies and trend in online dating and mobile gaming, our applications could become obsolete
We incur significant costs for research and development not only for the creation of new applications, but also for ensuring that our current applications will be compatible with new technologies. If our research and development team fail to upgrade our applications to stay current with new technologies or add new features that are popular for online dating and mobile gaming, our applications could become obsolete, which could result in a material adverse impact on our business and results of operations.
We depend heavily on key personnel, and turnover of key employees and senior management could harm our business.
Our future business and results of operations depend in significant part upon the continued contributions of our management, marketing and technical personnel. They also depend in significant part upon our ability to attract and retain additional qualified management, technical, marketing and sales and support personnel for our operations. As China is building its powerful technology industry and enhancing its market-oriented economic system, competition for talents becomes increasingly fierce. Many of our potential competitors have greater financial, personnel, technical, manufacturing, marketing, sales and other resources than we do. If we lose a key employee or if a key employee fails to perform in his or her current position, or if we are not able to attract and retain skilled employees as needed, our business could suffer. We depend on the skills and abilities of these key employees in managing the technical, marketing and sales aspects of our business, any part of which could be harmed by further turnover.
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We may not be able to manage our expansion of operations effectively.
We are in the process of developing our business in order to meet the potentially increasing demand for our future products, as well as capture new market opportunities. Our current business operations are small with a short history. We may be unable to achieve our performance targets, which will impact the Company’s operating results. As we continue to grow, we must continue to improve our operational and financial systems, procedures and controls, increase service capacity and output, and expand, train and manage our growing employee base. In order to fund our on-going operations and our future growth, we need to have sufficient internal sources of liquidity or access to additional financing from external sources. Furthermore, our management will be required to maintain and strengthen our relationships with our customers and other third parties. Currently, we only have thirty-seven employees. As a result, our continued expansion has placed, and will continue to place, significant strains on our management personnel, systems and resources. We also will need to further strengthen our internal control and compliance functions to ensure that we will be able to comply with our legal and contractual obligations and minimize our operational and compliance risks. Our current and planned operations, personnel, systems, internal procedures and controls may not be adequate to support our future growth. If we are unable to manage our growth effectively, we may not be able to take advantage of market opportunities, execute our business strategies or respond to competitive pressures.
Our holding company structure may limit the payment of dividends.
We have no direct business operations, other than our ownership of our subsidiaries. While we have no current intention of paying dividends, should we decide in the future to do so, as a holding company, our ability to pay dividends and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiaries and other holdings and investment. In addition, our operating subsidiaries, from time to time, may be subject to restrictions on their ability to make distributions to us, including as a result of restrictive covenants in loan agreements, restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions as discussed below. If future dividends are paid in RMB, fluctuations in the exchange rate for the conversion of RMB into U.S. dollars may reduce the amount received by U.S. stockholders upon conversion of the dividend payment into U.S. dollars.
Chinese regulations currently permit the payment of dividends only out of accumulated profits as determined in accordance with Chinese accounting standards and regulations. Our subsidiaries in China are also required to set aside a portion of their after-tax profits according to Chinese accounting standards and regulations to fund certain reserve funds. Currently, our subsidiaries in China are the only sources of revenues or investment holdings for the payment of dividends. If they do not accumulate sufficient profits under Chinese accounting standards and regulations to first fund certain reserve funds as required by Chinese accounting standards, we will be unable to pay any dividends.
After-tax profits/losses with respect to the payment of dividends out of accumulated profits and the annual appropriation of after-tax profits as calculated pursuant to PRC accounting standards and regulations do not result in significant differences as compared to after-tax earnings as presented in our financial statements.
However, there are certain differences between PRC accounting standards and regulations and U.S. GAAP, arising from different treatment of items such as amortization of intangible assets and change in fair value of contingent consideration rising from business combinations.
Risks Relating to our Commercial Relationship with VIE(s)
PRC laws and regulations governing our businesses and the validity of certain of our Contractual Arrangements are uncertain. If we are found to be in violation of such PRC laws and regulations, our business may be negatively affected and we may be forced to relinquish our interests in those operations.
PRC laws and regulations prohibit or restrict foreign ownership of companies that operate Internet information and content, value added telecommunications and certain other businesses in which we are engaged or could be deemed to be engaged. Consequently, we conduct certain of our operations and businesses in the PRC through our VIE(s). The Contractual Arrangements give us effective control over King Eagle (Tianjin) and enable us to obtain substantially all of the economic benefits arising from it as well as consolidate its financial results in our results of operations. Although the structure we have adopted is s commonly adopted by comparable companies in China, the PRC government may not agree that these arrangements comply with PRC licensing, registration or other regulatory requirements, with existing policies or with requirements or policies that may be adopted in the future.
We have been advised by our PRC counsel that the ownership structures of our PRC subsidiary and our VIE(s) in China do not violate any applicable PRC law, regulation or rule currently in effect; and the contractual arrangements between King Eagle (China), King Eagle (Tianjin) and its equity holders governed by PRC law are valid, binding and enforceable in accordance with their terms and applicable PRC laws and regulations currently in effect. However, our PRC counsel has also advised us that there are substantial uncertainties regarding the interpretation and application of current PRC laws, rules and regulations. Accordingly, the PRC regulatory authorities and PRC courts may in the future take a view that is contrary to the opinion of our PRC legal counsel.
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CX Network, KP International, KP Industrial are considered foreign investors or foreign invested enterprises under PRC law. As a result, CX Network, KP International and KP Industrial are subject to certain limitations under PRC law on foreign ownership of Chinese companies. These laws and regulations are relatively new and may be subject to change, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness of newly enacted laws, regulations or amendments may be delayed, resulting in detrimental reliance by foreign investors. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively.
The PRC government has broad discretion in dealing with violations of laws and regulations, including levying fines, revoking business and other licenses and requiring actions necessary for compliance. In particular, licenses and permits issued or granted to us by relevant governmental bodies may be revoked at a later time by higher regulatory bodies. We cannot predict the effect of the interpretation of existing or new PRC laws or regulations on our businesses. We cannot assure you that our current ownership and operating structure would not be found in violation of any current or future PRC laws or regulations. As a result, we may be subject to sanctions, including fines, and could be required to restructure our operations or cease to provide certain services. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention. If the imposition of any of these government actions causes us to lose our right to direct the activities of any of our VIE(s) or otherwise separate from them and if we are not able to restructure our ownership structure and operations in a satisfactory manner, we would no longer be able to consolidate the financial results of our VIE(s) in our consolidated financial statements. Any of these or similar actions could significantly disrupt our business operations or restrict us from conducting a substantial portion of our business operations, which could materially and adversely affect our business, financial condition and results of operations.
Our arrangements with the VIE(s) and their shareholders may be subject to scrutiny by the PRC tax authorities. Any adjustment of related party transaction pricing could lead to additional taxes, and therefore which could have an adverse effect on our income and expenses.
The tax regime in China is rapidly evolving and there is significant uncertainty for taxpayers in China as PRC tax laws may be interpreted in significantly different ways. The PRC tax authorities may assert that we or our subsidiaries or VIE(s) or their equity holders owe and/or are required to pay additional taxes on previous or future revenue or income. In particular, under applicable PRC laws, rules and regulations, arrangements and transactions among related parties, such as the contractual arrangements with our VIE(s), may be subject to audit or challenge by the PRC tax authorities. We could face material and adverse tax consequences if the PRC tax authorities determine that our agreements with the VIE(s) and their shareholders were not entered into based on arm’s length negotiations. As a result, they may adjust our income and expenses for PRC tax purposes in the form of a transfer pricing adjustment. Such an adjustment may require that we pay additional PRC taxes plus applicable penalties and interest, if any.
Our current corporate structure and business operations may be substantially affected by the newly enacted Foreign Investment Law.
On March 15, 2019, the National People’s Congress promulgated the Foreign Investment Law, which took effect on January 1, 2020. Since it is relatively new, substantially uncertainties exist in relation to its interpretation and implementation. The Foreign Investment Law does not explicitly classify whether variable interest entities that are controlled through contractual arrangements would be deemed as foreign invested enterprises if they are ultimately “controlled” by foreign investors. However, it has a catch-all provision under definition of “foreign investment” that includes investments made by foreign investors in China through other means as provided by laws, administrative regulations or the State Council. Therefore, it still leaves leeway for future laws, administrative regulations or provisions of the State Council to provide for contractual arrangements as a form of foreign investment, at which time it will be uncertain whether our contractual arrangements will be deemed to be in violation of the market access requirements for foreign investment in the PRC and if yes, how our contractual arrangements should be dealt with.
The Foreign Investment Law grants national treatment to foreign-invested entities, except for those foreign-invested entities that operate in industries specified as either “restricted” or “prohibited” from foreign investment in the Special Administrative Measures (Negative List) for Foreign Investment Access jointly promulgated by MOFCOM and the NDRC and took effect in July 2020. The Foreign Investment Law provides that foreign-invested entities operating in “restricted” or “prohibited” industries will require market entry clearance and other approvals from relevant PRC government authorities. If our control over our VIE through contractual arrangements are deemed as foreign investment in the future, and any business of our VIE is “restricted” or “prohibited” from foreign investment under the “negative list” effective at the time, we may be deemed to be in violation of the Foreign Investment Law, the contractual arrangements that allow us to have control over our VIE may be deemed as invalid and illegal, and we may be required to unwind such contractual arrangements and/or restructure our business operations, any of which may have a material adverse effect on our business operation.
Furthermore, if future laws, administrative regulations or provisions mandate further actions to be taken by companies with respect to existing contractual arrangements, we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all. Failure to take timely and appropriate measures to cope with any of these or similar regulatory compliance challenges could materially and adversely affect our current corporate structure and business operations.
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Our contractual arrangements may not be as effective in providing control over the variable interest entities as direct ownership.
We rely on contractual arrangements with our VIE(s) to operate our electronic platform in China and other businesses in which foreign investment is restricted or prohibited. These contractual arrangements may not be as effective as direct ownership in providing us with control over our VIE(s).
If we had direct ownership of the VIE(s), we would be able to exercise our rights as an equity holder directly to effect changes in the boards of directors of the entity, which could effect changes at the management and operational level. Under our contractual arrangements, we would be able to change the members of the boards of directors of the entity only by exclusively exercising the equity holders’ voting rights and would have to rely on the variable interest entity and the variable interest entity equity holders to perform their obligations in the contractual arrangements in order to exercise our control over the variable interest entity. The variable interest entity equity holders may have conflicts of interest with us or our shareholders, and they may not act in the best interests of our company or may not perform their obligations under these contracts. For example, our VIE(s) and their equity holders could breach their contractual arrangements with us by, among other things, failing to conduct their operations, including maintaining our website and using our domain names and trademarks which the relevant variable interest entity has exclusive rights to use, in an acceptable manner or taking other actions that are detrimental to our interests. Pursuant to the call option, we may replace the equity holders of the VIE(s) at any time pursuant to the contractual arrangements. However, if any equity holder is uncooperative and any dispute relating to these contracts or the replacement of the equity holders remains unresolved, we will have to enforce our rights under the contractual arrangements through the operations of PRC law and arbitral or judicial agencies, which may be costly and time-consuming and will be subject to uncertainties in the PRC legal system. See “Any failure by our VIE(s) or their equity holders to perform their obligations under the contractual arrangements would have a material adverse effect on our business, financial condition and results of operations.” Consequently, the contractual arrangements may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership.
Any failure by our VIE(s) or their equity holders to perform their obligations under the contractual arrangements would have a material adverse effect on our business, financial condition and results of operations.
If our VIE(s) or their equity holders fail to perform their respective obligations under the contractual arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. Although we have entered into an option agreement in relation to our variable interest entity, which provides that we may exercise an option to acquire, or nominate a person to acquire, ownership of the equity in that entity or, in some cases, its assets, to the extent permitted by applicable PRC laws, rules and regulations, the exercise of the option is subject to the review and approval of the relevant PRC governmental authorities. We have also entered into an equity interest pledge agreement with respect to the variable interest entity to secure certain obligations of such VIE(s) or their equity holders to us under the contractual arrangements. However, the enforcement of such agreement through arbitral or judicial agencies may be costly and time-consuming and will be subject to uncertainties in the PRC legal system. Moreover, our remedies under the equity pledge agreement are primarily intended to help us collect debts owed to us by the variable interest entity equity holders under the contractual arrangements and may not help us in acquiring the assets or equity of the variable interest entity.
The contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration or court proceedings in China. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal system in the PRC is not as developed as in some other jurisdictions, such as the United States. Moreover, there are very few precedents and little formal guidance as to how contractual arrangements in the context of a variable interest entity should be interpreted or enforced under PRC law, and as a result it may be difficult to predict how an arbitration panel or court would view such contractual arrangements. As a result, uncertainties in the PRC legal system could limit our ability to enforce the contractual arrangements. Under PRC law, if the losing parties fail to carry out the arbitration awards or court judgments within a prescribed time limit, the prevailing parties may only enforce the arbitration awards or court judgments in PRC courts, which would require additional expense and delay. In the event we are unable to enforce the contractual arrangements, we may not be able to exert effective control over the variable interest entities, and our ability to conduct our business, as well as our financial condition and results of operations, may be materially and adversely affected.
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Risk Related to Doing Business in China
Changes in the economic and political policies of the PRC government could have a material and adverse effect on our business and operations.
We conduct substantially all our business operations in China. Accordingly, our results of operations, financial condition and prospects are significantly dependent on economic and political developments in China. China’s economy differs from the economies of developed countries in many aspects, including the level of development, growth rate and degree of government control over foreign exchange and allocation of resources. While China’s economy has experienced significant growth in the past 30 years, the growth has been uneven across different regions and periods and among various economic sectors in China. We cannot assure you that China’s economy will continue to grow, or that if there is growth, such growth will be steady and uniform, or that if there is a slowdown, such slowdown will not have a negative effect on its business and results of operations.
The PRC government exercises significant control over China. Accordingly, our results of operations, financial condition and prospects are significantly dependent on economic and political developments in China. Certain measures adopted by the PRC government may restrict loans to certain industries, such as changes in the statutory deposit reserve ratio and lending guidelines for commercial banks by the People’s Bank of China. These current and future government actions could materially affect our liquidity, access to capital, and ability to operate our business.
The global financial markets experienced significant disruptions in 2008 and the United States, Europe and other economies went into recession. Since 2020 due to the global pandemic, growth of the Chinese economy has slowed down. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall PRC economy but may also have a negative effect on us. Our financial condition and results of operation could be materially and adversely affected by government control over capital investments or changes in tax regulations that are applicable to us. In addition, any stimulus measures designed to boost the Chinese economy, may contribute to higher inflation, which could adversely affect our results of operations and financial condition. See “—Future inflation in China may inhibit our ability to conduct business in China.”
Uncertainties with respect to the PRC legal system could limit the legal protections available to you and us.
We conduct substantially all of our business through our operating subsidiary in the PRC. Our operating subsidiary is generally subject to laws and regulations applicable to foreign investments in China and, in particular, laws applicable to FIEs. The PRC legal system is based on written statutes, and prior court decisions may be cited for reference but have limited precedential value. Since 1979, a series of new PRC laws and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. However, since the PRC legal system continues to evolve rapidly, the interpretations of many laws, regulations, and rules are not always uniform, and enforcement of these laws, regulations, and rules involve uncertainties, which may limit legal protections available to you and us. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention. In addition, all of our executive officers and directors are residents of China and not of the United States, and substantially all the assets of these persons are located outside the United States. As a result, it could be difficult for investors to affect service of process in the United States or to enforce a judgment obtained in the United States against our Chinese operations and subsidiaries.
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You may have difficulty enforcing judgments against us.
Most of our assets are located outside of the United States and most of our current operations are conducted in the PRC. In addition, all of our directors and officers are nationals and residents of countries other than the United States. A substantial portion of the assets of these persons is located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon these persons. It may also be difficult for you to enforce in U.S. courts judgments on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors, most of whom are not residents in the United States and the substantial majority of whose assets are located outside of the United States. In addition, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts. Our counsel as to PRC law has advised us that the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. Courts in China may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based on treaties between China and the country where the judgment is made or on reciprocity between jurisdictions. China does not have any treaties or other arrangements that provide for the reciprocal recognition and enforcement of foreign judgments with the United States. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates basic principles of PRC law or national sovereignty, security, or the public interest. So, it is uncertain whether a PRC court would enforce a judgment rendered by a court in the United States.
The PRC government exerts substantial influence over the manner in which we must conduct our business activities.
The PRC government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property, and other matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of the jurisdictions in which we operate may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.
Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof and could require us to divest ourselves of any interest we then hold in Chinese properties or joint ventures.
The enforcement of the PRC labor contract law may materially increase our costs and decrease our net income.
China adopted a new Labor Contract Law, effective on January 1, 2008, and issued its implementation rules, effective on September 18, 2008. The Labor Contract Law and related rules and regulations impose more stringent requirements on employers with regard to, among others, minimum wages, severance payment and non-fixed-term employment contracts, time limits for probation periods, as well as the duration and the times that an employee can be placed on a fixed-term employment contract. Due to the limited period of effectiveness of the Labor Contract Law and its implementation rules and regulations, and the lack of clarity with respect to their implementation and potential penalties and fines, it is uncertain how they will impact our current employment policies and practices. In particular, compliance with the Labor Contract Law and its implementation rules and regulations may increase our operating expenses. In the event that we decide to terminate some of our employees or otherwise change our employment or labor practices, the Labor Contract Law and its implementation rules and regulations may also limit our ability to effect those changes in a manner that we believe to be cost-effective or desirable, and could result in a material decrease in our profitability.
Future inflation in China may inhibit our ability to conduct business in China.
In recent years, the Chinese economy has experienced periods of rapid expansion and highly fluctuating rates of inflation. During the past ten years, the rate of inflation in China has been as high as 5.9% and as low as -0.8%. These factors have led to the adoption by the Chinese government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. High inflation may in the future cause the Chinese government to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China, and thereby harm the market for our products and our company.
Restrictions on currency exchange may limit our ability to receive and use our sales effectively.
Currently, all of our revenues are settled in RMB, and any future restrictions on currency exchanges may limit our ability to use revenue generated in RMB to fund any future business activities outside China or to make dividend or other payments in U.S. dollars. Although the Chinese government introduced regulations in 1996 to allow greater convertibility of the RMB for current account transactions, significant restrictions still remain, including primarily the restriction that FIEs may only buy, sell or remit foreign currencies after providing valid commercial documents, at those banks in China authorized to conduct foreign exchange business. In addition, conversion of RMB for capital account items, including direct investment and loans, is subject to governmental approval in China, and companies are required to open and maintain separate foreign exchange accounts for capital account items. We cannot be certain that the Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the RMB.
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Fluctuations in exchange rates could adversely affect our business and the value of our securities.
The value of our ordinary shares will be indirectly affected by the foreign exchange rate between the U.S. dollar and RMB and between those currencies and other currencies in which our sales may be denominated. Appreciation or depreciation in the value of the RMB relative to the U.S. dollar would affect our financial results reported in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. Fluctuations in the exchange rate will also affect the relative value of any dividend we issue that will be exchanged into U.S. dollars, as well as earnings from, and the value of, any U.S. dollar-denominated investments we make in the future.
Since July 2005, the RMB has no longer been pegged to the U.S. dollar. Although the People’s Bank of China regularly intervenes in the foreign exchange market to prevent significant short-term fluctuations in the exchange rate, the RMB may appreciate or depreciate significantly in value against the U.S. dollar in the medium to long term. Moreover, it is possible that in the future PRC authorities may lift restrictions on fluctuations in the RMB exchange rate and lessen intervention in the foreign exchange market.
Very limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions. While we may enter into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we may not be able to successfully hedge our exposure at all. In addition, our foreign currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currencies.
Restrictions under PRC law on our PRC subsidiaries’ ability to make dividends and other distributions could materially and adversely affect our ability to grow, make investments or acquisitions that could benefit our business, pay dividends to you, and otherwise fund and conduct our business.
Substantially all of our sales are earned by our PRC subsidiaries. However, PRC regulations restrict the ability of our PRC subsidiaries to make dividends and other payments to their offshore parent companies. PRC legal restrictions permit payments of dividends by our PRC subsidiaries only out of their accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations. Our PRC subsidiaries are also required under PRC laws and regulations to allocate at least 10% of their annual after-tax profits determined in accordance with PRC generally accepted accounting principles to a statutory general reserve fund until the amounts in said fund reaches 50% of their registered capital. Allocations to these statutory reserve funds can only be used for specific purposes and are not transferable to us in the form of loans, advances, or cash dividends. Any limitations on the ability of our PRC subsidiaries to transfer funds to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business.
The PRC government may issue further restrictive measures in the future.
We cannot assure you that the PRC’s government will not issue further restrictive measures in the future. The PRC government’s restrictive regulations and measures could increase our operating costs in adapting to these regulations and measures, limit our access to capital resources or even restrict our business operations, which could further adversely affect our business and prospects.
If our PRC subsidiary or consolidated affiliated entity are found incompliant with the employment and social security, taxation, marketing, tele-communication or other rules of China, they may face penalties imposed by the PRC government.
Our PRC subsidiary and consolidated affiliated entity failed to strictly comply with PRC laws and regulations to contribute towards social insurance premium and housing fund on behalf of their employees, as required by the applicable laws and regulations. We may be required by relevant authorities to make up the shortfall of social insurance premium and housing fund. Although we have made efforts to settle tax payables and take compliance measures, if any PRC government authority takes the position that there is non-compliance with the taxation, marketing, tele-communication or other rules by our PRC subsidiary or consolidated affiliated entity, they may be exposed to penalties from PRC government authorities, in which case the operation and financial conditions of our PRC subsidiary or consolidated affiliated entity may be adversely affected.
Under the Enterprise Income Tax Law, we may be classified as a “resident enterprise” of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC stockholders.
On March 16, 2007, the National People’s Congress of China passed the EIT Law, and on November 28, 2007, the State Council of China passed its implementing rules, which took effect on January 1, 2008. Under the EIT Law, an enterprise established outside of China with “de facto management bodies” within China is considered a “resident enterprise,” meaning that it can be treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. The implementing rules of the EIT Law define de facto management as “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of the enterprise.
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On April 22, 2009, the State Administration of Taxation issued the Notice Concerning Relevant Issues ding Cognizance of Chinese Investment Controlled Enterprises Incorporated Offshore as Resident Enterprises pursuant to Criteria of de facto Management Bodies, or the Notice, further interpreting the application of the EIT Law and its implementation non-Chinese enterprise or group controlled offshore entities. Pursuant to the Notice, an enterprise incorporated in an offshore jurisdiction and controlled by a Chinese enterprise or group will be classified as a “non-domestically incorporated resident enterprise” if (i) its senior management in charge of daily operations reside or perform their duties mainly in China; (ii) its financial or personnel decisions are made or approved by bodies or persons in China; (iii) its substantial assets and properties, accounting books, corporate chops, board and shareholder minutes are kept in China; and (iv) at least half of its directors with voting rights or senior management often resident in China. A resident enterprise would be subject to an enterprise income tax rate of 25% on its worldwide income and must pay a withholding tax at a rate of 10% when paying dividends to its non-PRC shareholders. However, it remains unclear as to whether the Notice is applicable to an offshore enterprise incorporated by a Chinese natural person. Nor are detailed measures on imposition of tax from non-domestically incorporated resident enterprises are available. Therefore, it is unclear how tax authorities will determine tax residency based on the facts of each case.
We may be deemed to be a resident enterprise by Chinese tax authorities. If the PRC tax authorities determine that we are a “resident enterprise” for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. First, we may be subject to the enterprise income tax at a rate of 25% on our worldwide taxable income as well as PRC enterprise income tax reporting obligations. In our case, this would mean that income such as interest on financing proceeds and non-China source income would be subject to PRC enterprise income tax at a rate of 25%. Second, although under the EIT Law and its implementing rules dividends paid to us from our PRC subsidiaries would qualify as “tax-exempt income,” we cannot guarantee that such dividends will not be subject to a 10% withholding tax, as the PRC foreign exchange control authorities, which enforce the withholding tax, have not yet issued guidance with respect to the processing of outbound remittances to entities that are treated as resident enterprises for PRC enterprise income tax purposes. Finally, it is possible that future guidance issued with respect to the new “resident enterprise” classification could result in a situation in which a 10% withholding tax is imposed on dividends we pay to our non-PRC stockholders and with respect to gains derived by our non-PRC stockholders from transferring our shares.
If we were treated as a “resident enterprise” by PRC tax authorities, we would be subject to taxation in both the U.S. and China, and our PRC tax may not be creditable against our U.S. tax.
We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.
On February 3, 2015, the SAT issued the Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises, or SAT Bulletin 7, which came into effect on the same day, revised in October 2017 and December 2017. SAT Bulletin 7 extends its tax jurisdiction to transactions involving the transfer of taxable assets through offshore transfer of a foreign intermediate holding company. In addition, SAT Bulletin 7 has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. SAT Bulletin 7 also brings challenges to both foreign transferor and transferee (or other person who is obligated to pay for the transfer) of taxable assets, as such persons need to determine whether their transactions are subject to these rules and whether any withholding obligation applies.
On October 17, 2017, the SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-Resident Enterprise Income Tax at Source, or SAT Bulletin 37, which came into effect on December 1, 2017 and revised in June 2018. The SAT Bulletin 37 further clarifies the practice and procedure of the withholding of non-resident enterprise income tax.
Where a non-resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an overseas holding company, which is an Indirect Transfer, the non-resident enterprise as either transferor or transferee, or the PRC entity that directly owns the taxable assets, may report such. Indirect Transfer to the relevant tax authority. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such Indirect Transfer may be subject to PRC enterprise income tax, and the transferee or other person who pays for the transfer is obligated to withhold the applicable taxes currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. Both the transferor and the transferee may be subject to penalties under PRC tax laws if the transferee fails to withhold the taxes and the transferor fails to pay the taxes.
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We face uncertainties as to the reporting and other implications of certain past and future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in our offshore subsidiaries and investments. Our company may be subject to filing obligations or may be taxed if our company is transferor in such transactions, and may be subject to withholding obligations if our company is transferee in such transactions, under SAT Bulletin 7 and/or SAT Bulletin 37. For transfers of shares of our company by investors who are non-PRC resident enterprises, our PRC subsidiaries may be requested to assist in the filing under SAT Bulletin 7 and/or SAT Bulletin 37. As a result, we may be required to expend valuable resources to comply with SAT Bulletin 7 and/or SAT Bulletin 37 or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our company should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.
PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident shareholders to penalties and limit our ability to inject capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to distribute profits to us, or otherwise adversely affect us.
The SAFE promulgated the notice on relevant issues relating to domestic resident’s investment and financing and roundtrip investment through special purpose vehicles (“SPV(s)”), or Notice 37, in July 2014 that requires PRC residents or entities to register with SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. In addition, such PRC residents or entities must update their safe registrations when the offshore SPV undergoes material events relating to material change of capitalization or structure of the PRC resident itself (such as capital increase, capital reduction, share transfer or exchange, merger or spin off).On February 28, 2015, SAFE issued a notice according to which the aforesaid PRC residents or entities are no longer required to register with SAFE or its local branch, instead the aforesaid PRC residents or entities need to register with local banks. We have notified substantial beneficial owners of our ordinary shares who we know are PRC residents of their filing obligation, and to the best of our knowledge, most of those shareholders whom we know are PRC residents have completed the registration. However, we may not be aware of the identities of all our beneficial owners who are PRC residents. In addition, we do not have control over our beneficial owners and cannot assure you that all of our PRC resident beneficial owners will comply with SAFE Circular 37. Failure by an individual to comply with the required SAFE registration and updating requirements described above may result in penalties up to RMB50, 000 imposed on such individual and restrictions being imposed on the foreign exchange activities of the PRC subsidiaries of such offshore SPV, including increasing the registered capital of, payment of dividends and other distributions to, and receiving capital injections for the offshore SPV. Failure to comply with Notice 37 may also subject relevant PRC resident beneficial owners or the PRC subsidiaries of such offshore SPV to penalties under PRC foreign exchange administration regulations for evasion of applicable foreign exchange restrictions.
Failure to comply with the individual foreign exchange rules relating to the overseas direct investment or the engagement in the issuance or trading of securities overseas by our PRC resident stockholders may subject such stockholders to fines or other liabilities.
Other than Notice 37, our ability to conduct foreign exchange activities in the PRC may be subject to the interpretation and enforcement of the implementation rules of the administrative measures for individual foreign exchange promulgated by safe in January 2007 (as amended and supplemented, the “Individual Foreign Exchange Rules”). Under the individual foreign exchange rules, any PRC individual seeking to make a direct investment overseas or engage in the issuance or trading of negotiable securities or derivatives overseas must make the appropriate registrations in accordance with safe provisions. PRC individuals who fail to make such registrations may be subject to warnings, fines or other liabilities.
We may not be fully informed of the identities of all our beneficial owners who are PRC residents. For example, because the investment in or trading of our shares will happen in an overseas public or secondary market where shares are often held with brokers in brokerage accounts, it is unlikely that we will know the identity of all of our beneficial owners who are PRC residents. Furthermore, we have no control over any of our future beneficial owners and we cannot assure you that such PRC residents will be able to complete the necessary approval and registration procedures required by the individual foreign exchange rules.
It is uncertain how the individual foreign exchange rules will be interpreted or enforced and whether such interpretation or enforcement will affect our ability to conduct foreign exchange transactions. Because of this uncertainty, we cannot be sure whether the failure by any of our PRC resident stockholders to make the required registration will subject our PRC subsidiaries to fines or legal sanctions on their operations, delay or restriction on repatriation of proceeds of this offering into the PRC, restriction on remittance of dividends or other punitive actions that would have a material adverse effect on our business, results of operations and financial condition.
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We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption laws, and any determination that we violated these laws could have a material adverse effect on our business.
We are subject to the Foreign Corrupt Practice Act, or FCPA, and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute, for the purpose of obtaining or retaining business. We have operations, agreements with third parties, and make most of our sales in China. The PRC also strictly prohibits bribery of government officials. Our activities in China create the risk of unauthorized payments or offers of payments by the employees, consultants, sales agents, or distributors of our Company, even though they may not always be subject to our control. It is our policy to implement safeguards to discourage these practices by our employees. However, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants, sales agents, or distributors of our Company may engage in conduct for which we might be held responsible. Violations of the FCPA or Chinese anti-corruption laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition, the U.S. government may seek to hold our Company liable for successor liability FCPA violations committed by companies in which we invest or that we acquire.
If we become directly subject to the recent scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, stock price and reputation and could result in a loss of your investment in our stock, especially if such matter cannot be addressed and resolved favorably.
Recently, U.S. public companies that have substantially all of their operations in China, particularly companies like us which have completed so-called reverse merger transactions, have been the subject of intense scrutiny, criticism and negative publicity by investors, financial commentators and regulatory agencies, such as the SEC. Much of the scrutiny, criticism and negative publicity has centered around financial and accounting irregularities and mistakes, a lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result of the scrutiny, criticism and negative publicity, the publicly traded stock of many U.S. listed Chinese companies has sharply decreased in value and, in some cases, has become virtually worthless. Many of these companies are now subject to shareholder lawsuits and SEC enforcement actions and are conducting internal and external investigations into the allegations. It is not clear what effect this sector-wide scrutiny, criticism and negative publicity will have on our Company, our business and our stock price. If we become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend our company. This situation will be costly and time consuming and distract our management from growing our company.
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The disclosures in our reports and other filings with the SEC and our other public pronouncements are not subject to the scrutiny of any regulatory bodies in the PRC. Accordingly, our public disclosure should be reviewed in light of the fact that no governmental agency that is located in China where substantially all of our operations and business are located have conducted any due diligence on our operations or reviewed or cleared any of our disclosure.
We are regulated by the SEC and our reports and other filings with the SEC are subject to SEC review in accordance with the rules and regulations promulgated by the SEC under the Securities Act and the Exchange Act. Unlike public reporting companies whose operations are located primarily in the United States, however, substantially all of our operations are located in China. Since substantially all of our operations and business takes place in China, it may be more difficult for the staff of the SEC to overcome the geographic and cultural obstacles that are present when reviewing our disclosure. These same obstacles are not present for similar companies whose operations or business take place entirely or primarily in the United States. Furthermore, our SEC reports and other disclosure and public pronouncements are not subject to the review or scrutiny of any PRC regulatory authority. For example, the disclosure in our SEC reports and other filings are not subject to the review of the China Securities Regulatory Commission, a PRC regulator that is tasked with oversight of the capital markets in China. Accordingly, you should review our SEC reports, filings and our other public pronouncements with the understanding that no local regulator has done any due diligence on our company and with the understanding that none of our SEC reports, other filings or any of our other public pronouncements has been reviewed or otherwise been scrutinized by any local regulator.
Risks Related to the Market for Our Securities
Our common stock is quoted on the OTC market, which may have an unfavorable impact on our stock price and liquidity.
Our common stock is quoted on the OTC market. The OTC market is a significantly more limited market than the New York Stock Exchange or NASDAQ. The quotation of our shares on the OTC market may result in a less liquid market available for existing and potential stockholders to trade shares of our common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability to raise capital in the future. We plan to list our common stock as soon as practicable. However, we cannot assure you that we will be able to meet the initial listing standards of any stock exchange, or that we will be able to maintain any such listing.
We are subject to penny stock regulations and restrictions and you may have difficulty selling shares of our common stock.
The SEC has adopted regulations which generally define so-called “penny stocks” to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. Our common stock is a “penny stock” and is subject to Rule 15g-9 under the Exchange Act, or the Penny Stock Rule. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and “accredited investors” (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses). For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market, thus possibly making it more difficult for us to raise additional capital.
For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in penny stock, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.
There can be no assurance that our common stock will qualify for exemption from the Penny Stock Rule. In any event, even if our common stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.
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We are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements applicable to “emerging growth companies” will make our common shares less attractive to investors.
We are an “emerging growth company,” as defined in the JOBS Act. For as long as we continue to be an “emerging growth company,” we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could be an “emerging growth company” until 2020, although circumstances could cause us to lose that status earlier, including if we become a large accelerated filer or if we have issued an aggregate of $1 billion in non-convertible debt during the preceding 3 years. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and the price of our common stock may be more volatile.
We do not intend to pay dividends for the foreseeable future.
For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our common stock. Accordingly, investors must be prepared to rely on sales of their common stock after price appreciation to earn an investment return, which may never occur. Investors seeking cash dividends should not purchase our common stock. Any determination to pay dividends in the future will be made at the discretion of our board of directors and will depend on our results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our board deems relevant.
Fulfilling our obligations incident to being a public company, including with respect to the requirements of and related rules under the Sarbanes-Oxley Act of 2002, is expensive and time-consuming, and any delays or difficulties in satisfying these obligations could have a material adverse effect on our future results of operations and our stock price.
As a public company, the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC require us to implement various corporate governance practices and adhere to a variety of reporting requirements and complex accounting rules. Compliance with these public company obligations requires us to devote significant time and resources and places significant additional demands on our finance and accounting staff and on our financial accounting and information systems. We plan to hire additional accounting and financial staff with appropriate public company reporting experience and technical accounting knowledge. Other expenses associated with being a public company include increased auditing, accounting and legal fees and expenses, investor relations expenses, increased directors’ fees and director and officer liability insurance costs, registrar and transfer agent fees and listing fees, as well as other expenses.
We are required under the Sarbanes-Oxley Act of 2002 to document and test the effectiveness of our internal control over financial reporting. In addition, we are required under the Exchange Act to maintain disclosure controls and procedures and internal control over financial reporting. Any failure to maintain effective controls or implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. If we are unable to conclude that we have effective internal control over financial reporting, investors could lose confidence in the reliability of our financial statements. This could result in a decrease in the value of our common stock. Failure to comply with the Sarbanes-Oxley Act of 2002 could potentially subject us to sanctions or investigations by the SEC or other regulatory authorities.
Compliance with changing regulation of corporate governance and public disclosure will result in additional expenses.
Changing laws, regulations and standards relating to corporate governance and public disclosure, including SOX and related SEC regulations, have created uncertainty for public companies and significantly increased the costs and risks associated with accessing the public markets and public reporting. Our management team will need to invest significant management time and financial resources to comply with both existing and evolving standards for public companies, which will lead to increased general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities.
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Provisions in our charter documents and under Nevada law could discourage a takeover that stockholders may consider favorable.
Provisions in our articles of incorporation and bylaws may have the effect of delaying or preventing a change of control or changes in our management. Our board of directors has the right to determine the authorized number of directors and to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to control the size of or fill vacancies on our board of directors. In addition, we are authorized to issue up to 40,000,000 shares of common stock, in one or more classes or series as may be determined by our board of directors. The issuance of shares of common stock, while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from acquiring, a majority of our outstanding voting stock.
The audit report included in this Current Report was prepared by auditors who are not inspected by the Public Company Accounting Oversight Board and, as a result, investors are deprived of the benefits of such inspection.
The independent registered public accounting firm that issues the audit report included in this Current Report, as auditors of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board (United States), or the “PCAOB”, is required by the laws of the United States to undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional standards. Because our auditors are located in China, a jurisdiction where the PCAOB is currently unable to conduct inspections without the approval of Chinese authorities, our auditors are not currently inspected by the PCAOB.
Inspections of other firms that the PCAOB has conducted outside China have identified deficiencies in those firms’ audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The inability of the PCAOB to conduct inspections in China prevents the PCAOB from regularly evaluating our auditor’s statements, audits and quality control procedures. As a result, investors may be deprived of the benefits of PCAOB inspections.
The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our auditor’s quality control and audit procedures as compared to auditors outside of China that are subject to PCAOB inspections. Investors may lose confidence in our reported financial information and procedures and the quality of our financial statements.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain statements that may be deemed “forward-looking statements” within the meaning of United States of America securities laws. All statements, other than statements of historical fact, that address activities, events or developments that we intend, expect, project, believe or anticipate and similar expressions or future conditional verbs such as will, should, would, could or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.
These statements include, without limitation, statements about our anticipated expenditures, including those related to general and administrative expenses; the potential size of the market for our services, future development and/or expansion of our services in our markets, our ability to generate revenues, our ability to obtain regulatory clearance and expectations as to our future financial performance. Our actual results will likely differ, perhaps materially, from those anticipated in these forward-looking statements as a result of various factors, including: our need and ability to raise additional cash. The forward-looking statements included in this report are subject to a number of additional material risks and uncertainties, including but not limited to the risks described in our filings with the Securities and Exchange Commission.
The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and the related notes to those statements included in this filing. In addition to historical financial information, this discussion may contain forward-looking statements reflecting our current plans, estimates, beliefs and expectations that involve risks and uncertainties. As a result of many important factors, particularly those set forth under “Special Note Regarding Forward-Looking Statements”, our actual results and the timing of events may differ materially from those anticipated in these forward-looking statements.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations of Kun Peng International Holding Limited and Its Subsidiaries and VIE for The Six Months Ended March 31, 2021 and for The Period from Inception Through September 30, 2020
Overview
Kun Peng International Holding Limited
Kun Peng International Holding Limited (“KP International”) was incorporated in the British Virgin Islands on April 20, 2021. KP International is a holding company and entered into a Bought and Sold Note with Kunpeng (China) Industrial Development Company Limited (“KP Industrial”), incorporated in Hong Kong on August 11, 2017, at a cash consideration of $0.129 (HK$1) on May 3, 2021. After the ownership transfer, it became a sole shareholder of KP Industrial.
It entered into the Share Exchange Agreement with CX Network Group, Inc. and the members of KP International to acquire all the issued and outstanding capital of KP International in exchange for the issuance of CX Network Group Inc. to those members (“Reverse Acquisition”). After the Reverse Acquisition, KP International became a wholly-owned subsidiary of CX Network on May 17, 2021.
Kunpeng (China) Industrial Development Company Limited
Kunpeng (China) Industrial Development Company Limited (“KP Industrial”) was incorporated as a limited liability company in Hong Kong under the name of Jing Jin Ji Investment Group Co., Limited (“Jing Jin Ji”) on August 11, 2017. The share capital of KP Industrial is 10,000 ordinary shares at $1,292 (HKD10,000) and was wholly owned by an individual. On November 9, 2018, Jing Jin Ji changed its name to “Kunpeng (China) Industrial Development Company Limited” and filed a Certificate of Change of Name with the Hong Kong Company Registry on the same day. Although it was incorporated in 2017, it did not commence operations until July 2020 as it focused on exploring business opportunities in its initial phrase and the developing our online mobile application, King Eagle Mall, through its subsidiary, King Eagle (China) Co., Ltd. It became a wholly owned subsidiary of KP International on May 3, 2021.
King Eagle (China) Co., Ltd.
King Eagle (China) Co., Ltd. (“King Eagle (China)”) was incorporated as a limited liability company in Beijing Economic and Technological Development Zone in the People’s Republic of China (“the PRC”) on March 20, 2019 with a registered capital of approximately $15 million (RMB100 million). King Eagle (China) was a wholly owned subsidiary of KP Industrial at the time of establishment. KP Industrial transferred its approximately $2.2 million (RMB 15 million) or 15% to Guoxin Ruilian Group Co., Ltd., a limited liability company incorporated in Beijing, the PRC, on November 2, 2020.
On March 26, 2021, Guoxin Ruilian Group Co., Ltd entered into equity transfer agreements with KP Industrial and Guoxin Zhengye. Both Guoxin Ruilian Group Co., Ltd and Guoxin Zhengye are wholly owned by a common shareholder, Guoxin United Holdings Group Co., Ltd. Under the agreements, Guoxin Ruilian Group Co., Ltd agreed to transfer its 8% of its ownership in King Eagle (China) to Guoxin Zhengye and the remaining 7% ownership in King Eagle (China) to KP Industrial on April 20, 2021. After the transfer, KP Industrial and Guoxin Zhengye became the 92% and 8% shareholders of King Eagle (China), respectively.
On May 15, 2021, King Eagle (China) entered into a series of VIE agreements with King Eagle (Tianjin) and its stockholders, which King Eagle (China) effectively assumed management of the business activities of King Eagle (Tianjin) and has the right to appoint all executives and senior management and the members of the board of directors of King Eagle (Tianjin). King Eagle (Tianjin) is a Chinese limited liability company and was incorporated under the laws of the People’s Republic of China on September 2, 2020. King Eagle (Tianjin) engages in the business of promoting preventive health care products in the PRC. King Eagle (Tianjin) purchases such products from the third-party merchants and sells to its members through a mobile social e-commerce platform, King Eagle Mall, which was initially developed by King Eagle (China). King Eagle (Tianjin) is currently developing and organizing offline physical platforms (Smart Kiosk) throughout various cities and local areas in 20 provinces across the PRC. The VIE Agreements are designed to provide King Eagle (China) with the power, rights and obligations equivalent in all material respects to those it would possess as the sole equity holder of King Eagle (Tianjin), including absolute control rights and the rights to the assets, property and revenue of King Eagle (Tianjin).
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King Eagle (Tianjin) Technology Co., Ltd.
King Eagle (Tianjin) Technology Co., Ltd. (“King Eagle (Tianjin)”) was incorporated as a limited liability company in Tianjin Pilot Free Trade Zone in the People’s Republic of China on September 2, 2020 with a registered capital of approximately $1.5 million (RMB 10 million). It is owned by multiple individuals: Chengyuan Li, 51%, Jinjing Zhang, Wanfeng Hu, Cuilian Liu, Zhizhong Wang (each of them owns 6%), Zhandong Fan, Yanlu Li, Yuanyuan Zhang, Xiangyi Mao and Hui Teng (each of them owns 5%). Those shareholders also indirectly own KP International through two British Virgin Islands entities: Kunpeng Tech Limited and Kunpeng TJ Limited. Additionally, out of these stakeholders, four of them are the director and executives of KP International which include: Chenyuan Li, Director, Xiangyi Mao, Chief Executive Officer, Yuanyuan Zhang, Chief Financial Officer and Yanlu Li, Vice President.
Through our subsidiary and VIE, we engage in the sale of health care and health related household products through its mobile platform, King Eagle Mall.
We refer to KP International, its consolidated subsidiaries and variable interest entity collectively as “we”, “us” and “our”.
Significant Accounting Policies
Basis of Presentation
The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America. This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred. The consolidated financial statements are expressed in U.S. dollars.
Principles of Consolidation
The consolidated financial statements include the financial statements of KP International Holding Limited, its subsidiaries and variable interest entity (“VIE”).
Use of Estimates and Assumptions
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimate and assumptions that impact the presented amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the presented amounts of revenues and expenses during the period. Actual results may differ from those estimates. Significant estimates during the six months ended March 31, 2021 and from inception through September 30, 2020 include the collectability of receivables, the useful lives of long-lived assets and intangibles, assumptions used in assessing impairment of long-lived assets, valuation of accruals for expenses and tax due.
Going Concern Consideration
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America which contemplate continuation of the Company as a going concern basis. The going-concern basis assumes that assets are realized and liabilities are extinguished in the ordinary course of business at amounts disclosed on the financial statements. The Company’s ability to continue as a going concern depends on the liquidation of its current assets and business developments. As of March 31, 2021, the Company incurred a negative working capital, $1,332,458 and a comprehensive loss of $653,063. As of September 30, 2020, the Company has incurred a negative working capital, $617,071 and a comprehensive loss of $215,659. These conditions raise substantial doubt about the ability of the Company to continue as a going concern. In an effort to continue as a going concern, we may continue raise fund through director’s support and/or private placement to support our operational needs. King Eagle (China) and King Eagle (Tianjin) introduced an offline platform “Smart Kiosk” which integrates with King Eagle Mall to develop the social e-commerce and physical store to expand the market of preventive health care and health related household products.
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Earnings (loss) per share
Basic income (loss) per share is computed by dividing net income (loss) attributable to the holders of ordinary shares by the weighted average number of ordinary shares outstanding during the year. Diluted income (loss) per share is calculated by dividing net income (loss) attributable to the holders of ordinary shares as adjusted for the effect of dilutive ordinary share equivalents, if any, by the weighted average number of ordinary shares and dilutive ordinary share equivalents outstanding during the period. However, ordinary share equivalents are not included in the denominator of the diluted earnings per share calculation when inclusion of such shares would be anti-dilutive, such as in a period in which a net loss is recorded.
Foreign Currency Translation
The reporting currency of the Company is the U.S. dollar. King Eagle uses the local currency, Renminbi (RMB), as its functional currencies as determined based on the criteria of ASC 830, “Foreign Currency Translation”. Assets and liabilities are translated at the unified exchange rate as quoted by www.xe.com at the end of the period. Income and expense accounts are translated at the average translation rates and the equity accounts are translated at historical rates. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Translation adjustments included in accumulated other comprehensive loss amounted to $13,676 and $6,888 for the six months ended March 31, 2021 and from inception through September 30, 2020.
Below is a table with foreign exchange rates used for translation:
For the six months ended March 31, 2021 (Average Rate) | Hong Kong Dollar (HKD) | Chinese Renminbi (RMB) | ||||||
| United States dollar ($1) | 7.7546 | 6.5544 | ||||||
| As of March 31, 2021 (Closing Rate) | ||||||||
| United States dollar ($1) | 7.7749 | 6.5528 | ||||||
From inception through September 30, 2020 (Average Rate) | Hong Kong Dollar (HKD) | Chinese Renminbi (RMB) | ||||||
| United States dollar ($1) | 7.7506 | 7.0145 | ||||||
| As of September 30, 2020 (Closing Rate) | ||||||||
| United States dollar ($1) | 7.7500 | 6.7905 | ||||||
Cash and Cash Equivalents
We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. We maintain with various financial institutions in PRC. As of September 30, 2020, cash balances held in PRC banks are uninsured. We have not experienced any losses in bank accounts and believes we are not exposed to any risks on our cash in bank accounts.
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Financial Instrument
The carrying amount reported in the balance sheet for cash, other receivables, accrued liabilities and other payables approximate fair value because of the immediate or short-term maturity of these financial instruments.
Plant, Property and Equipment
Plant, property and equipment are stated at cost less accumulated depreciation and impairment losses. Gains and losses on dispositions of property and equipment are included in operating income (loss). Major additions, renewals and improvements are capitalized, while maintenance and repairs are recognized as expense as incurred.
Depreciation is provided over the estimated useful life of each class of depreciable assets and is computed using the straight-line method over the useful lives of the assets are as follows:
| Classification | Estimated useful life | |
| Leasehold improvements | 5 years | |
| Office equipment | 3 years | |
| Computer equipment | 3 years | |
| Computer software | 5 years |
Impairment of Long-lived Assets
Long-lived assets, including buildings and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. We assess the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated discounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When we identify an impairment, reduce the carrying amount of the asset to the estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. As of September 30, 2020, management determined that there was no impairment.
Fair Value Measurements
The Company applies the provisions of ASC Subtopic 820-10, “Fair Value Measurements”, for fair value measurements of financial assets and financial liabilities and for fair value measurements of non-financial items that are recognized or disclosed at fair value in the financial statements. ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.
ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
| ● | Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
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| ● | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. | |
| ● | Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. |
The Company’s financial assets and liabilities include cash, receivables, accounts payable, accrued expenses and loans.
Comprehensive Income (Loss)
Other comprehensive income (loss) refers to revenues, expenses, gains and losses that under generally accepted accounting principles are included in comprehensive income but are excluded from net income (loss) as these amounts are recorded directly as an adjustment to stockholders’ equity. Our other comprehensive loss for the six months ended March 31, 2021 and for the period from inception through September 30, 2020 was comprised of foreign currency translation adjustments.
Revenue Recognition
Revenue is comprised of sales of goods and represents the amount of consideration the Company is entitled to upon the transfer of goods. Revenue was recorded on a gross basis, net of surcharges and value added tax (“VAT”) of gross sales. The Company recorded revenue on a gross basis because the Company is the primary obligor of the sales arrangements has latitude in establishing prices, has discretion in suppliers’ selection and assumes credit risks on receivables from customers.
Revenue is measured based on the amount of consideration that we expect to receive, reduced by estimates for return allowances, promotional discounts, and rebates. Revenue also excludes any amounts collected on behalf of third parties, including sales and indirect taxes.
Consistent with the criteria of ASC 606 “Revenue from Contracts with Customers,” we recognize revenue when performance obligations are satisfied by transferring control of a promised good or service to a customer. For performance obligations that are satisfied at a point in time, we also consider the following indicators to assess whether control of a promised good or service is transferred to the customer: (i) right to payment, (ii) legal title, (iii) physical possession, (iv) significant risks and rewards of ownership and (v) acceptance of the good or service. For performance obligations satisfied over time, we recognize revenue over time by measuring the progress toward complete satisfaction of a performance obligation.
Lease
In February 2016, the FASB issued ASU 2016-12, Leases (ASC Topic 842), which amends the leases requirements in ASC Topic 840, Leases. Under the new lease accounting standard, a lessee will be required to recognize a right-of-use asset and lease liability for most leases on the balance sheet. The new standard also modifies the classification criteria and accounting for sales-type and direct financing leases, and enhances the disclosure requirements. Leases will continue to be classified as either finance or operating leases.
The Company adopted ASC Topic 842 using the modified retrospective transition method on July 1, 2020. There was no cumulative effect of initially applying ASC Topic 842 that required an adjustment to the opening retained earnings on the adoption date nor revision of the balances in comparative periods. As a result of the adoption, the Company recognized a lease liability and right-of-use asset for each of the existing lease arrangement. The adoption of the new lease standard does not have a material impact on the consolidated income statements or the consolidated statements of cash flows.
Advertising Expenses
Advertising costs are classified as selling expenses and are expensed in the period incurred and represent online marketing, including fees paid to search engines, and online and offline marketing. Advertising expenses were $2,580 and $nil, respectively, for the six months ended March 31, 2021 and for the period from inception through September 30, 2020.
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Concentration of Risk
Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and other accounts receivable. As of March 31, 2021 and September 30, 2020, $516,405 (RMB3,383,886) and $140,430 (RMB 953,588), respectively, were deposited with various major financial institutions located in the PRC. While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness.
Historically, deposits in Chinese banks are secure due to state policy to protect depositor interests. However, China promulgated a Bankruptcy Law in August 2006 that came into effect on June 1, 2007, which contains a separate article expressly stating that the State Council may promulgate implementation measures to provide for the bankruptcy of Chinese banks based on the Bankruptcy Law. Under the current Bankruptcy Law, a Chinese bank may file bankruptcy if it deems itself to be insolvent. In addition, since China’s concession to the World Trade Organization, foreign banks have been gradually permitted to operate in China and have intensified competition in many aspects, especially since the opening of the Renminbi business to foreign banks in late 2006. Therefore, the risk of bankruptcy at the institutions that the Company maintains deposits has increased. In the event of bankruptcy, the Company is unlikely to reclaim its deposits in full since it is unlikely to be classified as a secured creditor under PRC laws.
Risks of variable interest entity structure
In the opinion of management, (i) the corporate structure of the Company is in compliance with existing PRC laws and regulations; (ii) the VIE Arrangements are valid and binding, and do not result in any violation of PRC laws or regulations currently in effect; and (iii) the business operations of our foreign-invested enterprise and the VIE are in compliance with existing PRC laws and regulations in all material respects.
However, there are substantial uncertainties regarding the interpretation and application of current and future PRC laws and regulations. Accordingly, the Company cannot be assured that PRC regulatory authorities will not ultimately take a contrary view to the foregoing opinion of its management. If the current corporate structure of the Company or the VIE Arrangements is found to be in violation of any existing or future PRC laws and regulations, the Company may be required to restructure its corporate structure and operations in the PRC to comply with changing and new PRC laws and regulations. In the opinion of management, the likelihood of loss in respect of the Company’s current corporate structure or the VIE Arrangements is remote based on current facts and circumstances.
Concentration of customers and vendors
There was no revenue from customers that individually represent greater than 10% of the total revenues for the six months ended March 31, 2021 and for the period from inception through September 30, 2020.
From inception through September 30, 2020, two major vendors accounted for 57% and 38% of the Company’s total cost of sales.
For the six months ended March 31, 2021, two major vendors accounted for 35% and 11% of the Company’s total cost of sales.
Income Taxes
We account for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance against deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date.
We apply ASC 740, Accounting for Income Taxes, to account for uncertainty in income taxes and the evaluation of a tax position is a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met.
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Recent Accounting Pronouncements
Management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. Our financial statements reflect the selection and application of accounting policies which require management to make significant estimates and judgments. The discussion of our critical accounting policies contained in Note 2 to our consolidated financial statements, “Summary of Significant Accounting Policies”, is incorporated herein by reference.
Results of Operations of KP International, Its Subsidiaries and VIE
The following discussion and analysis of the results of our operations should be read in conjunction with the Kun Peng International Holding Limited, its subsidiary and VIE for the six months ended March 31, 2021 and from inception through September 30, 2020, as well as the related notes to the consolidated financial statements that are included elsewhere in this report.
Results of operations for the six months ended March 31, 2021 and from inception through September 30, 2020:
For
the Six Months Ended on | From Inception Through September 30, 2020 | |||||||||||||||
| Amount | % of revenue | Amount | % of revenue | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Revenues | $ | 2,173,594 | 100.0 | % | $ | 819,130 | 100.0 | % | ||||||||
| Cost of revenues | 315,883 | 14.5 | 122,783 | 15.0 | ||||||||||||
| Gross profit | 1,857,711 | 85.5 | 696,347 | 85.0 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative expenses | 901,089 | 41.5 | 380,777 | 46.5 | ||||||||||||
| Selling expense | 1,602,121 | 73.7 | 524,443 | 64.0 | ||||||||||||
| Total operating expenses | 2,503,210 | 115.2 | 905,220 | 110.5 | ||||||||||||
| Loss from operations | (645,499 | ) | (29.7 | ) | (208,873 | ) | (25.5 | ) | ||||||||
| Other (expenses) income | 421 | (0.0 | ) | 102 | 0.0 | |||||||||||
| Loss before income taxes | (645,078 | ) | (29.7 | ) | (208,771 | ) | (25.5 | ) | ||||||||
| Income tax expense | - | - | - | - | ||||||||||||
| Net loss | $ | (645,078 | ) | (29.7 | )% | $ | (208,771 | ) | (25.5 | )% | ||||||
Revenue
For the six months ended March 31, 2021 and from inception through September 30, 2020, we recognized our revenue on a gross basis, net of sub-charges and value-added tax (“VAT”) of gross sales, in an amount of $2,173,594 and $819,130, respectively. Our revenue primarily included the sale of health care and health related household products to our customers via our mobile application, King Eagle Mall.
Cost of revenue
Our cost of revenue for the six months ended March 31, 2021 and for the period from inception through September 30, 2020 were $315,883 and $122,783, respectively. This primarily included the purchase of health care and health related household products from our suppliers.
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Gross profit
For the six months ended March 31, 2021 and from inception through September 30, 2020, our gross profit amounted to $1,857,711 or 85.5%, and $696,347 or 85%, respectively.
Operating Expenses
The operating expenses of KP International and its VIE, $2,503,210, mainly consisted of general and administrative expenses and selling expense, $901,089 and $1,602,121, respectively, for the six months ended March 31, 2021.
The operating expenses of KP International and its VIE, $1,055,559, mainly consisted of general and administrative expenses and selling expense, $380,777 and $524,443, respectively, from inception through September 30, 2020.
General and administrative expenses:
Our general and administrative expenses from inception through September 30, 2020 and for the six months ended March 31, 2021 comprised of the following:
| For Six Months Ended March 31, 2021 | From Inception Through September 30, 2020 | |||||||
| (Unaudited) | ||||||||
| Employee compensation and benefit | $ | 369,575 | $ | 125,238 | ||||
| Office rent and building management | 202,438 | 105,167 | ||||||
| Office supplies and meeting | 47,212 | 31,535 | ||||||
| Professional services fee | 193,092 | 59,208 | ||||||
| Business registration | - | 18,818 | ||||||
| Travel, transportation and gasoline | 31,224 | 18,220 | ||||||
| Meals and entertainment | 16,633 | 8,965 | ||||||
| Depreciation and amortization | 5,636 | 2,569 | ||||||
| Repair and maintenance | - | 8,049 | ||||||
| Others | 35,279 | 3,008 | ||||||
| Total | $ | 901,089 | $ | 380,777 | ||||
Selling expense
Our selling expense, which was primarily incurred by our sales and marketing department, for the six months ended March 31, 2021 and from inception through September 30, 2020 included the following:
| For Six Months Ended March 31, 2021 | From Inception Through September 30, 2020 | |||||||
| (Unaudited) | ||||||||
| Service agents | $ | 1,309,239 | $ | 321,575 | ||||
| Employee compensation and benefit | 208,307 | 168,785 | ||||||
| Office supplies and meeting | 49,514 | 20,892 | ||||||
| Customer services | 12,797 | 3,522 | ||||||
| Travel, transportation and gasoline | 7,486 | 1,538 | ||||||
| Meals and entertainment | 4,091 | 7,718 | ||||||
| Depreciation and amortization | 1,958 | 295 | ||||||
| Advertising | 2,580 | - | ||||||
| Others | 6,149 | 118 | ||||||
| Total | $ | 1,602,121 | $ | 524,443 | ||||
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Other (expenses) income
Other income for the six months ended March 31, 2021 was $421.
Other income from inception through September 30, 2020, $102 included other income, $20 and interest income, $82.
Income tax expense
For the six months ended March 31, 2021 and from inception through September 30, 2020, the income tax expense of the Company was nil. Due to the net loss before income tax, the Company recognized a full valuation recognition against its deferred tax assets, which included net operating loss carryforwards, as management believes it is more likely than not that the Company will not realize its net operating loss carryforwards before it expires in 5 years.
Net Loss
As a result of the factors discussed above, for the six months ended March 31, 2021 and from inception through September 30, 2020 and, net loss amounted to $645,078 and $208,771 respectively.
Foreign currency translation adjustment
The functional currency of our operation in PRC is Chinese Yuan or Renminbi (“RMB”) and while our operation in Hong Kong is Hong Kong Dollars (“HKD”). The financial statements are translated to U.S. dollars using the period end rates of exchange for assets and liabilities, equity is translated at historical exchange rates, and average rates of exchange (for the period) are used for revenues and expenses and cash flows. Transaction gains and or losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. As a result of foreign currency translation, which is a noncash adjustment, we reported a foreign currency translation loss of $7,985 and $6,888 for the six months ended March 31, 2021 and from inception through September 30, 2020, respectively. This non-cash loss had an effect of increasing our reported comprehensive loss.
Comprehensive loss
As a result of our net loss after income taxes, we had comprehensive loss for the six months ended March 31, 2021 and from inception through September 30, 2020, $645,078 and $208,771, respectively.
Liquidity and Capital Resources
As of March 31, 2021 and September 30, 2020, we had a cash balance of $520,159 and $141,166, respectively.
For the six months ended March 31, 2021, net cash provided by operating activities totaled to $389,620. Operating cash inflow was mainly attributable to an increase in trade and other payable, $1,348,657, offset by the net loss, $645,078, prepayments to vendors and lessors, $105,342 and decrease in deferred revenue, $206,831.
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Net cash used in investing activities totaled to $15,844 primarily related to the purchase of office and computer equipment.
There was no financing activity for the six months ended March 31, 2021.
Effect of exchange rate change on cash totaled $5,217. The resulting change in cash for the period was an increase of $378,993.
From inception through September 30, 2020, net cash provided by operating activities totaled to $207,407. Operating cash inflow was primarily attributable to an increase in deferred revenue, $197,085 and an increase in an amount due to our director, $244,359, who paid rent deposit and payments to our lessors on behalf of King Eagle (China), offset by the net loss, $208,771.
Net cash used in investing activities totaled to $70,748 primarily related to the purchase of office equipment, software and leasehold improvements.
There was no financing activity for the period from inception through September 30, 2020.
Effect of exchange rate change on cash totaled $4,507. The resulting change in cash for the period was an increase of $141,166.
| For Six Months Ended March 31, 2021 | From Inception Through September 30, 2020 | |||||||
| (Unaudited) | ||||||||
| Net cash provided by operating activities | $ | 389,620 | $ | 207,407 | ||||
| Net cash used in investing activities | (15,844 | ) | (70,748 | ) | ||||
| Effect of exchange rate change on cash | 5,217 | 4,507 | ||||||
| Total net change in cash and cash equivalents | $ | 378,993 | $ | 141,166 | ||||
The following table sets forth a summary of changes in our working capital as of March 31, 2021 and September 30, 2020:
| March 31, 20211 | September 30, 2020 | |||||||
| (Unaudited) | ||||||||
| Current Assets | $ | 698,458 | $ | 239,535 | ||||
| Current Liabilities | 2,030,916 | 856,606 | ||||||
| $ | (1,332,458 | ) | $ | (617,071 | ) | |||
We require cash in approximately $1.2 million within the next twelve months which primarily related to third party vendors payables. In an effort to support and maintain our financial positions and operations, the stakeholder of King Eagle (China) started a project of construction of 50 smart kiosks throughout 20 provinces in the PRC in March 2021. King Eagle (Tianjin) entered to a cooperation agreement with the stakeholder on March 31, 2021 that King Eagle (Tianjin) was authorized to operate the smart kiosks. We believe that the launch of the smart kiosks will increase our physical presence and market share of health care products in major cities in the PRC. Simultaneously, our director and stakeholder of King Eagle (China) continues to support our operation financially. Furthermore, on May 17, 2021, we have entered into a share exchange agreement with CX Network which enabled us to raise capital through the over-the-counter channel.
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Going Concern Consideration
Our operations and financial results are subject to numerous various risks and uncertainties that could adversely affect our business, financial condition, and results of operations.
Contractual Obligations and Other Commitments
We had the following contractual obligations and commercial commitments as of March 31, 2021:
| Payments Due by Period | ||||||||||||||||||||
| Less Than 1 Year | 1 to 3 Years | 3 to 5 Years | More Than 5 Years | Total | ||||||||||||||||
| Contractual Obligations: | ||||||||||||||||||||
| Operating lease obligations | $ | - | $ | 371,202 | $ | - | $ | - | $ | 371,202 | ||||||||||
| Cooperation Agreement of Smart Kiosk | 1,144,553 | - | - | - | 1,144,553 | |||||||||||||||
| Total contractual obligations | $ | 1,144,553 | $ | 371,202 | $ | - | $ | - | $ | 1,515,755 | ||||||||||
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements, including arrangements that would affect our liquidity, capital resources, market risk support, and credit risk support or other benefits.
Future Financings
We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities, or if we are able, there is no guarantee that existing shareholders will not be substantially diluted.
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PROPERTIES
King Eagle (China) and King Eagle (Tianjin) entered into multiple lease arrangements in Beijing and Tianjin, the PRC for their office spaces and employee accommodations:
| Entity | Description of Use | Leased Square Meters | Location | |||||
| King Eagle (China) | Office space (1) | 1,191.12 | Yizhuang Economic and Technological Development Zone, Beijing, PRC | |||||
| King Eagle (China) | Employee accommodation (2) | 100.42 | Beijing, PRC | |||||
| King Eagle (Tianjin) | Office space (3) | 564.88 | Tianjin Airport Economic Zone, Tianjin, PRC; Beijing Economic and Technological Development Zone, Beijing, PRC | |||||
| (1) | This includes 3 office locations in Beijing as of March 31, 2021. |
| (2) | This includes 2 employee accommodations in Beijing as of March 31, 2021. |
| (3) | This includes 1 office location in Tianjin and 2 office locations in Beijing as of March 31, 2021 |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of May 17, 2021, immediately following the Reverse Takeover by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities, (ii) each of our directors and each of our named executive officers (as defined under Item 402(m)(2) of Regulation S-K), and (iii) officers and directors as a group. Unless otherwise indicated, the shareholders listed possess sole voting and investment power with respect to the shares shown except to the extent voting power may be shared with a spouse. Unless otherwise indicated, the address for each director and executive officer listed is: c/o CX Network Group, Inc., room 1205, 1A Building, Shenzhen Software Industry Base, Xuefu Rd, Nanshan District, Shenzhen, Guangdong Province, China, 518005.
| Common Stock Beneficially Owned | ||||||||
| Name and Address of Beneficial Owner | Number of Shares and Nature of Beneficial Ownership | Percentage of Total Common Equity (1) | ||||||
| Mr. Richun Zhuang | 0 | 0 | % | |||||
| Ms. Chengyuan Li | 0 | 0 | % | |||||
| Ms. Xiangyi Mao (2) | 427,407 | 1 | % | |||||
| Ms. Yuanyuan Zhang (2) | 427,407 | 1 | % | |||||
| Mr. Yanlu Li (2) | 427,407 | 1 | % | |||||
| All executive officers and directors as a Group | 1,282,209 | 3 | % | |||||
| 5% or Greater Stockholders: | ||||||||
| Pui Chun Wong | 22,202,954 | 55.5 | % | |||||
| Kunpeng TJ Limited | 6,575,490 | 16.4 | ||||||
(1) |
Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. Applicable percentage ownership is based on 40,000,000 shares of common stock outstanding as of May 17, 2021. There are no options, warrants or other rights to acquire shares of our common stock. |
| (2) | Each of Xiangyi Mao. Yuanyuan Zhang, and Yanlu Li own 6.5 percent of Kunpeng TJ Limited and as such may be deemed to beneficially own 427,407 of the total number of shares held by Kunpeng TJ Limited of our common stock. |
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DIRECTORS AND EXECUTIVE OFFICERS
In connection with the closing of the Reverse Acquisition described above in Item 2.01 Mr. Wenhai Xia, our sole officer and director resigned from his positions as Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, and sole director, and appointed the following persons as Directors and Executive Officers of the Company effective with his resignation.
The following table sets forth certain information concerning our newly appointed directors and executive officers:
| Name | Age | Position | ||
| Ms. Xiangyi Mao | 55 | Chief Executive Officer | ||
| Ms. Yuanyuan Zhang | 40 | Chief Financial Officer | ||
| Mr. Yanlu Li | 59 | Vice President | ||
| Mr. Richun Zhuang | 57 | Director | ||
| Ms. Chengyuan Li | 34 | Director |
Ms. Xiangyi Mao, Chief Executive Officer
Ms. Mao graduated from Dongbei University with a major in Finance and Economics and earned a bachelor degree of Business Administration. In October 1984, Ms. Mao started her career at Foreign Trade Division II of Heilongjiang Department of Foreign Trade and Economic Cooperation (Provincial Department of Foreign Trade and Economic Cooperation) where she was responsible for the import and export trade with Russia. From May 1991-December 2000, she served as Deputy General Manager and Chief Executive Officer at Shenzhen Haitian Publishing House where she was responsible for analyzing and summarizing the company’s administrative businesses. Ms. Mao was a Senior Manager at Amway (China) Co., Ltd from December 2000 through July 2005 and Marketing Operation Director at Shenzhen Neptunus Pharmaceutical Group from April 2006 through January 2009.
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In March 2009, Ms. Mao was appointed as Board Chairman of Shenzhen Wugufeng Ecological Agriculture Technology Development Co., Ltd. It was the first company to introduce Australian capital into agricultural projects, and the first company to establish a farmers’ cooperative, with 24 agricultural demonstration and cooperation bases in the whole country, and advocating the characteristic philosophy from farm to table directly; setting up 507 Wugufeng organic food stores; the productive value in three years reached RMB 70 million yuan.
From May 2012 through September 2015, Ms. Mao served as a Chief Executive Officer of Xinkeqi E-Commerce Co., Ltd. where she managed the operation of the entire company and formulated the annual work plans of the subsidiaries and affiliated departments in six major districts in the PRC.
Ms. Mao was a Vice President at Shanghai Chicmax Group Kans Cosmetics Co., Ltd. from September 2015-July 2019 where she was responsible for managing the group’s development direction, reviewing the development strategy and providing opinions.
Ms. Mao established Nanao (Shanghai) Health Management Co., Ltd. and acted as Board Chairman in October 2019. Since November 2020, Ms. Mao joined King Eagle (Tianjin) as Chief Executive Officer and was appointed as the Chief Executive Officer of KP International in April 2021.
Ms. Yuanyuan Zhang, Chief Financial Officer
Ms. Zhang attended at Beijing College of Science and Technology and earned a bachelor’s degree in international finance in 2005. Ms. Zhang developed her career as a sales specialist at Fenghua Haojing Real Estate where she achieved sales of approximately RMB 120 million during her tenure from September 2005 through December 2006. She then became a Sales Manager at Tianan Tiandi Real Estate Development Co., Ltd from January 2007 through March 2012. Ms. Zhang was appointed as a Marketing Director at Tongbang Real Estate Brokerage Co., Ltd for two years from April 2012 and General Manager at One Central Apartment project of Sunac Real Estate Company from May 2014 through August 2015. Thereafter, she was a General Manager at Beijing Jinfeng Venture Real Estate Brokerage and an Assistant to Secretary General at China Association of Real Estate Investment & Financing.
In October 2017, Ms. Zhang established her own business, “Fre Flo Bread & 16”. Since July 2020, she became our Executive Deputy General Manager of King Eagle (China) and was appointed as our Chief Financial Officer of KP International in April 2021.
Mr. Yanlu Li, Vice President
Mr. Li attended at Heilongjiang Machinery Manufacturing School and studied mechanical processing in 1981. He started his career as a mechanics in Heilongjiang Kiamusze Light Industry Machinery Plant. He then furthered his studies in mechanical engineering at Kiamusze Institute of Technology from September 1983 through July 1987 and earned a Bachelor degree in July 1987.
After his graduation from Kiamusze Institute of Technology, Mr. Li became an Assistant Engineer at Kiamusze Light Industry Machinery Plant from August 1987 through December 1990. In January 1991, he enhanced his career as a General Manager at Kiamusze Ceramics Store and became a Legal Representative/General Manager of Kiamusze Ceramic Refractory Material Distribution Office in June 1992 until December 1999.
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In January 2000, Mr. Li joined Amway (China) Co., Ltd as a distributor. From June 2010 through July 2013, Mr. Li served as a Legal Representative and General Manager at Beijing Dongze Education Technology Co., Ltd. From August 2013 through April 2018, Mr. Li served as a distributor of Shaklee (China) Co., Ltd. In May 2018, Mr. Li joined Lehua Tongrentang (Tianjin) Sales Company as a General Manager. In June 2020, Mr. Li joined King Eagle (China) as Vice President and then appointed as Vice President of KP International in April 2021.
Mr. Richun Zhuang, Director
Mr. Richun Zhuang obtained a bachelor degree in Political Studies from Heilongjiang Province National College in 1983. He started his career as a secretary at Heilongjiang Province Wangkui County Public Transport Bureau until 1989. Then he was promoted to the Deputy General of Heilongjiang Province Wangkui County Transport Management Station in 1989. He then transferred to Heilongjiang Daqing Long-distance Bus Station as Chief Dispatcher in 1991. In 2008, Mr. Zhuang was appointed as Vice President, Marketing of Wuxi Kangjiafu Technology Co., Ltd. He joined Beijing Luji Culture Media Co., Ltd as Chief Executive Officer in 2017. In June 2020, he joined King Eagle (China) as General Consultant focusing on enterprise operation and strategic planning. On May 14, 2021, Mr. Zhuang was appointed as our Director of KP International.
Ms. Chengyuan Li, Director
Ms. Li earned an Associate Degree in Computer Information System at Beihua University in 2006 and Bachelor Degree in Finance at Harbin Institute of Finance in 2020. Ms. Li established her trading business in health care supplies through Wangkuihua Trading Company from September 2006 through September 2015. In September 2015, she joined Wangkui Daren Pharmaceuticals Co. Ltd as Quality Control Coordinator. In June 2020, she joined King Eagle (China) as Business Consultant and was appointed as our Director of KP International in April 2021.
Our directors hold their positions until the next annual meeting of shareholders and until her successor is elected and qualified by our shareholders, or until earlier death, retirement, resignation or removal.
Director Independence
Except as reported above, our directors, Mr. Richun Zhuang and Ms. Chengyuan Li, do not hold any directorships in other reporting companies and do not qualify as “independent directors” under the Rules of NASDAQ, Marketplace Rule 4200(a)(15). There are no family relationships among our directors or officers.
Family Relationships
There are no family relationships between any of our directors, executive officers or directors.
Involvement in Certain Legal Proceedings
To our knowledge, during the last ten years, none of our officers and directors (including those of our subsidiaries) has:
| ● | Had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time. | |
| ● | Been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor offenses. | |
| ● | Been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities. |
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| ● | Been found by a court of competent jurisdiction (in a civil action), the SEC, or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated. | |
| ● | Been the subject to, or a party to, any sanction or order, not subsequently reverse, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Director Qualifications
Directors are responsible for overseeing the Company’s business consistent with their fiduciary duty to the stockholders. This significant responsibility requires highly-skilled individuals with various qualities, attributes and professional experience. Our director believes that there are general requirements for service on the Board that are applicable to directors and that there are other skills and experience that should be represented on the Board as a whole but not necessarily by each director. The Board considers the qualifications of director and director candidates individually and in the broader context of the Board’s overall composition and the Company’s current and future needs.
Qualifications for All Directors
In its assessment of each potential candidate, including those recommended by the stockholders, the Board will consider the nominee’s judgment, integrity, experience, independence, understanding of the Company’s business or other related industries and such other factors it determines are pertinent in light of the current needs of the Board. The Board also takes into account the ability of a director to devote the time and effort necessary to fulfill his or her responsibilities to the Company.
The Board requires that each director be a recognized person of high integrity with a proven record of success in his or her field. Each director must demonstrate innovative thinking, familiarity with and respect for corporate governance requirements and practices, an appreciation of multiple cultures and a commitment to sustainability and to dealing responsibly with social issues. In addition to the qualifications required of all directors, the Board conducts interviews of potential director candidates to assess intangible qualities including the individual’s ability to ask difficult questions and, simultaneously, to work collegially.
Qualifications, Attributes, Skills and Experience to be Represented on the Board as a Whole
The Board has identified particular qualifications, attributes, skills and experience that should be represented on the Board as a whole, in light of the Company’s current needs and its business priorities. The Board believes that it should include some directors with a high level of financial literacy and some directors who possess relevant business experience as a chief executive officer, president or similar position at a company.
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Board Leadership Structure and Role in Risk Oversight
The Board of Directors intends to exercise its oversight in the following manner:
| - | appointing, retaining and overseeing the work of the independent auditors, including resolving disagreements between the management and the independent auditors relating to financial reporting; | |
| - | approving all auditing and non-auditing services permitted to be performed by the independent auditors; | |
| - | reviewing annually the independence and quality control procedures of the independent auditors; | |
| - | reviewing and approving all proposed related party transactions; | |
| - | discussing the annual audited financial statements with the management; and | |
| - | meeting separately with the independent auditors to discuss critical accounting policies, management letters, recommendations on internal controls, the auditor’s engagement letter and independence letter and other material written communications between the independent auditors and the management. |
Board Committees
Audit Committee. We intend to establish an audit committee of the Board which will consist of soon-to-be-nominated independent directors. The audit committee’s duties will be to recommend to the Board the engagement of independent auditors to audit our financial statements and to review our accounting and auditing principles. The audit committee will review the scope, timing and fees for the annual audit and the results of audit examinations performed by the internal auditors and independent public accountants, including their recommendations to improve the system of accounting and internal controls. The audit committee will at all times be composed exclusively of directors who are, in the opinion of the Board, free from any relationship which would interfere with the exercise of independent judgment as a committee member and who possess an understanding of financial statements and generally accepted accounting principles.
Audit Committee Financial Expert. The Board currently acts as our audit committee. The Board is still in the process of finding an “audit committee financial expert” as defined in Regulation S-K and directors that are “independent” as that term is used in Section 10A of the Exchange Act.
Compensation Committee. We intend to establish a compensation committee of the Board. The compensation committee will review and approve our salary and benefits policies, including compensation of executive officers.
Nominating Committee. We do not presently have a nominating committee. Our board of directors currently acts as our nominating committee.
Code of Ethics
We are developing a Code of Business Conduct and Ethics that applies to our principal executive officers and principal financial officer, principal accounting officer or controller, or persons performing similar functions and also to other employees.
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EXECUTIVE COMPENSATION
Our executive compensation program is designed to help us attract talented individuals to manage and operate all aspects of our business, to reward those individuals fairly over time and to retain those individuals who continue to meet our high expectations.
The following is a summary of the compensation we paid to our Chief Executive Officer, Chief Financial Officer and Vice President from inception through September 30, 2020 and from October 1, 2020 through March 31, 2021. This includes all compensation, including any compensation paid to the officer by any of our subsidiaries. Other than otherwise disclosed, no executive officer received compensation in excess of $100,000 from inception through March 31, 2021.
Summary Compensation Table
| Name & Principal Position | Fiscal Year | Base Compensation (annual, unless otherwise noted) | Performance Award | Stock Options | Total Annual | |||||||||||||
| Mr. Wenhai Xia, CEO, CFO, COO, Chairman and Director of the Board (1) | From inception through September 30, 2020 | $ | - | $ | - | $ | - | $ | - | |||||||||
| October 1, 2020 through March 31, 2021 | $ | - | $ | - | $ | - | $ | - | ||||||||||
| Ms. Xiangyi Mao, CEO (2) | From inception through September 30, 2020 | $ | - | $ | - | $ | - | $ | - | |||||||||
| October 1, 2020 through March 31, 2021 | $ | 10,262 | $ | 1,831 | $ | - | $ | 12,093 | ||||||||||
| Ms. Yuanyuan Zhang, CFO (3) | From inception through September 30, 2020 | $ | 9,038 | $ | 5,988 | $ | - | $ | 15,026 | |||||||||
| October 1, 2020 through March 31, 2021 | $ | 19,659 | $ | 12,816 | $ | - | $ | 32,475 | ||||||||||
| Mr. Yanlu Li, Vice President (4) | From inception through September 30, 2020 | $ | 15,702 | $ | 10,264 | - | $ | 25,966 | ||||||||||
| October 1, 2020 through March 31, 2021 | $ | 22,386 | $ | 5,492 | - | $ | 27,878 | |||||||||||
| (1) | Mr. Wenhai Xia was appointed as Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chairman and Director of the Board of Directors of CXN on May 11, 2021. Mr. Xia resigned from those positions on May 17, 2021 in conjunction with the Reverse Acquisition. |
| (2) | Ms. Xiangyi Mao joined King Eagle (Tianjin) as Chief Executive Officer on November 3, 2020. She was appointed Chief Executive Officer of KP International on April 20, 2021. |
| (3) | Ms. Yuanyuan Zhang joined King Eagle (China) as Executive Vice President on July 10, 2020 and was appointed as Chief Financial Officer of KP International on April 20, 2021. |
| (4) | Mr. Yanlu Li joined King Eagle (China) on June 1, 2020 as Chief Executive Officer. He became Vice President of KP International on April 20, 2021. |
Employment Agreements
As of the reporting date, we have entered into an employment agreement with our Chief Executive Officer, Chief Financial Officer and Vice President.
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Compensation Discussion and Analysis
We strive to provide our named executive officers (as defined in Item 402 of Regulation S-K) with a competitive base salary that is in line with their roles and responsibilities when compared to peer companies of comparable size in similar locations.
It is not uncommon for PRC private companies in to have base salaries as the sole form of compensation. The base salary level is established and reviewed based on the level of responsibilities, the experience and tenure of the individual and the current and potential contributions of the individual. The base salary is compared to the list of similar positions within comparable peer companies and consideration is given to the executive’s relative experience in his or her position. Base salaries are reviewed periodically and at the time of promotion or other changes in responsibilities.
We will consider forming a compensation committee to oversee the compensation of our named executive officers. The majority of the members of the compensation committee would be independent directors.
Compensation of Directors
Directors are permitted to receive fixed fees and other compensation for their services as directors. The board of directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity.
As of the date of this report, our director has received no compensation for her service on the board of directors. We plan to implement a compensation program for our independent directors, as and when they are appointed, which we anticipate will include such elements as an annual retainer, meeting attendance fees and stock options. The details of that compensation program will be negotiated with each independent director.
Aggregated Option Exercises and Fiscal Year-End Option Value Table
There were no stock options exercised during the six months ended March 31, 2021 and from inception through September 30, 2020, by the executive officers named in the Executive Compensation Table. Further, there are no option, warrants or rights to receive any of the Company’s securities outstanding.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except for the ownership of our securities, and except as set forth below, none of the directors, executive officers, holders of more than five percent of our outstanding common stock, or any member of the immediate family of any such person have, to our knowledge, had a material interest, direct or indirect, in any transaction or proposed transaction which may materially affect our company.
Procedures for Approval of Related Party Transactions
Our board of directors is charged with reviewing and approving all potential related party transactions. All such related party transactions must then be reported under applicable SEC rules. We have not adopted other procedures for review, or standards for approval, of such transactions, but instead review them on a case-by-case basis.
LEGAL PROCEEDINGS
We know of no material, active, pending or threatened proceeding against us or our subsidiaries, nor are we, or any subsidiary, involved as a plaintiff or defendant in any material proceeding or pending litigation.
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MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANTS
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
Our common stock has been quoted on the OTCBB since November 3, 2017 under the designation “CXKJ”. However, our common stock has not been traded on the OTC market except on a limited and sporadic basis and there is no assurance that a regular public trading market will ever develop. OTC market securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTC market securities transactions are conducted through a telephone and computer network connecting dealers. OTC market issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.
Holders of Our Common Stock
Dividends
We have not paid dividends on our common stock and do not anticipate paying such dividends in the foreseeable future. We will rely on dividends from our PRC operation entity for our funds and PRC regulations may limit the amount of funds distributed to us from our PRC operation entity, which will affect our ability to declare any dividends.
Stock Option and Warrant Grants
We have no stock option and warrant granted to our executives, employees, vendors, consultants and any other parties as of the reporting date.
Registration Rights
We have not granted registration rights to the selling shareholders or to any other persons.
Equity Compensation Plans
We have not adopted any equity compensation plans as of the reporting date.
Penny Stock Regulations
Our shares of common stock are subject to the “penny stock” rules of the Securities Exchange Act of 1934 and various rules under this Act. In general terms, “penny stock” is defined as any equity security that has a market price less than $5.00 per share, subject to certain exceptions. The rules provide that any equity security is considered to be a penny stock unless that security is registered and traded on a national securities exchange meeting specified criteria set by the SEC, issued by a registered investment company, and excluded from the definition on the basis of price (at least $5.00 per share), or based on the issuer’s net tangible assets or revenues. In the last case, the issuer’s net tangible assets must exceed $3,000,000 if in continuous operation for at least three years or $5,000,000 if in operation for less than three years, or the issuer’s average revenues for each of the past three years must exceed $6,000,000.
Trading in shares of penny stock is subject to additional sales practice requirements for broker-dealers who sell penny stocks to persons other than established customers and accredited investors. Accredited investors, in general, include individuals with assets in excess of $1,000,000 or annual income exceeding $200,000 (or $300,000 together with their spouse), and certain institutional investors. For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of the security and must have received the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, the rules require the delivery, prior to the first transaction, of a risk disclosure document relating to the penny stock. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the security. Finally, monthly statements must be sent disclosing recent price information for the penny stocks. These rules may restrict the ability of broker-dealers to trade or maintain a market in our common stock, to the extent it is penny stock, and may affect the ability of shareholders to sell their shares.
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DESCRIPTION OF SECURITIES
The following is a summary description of our capital stock and certain provisions under the laws of the State of Nevada where the Company was incorporated. The following discussion is qualified in its entirety by reference to such exhibits.
General
We are authorized to issue 40,000,000 shares of common stock, par value $0.0001 per share, all of which are issued and outstanding following the completion of the Reverse Takeover.
Common Stock
The holders of our common stock are entitled to one vote for each share held of record on all matters to be voted on by stockholders. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voting for the election of directors can elect all of the directors then up for election. The holders of our common stock are entitled to receive dividends when, as and if declared by the board of directors out of funds legally available therefor. In the event of liquidation, dissolution or winding up of our company, the holders of common stock are entitled to share ratably in all assets remaining which are available for distribution to them after payment of liabilities and after provision has been made for each class of stock, if any, having preference over the common stock. Holders of shares of our common stock, as such, have no conversion, preemptive or other subscription rights, and there are no redemption provisions applicable to the common stock.
Indemnification of Directors and Officers
Under provisions of the certificate of incorporation and bylaws of the registrant, directors and officers will be indemnified for any and all judgments, fines, amounts paid in settlement and reasonable expenses, including attorney’s fees, in connection with threatened, p ending or completed actions, suits or proceedings, whether civil, or criminal, administrative or investigative (other than an action arising by or in the right of the registrant), if such director or officer has been wholly successful on the merits or otherwise, or is found to have acted in good faith and in a manner he or she reasonably believes to be in or not opposed to the best interests of the registrant, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. In addition, directors and officers will be indemnified for reasonable expenses in connection with threatened, pending or completed actions or suits by or in the right of registrant if such director or officer has been wholly successful on the merits or otherwise, or is found to have acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the registrant, except in the case of certain findings by a court that such person is liable for negligence or misconduct in his or her duty to the registrant unless such court also finds that such person is nevertheless fairly and reasonably entitled to indemnity. The registrant’s Articles of Incorporation also eliminates the liability of directors of the registrant for monetary damages to the fullest extent permissible under Nevada law.
Indemnification against Public Policy
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling an issuer pursuant to the foregoing provisions, the opinion of the SEC is that such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than by a director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The effect of indemnification may be to limit the rights of the Company and the stockholders (through stockholders’ derivative suits on behalf of the Company) to recover monetary damages and expenses against a director for breach of fiduciary duty.
Item 3.02 Unregistered Sales of Equity Securities.
Reference is made to the disclosure made under Item 1.01 which is incorporated herein by reference.
Item 5.01 Change in Control of Registrant.
Reference is made to the disclosure made under Item 1.01 and Item 2.01 which is incorporated herein by reference.
Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.
Reference is made to the disclosure made under Item 1.01 and Item 2.01 which is incorporated herein by reference. For certain biographical and other information regarding the newly appointed officers and directors, see the disclosure under the heading “DIRECTORS AND EXECUTIVE OFFICERS.
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Item 9.01 Financial Statements and Exhibits.
| (a) | Financial statements of business acquired |
In accordance with Item 9.01(a), Kun Peng International Holding Limited’s audited financial statements as of, and for the period from inception through September 30, 2020, and the accompanying notes, are included in this Report beginning on Page F-1. Kun Peng International Holding Limited’s unaudited financial statements as of March 31, 2021 and for the six months ended March 31, 2021, the accompany notes are included in this reporting beginning page F-1.
| (b) | Pro forma financial information |
Pursuant to Item 9.01(c), the following unaudited pro forma financial information with respect to the Share Exchange with Kun Peng International Holding Limited reported on Form 8-K are included in this Report beginning page F-27.
| Unaudited Pro Forma Condensed Combined Balance Sheet as of March 30, 2021 and September 30, 2020 |
| Unaudited Pro Forma Condensed Combined Statements of Operations and Comprehensive Loss for the Six Months Ended March 31, 2021 and from Inception through September 30, 2020 |
| (c) | Exhibits |
In reviewing the agreements included or incorporated by reference as exhibits to this Current Report on Form 8-K, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:
| ● | should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; | |
| ● | have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; | |
| ● | may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and | |
| ● | were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. |
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Current Report on Form 8-K and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.
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| (d) | The following exhibits are filed with this report: |
| Exhibit Number |
Description | |
| 10.1 | Share Cancellation Agreement * | |
| 10.2 | Share Exchange Agreement * | |
| 10.3 | Employment Agreement of Xiangyi Mao * | |
| 10.4 | Employment Agreement of Ms. Yuanyuan Zhang * | |
| 10.5 | Employment Agreement of Mr. Yanlu Li * | |
| 10.6 | Han Plaza Lease Agreement | |
| 10.7 | Smart Kiosk Cooperation Agreement | |
| 10.8 | Exclusive Consultant and Service Agreement | |
| 10.9 | Equity Pledge Agreement | |
| 10.10 | Agent Agreement | |
| 10.11 | Equity Disposal Agreement | |
| 10.12 | Business Operation Agreement |
| * | Previously filed as an Exhibit to the Form 8-K filed on May 18, 2021 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: May 19, 2021 | ||
| /s/ Xiangyi Mao | ||
| Name: | Xiangyi Mao | |
| Title: | Chief Executive Officer |
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KUN PENG INTERNATIONAL HOLDING LIMITED
FINANCIAL STATEMENTS
CX NETWORK GROUP, INC. (CXKJ) AND ITS SUBSIDIARIES
PRO FORMA FINANCIAL STATEMENTS
F-1
Report of Independent Registered Public Accounting Firm
| To: | The Board of Directors and Stockholders of |
| Kun Peng International Holding Limited |
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Kun Peng International Holding Limited (the Company) as of September 30, 2020, and the consolidated related statements of operations, stockholders’ equity, and cash flows for the year then ended September 30, 2020, and the related notes (collectively referred to as the financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2020, and the results of its operations and its cash flows for the year then ended September 30, 2020, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph Regarding Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company had incurred substantial losses during the year and negative working capital, which raises substantial doubt about its ability to continue as a going concern. Management’s plan in regards to these matters are described in Note 2. These 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 audit 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.
F-2
Critical Audit Matter
The Critical Audit Matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the 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 financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition
The Company recognizes revenue at gross as a principal upon transfer of control of promised products to customers by the supplier in an amount that reflects the consideration the Company receives in exchange for those products.
We identified the revenue recognition as key audit matter because significant judgment is exercised in determining whether the Company is the principal or agent in a given transaction and whether the Company’s presentation of revenue on a gross basis (as a principal) vs. a net basis (as an agent) complies with applicable standards.
Our audit procedures in this area included the following, among others:
| (a) | Obtained an understanding from the management regarding the Company’s business and revenue model to evaluate and assess the performance obligations of the Company | |
| (b) | Reviewed supplier agreements to evaluate and assess the performance obligations within the contract |
/s/ JLKZ CPA LLP
JLKZ CPA LLP
Flushing, New York
May 18, 2021
We have served as the Company’s auditor since 2020.
F-3
Kun Peng International Holding Limited
Consolidated Balance Sheets
(Expressed in U.S. dollar, except for the number of shares)
| March 31, 2021 | September 30, 2020 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 520,159 | $ | 141,166 | ||||
| Advance and prepayments | 149,629 | 42,711 | ||||||
| Other receivables | 28,670 | 55,658 | ||||||
| Total current assets | 698,458 | 239,535 | ||||||
| Noncurrent assets | ||||||||
| Property, plant and equipment, net | 76,800 | 70,122 | ||||||
| Right-of-use assets | 359,549 | 413,156 | ||||||
| Security deposits | 93,943 | 76,510 | ||||||
| Total noncurrent assets | 530,292 | 559,788 | ||||||
| Total assets | $ | 1,228,750 | $ | 799,323 | ||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Trade and other payables | 1,361,894 | 12,446 | ||||||
| Deferred revenue | 4,089 | 203,586 | ||||||
| Payroll payable | 80,091 | 88,744 | ||||||
| Tax payable | 100,255 | 44,444 | ||||||
| Other payable related party | 191,594 | 252,606 | ||||||
| Operating lease obligations-current portion | 292,993 | 254,780 | ||||||
| Total current liabilities | 2,030,916 | 856,606 | ||||||
| Noncurrent liabilities | ||||||||
| Operating lease obligations-net | 66,556 | 158,376 | ||||||
| Total noncurrent liabilities | 66,556 | 158,376 | ||||||
| Total liabilities | 2,097,472 | 1,014,982 | ||||||
| Commitment and contingencies | ||||||||
| Equity | ||||||||
| Share capital | 1,462,349 | 1,462,349 | ||||||
| Subscription receivable | (1,462,349 | ) | (1,462,349 | ) | ||||
| Accumulated deficits | (757,087 | ) | (208,771 | ) | ||||
| Accumulated other comprehensive loss | (13,676 | ) | (6,888 | ) | ||||
| Total stockholders’ equity | (770,763 | ) | (215,659 | ) | ||||
| Non-controlling interests | (97,959 | ) | - | |||||
| Total equity | (868,722 | ) | (215,659 | ) | ||||
| Total liabilities and equity | $ | 1,228,750 | $ | 799,323 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
Kun Peng International Holding Limited
Consolidated Statements of Operations and Comprehensive Loss
(Expressed in U.S. dollar, except for the number of shares)
| For the Six Months Ended March 31, 2021 | From Inception Through September 30, | |||||||
| (Unaudited) | ||||||||
| Revenue | $ | 2,173,594 | $ | 819,130 | ||||
| Cost of revenue | (315,883 | ) | (122,783 | ) | ||||
| Gross profit | 1,857,711 | 696,347 | ||||||
| Operating expenses | ||||||||
| General and administrative expenses | 901,089 | 380,777 | ||||||
| Selling expense | 1,602,121 | 524,443 | ||||||
| Total operating expenses | 2,503,210 | 905,220 | ||||||
| Loss from operations | (645,499 | ) | (208,873 | ) | ||||
| Other (expenses) income: | ||||||||
| Interest income | 206 | 82 | ||||||
| Other (expenses) income | 215 | 20 | ||||||
| Total other (expenses) income | 421 | 102 | ||||||
| Loss before income taxes | (645,078 | ) | (208,771 | ) | ||||
| Income tax expense | - | - | ||||||
| Net loss | (645,078 | ) | (208,771 | ) | ||||
| Less: Net loss attributable to non-controlling interest | (96,762 | ) | - | |||||
| Net loss attributable to Kun Peng International Holding Limited | (548,316 | ) | (208,771 | ) | ||||
| Foreign currency translation adjustment | (7,985 | ) | (6,888 | ) | ||||
| Comprehensive loss | (653,063 | ) | (215,659 | ) | ||||
| Less: Comprehensive loss attributable to non-controlling interest | (97,959 | ) | - | |||||
| Comprehensive loss attributable to Kun Peng International Holding Limited | $ | (555,104 | ) | $ | (215,659 | ) | ||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Kun Peng International Holding Limited
Consolidated Statements of Equity
(Expressed in U.S. dollar, except for the number of shares)
Kun Peng International Holding Limited Shareholders | ||||||||||||||||||||||||||||
| Share capital | Accumulated other | Total | Non- | |||||||||||||||||||||||||
| Amount | Subscription receivable | Accumulated deficits | comprehensive loss | stockholders’ equity | Controlling Interest | Total equity | ||||||||||||||||||||||
| From Inception | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Capital contribution | 1,462,349 | (1,462,349 | ) | - | - | - | - | - | ||||||||||||||||||||
| Net loss for the year | - | - | (208,771 | ) | - | (208,771 | ) | - | (208,771 | ) | ||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | (6,888 | ) | (6,888 | ) | - | (6,888 | ) | ||||||||||||||||||
| Balance, September 30, 2020 | 1,462,349 | (1,462,349 | ) | (208,771 | ) | (6,888 | ) | (215,659 | ) | - | (215,659 | ) | ||||||||||||||||
| Net loss attributable to Kun Peng International Holding Limited | - | - | (548,316 | ) | - | (548,316 | ) | - | (548,316 | ) | ||||||||||||||||||
| Net loss attributable to non-controlling interest | - | - | - | - | - | (96,762 | ) | (96,762 | ) | |||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | (6,788 | ) | (6,788 | ) | (1,197 | ) | (7,985 | ) | |||||||||||||||||
| Balance, March 31, 2021 | $ | 1,462,349 | $ | (1,462,349 | ) | $ | (757,087 | ) | $ | (13,676 | ) | $ | (770,763 | ) | $ | (97,959 | ) | $ | (868,722 | ) | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
Kun Peng International Holding Limited
Consolidated Statements of Cash Flows
(Expressed in U.S. dollar)
| For the Six Months Ended March 31, 2021 | From Inception Through September 30, 2020 | |||||||
| (Unaudited) | ||||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (645,078 | ) | $ | (208,771 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation and amortization | 11,711 | 2,865 | ||||||
| Amortization of right-of-use assets | 147,649 | 101,434 | ||||||
| Changes in operating assets and liabilities | ||||||||
| Advance and prepayments | (105,342 | ) | (41,347 | ) | ||||
| Other receivables | 14,345 | (127,946 | ) | |||||
| Trade and other payables | 1,348,657 | 12,049 | ||||||
| Deferred revenue | (206,831 | ) | 197,085 | |||||
| Payroll payable | (11,870 | ) | 85,910 | |||||
| Amount due to a related party | (70,158 | ) | 244,539 | |||||
| Tax payable | 54,186 | 43,023 | ||||||
| Lease liabilities | (147,649 | ) | (101,434 | ) | ||||
| Net cash provided by operating activities | 389,620 | 207,407 | ||||||
| Cash flows from investing activities | ||||||||
| Purchase of property and equipment | (15,844 | ) | (70,748 | ) | ||||
| Net cash used in investing activities | (15,844 | ) | (70,748 | ) | ||||
| Effect of exchange rate changes on cash | 5,217 | 4,507 | ||||||
| Net increase in cash and cash equivalents | 378,993 | 141,166 | ||||||
| Cash and cash equivalents, beginning balance | 141,166 | - | ||||||
| Cash and cash equivalents, ending balance | $ | 520,159 | $ | 141,166 | ||||
| Supplementary cash flows information: | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| Cash paid for income tax | $ | - | $ | - | ||||
The accompanying notes are an integral part of these consolidated financial statements.
F-7
Kun Peng International Holding Limited
Notes to Consolidated Financial Statements
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Kun Peng International Holding Limited engages in the sale of health care and health related household products through its online mobile application, King Eagle Mall. The principal executive office of our operations is located a Unit 2702, 27th Floor, Building T1, Han's Plaza, No. 2 Ronghua South Road, Beijing Economic and Technological Development Zone, Beijing, PRC.
Kun Peng International Holding Limited
KP International Holding Limited (“KP International”) was incorporated in the British Virgin Islands on April 20, 2021. KP International is a holding company and entered into a Bought and Sold Note with Kunpeng (China) Industrial Development Company Limited (“KP Industrial”), incorporated in Hong Kong on August 11, 2017, at a cash consideration of $0.129 (HK$1) on May 3, 2021. After the ownership transfer, it became a sole shareholder of KP Industrial.
Kunpeng (China) Industrial Development Company Limited
Kunpeng (China) Industrial Development Company Limited (“KP Industrial”) was incorporated as a limited liability company in Hong Kong under the name of Jing Jin Ji Investment Group Co., Limited (“Jing Jin Ji”) on August 11, 2017. On November 9, 2018, Jing Jin Ji changed its name to “Kunpeng (China) Industrial Development Company Limited” and filed a Certificate of Change of Name with the Hong Kong Company Registry on the same day. Although it was incorporated in 2017, it did not commence operations until July 2020 as it focused on exploring business opportunities in its initial phrase and the development of our online mobile application, King Eagle Mall, through its subsidiary, King Eagle (China) Co., Ltd. It became a wholly owned subsidiary of KP International on May 3, 2021.
King Eagle (China) Co., Ltd.
King Eagle (China) Co., Ltd. (“King Eagle (China)”) was incorporated as a limited liability company in Beijing Economic and Technological Development Zone in the People’s Republic of China (“the PRC”) on March 20, 2019 with a registered capital of approximately $15 million (RMB100 million). King Eagle (China) was a wholly owned subsidiary of KP Industrial until at the time of establishment. KP Industrial transferred its approximately $2.2 million (RMB 15 million) or 15% to Guoxin Ruilian Group Co., Ltd., a limited liability company incorporated in Beijing, the PRC, on November 2, 2020.
On March 26, 2021, Guoxin Ruilian Group Co., Ltd entered into equity transfer agreements with KP Industrial and Guoxin Zhengye. Both Guoxin Ruilian Group Co., Ltd and Guoxin Zhengye are wholly owned by a common shareholder, Guoxin United Holdings Group Co., Ltd. Under the agreements, Guoxin Ruilian Group Co., Ltd agreed to transfer its 8% of its ownership in King Eagle (China) to Guoxin Zhengye and the remaining 7% ownership in King Eagle (China) to KP Industrial on April 20, 2021. After the transfer, KP Industrial and Guoxin Zhengye became the 92% and 8% shareholders of King Eagle (China), respectively.
On May 15, 2021, King Eagle (China) entered into a series of VIE agreements with King Eagle (Tianjin) and its stockholders, which King Eagle (China) effectively assumed management of the business activities of King Eagle (Tianjin) and has the right to appoint all executives and senior management and the members of the board of directors of King Eagle (Tianjin). King Eagle (Tianjin) is a Chinese limited liability company and was incorporated under the laws of the People’s Republic of China on September 2, 2020. King Eagle (Tianjin) engages in the business of promoting preventive health care products and services in the PRC. King Eagle (Tianjin) purchases such products from the third-party merchants and sells to its members through a mobile social e-commerce platform, King Eagle Mall, which was initially developed by King Eagle (China). King Eagle (Tianjin) is currently developing and organizing offline physical platforms (Smart Kiosk) throughout various cities and local areas in 20 provinces across the PRC. The VIE Agreements are designed to provide King Eagle (China) with the power, rights and obligations equivalent in all material respects to those it would possess as the sole equity holder of King Eagle (Tianjin), including absolute control rights and the rights to the assets, property and revenue of King Eagle (Tianjin).
F-8
King Eagle (Tianjin) Technology Co., Ltd.
King Eagle (Tianjin) Technology Co., Ltd. (“King Eagle (Tianjin)”) was incorporated as a limited liability company in Tianjin Pilot Free Trade Zone in the People’s Republic of China on September 2, 2020 with a registered capital of approximately $1.5 million (RMB 10 million). It is owned by multiple individuals: Chengyuan Li, 51%, Jinjing Zhang, Wanfeng Hu, Cuilian Liu, Zhizhong Wang (each of them owns 6%), Zhandong Fan, Yanlu Li, Yuanyuan Zhang, Xiangyi Mao and Hui Teng (each of them owns 5%). Those shareholders also indirectly own KP International through two British Virgin Islands entities: Kunpeng Tech Limited and Kunpeng TJ Limited. Additionally, out of these stakeholders, four of them are the director and executives of KP International which include: Chenyuan Li, Director, Xiangyi Mao, Chief Executive Officer, Yuanyuan Zhang, Chief Financial Officer and Yanlu Li, Vice President.
Contractual Arrangements
On May 15, 2021, King Eagle (China) Co., Ltd. (“King Eagle (China)”) and the shareholders of King Eagle (Tianjin) Technology Co., Ltd. (“King Eagle (Tianjin)”) entered into a series of contractual agreements for King Eagle (Tianjin) to qualify as variable interest entity or VIE (the “VIE Agreements”). The VIE Agreements are as follows:
Consulting Service Agreement
Pursuant to the terms of certain Exclusive Consulting Service Agreement dated May 15, 2021, between King Eagle (China) and King Eagle (Tianjin) (the “Consulting Service Agreement”), King Eagle (China) is the exclusive consulting service provider to King Eagle (Tianjin) to provide business-related software research and development services; design, installation, and testing services; network equipment support, upgrade, maintenance, monitor, and problem-solving services; employees technical training services; technology development and sublicensing services; public relations services; market investigation, research, and consultation services; short to medium term marketing plan-making services; compliance consultation services; marketing events and membership related activities organizing services; intellectual property permits; equipment and rental services; and business-related management consulting services. Pursuant to the Consulting Service Agreement, the service fee is the remaining amount after King Eagle (Tianjin)’s profit before tax in the corresponding year deducts King Eagle (Tianjin)’s losses, if any, in the previous year, the necessary costs, expenses, taxes, and fees incurred in the corresponding year, and the withdraws of the statutory provident fund. King Eagle (Tianjin)agreed not to transfer its rights and obligations under the Consulting Service Agreement to any third party without prior written consent from King Eagle (China). In addition, King Eagle (China) may transfer its rights and obligations under the Consulting Service Agreement to King Eagle (China)’s affiliates without King Eagle (Tianjin)’s consent, but King Eagle (China) shall notify King Eagle (Tianjin) of such transfer. This Agreement is valid for a term of 10 years subject to any extension requested by King Eagle (China) unless terminated by King Eagle (China) unilaterally prior to the expiration.
Business Operation Agreement
Pursuant to the terms of certain Business Operation Agreement dated May 15, 2021, among King Eagle (China), King Eagle (Tianjin)and the shareholders of King Eagle (Tianjin) (the “Business Operation Agreement”), King Eagle (Tianjin) has agreed to subject the operations and management of its business to the control of King Eagle (China). According to the Business Operation Agreement, King Eagle (Tianjin) is not allowed to conduct any transactions that has substantial impact upon its operations, assets, rights, obligations and personnel without the King Eagle (China)’s written approval. The shareholders of King Eagle (Tianjin) and King Eagle (Tianjin) will take King Eagle (China) 's advice on appointment or dismissal of directors, employment of King Eagle (Tianjin)’s employees, regular operation, and financial management of King Eagle (Tianjin). The shareholders of King Eagle (Tianjin) have agreed to transfer any dividends, distributions or any other profits that they receive as the shareholders of King Eagle (Tianjin) to King Eagle (China) without consideration. The Business Operation Agreement is valid for a term of 10 years or longer upon the request of King Eagle (China) prior to the expiration thereof. The Business Operation Agreement might be terminated earlier by King Eagle (China) with a 30-day written notice.
F-9
Proxy Agreement
Pursuant to the terms of the Proxy Agreement dated on May 15, 2021, among King Eagle (China), and the shareholders of King Eagle (Tianjin) (the “Proxy Agreement”), the shareholders of King Eagle (Tianjin) have entrusted their vote rights as King Eagle (Tianjin)’s shareholders to King Eagle (China) for the longest duration permitted by PRC law. The Proxy Agreement can be terminated by mutual consents of King Eagle (Tianjin) Shareholders and King Eagle (China) or upon a 30-day notice of King Eagle (China).
Equity Disposal Agreement
Pursuant to the terms of the Equity Disposal Agreement dated on May 15, 2021, among King Eagle (China), King Eagle (Tianjin), and the shareholders of King Eagle (Tianjin) (the “Equity Disposal Agreement”), the shareholders of King Eagle (Tianjin) granted King Eagle (China) or its designees an irrevocable and exclusive purchase option (the “Option”) to purchase King Eagle (Tianjin)’s all or partial equity interests and/or assets at the lowest purchase price permitted by PRC laws and regulations. The option is exercisable at any time at King Eagle (China)’s discretion in full or in part, to the extent permitted by PRC law. The shareholders of King Eagle (Tianjin) agreed to give King Eagle (Tianjin) the total amount of the exercise price as a gift, or in other methods upon King Eagle (China)’s written consent to transfer the exercise price to King Eagle (Tianjin). The Equity Disposal Agreement is valid for a term of 10 years or longer upon the request of King Eagle (China).
Equity Pledge Agreement
Pursuant to the terms of certain Equity Pledge Agreement dated on May 15,2021, among King Eagle (China) and the shareholders of King Eagle (Tianjin) (the “Pledge Agreement”), the shareholders of King Eagle (Tianjin) pledged all of their equity interests in King Eagle (Tianjin)to King Eagle (China), including the proceeds thereof, to guarantee King Eagle (Tianjin)’s performance of its obligations under the Business Operation Agreement, the Consulting Service Agreement and the Equity Disposal Agreement (each, a “Agreement”, collectively, the “Agreements”). If King Eagle (Tianjin) or its shareholders breach its respective contractual obligations under any Agreement, or cause to occur one of the events regards as an event of default under any Agreement, King Eagle (China), as pledgee, will be entitled to certain rights, including the right to dispose of the pledged equity interest in King Eagle (Tianjin). During the term of the Pledge Agreement, the pledged equity interests cannot be transferred without King Eagle (China)’s prior written consent. The Pledge Agreements is valid until all the obligations due under the Agreements have been fulfilled.
As a result of the foregoing contractual arrangements, which give King Eagle (China) an effective control of the King Eagle (Tianjin), obligate King Eagle (China) to absorb all of the risk of loss from their activities, and enable King Eagle (China) to receive all of their expected residual returns, Kun Peng International accounts for King Eagle (Tianjin) as a variable interest entity (“VIE”). Additionally, as the parent company of King Eagle (China), KP International is considered the primary beneficiary of the King Eagle (Tianjin). Accordingly, KP International consolidates the accounts of the King Eagle (Tianjin) for the six months ended March 31, 2021 and from inception through September 30, 2020, in accordance with Regulation S-X-3A-02 promulgated by the Securities Exchange Commission, and Accounting Standards Codification (“ASC”) 810-10, Consolidation as KP International indirectly has controlling financial interest in King Eagle (Tianjin).
| Name | Background | Ownership | |||
| KP International | ● | A British Virgin Islands company | 100% | ||
| ● | Incorporated on April 20, 2021 | ||||
| · | |||||
| KP Industrial | ● | A Hong Kong company | 100% | ||
| ● | Incorporated on August 11, 2017 | ||||
| ● | Acquired by KP International on May 3, 2021 at a cash consideration of $0.129 (HK$1) | ||||
| ● | Commenced operation in July 2020 | ||||
| King Eagle (China) | ● | A PRC limited liability company and deemed a wholly foreign-invested enterprise | 85% as of March 31, 2021 92% on April 20, 2021 | ||
| ● | Incorporated on March 20, 2019 | ||||
| ● | Registered capital of $15 million (RMB100 million) | ||||
| ● | Commenced operation in July 2020 | ||||
| ● | Owned by KP Industrial, 85%, and Guoxin Ruilian Group Co., Ltd, 15% as of March 31, 2020 | ||||
| ● | Owned by KP Industrial, 92% and Guoxin Zhengye Enterprise Management Co., Ltd, 8% on April 20, 2021 | ||||
| King Eagle (Tianjin) | ● | A PRC limited liability company | VIE by contractual | ||
| ● | Incorporated on September 2, 2020 | arrangements | |||
| ● | Registered capital of $1.5 million (RMB 10 million) | ||||
| ● | Sale of health care and health-related household products through King Eagle Mall | ||||
Kun Peng International Holding Limited its subsidiaries and Variable interest entity (“VIE”) shall be referred as the Company.
F-10
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant Accounting Policies
Basis of Presentation
The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America. This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred. The consolidated financial statements are expressed in U.S. dollars.
Principles of Consolidation
The consolidated financial statements include the financial statements of KP International Holding Limited, its subsidiaries and variable interest entity (“VIE”).
Use of Estimates and Assumptions
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimate and assumptions that impact the presented amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the presented amounts of revenues and expenses during the period. Actual results may differ from those estimates. Significant estimates during the six months ended March 31, 2021 and from inception through September 30, 2020 include the collectability of receivables, the useful lives of long-lived assets and intangibles, assumptions used in assessing impairment of long-lived assets, valuation of accruals for expenses and tax due.
Going Concern Consideration
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America which contemplate continuation of the Company as a going concern basis. The going-concern basis assumes that assets are realized and liabilities are extinguished in the ordinary course of business at amounts disclosed on the financial statements. The Company’s ability to continue as a going concern depends on the liquidation of its current assets and business developments. As of March 31, 2021, the Company incurred a negative working capital, $1,332,458 and a comprehensive loss of $653,063. As of September 30, 2020, the Company has incurred a negative working capital, $617,071 and a comprehensive loss of $215,659. These conditions raise substantial doubt about the ability of the Company to continue as a going concern. In an effort to continue as a going concern, we may continue raise fund through director’s support and/or private placement to support our operational needs. King Eagle (China) and King Eagle (Tianjin) introduced an offline platform “Smart Kiosk” which integrates with King Eagle Mall to develop the social e-commerce and physical store to expand the market of preventive health care and health related household products.
F-11
COVID-19 outbreak
In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. The COVID-19 pandemic has negatively impacted the global economy, workforces, customers, and created significant volatility and disruption of financial markets. It has also disrupted the normal operations of many businesses, including ours. This outbreak could decrease spending, adversely affect demand for our services and harm our business and results of operations. It is not possible for us to predict the duration or magnitude of the adverse results of the outbreak and its effects on our business or results of operations at this time.
Earnings (loss) per share
Basic income (loss) per share is computed by dividing net income (loss) attributable to the holders of ordinary shares by the weighted average number of ordinary shares outstanding during the year. Diluted income (loss) per share is calculated by dividing net income (loss) attributable to the holders of ordinary shares as adjusted for the effect of dilutive ordinary share equivalents, if any, by the weighted average number of ordinary shares and dilutive ordinary share equivalents outstanding during the period. However, ordinary share equivalents are not included in the denominator of the diluted earnings per share calculation when inclusion of such shares would be anti-dilutive, such as in a period in which a net loss is recorded.
Foreign Currency Translation
The reporting currency of the Company is the U.S. dollar. King Eagle uses the local currency, Renminbi (RMB), as its functional currencies as determined based on the criteria of ASC 830, “Foreign Currency Translation”. Assets and liabilities are translated at the unified exchange rate as quoted by www.xe.com at the end of the period. Income and expense accounts are translated at the average translation rates and the equity accounts are translated at historical rates. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Translation adjustments included in accumulated other comprehensive loss amounted to $13,676 and $6,888 for the six months ended March 31, 2021 and from inception through September 30, 2020.
Below is a table with foreign exchange rates used for translation:
For the six months ended March 31, 2021 (Average Rate) | Hong Kong Dollar (HKD) | Chinese Renminbi (RMB) | ||||||
| United States dollar ($1) | 7.7546 | 6.5544 | ||||||
| As of March 31, 2021 (Closing Rate) | ||||||||
| United States dollar ($1) | 7.7749 | 6.5528 | ||||||
From inception through September 30, 2020 (Average Rate) | Hong Kong Dollar (HKD) | Chinese Renminbi (RMB) | ||||||
| United States dollar ($1) | 7.7506 | 7.0145 | ||||||
| As of September 30, 2020 (Closing Rate) | ||||||||
| United States dollar ($1) | 7.7500 | 6.7905 | ||||||
F-12
Cash and Cash Equivalents
We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. We maintain with various financial institutions in PRC. As of September 30, 2020, cash balances held in PRC banks are uninsured. We have not experienced any losses in bank accounts and believes we are not exposed to any risks on our cash in bank accounts.
Financial Instrument
The carrying amount reported in the balance sheet for cash, other receivables, accrued liabilities and other payables approximate fair value because of the immediate or short-term maturity of these financial instruments.
Plant, Property and Equipment
Plant, property and equipment are stated at cost less accumulated depreciation and impairment losses. Gains and losses on dispositions of property and equipment are included in operating income (loss). Major additions, renewals and improvements are capitalized, while maintenance and repairs are recognized as expense as incurred.
Depreciation is provided over the estimated useful life of each class of depreciable assets and is computed using the straight-line method over the useful lives of the assets are as follows:
| Classification | Estimated useful life | |
| Leasehold improvements | 5 years | |
| Office equipment | 3 years | |
| Computer equipment | 3 years | |
| Computer software | 5 years |
Impairment of Long-lived Assets
Long-lived assets, including buildings and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. We assess the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated discounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When we identify an impairment, reduce the carrying amount of the asset to the estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. As of September 30, 2020, management determined that there was no impairment.
Fair Value Measurements
The Company applies the provisions of ASC Subtopic 820-10, “Fair Value Measurements”, for fair value measurements of financial assets and financial liabilities and for fair value measurements of non-financial items that are recognized or disclosed at fair value in the financial statements. ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.
F-13
ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
| ● | Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| ● | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. | |
|
● | Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. |
The Company’s financial assets and liabilities include cash, receivables, accounts payable, accrued expenses and loans.
Comprehensive Income (Loss)
Other comprehensive income (loss) refers to revenues, expenses, gains and losses that under generally accepted accounting principles are included in comprehensive income but are excluded from net income (loss) as these amounts are recorded directly as an adjustment to stockholders’ equity. Our other comprehensive loss for the six months ended March 31, 2021 and for the period from inception through September 30, 2020 was comprised of foreign currency translation adjustments.
Revenue Recognition
Revenue is comprised of sales of goods and represents the amount of consideration the Company is entitled to upon the transfer of goods. Revenue was recorded on a gross basis, net of surcharges and value added tax (“VAT”) of gross sales. The Company recorded revenue on a gross basis because the Company is the primary obligor of the sales arrangements has latitude in establishing prices, has discretion in suppliers’ selection and assumes credit risks on receivables from customers.
Revenue is measured based on the amount of consideration that we expect to receive, reduced by estimates for return allowances, promotional discounts, and rebates. Revenue also excludes any amounts collected on behalf of third parties, including sales and indirect taxes.
Consistent with the criteria of ASC 606 “Revenue from Contracts with Customers,” we recognize revenue when performance obligations are satisfied by transferring control of a promised good or service to a customer. For performance obligations that are satisfied at a point in time, we also consider the following indicators to assess whether control of a promised good or service is transferred to the customer: (i) right to payment, (ii) legal title, (iii) physical possession, (iv) significant risks and rewards of ownership and (v) acceptance of the good or service. For performance obligations satisfied over time, we recognize revenue over time by measuring the progress toward complete satisfaction of a performance obligation.
Lease
In February 2016, the FASB issued ASU 2016-12, Leases (ASC Topic 842), which amends the leases requirements in ASC Topic 840, Leases. Under the new lease accounting standard, a lessee will be required to recognize a right-of-use asset and lease liability for most leases on the balance sheet. The new standard also modifies the classification criteria and accounting for sales-type and direct financing leases, and enhances the disclosure requirements. Leases will continue to be classified as either finance or operating leases.
The Company adopted ASC Topic 842 using the modified retrospective transition method on July 1, 2020. There was no cumulative effect of initially applying ASC Topic 842 that required an adjustment to the opening retained earnings on the adoption date nor revision of the balances in comparative periods. As a result of the adoption, the Company recognized a lease liability and right-of-use asset for each of the existing lease arrangement. The adoption of the new lease standard does not have a material impact on the consolidated income statements or the consolidated statements of cash flows.
Advertising Expenses
Advertising costs are classified as selling expenses and are expensed in the period incurred and represent online marketing, including fees paid to search engines, and online and offline marketing. Advertising expenses were $2,580 and $nil, respectively, for the six months ended March 31, 2021 and for the period from inception through September 30, 2020.
F-14
Concentration of Risk
Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and other accounts receivable. As of March 31, 2021 and September 30, 2020, $516,405 (RMB3,383,886) and $140,430 (RMB 953,588), respectively, were deposited with various major financial institutions located in the PRC. While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness.
Historically, deposits in Chinese banks are secure due to state policy to protect depositor interests. However, China promulgated a Bankruptcy Law in August 2006 that came into effect on June 1, 2007, which contains a separate article expressly stating that the State Council may promulgate implementation measures to provide for the bankruptcy of Chinese banks based on the Bankruptcy Law. Under the current Bankruptcy Law, a Chinese bank may file bankruptcy if it deems itself to be insolvent. In addition, since China’s concession to the World Trade Organization, foreign banks have been gradually permitted to operate in China and have intensified competition in many aspects, especially since the opening of the Renminbi business to foreign banks in late 2006. Therefore, the risk of bankruptcy at the institutions that the Company maintains deposits has increased. In the event of bankruptcy, the Company is unlikely to reclaim its deposits in full since it is unlikely to be classified as a secured creditor under PRC laws.
Risks of variable interest entity structure
In the opinion of management, (i) the corporate structure of the Company is in compliance with existing PRC laws and regulations; (ii) the VIE Arrangements are valid and binding, and do not result in any violation of PRC laws or regulations currently in effect; and (iii) the business operations of the foreign-invested enterprise and the VIE are in compliance with existing PRC laws and regulations in all material respects.
However, there are substantial uncertainties regarding the interpretation and application of current and future PRC laws and regulations. Accordingly, the Company cannot be assured that PRC regulatory authorities will not ultimately take a contrary view to the foregoing opinion of its management. If the current corporate structure of the Company or the VIE Arrangements is found to be in violation of any existing or future PRC laws and regulations, the Company may be required to restructure its corporate structure and operations in the PRC to comply with changing and new PRC laws and regulations. In the opinion of management, the likelihood of loss in respect of the Company’s current corporate structure or the VIE Arrangements is remote based on current facts and circumstances.
Concentration of customers and vendors
There was no revenue from customers that individually represent greater than 10% of the total revenues for the six months ended March 31, 2021 and for the period from inception through September 30, 2020.
From inception through September 30, 2020, two major vendors accounted for 57% and 38% of the Company’s total cost of sales.
For the six months ended March 31, 2021, two major vendors accounted for 35% and 11% of the Company’s total cost of sales.
Income Taxes
We account for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance against deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date.
We apply ASC 740, Accounting for Income Taxes, to account for uncertainty in income taxes and the evaluation of a tax position is a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met.
F-15
Recent Accounting Pronouncement
Recently Adopted Accounting Standards
Adoption of ASC Topic 606, “Revenue from Contracts with Customers”
In May 2014, the Financial Accounting Standards Board (FASB) issued Topic 606, which supersedes the revenue recognition requirements in Topic 605. The Company adopted Topic 606 as of the inception date.
Adoption of ASC Topic 842, “Leases”
In February 2016, the FASB issued ASU 2016-12, Leases (ASC Topic 842), which amends the leases requirements in ASC Topic 840, Leases.
The Company adopted ASC Topic 842 using the modified retrospective transition method effective the inception date. There was no cumulative effect of initially applying ASC Topic 842 that required an adjustment to the opening retained earnings on the adoption date. See Note 2 “Leases” above for further details.
Accounting Pronouncements Issued But Not Yet Adopted
Financial Instruments. In June 2016, the FASB issued Accounting Standards Update No. 2016-13,“Financial Instruments - Credit Losses (Topic 326)” ("ASU 2016-13"). ASU 2016-13 revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. Originally, ASU 2016-13 was effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. In November 2019, FASB issued ASU 2019-10, “Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842).” This ASU defers the effective date of ASU 2016-13 for public companies that are considered smaller reporting companies as defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is planning to adopt this standard in the first quarter of fiscal 2023.The Company is currently evaluating the potential effects of adopting the provisions of ASU No. 2016-13 on its consolidated financial statements.
Income Taxes. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which modifies and eliminates certain exceptions to the general principles of ASC 740, Income Taxes. This standard will be effective for King Eagle beginning September 30, 2021. We are currently evaluating the impact of the standard on our consolidated financial statements.
Except for the ASU above, in the period from January 2020 through April 2021, the FASB has issued ASU No. 2020-01 through ASU 2021-01, which are not expected to have a material impact on the consolidated financial statements upon adoption.
F-16
NOTE 3 - VARIABLE INTEREST ENTITIES “VIE” ARRANGEMENTS
On May 15, 2021, King Eagle (China) entered into a series of contractual arrangements with King Eagle (Tianjin) and its shareholders. The significant terms of the contractual arrangements are summarized in “Note 1-Organization and Description of Business” above. As a result of the contractual arrangements, KP International classified King Eagle (Tianjin) as a Variable Interest Entity “VIE”.
VIEs are entities that have either a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest, such as through voting rights, right to receive the expected residual returns of the entity or obligation to absorb the expected losses of the entity. The variable interest holder, if any, that has a controlling financial interest in a VIE is deemed to be the primary beneficiary and must consolidate the VIE. King Eagle (China) is deemed to have a controlling financial interest and be the primary beneficiary of King Eagle (Tianjin) because it has both of the following characteristics:
| (1) | The power to direct activities at King Eagle (Tianjin) that most significantly impact such entity’s economic performance, and |
| (2) | The obligation to absorb losses of, and the right to receive benefits from, King Eagle (Tianjin) that could potentially be significant to such entity. |
Pursuant to the Contractual Arrangements, King Eagle (Tianjin) pays service fees equal to all of its net profit after tax payments to King Eagle (China). At the same time, to King Eagle (China) is obligated to absorb all of their losses. The Contractual Arrangements are designed so that King Eagle (Tianjin) operates for the benefit of to King Eagle (China) and ultimately, KP International.
Accordingly, the accounts of the King Eagle (Tianjin) are consolidated in the accompanying financial statements pursuant to ASC 810-10, Consolidation. In addition, their financial positions and results of operations are included in KP International’s financial statements
The Company consolidated its VIE as of March 31, 2021 and September 30, 2020. The carrying amounts and classification of the VIE’s assets and liabilities included in the consolidated balance sheets are as follows:
| March 31, 2021 | September 30, 2020 | |||||||
| (Unaudited) | ||||||||
| Current assets | $ | 1,586,801 | $ | 209,316 | ||||
| Noncurrent assets | 56,976 | 71.192 | ||||||
| Total assets | 1,643,777 | 280,508 | ||||||
| Total liabilities | 1,654,476 | 290,892 | ||||||
| Net liabilities | $ | (10,699 | ) | $ | (10,384 | ) | ||
The VIE’s liabilities consisted of the following as of March 31, 2021 and September 30, 2020:
| March 31, 2021 | September 30, 2020 | |||||||
| (Unaudited) | ||||||||
| Current liabilities | $ | $ | ||||||
| Trade and other payable | 1,519,116 | 9,244 | ||||||
| Deferred revenue | 4,089 | 203,586 | ||||||
| Payroll payable | 6,574 | - | ||||||
| Tax payable | 73,062 | 8,550 | ||||||
| Operating lease obligations, current | 31,428 | 40,752 | ||||||
| Total current liabilities | 1,634,269 | 262,132 | ||||||
| Total noncurrent liabilities | ||||||||
| Operating lease obligations, net of current portion | 20,207 | 28,760 | ||||||
| Total noncurrent liabilities | 20,207 | 28,760 | ||||||
| Total liabilities | $ | 1,654,476 | $ | 290,892 | ||||
F-17
The operating results of the VIE were as follows:
| For the Six Months Ended March 31, 2021 | September 30, 2020 | |||||||
| (Unaudited) | ||||||||
| Revenue | $ | 2,173,594 | $ | 818,647 | ||||
| Gross profit | 1,858,207 | 563,048 | ||||||
| (Loss) income from operations | (52 | ) | (10,054 | ) | ||||
| Other income (expenses) | 117 | - | ||||||
| Net income (loss) | $ | 65 | $ | (10,054 | ) | |||
NOTE 4 - PREPAYMENTS
Prepayments consisted of the following:
| March 31, 2021 | September 30, 2020 | |||||||
| (Unaudited) | ||||||||
| Prepaid rent and building management and utilities | $ | 73,664 | $ | 34,651 | ||||
| Prepaid supplies | 67,842 | - | ||||||
| Prepaid system maintenance services | - | 6,733 | ||||||
| Prepaid travel expense | 6,179 | - | ||||||
| Prepaid professional services | - | 356 | ||||||
| Prepaid others | 1,944 | 971 | ||||||
| Total prepayments | $ | 149,629 | $ | 42,711 | ||||
NOTE 5 - OTHER RECEIVABLES
Other receivables included the following:
| March 31, 2021 | September 30, 2020 | |||||||
| (Unaudited) | ||||||||
| Rental deposits | $ | 6,296 | $ | 8,847 | ||||
| Advance to employees | 22,374 | 46,811 | ||||||
| Total other receivables, net | $ | 28,670 | $ | 55,658 | ||||
F-18
NOTE 6 - PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following:
| March 31, 2021 | September 30, 2020 | |||||||
| (Unaudited) | ||||||||
| Leasehold improvements | $ | 29,401 | $ | 28,372 | ||||
| Computer equipment | 40,277 | 32,625 | ||||||
| Office equipment | 10,125 | 720 | ||||||
| Computer software | 11,777 | 11,364 | ||||||
| Subtotal | 91,580 | 73,081 | ||||||
| Less: accumulated depreciation | (14,780 | ) | (2,959 | ) | ||||
| Total property and equipment, net | $ | 76,800 | $ | 70,122 | ||||
The depreciation expense for the six months ended March 31, 2021 and from the inception through September 30, 2020 was $11,711 and $2,865, respectively.
NOTE 7 - RELATED PARTY TRANSACTIONS
Other payables-related party is nontrade payable arising from transactions between the Company and a related party, such as operating loans from such related party. The loans are unsecured and non-interest bearing. Current payables are payable on demand.
Other payables-related party consisted of the following:
| Name of related party | Relationship | Nature of transactions | March 31, 2021 | September 30, 2020 | ||||||||||
| (Unaudited) | ||||||||||||||
| Mr. Yihe Pang | Director | Loan from a director for operating cash flows | $ | 191,594 | $ | 252,606 | ||||||||
| Total | $ | 191,594 | $ | 252,606 | ||||||||||
NOTE 8 - EQUITY
Share capital:
The share capital, $1,462,349, included the share capital of King Eagle (Tianjin), the VIE, $1,462,345 and KP International, $4.
On September 1, 2020, KP Industrial entered into a sales and purchase agreement with Guoxin Ruilian Group Co., Ltd. KP Industrial transferred 15% of its ownership in King Eagle (China) to Guoxin Ruilian Group Co., Ltd on November 2, 2020. After the ownership transfer, KP Industrial became a 85% shareholder of King Eagle (China).
On March 26, 2021, Guoxin Ruilian Group Co., Ltd entered into equity transfer agreements with KP Industrial and Guoxin Zhengye. Both Guoxin Ruilian Group Co., Ltd and Guoxin Zhengye are wholly owned by a common shareholder, Guoxin United Holdings Group Co., Ltd. Under the agreements, Guoxin Ruilian Group Co., Ltd agreed to transfer its 8% of its ownership in King Eagle (China) to Guoxin Zhengye and the remaining 7% ownership in King Eagle (China) to KP Industrial on April 20, 2021. After the transfer, KP Industrial and Guoxin Zhengye became the 92% and 8% shareholders of King Eagle (China), respectively.
On May 3, 2021, KP International entered into a Bought and Sold Note with Kunpeng (China) Industrial Development Company Limited (“KP Industrial”), incorporated in Hong Kong on August 11, 2017 at a cash consideration of $0.128 (HK$1). After the ownership transfer, it became a sole shareholder of KP Industrial.
On May 17, 2021, KP International entered into a share exchange agreement with CX Network Group, Inc. (“CXKJ”) and the members of KP International on May 17, 2021 to acquire all the issued and outstanding capital of KP International in exchange for the issuance of CX Network Group Inc. to those members (“Reverse Acquisition”). CX Network Group, Inc shall issue an aggregate of 34,158,391 newly issued, fully paid and non-assessable shares of CXKJ, par value $0.0001, to the KP International’s Shareholders. After the Reverse Acquisition, KP International became a wholly-owned subsidiary of CX Network on May 17, 2021.
F-19
Restricted net assets:
Our ability to pay dividends is primarily dependent on us receiving distributions of funds from its subsidiary or VIE. Relevant PRC statutory laws and regulations permit payments of dividends by only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations and after it has met the PRC requirements for appropriation to statutory reserves. Share capital of the PRC subsidiary and VIE included in the Company’s consolidated net assets are also non-distributable for dividend purposes. The results of operations reflected in the accompanying consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of King Eagle (China), the foreign-invested enterprise, and King Eagle (Tianjin), the VIE. The Company is required to set aside at least 10% of their after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, the Company may allocate a portion of its after-tax profits based on PRC accounting standards to enterprise expansion fund and staff bonus and welfare fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends.
As a result of the foregoing restrictions, King Eagle (China) and King Eagle (Tianjin) are restricted in their ability to transfer their net assets to the Company. Foreign exchange and other regulation in the PRC may further restrict these two entities from transferring funds to the Company in the form of dividends, loans and advances. As of March 31, 2021 and September 30, 2020, the Company had negative net assets which included share capital, subscription receivable, accumulated deficit and foreign exchange translation adjustment of KP International, KP Industrial, King Eagle (China) and King Eagle (Tianjin) that are included in the Company’s consolidated financial statements. Due to the net operating loss, as of March 31, 2021 and September 30, 2020, both King Eagle (China) and King Eagle (Tianjin) incurred negative net assets which amounted to $770,763 and $215,659, respectively. Accordingly, the Company did not accrue statutory reserve funds as of March 31, 2021 and September 30, 2020.
NOTE 9 - INCOME TAXES
PRC
are incorporated in the People’s Republic of China and governed by the income tax laws of the PRC. The income tax provision in respect to operations in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), Chinese enterprises are subject to income tax at a rate of 25% after appropriate tax adjustments.
Under the EIT Laws, dividends paid by PRC enterprises out of profits earned post-2007 to non-PRC tax resident investors are subject to PRC withholding tax of 10%. A lower withholding tax rate may be applied based on applicable tax treaty with certain countries.
According to PRC tax regulations, the PRC net operating loss can generally carry forward no longer than five years starting from the year subsequent to the year in which the loss is incurred. Carryback of losses is not permitted. If not utilized, the PRC net operating loss of $839,743 and $208,802 will expire in 2026 and 2025, respectively.
Income tax expense was comprised of the following:
| For the Six Months Ended March 31, 2021 | From Inception Through September 30, 2020 | |||||||
| (Unaudited) | ||||||||
| Current | $ | - | $ | - | ||||
| Deferred | - | - | ||||||
| Total income tax expense | $ | - | $ | - |
F-20
A reconciliation between the Company’s actual provision for income taxes and the provision at the statutory rate is as follow:
| For the Six Months Ended March 31, 2021 | From Inception Through September 30, 2020 | |||||||
| (Unaudited) | ||||||||
| Loss before income tax expense | $ | (645,078 | ) | $ | (208,771 | ) | ||
| Computed tax expense (benefit) with statutory tax rate | 25 | % | 25.0 | % | ||||
| Impact of different tax rates in other jurisdictions | 0 | % | 0 | % | ||||
| Tax effect of non-deductible expenses | (0.6 | )% | (0.8 | )% | ||||
| Change in valuation allowance | (24.4 | )% | (24.2 | )% | ||||
| Effective tax rate | 0 | % | 0 | % | ||||
Deferred tax assets included the following:
| March 31, 2021 | September 30, 2020 | |||||||
| (Unaudited) | ||||||||
| Deferred tax assets | $ | $ | ||||||
| Net operating loss carryforwards in the PRC | 209,936 | 52,201 | ||||||
| Total deferred tax assets | 209,936 | 52,201 | ||||||
| Valuation allowance | (209,936 | ) | (52,201 | ) | ||||
| Total deferred tax assets, net | $ | - | $ | - | ||||
As of March 31, 2021 and September 30, 2020, the Company had $209,936 and $52,201 in net deferred tax assets (DTAs). These DTAs related to the net operating loss carryforwards generated by King Eagle (China) and King Eagle (Tianjin) that can be used to offset taxable income in future periods and reduce the income taxes payable of King Eagle (China) and King Eagle (Tianjin) in those future periods. The NOL carryforwards will expire in 5 years from the date they incurred if they are not used. At this time, the Company considered it is more likely than not that King Eagle (China) and King Eagle (Tianjin) have sufficient taxable income in the near future that will allow us to realize these DTAs. Therefore, the Company recorded a full valuation allowance against all of its deferred tax assets as of both March 31, 2021 and September 30, 2020. The Company intends to continue maintaining a full valuation allowance on its deferred tax assets until there is sufficient evidence to support the reversal of all or portion of these allowance.
NOTE 10 - LEASE
The Company has operating leases for its office facilities and employee accommodation. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term.
The following table provides a summary of leases as of March 31, 2021 and September 30, 2020:
| Assets/liabilities | Classification | March 31, 2021 | September 30, 2020 | |||||||
| (Unaudited) | ||||||||||
| Assets | ||||||||||
| Operating lease right-of-use assets | Operating lease assets | $ | 359,549 | $ | 413,156 | |||||
| Liabilities | ||||||||||
| Current | ||||||||||
| Operating lease liability - current | Current operating lease liabilities | $ | 292,993 | $ | 254,780 | |||||
| Long-term | ||||||||||
| Operating lease liability – net of current portion | Long-term operating lease liabilities | 66,556 | 158,376 | |||||||
| Total lease liabilities | $ | 359,549 | $ | 413,156 | ||||||
F-21
The operating lease expense for the six months ended March 31, 2021 and from inception through September 30, 2020 was as follows:
| For the Six Months Ended | From Inception Through | |||||||||
| Lease Cost | Classification | March 31, 2021 | September 30, 2020 | |||||||
| (Unaudited) | ||||||||||
| Operating lease cost | General and administrative | $ | 147,649 | $ | 101,340 | |||||
| Total lease cost | $ | 147,649 | $ | 101.340 | ||||||
Maturities of operating lease liabilities as of March 31, 2021 were as follow:
| Maturity of Lease Liabilities | Operating Leases | |||
| The remaining 2021 | $ | 156,842 | ||
| 2022 | 205,204 | |||
| 2023 | 9,156 | |||
| 2024 | - | |||
| 2025 | - | |||
| Thereafter | - | |||
| Total lease payments | $ | 371,202 | ||
| Less: interest | (11,653 | ) | ||
| Present value of lease payments | $ | 359,549 | ||
Maturities of operating lease liabilities as of September 30, 2020 were as follow:
| Maturity of Lease Liabilities | Operating Leases | |||
| 2021 | $ | 267,360 | ||
| 2022 | 162,677 | |||
| 2023 | - | |||
| 2024 | - | |||
| 2025 | - | |||
| Thereafter | - | |||
| Total lease payments | $ | 430,037 | ||
| Less: interest | (16,881 | ) | ||
| Present value of lease payments | $ | 413,156 | ||
F-22
Supplemental information related to operating leases was as follows:
| For the Six Months Ended March 31, 2021 | From Inception Through September 30, 2020 | |||||||
| (Unaudited) | ||||||||
| Cash paid for amounts included in the measurement of lease liabilities | $ | 147,649 | $ | 101,434 | ||||
| New operating lease assets obtained in exchange for operating lease liabilities | $ | 70,024 | $ | 511,710 | ||||
| Weighted average remaining lease term | 1.28 years | 1.6 years | ||||||
| Weighted average discount rate | 4.75 | % | 4.75 | % | ||||
NOTE 11- COMMITMENTS AND CONTINGENCIES
On March 31, 2021, King Eagle (Tianjin) entered into a Cooperation Agreement with Guoxin Star Network Co., Ltd who assigned and franchised the operation of 50 Smart Kiosks to King Eagle (Tianjin) for five years. Total franchise fee payable by King Eagle (Tianjin) to Guoxin Star Network Co., Ltd is approximately $1.14 million (RMB 7,500,000). On or before April 5, 2021, King Eagle (Tianjin) is required to remit approximately $0.34 million to Guoxin Star Network Co. Ltd. The remaining balance, approximately $0.8 million (RMB5,250,000), is payable upon the completion of the implementation of Smart Kiosks. King Eagle (Tianjin) estimated the implementation will be completed by the end of the fiscal year 2021.
NOTE 12 - SUBSEQUENT EVENT
As of March 31, 2021, the Company evaluated and concluded that no subsequent events have occurred that would require recognition or disclosure in the financial statements.
F-23
NOTE 13 – CONDENSED PARENT COMPANY’S FINANCIAL STATEMENTS
Kun Peng International Holding Limited
Schedule 1 – Condensed Parent Company Balance Sheets
(Unaudited)
| March 31, 2021 | September 30, 2020 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Noncurrent assets | ||||||||
| Investment in subsidiary | $ | - | $ | - | ||||
| Total noncurrent assets | - | - | ||||||
| Total assets | $ | - | $ | - | ||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Subscription payable | - | - | ||||||
| Total current liabilities | - | - | ||||||
| Total liabilities | - | - | ||||||
| Equity | ||||||||
| Share capital | 4 | 4 | ||||||
| Subscription receivable | (4 | ) | (4 | ) | ||||
| Accumulated deficits | - | - | ||||||
| Accumulated other comprehensive loss | - | - | ||||||
| Total stockholders’ equity | - | - | ||||||
| Non-controlling interests | - | - | ||||||
| Total equity | - | - | ||||||
| Total liabilities and equity | $ | - | $ | - | ||||
The accompanying notes are an integral part of the unaudited schedule 1.
F-24
Schedule 1 - Parent Company Statements of Operations and Comprehensive Loss
(Unaudited)
| For the Six Months Ended March 31, 2021 | From Inception Through September 30, | |||||||
| Revenue | $ | - | $ | - | ||||
| Cost of revenue | - | - | ||||||
| Gross profit | - | - | ||||||
| Operating expenses | ||||||||
| General and administrative expenses | - | - | ||||||
| Selling expense | - | - | ||||||
| Total operating expenses | - | - | ||||||
| Loss from operations | - | - | ||||||
| Other (expenses) income: | ||||||||
| Interest income | - | - | ||||||
| Other (expenses) income | - | - | ||||||
| Total other (expenses) income | - | - | ||||||
| Loss before income taxes | - | - | ||||||
| Income tax expense | - | - | ||||||
| Net loss | - | - | ||||||
| Foreign currency translation adjustment | - | - | ||||||
| Comprehensive loss | $ | - | $ | - | ||||
The accompanying notes are an integral part of the unaudited schedule 1.
F-25
Schedule 1 - Parent Company Statements of Cash Flows
(Unaudited)
| For the Six Months Ended March 31, 2021 | From Inception Through September 30, 2020 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | - | $ | - | ||||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Changes in operating assets and liabilities | ||||||||
| Net cash provided by operating activities | - | - | ||||||
| Cash flows from investing activities | ||||||||
| Net cash provided by investing activities | - | - | ||||||
| Effect of exchange rate changes on cash | - | - | ||||||
| Net increase in cash and cash equivalents | - | - | ||||||
| Cash and cash equivalents, beginning balance | - | - | ||||||
| Cash and cash equivalents, ending balance | $ | - | $ | - | ||||
| Supplementary cash flows information: | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| Cash paid for income tax | $ | - | $ | - | ||||
F-26
Kun Peng International Holding Limited
Notes to Unaudited Schedule 1
Note 1 – Basis of presentation
The parent company only financial statements should be read in conjunction with the Company’s consolidated financial statements.
For the parent company only financial information, the Company records its investment in its subsidiaries under the equity method of accounting as prescribed in ASC 323-10 , Investments-Equity Method and Joint Ventures: Overall. Such investment is presented on the balance sheets as “Investment in subsidiaries” and share of their income as “Equity income of subsidiaries” on the statements of income and comprehensive income.
Note 2 – Restricted net assets
Schedule I of Article 5-04 of Regulation S-X requires the financial information of registrant shall be filed when the restricted net assets of consolidated subsidiaries/VIEs exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. For purposes of the above test, restricted net assets of consolidated subsidiaries/VIEs shall mean that amount of the registrant’s proportionate share of net assets of consolidated subsidiaries/VIEs (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company by subsidiaries in the form of loans, advances or cash dividends without the consent of a third party (i.e., lender, regulatory agency, foreign government, etc.).
The parent company financial statements have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X as the restricted net assets of the subsidiaries/VIEs of the Company exceed 25% of the consolidated net assets of the Company. The ability of the Company’s Chinese operating affiliates to pay dividends may be restricted due to Chinese foreign exchange control policies and the availability of cash balances of the Chinese operating subsidiaries/VIEs. Because a significant portion of the Company’s operations are conducted and revenues generated in China, a significant portion of its revenues being earned and currency received are denominated in Renminbi (RMB). Because RMB is subject to China’s exchange control regulations, including restrictions on converting RMB into US Dollars, the Company may be unable to distribute any dividends outside of China.
Note 3 – Equity
On May 17, 2021, KP International entered into a share exchange agreement with CX Network Group, Inc. (“CXKJ”) and the members of KP International on May 17, 2021 to acquire all the issued and outstanding capital of KP International in exchange for the issuance of CX Network Group Inc. to those members (“Reverse Acquisition”). CX Network Group, Inc shall issue an aggregate of 34,158,391 newly issued, fully paid and non-assessable shares of CXKJ, par value $0.0001, to the KP International’s Shareholders. After the Reverse Acquisition, KP International became a wholly-owned subsidiary of CX Network on May 17, 2021.
F-27
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
On May 17, 2021, CX Network Group, Inc. (“CXKJ”) entered into a definitive Share Exchange Agreement (the “Share Exchange Agreement”) with Kun Peng International Holding Limited (“KP International”), a British Virgins Island company, and the shareholders of KP International (the “Shareholders”). The Share Exchange Agreement is effective on May 17, 2021.
For accounting purposes, the Share Exchange Agreement has been accounted for as a reverse acquisition, and the transactions has been treated as a recapitalization of KP International, with KP International as the accounting acquirer and continuing entities although CXKJ is the legal acquirer. Accordingly, the Company’s historical financial statements are those of KP International immediately following the consummation of the reverse acquisition.
The accompanying unaudited pro forma condensed combined financial information have been prepared to present the balance sheet and statements of operations of CXKJ to indicate how the combined financial statements might have looked like if the acquisition of KP International and the transactions related to the acquisition had occurred as of the beginning of the period presented.
The unaudited pro forma condensed combined balance sheet as of March 31, 2021 and September 30, 2020 is presented as if we have entered into and closed the Share Exchange Agreement, hence consummation of the reverse acquisition on March 31, 2021 and September 30, 2020.
The unaudited pro forma condensed combined statements of operations for the six months ended March 31, 2021 and from inception through September 30, 2020 are presented as if the reverse acquisition consummated at the beginning of the period presented and were carried forward through each of the aforementioned periods presented. The unaudited pro forma condensed combined financial statements of CXKJ were derived from the audited financial statements contained on its September 30, 2020 Form 10-K, as filed with the Securities and Exchange Commission. The unaudited pro forma condensed combined financial statements of CXKJ were derived from its books and records.
The unaudited pro forma condensed financial statements of KP International and its subsidiaries were derived from their books and records and assumed the VIE Agreements consummated on such period.
The unaudited pro forma condensed financial statements of King Eagle (Tianjin) were derived from its books and records.
These unaudited pro forma condensed financial statements are presented for illustrative purposes only and are not intended to be indicative of actual consolidated financial position and consolidated results of operations.
F-28
CX NETWORK GROUP, INC. (CXKJ) AND ITS SUBSIDIARIES
Unaudited Pro Forma Condensed Combined Balance Sheets as of March 31, 2021
| CX Network Group, Inc. | Consolidated Combined Kun Peng International Holding Limited and Its Subsidiaries | Adjustment | Pro forma Balances | |||||||||||||
| ASSETS | ||||||||||||||||
| Current Assets | ||||||||||||||||
| Cash and cash equivalents | $ | - | $ | 520,159 | $ | - | $ | 520,159 | ||||||||
| Prepayments | - | 149,629 | - | 149,629 | ||||||||||||
| Other receivables, net | - | 28,670 | - | 28,670 | ||||||||||||
| Total Current Assets | - | 698,458 | - | 698,458 | ||||||||||||
| Non-current Assets | ||||||||||||||||
| Property, plant and equipment, net | - | 76,800 | - | 76,800 | ||||||||||||
| Right-of-use assets | - | 359,549 | - | 359,549 | ||||||||||||
| Security deposit | - | 93,943 | - | 93,943 | ||||||||||||
| Investment in subsidiary | - | - | - | - | ||||||||||||
| Total Non-current Assets | - | 530,292 | - | 530,292 | ||||||||||||
| Total Assets | $ | - | $ | 1,228,750 | $ | - | $ | 1,228,750 | ||||||||
| LIABILITIES AND EQUITY | ||||||||||||||||
| LIABIILITIES | ||||||||||||||||
| Current Liabilities | ||||||||||||||||
| Trade and other payables | $ | - | $ | 1,361,894 | $ | - | $ | 1,361,894 | ||||||||
| Deferred revenue | - | 4,089 | - | 4,089 | ||||||||||||
| Payroll payable | - | 80,091 | - | 80,091 | ||||||||||||
| Tax payable | - | 100,255 | - | 100,255 | ||||||||||||
| Other payable-related parties | - | 191,594 | - | 191,594 | ||||||||||||
| Operating lease obligations-current portion | - | 292,993 | - | 292,993 | ||||||||||||
| Total Current Liabilities | - | 2,030,916 | - | 2,030,916 | ||||||||||||
| Non-current Liabilities | ||||||||||||||||
| Operating lease obligations-net of current portion | - | 66,556 | - | 66,556 | ||||||||||||
| Total Non-current Liabilities | - | 66,556 | - | 66,556 | ||||||||||||
| Total Liabilities | - | 2,097,472 | - | 2,097,472 | ||||||||||||
| Commitment and contingencies | ||||||||||||||||
| EQUITY | ||||||||||||||||
| Common stock, $.0001 par value, 40,000,000 shares authorized, issued and outstanding at March 31, 2021 | 2,138 | - | 1,862 | (2) | 4,000 | |||||||||||
| Additional paid-in capital | 2,658,417 | - | (1,200,064 | )(2)(3) | 1,458,353 | |||||||||||
| Share capital | - | 1,462,349 | (1,462,349 | )(2) | - | |||||||||||
| Subscription receivable | - | (1,462,349 | ) | (4 | )(2) | (1,462,353 | ) | |||||||||
| Accumulated deficits | (2,637,668 | ) | (757,087 | ) | 2,637,668 | )(1) | (757,087 | ) | ||||||||
| Accumulated other comprehensive income | (22,887 | ) | (13,676 | ) | 22,887 | (13,676 | ) | |||||||||
| Total Stockholders’ equity (deficits) | - | (770,763 | ) | - | (770,763 | ) | ||||||||||
| Non-controlling interest | - | (97,959 | ) | - | (97,959 | ) | ||||||||||
| Total Equity | - | (868,722 | ) | - | (868,722 | ) | ||||||||||
| Total Liabilities and Equity | $ | - | $ | 1,228,750 | $ | - | $ | 1,228,750 | ||||||||
F-29
CX NETWORK GROUP, INC. (CXKJ) AND ITS SUBSIDIARIES
Unaudited Pro Forma Condensed Statements of Operations and Comprehensive Loss
for the Six Months Ended March 31, 2021
| CX Network Group, Inc. | Consolidated Combined Kun Peng International Holding Limited and Its Subsidiaries | Adjustments | Proforma Balance | |||||||||||||
| Revenue | $ | - | $ | 2,173,594 | $ | - | $ | 2,173,594 | ||||||||
| Cost of revenue | - | (315,883 | ) | - | (315,883 | ) | ||||||||||
| Gross profit | - | 1,857,711 | - | 1,857,711 | ||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative expenses | 72,008 | 901,089 | (72,008 | )(4) | 901,089 | |||||||||||
| Selling expense | - | 1,602,121 | - | 1,602,121 | ||||||||||||
| Total operating expenses | 72,008 | 2,503,210 | (72,008 | ) | 2,503,210 | |||||||||||
| Loss from operations | (72,008 | ) | (645,499 | ) | 72,008 | (645,499 | ) | |||||||||
| Other income (expense): | - | - | ||||||||||||||
| Interest income | - | 206 | - | 206 | ||||||||||||
| Other income (expenses) | 1,753 | 215 | (1,753 | )(4) | 215 | |||||||||||
| Total other income (expenses) | 1,753 | 421 | (1,753 | ) | 421 | |||||||||||
| Loss before income taxes | (70,255 | ) | (645,078 | ) | 70,255 | (645,078 | ) | |||||||||
| Income tax expense | - | - | - | |||||||||||||
| Net loss | (70,255 | ) | (645,078 | ) | 70,255 | (645,078 | ) | |||||||||
| Less: Net loss attributable to non-controlling interest | - | (96,762 | ) | - | (96,762 | ) | ||||||||||
| Net loss attributable to Kun Peng International Holding Limited | (70,255 | ) | (548,316 | ) | 70,255 | (548,316 | ) | |||||||||
| Foreign currency translation adjustment | (3,487 | ) | (7,985 | ) | 3,487 | (4) | (7,985 | ) | ||||||||
| Comprehensive loss | (73,742 | ) | (653,063 | ) | 73,742 | (653,063 | ) | |||||||||
| Less: Comprehensive loss attributable to non-controlling interest | - | (97,959 | ) | - | (97,959 | ) | ||||||||||
| Comprehensive loss attributable to Kun Peng International Holding Limited | $ | (73,742 | ) | $ | (555,104 | ) | 73,742 | (555,104 | ) | |||||||
| Weighted Average Number of Ordinary Shares | ||||||||||||||||
| Basic and diluted* | 21,376,918 | 40,000,000 | ||||||||||||||
| Loss Per Share attributable to Kun Peng International Holding Limited | ||||||||||||||||
| Basic and diluted* | $ | (0.00 | ) | $ | (0.01 | ) | ||||||||||
F-30
CX NETWORK GROUP, INC. (CXKJ) AND ITS SUBSIDIARIES
Unaudited Pro Forma Condensed Combined Balance Sheets as of September 30, 2020
| CX Network Group, Inc. | Consolidated Combined Kun Peng International Holding Limited and Its Subsidiaries | Adjustment | Pro forma Balances | |||||||||||||
| ASSETS | ||||||||||||||||
| Current Assets | ||||||||||||||||
| Cash and cash equivalents | $ | 226 | $ | 141,166 | $ | (226 | )(1) | $ | 141,166 | |||||||
| Prepayments | - | 42,711 | 42,711 | |||||||||||||
| Other receivables, net | - | 55,658 | 132,168 | |||||||||||||
| Total Current Assets | 226 | 239,535 | (226 | ) | 316,045 | |||||||||||
| Non-current Assets | ||||||||||||||||
| Property, plant and equipment, net | - | 70,122 | - | 70,122 | ||||||||||||
| Right-of-use assets | - | 413,156 | - | 413,156 | ||||||||||||
| Security deposit | - | 76,510 | - | 76,510 | ||||||||||||
| Investment in subsidiary | 535 | - | (535 | )(1) | - | |||||||||||
| Total Non-current Assets | 535 | 559,788 | (535 | ) | 559,788 | |||||||||||
| Total Assets | $ | 761 | $ | 799,323 | $ | (761 | ) | $ | 799,323 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
| LIABIILITIES | ||||||||||||||||
| Current Liabilities | ||||||||||||||||
| Trade and other payables | $ | 171,919 | $ | 12,446 | $ | (171,919 | )(1) | $ | 12,446 | |||||||
| Deferred revenue | - | 203,586 | - | 203,586 | ||||||||||||
| Payroll payable | - | 88,744 | - | 88,744 | ||||||||||||
| Tax payable | - | 44,444 | - | 44,444 | ||||||||||||
| Other payable-related parties | 292,112 | 252,606 | (292,112 | )(1) | 252,606 | |||||||||||
| Operating lease obligations-current portion | - | 254,780 | - | 254,780 | ||||||||||||
| Total Current Liabilities | 464,031 | 856,606 | (464,031 | ) | 856,606 | |||||||||||
| Non-current Liabilities | ||||||||||||||||
| Operating lease obligations-net of current portion | - | 158,376 | - | 158,376 | ||||||||||||
| Total Non-current Liabilities | - | 158,376 | - | 158,376 | ||||||||||||
| Total Liabilities | 464,031 | 1,014,982 | (464,031 | ) | 1,014,982 | |||||||||||
| Commitment and contingencies | ||||||||||||||||
| EQUITY | ||||||||||||||||
| Common stock, $.0001 par value, 40,000,000 shares authorized, shares issued and outstanding | 2,138 | - | 1,862 | (2) | 4,000 | |||||||||||
| Additional paid-in capital | 464,992 | - | 993,361 | (2)(3) | 1,462,353 | |||||||||||
| Share capital | - | 1,462,349 | (1,462,349 | )(2) | - | |||||||||||
| Subscription receivable | - | (1,462,349 | ) | (4 | )(2) | (1,462,353 | ) | |||||||||
| Accumulated deficits | (930,400 | ) | (208,771 | ) | 930,400 | (1) | (208,771 | ) | ||||||||
| Accumulated other comprehensive income | - | (6,888 | ) | - | (6,888 | ) | ||||||||||
| Total Stockholders’ equity (deficits) | (463,270 | ) | (215,659 | ) | 463,270 | (215,659 | ) | |||||||||
| Non-controlling interest | ||||||||||||||||
| Total Equity | (463,270 | ) | (215,659 | ) | 463,270 | (215,659 | ) | |||||||||
| Total Liabilities and Equity | $ | 761 | $ | 799,323 | $ | (761 | ) | $ | 799,323 | |||||||
F-31
CX NETWORK GROUP, INC. (CXKJ) AND ITS SUBSIDIARIES
Unaudited Pro Forma Condensed Statements of Operations and Comprehensive Loss
for the year ended September 30, 2020
| CX Network Group, Inc. | Consolidated Combined Kun Peng International Holding Limited and Its Subsidiaries | Adjustments | Proforma Balance | |||||||||||||
| Revenue | $ | - | $ | 819,130 | $ | - | $ | 819,130 | ||||||||
| Cost of revenue | - | (122,783 | ) | - | (122,783 | ) | ||||||||||
| Gross profit | - | 696,347 | - | 696,347 | ||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative expenses | 209,488 | 380,777 | (209,488 | )(4) | 380,777 | |||||||||||
| Selling expense | - | 524,443 | - | 524,443 | ||||||||||||
| Total operating expenses | 209,488 | 905,220 | (209,488 | )(4) | 905,220 | |||||||||||
| Loss from operations | (209,488 | ) | (208,873 | ) | 209,488 | (208,783 | ) | |||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | - | 82 | - | 82 | ||||||||||||
| Other income (expenses) | (1,244 | ) | 20 | 1,244 | (4) | 20 | ||||||||||
| Total other income (expenses) | (1,244 | ) | 102 | 1,244 | 102 | |||||||||||
| Loss before income taxes | (210,732 | ) | (208,771 | ) | 210,732 | (208,771 | ) | |||||||||
| Income tax expense | - | - | - | - | ||||||||||||
| Net loss | (210,732 | ) | (208,771 | ) | 210,732 | (208,771 | ) | |||||||||
| Less: Net loss attributable to non-controlling interest | - | - | ||||||||||||||
| Net loss attributable to Kun Peng International Holding Limited | (210,732 | ) | (208,771 | ) | 210,732 | (208,771 | ) | |||||||||
| Net loss | (208,771 | ) | (208,771 | ) | ||||||||||||
| Foreign currency translation adjustment | - | (6,888 | ) | - | (6,888 | ) | ||||||||||
| Comprehensive loss | (210,732 | ) | (215,659 | ) | 210,732 | (215,659 | ) | |||||||||
| Less: Comprehensive loss attributable to non-controlling interest | - | - | - | - | ||||||||||||
| Comprehensive loss attributable to Kun Peng International Holding Limited | $ | (210,732 | ) | $ | (215,659 | ) | 210,732 | (215,659 | ) | |||||||
| Weighted Average Number of Ordinary Shares | ||||||||||||||||
| Basic and diluted | 21,376,918 | 40,000,000 | ||||||||||||||
| Loss Per Share | ||||||||||||||||
| Basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) | ||||||||||
F-32
CX NETWORK GROUP, INC. (CXKJ) AND ITS SUBSIDIARIES
Notes to Unaudited Pro Forma Condensed Financial Statements
Note 1 – Basis of Presentation
The unaudited pro forma condensed combined balance sheet as of March 31, 2021 and September 30, 2020 and the unaudited pro forma condensed combined statements of operations for the six months ended March 31, 2021 and from inception through September 30, 2020, are based on the historical financial statements of CX Network Group Inc (“CXKJ”) and KP International after giving effect of the reverse merger between CXKJ and KP International on May 17, 2021, and the assumptions, reclassifications and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial information.
For accounting purpose, the transaction with KP International was treated as a reserve acquisition, with KP International as the acquirer and CX Network as the acquired party
Note 2 –Adjustments
| (1) | To eliminate assets and liabilities retained by predecessor owners of the Company (CXKJ) |
| (2) | To record an issuance of 34,158,391 of CXKJ’s common stock to KP International’s shareholders |
| (3) | To adjust the equity of subsidiaries |
| (4) | To eliminate the expenses of CXKJ as a result of the elimination of assets and liabilities |
F-33
Exhibit 10.6
Contract No.: (DZGC-XZLHT-2020-025)
Han’s Plaza
Office Building Rental Contract
Signing Place: Beijing, China
Table of Contents
| Article 1 Rental Unit and Area | 2 |
| Article 2 Rental Usage and Relevant Agreements | 3 |
| Article 3 Delivery of House | 3 |
| Article 4 Lease Term | 3 |
| Article 5 Decoration Period | 3 |
| Article 6 Paying of Rent, Arrearage and Invoice | 4 |
| Article 7 Performance Bond | 5 |
| Article 8 Property Management and Relevant Expenses | 6 |
| Article 9 House Decoration | 6 |
| Article 10 Maintenance and Repair of House and Auxiliary Facilities | 7 |
| Article 11 Use and Management of Parking Space | 8 |
| Article 12 Return of House | 9 |
| Article 13 Sublease, Transfer and Exchange | 10 |
| Article 14 Insurance | 10 |
| Article 15 Change, Rescission and Termination of Contract | 10 |
| Article 16 Liabilities for Breach of Contract | 12 |
| Article 17 Joint and Several Liabilities | 13 |
| Article 18 Parties’ Rights and Obligations | 13 |
| Article 19 Notification and Service | 17 |
| Article 20 Confidentiality Obligations | 18 |
| Article 21 Force Majeure | 18 |
| Article 22 Effect of Contract and Dispute Settlement | 18 |
| Article 23 Contract Text | 18 |
| Han’s Plaza Office Towers | 1 | |
Han’s Global House Rental Contract
Lessor: Han’s Global Technology Co., Ltd. (“Party A”)
Legal representative: Gao Yunfeng
Mailing address: 2F/3F, 5# Building, No. 2 Courtyard, South Ronghua Road, Beijing Economic-Technological Development Area, Beijing
Postal code: 100176
Tel.: 010-87169705
Fax: 010-87169701
Lessee: King Eagle (China) Co., Ltd. (“Party B”)
Legal representative: Wang Wenqiang
Mailing address: 124, 1F, 1# Building, No. 3 Courtyard, Wantong Road, Chaoyang District, Beijing
Postal code: 100015
Tel.: 010-53651203
Fax: 010-53651203
In accordance with the provisions of Contract Law of the People’s Republic of China and Several Provisions of Beijing Municipality on House Leasing Management and on the basis of equality and free will, Party A and Party B hereby enter into this Contract concerning the matters that involve Party B’s renting of Party A’s house through amicable negotiation.
Article 1 Rental Unit and Area
1.1 Party A is the development and construction unit of Han’s Plaza (project popularization name, “Plaza” for short) locate at No. 2 Courtyard, South Ronghua Road, Beijing Economic-Technological Development Area, Beijing
1.2 The house rented by party B refers to Unit (02 (AB), 03 (AB), 04 and 05 (ABC) located on [27]F (elevator floor), Tower T[1] (actual floor as [23]F); the total construction area of the rental unit is [1049.88] m2.
1.3 Party B hereby states that it has already carefully read the relevant information of this house including [Table of Actually Measured Area] (detailed in Appendix 1) and [Project Acceptance Filing Certificate], and has checked the house on the spot before signing this Contract, and thus Party B fully comprehends and accepts the relevant conditions of this house and its existing decoration and facility conditions as well as its relevant qualification formalities.
1.4 Whereas, the property ownership certificate has been handled and the time for completion of the handling of the certificate is not clear yet. Meanwhile, Party A does not have the conditions to handle house leasing registration and recordation in the house administrative department; currently, Party A can provide the following authentic, legal and effective documents: (1) State-owned land use right certificate; (2) Construction land planning license; (3) Construction project planning license; (4) Construction project license; (5) Project acceptance filing certificate, and (6) copy of J.J.G. 2016 No. [61] Document issued by the management committee of Yizhuang Economic Development Area (detailed in appendix ?), which can prove that Party A owns a legal right to rent out the Plaza which can be used by Party B to handle industrial and commercial registration, tax registration and bank account opening, etc.
| Han’s Plaza Office Towers | 2 | |
Article 2 Rental Usage and Relevant Agreements
2.1 Party B rents Party A’s house for the purpose of conducting [office and e-commerce platform] activities. Party B shall guarantee to engage in business that complies with national laws and regulations, local rules, industry standards, scope of business and agreements reached herein in the house.
2.2 Party B shall finish the handling of all operation qualifications needed for the business under this Contract within 6 months since the date when this Contract is signed, and submit a copy stamped with official seal to Party A for archiving and recordation.
2.3 Without Party A’s prior written consent, Party B shall not change the rental usage agreed here arbitrarily.
2.4 Without Party A’s prior written consent, Party B shall not engage in [financial business, offline sales and external training] activities within the rental area. If Party B violates this paragraph, it shall undertake all losses and legal consequences therefore caused, including but not limited to losses caused to Party A and a third party.
2.5 If conditions including but not limited to gathering of a crowd, sit-ins and door blockage take place due to Party B’s conduct, and consequently Party A’s operation order and reputation are affected, it will be deemed as Party B’s default; in this case, Party A has the right to immediately, unilaterally rescind this Contract, and request Party B to undertake all liabilities for breach of contract and compensate for all the losses therefore caused to Party A.
Article 3 Delivery of House
Party A and Party B shall handle the handover formalities of this house and pay property related expenses at Party A’s office or the office of a property company designated by Party A on [May 16, 2020], and Party A shall deliver the house to Party B according to the standards listed in “Appendix 3”.
Article 4 Lease Term
4.1 The lease term of this Contract lasts for [2] years, i.e. from [May 16, 2020] to [May 15, 2022].
4.2 A period from the agreed date of house delivery to the date of expiry of 12 months is determined as a rental year; the next day after expiry of a rental year is the starting date of another rental year. The rest can be done in the same manner.
Article 5 Decoration Period
5.1 The decoration period lasts for [92] days, i.e. from [May 16, 2020] to [August 15, 2020].
| Han’s Plaza Office Towers | 3 | |
5.2 During the decoration period, Party B shall pay rent to Party A according to the discounted rental amount (shown in 6.1.2), and abide by other terms of this Contract as well as the relevant regulations formulated by the property company. Furthermore, Party B shall pay property management fee and other expenses payable during the decoration period in accordance with the stipulated time and amount.
Article 6 Paying of Rent, Arrearage and Invoice
6.1 Rent (The rent refers to a tax-inclusive price (including VAT) in this Contract unless otherwise specifically instructed).
6.1.1 Unit Price of Rent
During the lease term, the daily rent of this rental unit is RMB [4.8] Yuan (in words: Four Yuan Eight Jiao) /m2 (per construction area) from the [1st] rental year to the [2nd] rental year. Therefore, the total monthly rent is RMB [153,282.48] Yuan.
6.1.2 Rent Preference
In consideration of factors like Party B’s decoration period, Party A hereby agrees to grant a preference of RMB [459,847.44] Yuan to the annual rent from the [1st] rental year to the [2nd] rental year. Therefore, the monthly rent in the aforesaid year becomes RMB [134,122.17] Yuan (in words: RMB One Hundred and Thirty-four Thousand One Hundred and Twenty-two Yuan One Jiao Seven Fen) after Party A grants the preference.
If this Contract is performed for less than [24] months, and it is terminated ahead of time due to Party B’s reason, Party B will no longer enjoy the rent preference granted by Party A, and thus it shall supplement the preferential amount already enjoyed.
6.2 Payment
6.2.1 The rent shall be paid once every [2] months (hereinafter referred to as “cycle”); the rent is prepaid and the rent of next period shall be paid 15 days before end of each cycle (if this date is a holiday, the rent shall be paid on the final working day before this holiday).
6.2.2 The rent for the first period from [May 16, 2020] to [July 15, 2020], with a total amount of RMB [268,244.34] Yuan (in words: RMB Two Hundred and Sixty-eight Thousand Two Hundred and Forty-four Yuan Three Jiao Four Fen), shall be paid within [5] working days after this Contract is signed; if Party B fails to pay the rent for the first period and performance bond on the agreed date, Party A shall have the right to rent out the rental unit to others.
6.2.3 Party B shall pay house rent, performance bond and all other payables to Party A’s designated bank account via bank transfer. Party A designates the bank account used to collect the aforesaid amount as follows:
Opening bank: Industrial and Commercial Bank of China Beijing Economic-Technological Development Area Sub-branch
Name of account: Han’s Global Technology Co., Ltd
Account number: 0200 3168 1910 0097174
6.3 Overdue Liquidated Damages
| Han’s Plaza Office Towers | 4 | |
If Party B fails to pay the rent at the agreed time during the entire lease term, Party B shall pay [3‰] of amount unpaid to Party A as rent overdue liquidated damages for each delayed day.
6.4 Invoice
6.4.1 After receiving house rent prepaid by Party B, Party A shall issue a house rent VAT invoice to Party B within 10 working days. If Party B requests the delay of issuing of invoice due to its own reason, it shall submit a written application. However, the delayed period shall not exceed 60 days at most and shall not cross accounting years after Party A receives the house rent prepaid by Party B.
Party B’s invoicing information is as below:
| (1) | Name (full name on the business license): King Eagle (China) Co., Ltd. |
| (2) | Taxpayer’s identification number: 91110105MA01HUYJ4H |
| (3) | Registered address (registered address on enterprise business license): 124, 1# Building, No. 3 Courtyard, Wantong Road, Chaoyang District, Beijing |
| (4) | Contact number: 010-53651203 |
| (5) | Opening bank (bank account opening license): |
| (6) | Bank account (bank account opening license): |
| (7) | Nature of VAT taxpayer (general taxpayer/small-scale taxpayer). |
6.4.2 Party A selects the application of simple tax method, calculates tax payable according to a collection rate of 5%, and issues the relevant VAT invoice. Party B is clear about this situation and recognizes it.
6.4.3 Party A issues special VAT invoice for general taxpayer, and general VAT invoice for small-scale taxpayer respectively.
6.4.4 If Party B’s identity as taxpaying subject is changed, it shall inform Party A in writing within 10 days since the date when the change is made.
Article 7 Performance Bond
7.1 Party B shall pay performance bond that is equivalent to the rent of [1] rental year and [3] months, i.e. RMB [459,847.44] Yuan (in words: RMB Four Hundred and Fifty-nine Thousand Eight Hundred and Forty-seven Yuan Four Jiao Four Fen), to Party A when paying the rent for the first period. After collecting the performance bond, Party A shall issue a relevant receipt to Party B.
7.2 After Party B pays off all rent, property management fee, utilities as well as potential liquidated damages, damage compensation, etc., finishes the handling of site clearing and handover formalities, and issues a certificate indicating that it has already moved out or changed the registered office address upon expiry of the lease term, Party A shall refund the performance bond to Party B in full amount and free of interest within 15 working days with receipt of performance bond submitted by Party B.
| Han’s Plaza Office Towers | 5 | |
7.3 If Party B still owes any amount upon expiry of lease term (including but not limited to rent, property management fee, utilities, liquidated damages, damage compensation, and funds paid by Party A in advance), Party B shall supplement the owed amount to Party A. If Party B refuses to do so, Party A shall have the right to directly deduct the relevant amount from the performance bond, and refund the remaining part to Party B free of interest. If the performance bond is not enough to deduct the amount owed by Party B, Party B shall further pay in full.
7.4 The performance bond is used to pay off the liquidated damages borne by Party B due to Party B’s default as well as loss or damage caused to Party A or its agents (including but not limited to Han’s Property) due to failure to observe or perform its obligations under this Contract. Party B shall not use performance bond to offset the rent, property management fee or expenses owed.
7.5 If the performance is decreased due to deduction, Party B shall supplement the performance bond to its full amount within [10] days since the date when it receives a written notice from Party A.
7.6 If this Contract is terminated ahead of time due to Party B’s breach of contract, or conditions agreed in 15.3 of this Contract arise to result in the premature termination of this Contract, Party A will not refund this performance bond.
Article 8 Property Management and Relevant Expenses
8.1 The property company designated by Party A is [Shenzhen Han’s Property Management Co., Ltd. Beijing Branch] (hereinafter referred to as “Han’s Property”); when signing this Contract, Party B agrees to sign the relevant property management agreement with Han’s Property.
8.2 The current standard of property management fee of Han’s Property is RMB [23] Yuan/month/m2.
8.3 Party B shall pay property management fee and other expenses, including electric charge, telephone bill, overtime air-conditioning fee, and parking lot fee, etc. (please see each charging standard formulated by the property company and modified from time to time according to the provisions of the relevant departments of the State and Beijing Municipality) in accordance with the standard and method stipulated in the relevant property management agreement; and Party B shall guarantee to abide by other normative management documents formulated by Han’s Property.
8.4 After Party B pays the aforesaid expenses to Han’s Property, Han’s Property shall provide the relevant invoice as the case may be.
8.5 During the cooperation between Party A and Party B, Party A shall have the right to replace the property company. However, in this case, it shall inform Party B in writing one month ahead of time.
Article 9 House Decoration
9.1 If Party B needs to decorate, including but not limited to redecoration, addition or change of original auxiliary facilities and equipment, it shall submit a written decoration application to the property company designated by Party A 7 days ahead of time, and attach a whole set of copies of decoration construction drawings as well as other data required by the property company. Without written approval from Han’s Property, Party B shall not construct.
| Han’s Plaza Office Towers | 6 | |
9.2 If the decoration needs to be approved or recorded by a relevant department, Party B shall obtain approval or recordation document from the relevant department, handle the relevant administrative approval formalities, and pay the relevant expenses itself.
9.3 If Party B decorates, fits, repairs or changes the house according to the agreements reached here, it shall meet the requirements from departments in charge of fire protection and environmental protection, as well as other competent governmental departments. Party B shall not open business until the acceptance from the aforesaid departments is passed; if rectification is needed, Party B shall pay the expenses therefore incurred.
9.4 If Party B’s decoration scheme fails to be approved by Party A, the property company designated by Party A, departments in charge of fire protection and environmental protection, as well as other competent governmental departments, Party B shall take responsibility for delay and loss therefore caused as well as all losses therefore caused to Party A.
9.5 Party B’s decoration activities shall abide by the provisions of the property company designated by Party A on decoration management, and pay the relevant expenses according to the provisions of the property company.
9.6 Party A or the property company has the right to standardize and manage the decoration, splitting, building, equipment installation or reconstruction of this house, including reasonable management of access of Party B’s construction personnel, transport of materials, construction time, construction safety and other relevant matters.
9.7 Party B shall hire a decoration unit with the relevant qualification of level two and above to construct. If Party B or the decoration unit hired by Party B or a third party causes certain damages to the rented house, or their or others’ property losses and casualties during the construction period, Party B shall be held responsible. If a dispute arises because other tenants’ normal operating activities are affected by construction, Party B shall be responsible for fixing the problem. If the relevant loss is borne by Party A for Party B first, Party A shall have the right to demand compensation from Party B, and request Party B to pay 10% of the part borne by Party A as service fee.
9.8 After completing the decoration of the house as agreed herein, Party B shall provide the property company with a whole set of copies of decoration as-built drawings which shall be checked and confirmed by the property company and then affixed with official seal by Party B. Party A and the property company shall spare no effort to coordinate Party B to complete the reconstruction acceptance of the rented house.
Article 10 Maintenance and Repair of House and Auxiliary Facilities
10.1 Party A’s and/or Property Company’s Repair Obligation
10.1.1 When Party B finds out any damage or fault in this house and its auxiliary facilities during the lease term, it shall timely inform Party A and/or Han’s Property to repair. If Party B delays reporting for repair to result in the expansion of loss, Party B shall assume the relevant responsibility. Party A and/or Han’s Property shall timely give a feedback and assign personnel to repair after receiving Party B’s notice.
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10.1.2 During the lease term, Party A and/or Han’s Property shall guarantee that this unit and its auxiliary facilities are under a normally usable and safe status; Party A and/or Han’s Property shall check and maintain this unit, and shall inform Party B in advance in this case; Party B shall coordinate during such check and maintenance; Party A and/or Han’s Property shall reduce the influence on Party B’s use of this unit.
10.1.3 Party B shall allow Party A and/or Han’s Property to enter this unit, survey the repair status of this unit, check the auxiliary facilities in this unit, and carry out necessary renovation and maintenance works after giving a prior notice to Party B and within reasonable time that possibly does not affect Party B’s work.
10.1.4 In case of an emergency, the staff of Party A and/or Han’s Property shall enter this house with the company of Party B’s personnel during the working hours. However, beyond the working hours, or given that Party B cannot be reached, Party A and/or Han’s Property or its authorized representative may enter this house without a prior notice. However, Party A and/or Han’s Property shall explain the situation to Party B in writing, and take responsibility and compensate for the damages caused due to enter into this house. If the emergency occurs in the house rented by Party B, Party A will not be required to assume damage compensatory responsibility.
10.2 Party B’s Repair Obligation
10.2.1 During the lease term, Party B shall reasonably use and take good care of this unit and its auxiliary facilities. If this unit and its auxiliary facilities are damaged or become faulty due to its improper or unreasonable use, Party B shall be responsible for repair or compensation; if Party B refuses to repair or assume compensatory responsibility, Party A may repair or replace on its behalf and expenses incurred shall be borne by Party B. Party A shall have the right to demand compensation from Party B, and request Party B to pay 10% of the part borne by Party A as service fee.
10.2.2 During the lease term, Party B shall keep this unit and the equipment and facilities provided by Party A inside it under a rentable and favorable status that comply with the original shapes (except natural wastage).
10.2.3 The responsibilities for repairing and maintaining auxiliary facilities and equipment added by Party B during the lease term shall be fully borne by Party B. If Party B does not renew this Contract anymore, or this Contract is terminated due to Party B’s reason, Party A may request Party B to demolish the facilities and equipment it has added as needed, and Party B shall not damage this house. The expenses therefore incurred shall be borne by Party B.
10.3 Compensatory Responsibility for Losses Caused by Renovation Responsibility
Party A and Party B are obliged to check, maintain, renovate and replace their own equipment and facilities. If either party causes a certain loss to the other party or a third party when performing this obligation, it shall assume compensatory responsibility independently.
Article 11 Use and Management of Parking Space
11.1 When using parking space of Han’s Plaza, Party B shall abide by the relevant provisions formulated by Party A and Han’s Property.
11.2 The Lessor provides the Lessee with the qualification to use [5] parking spaces during the lease term, and the Lessee shall pay the expenses according to the charging standard stipulated by the property management company.
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Article 12 Return of House
12.1 Party B shall recover the rental unit into its original shape and return it to Party A after clearing and cleaning in accordance with the standards agreed in “Appendix 5” to this Contract upon expiry or premature rescission of the lease contract term. Party B shall pay all expenses incurred for the demolition of the added decoration and fitment in the rental unit (including but not limited to fixtures, decorations, additions, separators, ground pavings, devices and changes added by Party B) itself, and undertake all repair expenses incurred for the damages caused due to the aforesaid demolition.
12.2 Despite the provisions stipulated in 12.1 above, Party A has the right to perform the obligation to demolish decoration and fitment in the rental unit without following the provisions of 12.1 above after Party A’s prior approval is obtained and Party B pays all expenses needed to recover the rental unit into its original shape (recognition of all expenses: Refer to total amount jointly confirmed by Party A and Party B after Party B provides Party A with details of the relevant decoration, fitment, recovery and repair expenses before the date of termination of this Contract). In this case, the decoration and fitment in Party B’s rental unit belong to Party A, and Party A is not required to give Party B any economic compensation.
12.3 Party A and Han’s Property will conduct tripartite acceptance for the house upon Party B’s returning of it. The house will be deemed as finally returned to Party A after Party B settles each expense and returns the keys.
12.4 If Party B uses the address of this house as the company’s registered address, mailing address as well as registered address of the relevant license(s), it shall handle relocation, cancellation or change formalities within two months before the date of termination of this Contract so as to ensure that Party A may continuously use and rent out this house without any influence.
12.5 Party A has the right to request Party B to move all its articles out of this house at Party B’s own expense when Party B returns it no matter what the reason is to cause the termination of this Contract. When demolishing the added equipment or facilities, Party B shall not damage the original structure of the house and its facilities. If the status of this house upon return does not comply with the aforesaid provisions, Party A shall have the right to request Party B to take measures, or take such measures itself to make the status of this house comply with the provisions of 12.1 above. All expenses therefore incurred shall be borne by Party B.
12.6 After Party B returns the house, or Party A forcefully takes back the house due to Party B’s unilateral breach of contract, the ownership of articles not demolished or still left in the rented house will be deemed as waived by Party B, and Party A has the right to dispose them by itself.
12.7 Except for the expiry of lease term of this Contract, if Party A unilaterally rescinds this Contract according to the provisions of this Contract or laws and regulations, Party B shall empty and return this house within 5 days since the date when it receives receiving a written notice of rescission of this Contract from Party A; if this Contract is terminated ahead of time due to other reasons like force majeure or act of government, Party B shall empty and return this house within 30 days since the date when when it receives receiving a written notice of rescission of this Contract from Party A.
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12.8 If Party B’s demolishing behavior causes any loss or damage to Party A or any third party during the process of moving-out or after termination of this Contract, Party B shall assume the relevant compensatory responsibility.
12.9 When moving out, Party B shall not obstruct Party A’s letting activities in this house for no reason.
12.10 If Party B fails to return the house to Party A according to the house return status and time agreed here upon expiry or premature rescission of lease term of this Contract, Party A will collect house occupation fee from Party B according to agreements reached in 16.2 of this Contract. If Party B still does not return the house with a delay of 5 days, Party A shall have the right to forcefully take back the rental unit and clear it. The losses therefore caused shall be borne by Party B.
Article 13 Sublease, Transfer and Exchange
13.1 The house can only be used by Party B itself; without Party A’s written consent, Party B shall not have any of the following behaviors:
| 1) | Sublease; |
| 2) | Transfer this Contract; |
| 3) | Let a third party operate and use the house; |
| 4) | Use this house together, or exchange the use of all or a part of the house with a third party by any means. |
13.2 Party B definitely agrees to waive the right of first refusal during the lease term no matter whether Party A sells or transfers this house to the internal company of the group, or a third-party company. At that time, Party A’s relevant rights and obligations under this Contract shall be enjoyed and undertaken by the transferee of this house.
13.3 If Party A transfers this house to any third party, it shall disclose the fact that this house is already rented out to Party B to the transferee, and timely inform Party B of the fact that this house is already transferred to a third party.
13.4 If the rented house is transferred or assigned due to Party A’s internal events like enterprise transformation, asset appropriation and enterprise restructuring, it shall inform Party B in writing within 5 working days after such changes occur, and the Parties shall handle the relevant formalities through negotiation.
Article 14 Insurance
14.1 Party B shall purchase a relevant limit of insurance for the property, equipment and decoration added by Party B in the rental unit.
14.2 Party B shall purchase a relevant limit of insurance for personal property damage liability possibly taking place within the rental unit.
Article 15 Change, Rescission and Termination of Contract
15.1 This Contract can be changed or rescinded after the Parties reach negotiated consensus. Change or rescission of this Contract shall be conducted in writing and shall come into force after the Parties sign names and affix seals.
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15.2 This Contract is terminated and neither Party A nor Party B will assume liabilities for breach of contract under any of the following circumstances. In this case, Party A shall return the performance bond already paid by Party B and rent not incurred yet.
| 1) | The land use right within the scope of occupation of this house is taken back ahead of time according to law; |
| 2) | This house is legally included in the scope of house demolition and relocation due to urban construction demand, and is relocated during the contract term; |
| 3) | Party A cannot rent out this house to Party B as agreed due to the influence of other government planning or act; |
| 4) | This house is destroyed, lost or authenticated as a dangerous house due to the reason of either Party A or Party B; |
| 5) | The continuous performance of this Contract goes against the new national policies, orders and provisions. |
15.3 Party A has the right to unilaterally rescind this Contract under any of the following circumstances, and Party B shall return the house according to Article 12 of this Contract within 5 days after Party B receives a written notice of rescission from Party A.
| 1) | Where Party B violates the agreements reached in Article 2, Article 3 and Article 14 of this Contract; |
| 2) | If Party B decorates the house or adds major auxiliary facilities without Party A’s written consent, or approval and acceptance from governmental departments, or beyond the scope and requirements approved by party A in writing or approved by governmental departments, or changes the originally approved decoration scheme after obtaining approval from governmental departments and Party A’s written consent; |
| 3) | Party B subleases, sublets or transfers this house to others for renting or exchange this house with others’ house without Party A’s written consent; |
| 4) | Party B delays the paying of any payable beyond the rent for the first period (executed according to paragraph 5 of this article) for 10 continuous days (including given figure) or twice or above accumulatively during the lease term; |
| 5) | Party B fails to pay the performance bond and rent for the first period as scheduled; |
| 6) | Party B utilizes this house to engage in illegal activities or illegal operation; |
| 7) | Party B uses this house illegal or improperly and consequently this house is destroyed, lost or authenticated as a dangerous house; |
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| 8) | Party B fails to provide the relevant facilities according to the provisions on fire safety within the rental area, or the facilities provided do not comply with provisions on fire safety, and rectification hasn’t been completed within a time limit defined by party A or the relevant department; |
| 9) | Party B’s storage of combustible, explosive, radioactive, polluting, corrosive, toxic and hazardous articles in the rented house must comply with the provisions of the relevant laws and regulations of the State on work safety. But, Party B fail to comply with the said provisions and complete rectification within the defined time limit; |
| 10) | Party B has other behaviors that seriously violate the agreements reached herein. |
15.4 If Party A has any of the following circumstances, Party B shall have the right to unilaterally rescind this Contract and return the house within 15 days after a written notice is served to Party A.
| 1) | Party A delays the delivery of this house for more than 30 days from the agreed time; |
| 2) | The house delivered does not comply with the agreements reached herein and consequently Party B cannot use the house in accordance with the rental usage agreed herein; |
| 3) | Party A does not undertake the agreed obligations for warranty and repair, and consequently Party B cannot use the house in accordance with the rental usage agreed herein; |
| 4) | Party A has no ownership over this house; |
| 5) | This house is destroyed, lost or authenticated as a dangerous house due to Party A’s reason. |
Article 16 Liabilities for Breach of Contract
16.1 If Party A delays the house delivery for less than 30 days in violation of agreements reached in Article 3 of this Contract, Party A shall postpone Party B’s decoration period according to the overdue days; if Party B delays the collection of the house for less than 30 days in violation of agreements reached in Article 3 of this Contract, the decoration period will not be postponed.
16.2 If Party B cannot return the house to Party A as scheduled in violation of agreements reached in 12.1 or 12.7 of this Contract, or the house returned does not meet Party A’s requirements, it will be deemed that the return of the house is delayed, and consequently Party B shall pay house occupation fee to Party A for each delayed day using the calculation method below until Party B returns the house that meets Party A’s requirements to Party A: Three times of daily rent standard in the final rental year of contract performance × Overdue days. If the house occupation fee is not enough to compensate for Party A’s loss, Party A shall have the right to claim compensation.
16.3 If Party B violates the circumstances agreed in 13.1, Party A shall have the right to take back the house immediately. Party B agrees that the performance bond belongs to Party A and Party A will undertake all economic losses therefore caused to Party A.
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16.4 If this Contract is terminated due to circumstances agreed in 15.2, Party A shall refund rent and performance bond already paid by Party B but not due yet, and shall give at least 60 days for Party B to move out of and return the house. However, Party B must pay the rent incurred during this period in accordance with the daily rent standard in current year.
16.5 If this Contract is rescinded according to the circumstances agreed in 15.3, Party B shall agree to waive the performance bond already paid as liquidated damages for premature rescission of this Contract paid to Party A. Also, Party B shall undertake all economic losses therefore caused to Party A, including but not limited to court costs, counsel fee and other relevant expenses. Besides, Party A shall have the right to take back the house 5 days after notice of rescission of this Contract is served to Party B.
16.6 If this Contract is terminated according to the circumstances agreed in 15.4, Party A shall refund Party B’s performance bond and also pay one time of performance bond as liquidated damages for premature rescission of this Contract, and refund rent already paid by Party B but not yet used free of interest.
16.7 If Party B puts forward the premature rescission of this Contract during the lease term, it shall inform Party A in writing [2] months ahead of time, and Party A has the right to deduct all performance bond already paid by Party B as compensation for premature rescission of this Contract; if Party B fails to complete the obligation of prior notice within the aforesaid time limit, Party A shall have the right to deduct all performance bond already paid by Party B, and request Party B to pay extra [2] months’ rent as compensation for premature rescission of this Contract.
16.8 If Party A puts forward the premature rescission of this Contract, Party A shall inform Party B in writing [2] months ahead of time, and Party B has the right to request Party A to return all performance bond already paid; if Party A fails to complete the obligation of prior notice within the aforesaid time limit, Party B shall have the right to request Party A to refund all performance bond already paid by Party B, and request Party A to pay extra [2] months’ rent as compensation for premature rescission of this Contract.
Article 17 Joint and Several Liabilities
If this house is used by two or more actual users (individuals and/or entities) at present or in the future:
| (1) | The aforesaid individuals and/or entities shall undertake joint and several liabilities for each of Party B’s obligations under this Contract; |
| (2) | Party A is entitled but is not obliged to the liabilities of any aforesaid personnel or entities under this Contract, or compromise concerning such liabilities, or give time or other preference at any time without influencing the other parties’ due liabilities. |
Article 18 Parties’ Rights and Obligations
18.1 Party A’s Rights and Obligations
18.1.1 Under the condition that Party B has paid rent and all other expenses payable as scheduled and performed and observed all its obligations under this Contract during the lease term, Party A shall not disturb Party B’s normal use of the rental unit. If Party B fails to pay the rent as scheduled, or owes other relevant expenses payable, Party A shall have the right not to provide house cooling, heating and other relevant services itself or by notifying the property company to do so; when the conditions for rescission of this Contract are fulfilled, Party A shall have the right to enclose the entrance door of the rental unit itself or by notifying the property company to do so, and Party A will not be required to undertake any loss therefore caused to Party B.
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18.1.2 Party A shall be responsible for repairing the damages caused to the main structure of the rental unit and the equipment and facilities provided by Party A due to natural wastage and their own quality problems, and paying the repair expenses therefore incurred.
18.1.3 After notifying Party B, Party A may bring any future tenant(s) to visit and check the exhibited rental unit within proper normal working time three months before expiry of lease term of this Contract. However, it shall not seriously influence Party B’s normal work order.
18.1.4 Party A shall provide Party B with connections to utilities like water, electricity and telephone.
18.1.5 Party A has the right to decide on the use of exterior wall and public areas of the Plaza, and transfer or assign such right to others.
18.1.6 Party A’s acceptance of Party B’s rent or other expenses shall not be deemed as Party A’s waiver of the right to demand Party B to take responsibility for its violation of any of its provisions to observe and perform under this Contract.
18.1.7 Party A’s forgiving of Party B’s violation of any of its responsibilities under this Contract once or for multiple times shall not constitute the basis for Party A’s waiver to hold Party B liable for any of its continuous, subsequent breaching behaviors; or shall not impair or influence Party A’s exercising of right and remedial measures against any of Party B’s continuous, subsequent breaching behaviors at any aspect. Party A’s performance or non-performance of any event shall not constitute Party A’s waiver to investigate Party B’s breaching behavior unless Party A otherwise indicates expressly in writing to waive the holding of Party B liable.
18.1.8 If Party B does not return the rental unit within agreed time under this Contract, Party A shall have the right not to provide all energy and property services itself or by notifying Han’s Property to do so, and will take back the rental unit as agreed herein.
18.1.9 Rights and remedial measures enjoyed by Party A according to the aforesaid provisions of this Contract do not influence or exclude Party A’s other remedies and rights enjoyed in accordance with laws or terms of this Contract.
18.2 Party B’s Rights and Obligations
18.2.1 Party B is entitled to use this rental unit within the lease term without being illegally disturbed by Party A or its representative under the precondition that Party B pays the rent according to provisions of this Contract and observes and performs all the provisions supposed to be observed and performed under this Contract;
18.2.2 Party B shall submit an application for renewal of the lease to Party A in writing [90] days in advance upon the date of expiry of lease term. After receiving Party B’s application, Party A will decide to renew the lease with Party B or not and determine the relevant conditions for renewal based on the actual circumstances then, and complete the signing of Lease Renewal Agreement 60 days before expiry of the lease term; if Party B does not submit the written application, it will be deemed that Party B waives this right.
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18.2.3 Party B shall strictly abide by all rules and management regulations related to the rental unit as formulated by Party A and Han’s Property at present or in the future on an irregular basis; such rules and regulations come into force after Party A or Han’s Property sends a written notice to Party B.
18.2.4 Party B shall not put any articles that may block or cause damage, danger or pollution or any toxic or radioactive articles to pipelines and lines used in the rental unit, including pipelines and lines used for water supply and drainage, natural gas, power supply, telecommunication and data processing;
18.2.5 Party B shall not damage, injure or stain the facilities of the Plaza as well as any parts of structures or decorations of areas of the Plaza stipulated in Party A or Tenant Manual as for public use;
18.2.6 Party B shall not set off firecrackers or burn any articles in any places of the rental unit or the Plaza;
18.2.7 Party B shall not bring or put any drugs, guns, dangerous articles, combustibles, explosives, hazardous articles, dangerous articles or disgusting articles in the Plaza or rental unit;
18.2.8 Party B shall not use the rental unit for any illegal or immoral purposes, or use them for any dangerous, hazardous, boisterous and disgusting business, or use the rental unit in a way that disgusts adjacent owners or tenants;
18.2.9 Party B shall not use the rental unit to convene public gathering, or use it as residence, or raise animals inside;
18.2.10 Party B shall not use the Plaza as well as its pipelines, lines or any other parts in an overloading way;
18.2.11 Party B shall clean the garbage to Party A’s designated place and trash bin on a daily basis, and keep the rental unit clean, tidy and orderly;
18.2.12 Party B shall not obstruct any roads, sidewalks or stairs in the Plaza or utilized by the Plaza, or adopt any behaviors that may obstruct others’ use of the roads, sidewalks or stairs;
18.2.13 Party B shall not park or handle goods beyond Party A’s designated parking area or goods handling area (if any);
18.2.14 Party B shall not clean vehicles in Party A’s designated parking area;
18.2.15 Party B shall use contractor approved and consented by Party A in advance when conducting any repair or decoration work for the rental unit, and supervise and ensure that this contractor abides by the provisions formulated by Party A concerning the repair or decoration works. If the repair or decoration works involve the Plaza’s fire safety facilities, air-conditioning system and telecommunication, Party B shall use a contractor with relevant construction qualification and recognized by Party A or Han’s Plaza;
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18.2.16 Party B shall not carry out any open profit-oriented training or allow any sales, auction, loan clearing upon close-down or similar selling activities in the rental unit;
18.2.17 Party B shall guarantee that the rental unit is only used for office work. Party B shall not utilize the rental unit to engage in the production and storage of goods or commodities, except a little quantity of goods or commodities displayed as samples and exhibitions that comply with the business operated by Party B;
18.2.18 Party B shall not transport furniture or other large articles to the rental unit within normal working hours. Party B shall not use passenger elevator for the purpose of handling at any time, or load articles beyond the elevator’s design load weight to any freight elevator or passenger elevator of the Plaza.
18.2.19 Party B shall not cook or allow others to cook or prepare food within the rental unit, or send or spread unusual smell or peculiar smell in the rental unit;
18.2.20 Party B shall take all necessary steps and measures to prevent the rental unit or any part of it from being harmed by termite, rat, cockroach or any other harmful insects or parasites;
18.2.21 Party B shall not solicit business and distribute any propaganda materials, notices or advertising matters in any other places outside the rental unit or within the Plaza via its personnel or agents or by allowing others to do so;
18.2.22 Party B shall not allow anyone to stay over night within the rental unit;
18.2.23 To ensure the safety of rental unit, Party B shall provide Han’s Property with a list of employees in charge of handling emergent affairs beyond office hours. In case of change in emergency contact, Party B shall timely inform Han’s Property;
18.2.24 Party B shall hand over the spare keys or access control card of the rental unit to Han’s Property. When a fire occurs, or other emergent or suspiciously emergent situation occurs, Han’s Property shall have the right to enter the rental unit for handling of this situation using spare keys or access card card;
18.2.25 Party B shall abide by and ensure that its employees, visitors, and contractors abide by the relevant fire safety regulations and safety rules formulated by Party A, and provide enough portable fire extinguishers in the rental unit;
18.2.26 Party B shall not install unusual machinery equipment, or devices and machinery equipment beyond the capacity of the circuits and water drainage facilities of the rental unit in the rental unit or the Plaza, and shall not install equipment with weight going beyond the ground bearing capacity (Party A has the right to stipulate the maximum weight, installation positions and installation method of heavy objects);
18.2.27 Party B shall not change, convert or add the loads of water, electricity and central air-conditioning without Party A’s written consent.
18.2.28 Han’s Plaza is a non-smoking building. Party B shall guarantee to keep a smoke-free work environment in the rental unit or public areas. Party B shall guarantee that its employees and/or visitors abide by the agreements reached in this paragraph. Party B agrees to assume joint and several liabilities for the behaviors of its employees and/or visitors in violation of agreements reached in this paragraph.
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18.2.29 Party B shall strictly abide by the internal security work rules and regulations in the Plaza, take responsibility for the management of security work as well as internal employees and vehicles of the rental unit. Party B shall not utilize the rental unit to engage in various kinds of unlawful and illegal activities, and shall install and use technical protection facilities and equipment according to required specifications, and ensure that the technical protection and material protection facilities in the rental unit complete and effective. Furthermore, Party B shall provide its own basic conditions, including name of unit, registered address, legal representative, employees, nature of unit, scope of business, person in charge of the security work, and management measures for the precious articles in the unit, etc.
18.2.30 When a natural disaster or emergency occurs, Party B shall actively take remedial measures under the precondition that Party B’s personal safety is assured. If Party B fails to timely take measures to result in the expansion of loss in the rental unit, the loss of the expanded part shall be borne by Party B.
18.2.31 Party B shall be responsible for personal injuries or property losses caused in the rental unit. Besides, Party B hereby promises and agrees to compensate Party A for expense requests, claims, lawsuits and any legal procedures lodged by anyone against Party A due to any of the aforesaid accidents, losses, damages or injuries, as well as all expenses and expenditures therefore incurred, including counsel fee.
Article 19 Notification and Service
19.1 Any document or notice for the purpose of the contract or related to it shall be sent in person, or by mails and express or faxed to the contact address and/or contact information listed below, otherwise it’s invalid.
| Contact Person of Party A: Wu Panpan | WeChat:18210034615 |
| Mailing Address: Office Building Operating Center, 2F, Building 5, No. 2 Yard, Ronghua South Road, Beijing Economic-Technological Development Area | |
| Tel.: 18210034615 | E-mail Address: wupp61195@hanslaser. com |
| Contact Person of Party B: Niu Jianxin | WeChat: niujianxin002 |
| Mailing Address: No. 76, Fukang Road East Street, Lutai Industrial Area, Lunan District, Tangshan City, Hebei Province | |
| Tel.: 13911008014 | E-mail Address: |
In case of any changes to the contact address and/or contact information of one contracting party to be informed, the other party shall be informed in writing within three days after such changes, and the former address shall prevail before the notice of address change is received. If such document or notice is sent in person, it shall be regarded as effective delivery upon being signed and received by the recipient or the authorizer, the successor, employee and agent. If the recipient refuses to sign, the notice can be sent by posts.
19.2 The date of service for notice shall be decided as per the following methods:
19.2.1 The notice sent by a specially-assigned person shall be regarded as effective delivery upon being sent by the person;
19.2.2 The notice sent by registered letters (with the postage being prepaid) shall be regarded as effective delivery on the 7th day after being sent (subject to the postmark);
19.2.3 The notice sent by express shall be regarded as effective delivery on the 3rd day after being sent by legal express services;
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19.2.4 The notice sent by fax shall be regarded as effective delivery on the first working day after faxing.
19.2.5 The notice sent by posts shall be regarded as effective delivery upon being posted on the entry door or other striking places.
Article 20 Confidentiality Obligations
Before, during or after the contract is signed, without the written notice of the other party, it’s prohibited from disclosing the house leasing affairs in any mode. All data and materials provided by one contracting party to the other party when negotiating, signing and performing the contract shall be regarded as confidential information, including but not limited to document copies, design drawings and other intellectual property rights, commercial secrets and any data, and all parties shall be obligated to keep such information confidential. In case that any party violates the confidential obligations, it’s requested to compensate for all losses incurred to the other party.
Article 21 Force Majeure
In case that force majeure has resulted in two or one contracting party failing to perform the obligations under the contract in whole or in part, this shall not be regarded as a breach of contract, and the two parties can cancel the contract through negotiations. But reasonable remedial measures shall be taken, to lower losses. In case that the party subjected to force majeure fails to inform the other party in time, causing the expansion of losses, such expanded losses shall be borne by the obligor of notice.
Article 22 Effect of Contract and Dispute Settlement
22.1 The contract and the supplementary agreement as well as the appendix shall constitute all agreements signed by Party A and Party B considering items involved in the contract, and shall replace all oral and written agreements for items recorded in the contract. The two parties have paid full attention to any clauses of the contract, including but not limited to clauses related to respective or joint restrictions of Party A and Party B or their exemption from liabilities. The two parties agree to confirm the aforesaid content in the article by signing the contract.
22.2 Disputes under the contract shall be solved by the two contracting parties through negotiations or applied for mediation. If negotiation or mediation fails, a lawsuit can be filed in the people’s court where the house is located.
Article 23 Contract Text
23.1 As for uncovered matters in the contract, supplementary agreement can be concluded after Party A and Party B have reached a consensus, and both the supplementary agreement and appendix shall be inseparable parts of the contract, with equal legal effect.
23.2 The contract shall come into effect after being signed and sealed by Party A and Party B, with the down payment and performance bond being paid by Party B. The contract and the appendix are made in sextuplicate, with Party A and Party B holding three and two copies respectively, and one copy being filed by the management department, and all copies are of equal legal effect.
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| Party A: Han’s Global Technology Co., Ltd. | Party B: King Eagle (China) Co., Ltd. | |
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| Special Seal for Contract of Han’s Global Technology Co., Ltd. (Sealed) | Special Seal for Contract of King Eagle (China) Co., Ltd. (Sealed) | |
| Authorized Representative: | Authorized Representative: | |
 |
 | |
| Seal of Xie Guodong (Sealed) | Seal of Wang Wenqiang (Sealed) | |
| DD/MM/YY | June 15, 2020 |
| Han’s Plaza Office Towers | 19 | |
Appendix:
Appendix I: [Table of Measured Area]
IV. Computation Table of Housing Construction Area by Households (Table 4)
Project Name: Han’s Plaza Building No.: Building 1
Page 25 of 28
| Han’s Plaza Office Towers | 20 | |
Appendix II: Charging Standard of the Office Towers
| Items | Content | Charging Standard | Remarks |
| Management Fees | Property management fees | RMB 23.00/ m2/month | It shall be calculated as per the construction area of the leasing unit from the date for customers to enter the site for decoration, and the leasing clauses shall prevail, in case of additional regulations in the Leasing Contract of Office Towers. |
| Deposit for management fees | Equivalent to three-month management fees | The deposit can be returned, and the leasing clauses shall prevail, in case of additional regulations in the Leasing Contract of Office Towers. | |
| Energy Fees | Electric charges | RMB 1.2/KWH | It shall be purchased in advance as per the amount of usage |
| Overtime air conditioning fees | RMB 0.6/h/ m2 | RMB 300/h is charged for area below 500m2 (inclusive), and RMB 0.6/m2/h is charged for area above 500m2, while RMB 800/h is charged at most for single floors. | |
| Access Card | RMB ***/pcs | It shall be confirmed as per the actual production cost, and shall be supplemented, in case of any damage or loss. | |
| Decoration | Deposit for decoration | RMB 46/ m2 | The deposit can be returned three months after passing decoration completion acceptance, and the minimum amount charged is RMB 5,000. |
| Decoration service fees | RMB 11/ m2/4 months | It shall be calculated as per the construction area of the leasing unit, including the fees for drawing audit, the use of freight elevator, water for construction as well as the inspection and acceptance. In case of exceeding 4 months, the decoration service fees shall be re-paid as per the construction area. | |
| Electric charges for decoration | RMB 1.2/KWH | It shall be charged as per actual amount of usage | |
| Pass card for construction personnel | RMB 20/pcs | The deposit is RMB 10, which can be returned, while the other RMB 10 is the nominal fee. The deposit won’t be returned, if the pass card or deposit receipt is lost | |
| Air conditioning/firefighting discharge fees | RMB 1,000/time | Expenses shall be further negotiated, in case of major transformation projects. | |
| Service fees for leasing fire extinguisher | RMB 10/set/month | The deposit is RMB 100/set, and won’t be returned, if the fire extinguisher is used or damaged | |
| Transport fees for construction garbage | RMB 7/m2/4 months | It can be independently cleaned or uniformly cleaned by the property company. As for the later one, it’s requested to stack at the specified place as required. As for the first one, it’s requested to submit the effective cleaning license. | |
| Parking | Underground long-term rent parking place | RMB****/month | Including the fees for making the vehicle certificate |
| Remarks: The first water card will be provided to customers free of charge. | |||
| Han’s Plaza Office Towers | 21 | |
Appendix III: Rental Housing Delivery Standard
Left-over Decoration
| Han’s Plaza Office Towers | 22 | |
Appendix IV: Enterprise Qualification and Qualification Copies of General Taxpayer Stamped with Seals
Appendix V: Rental Housing Return Standard
1. Basic decoration return standard:
Party B shall deliver the rental unit to Party A on the date of delivery, with the following equipment being installed:
McQuay dual-pipe fan coil air-conditioning system;
Fire sprinkler system;
Fire smoke detection system;
Delivery of leasing area with simple decoration (ceiling, white wall, network floor, ceiling-mounted energy-saving lamp and curtains shall be installed in place);
Glass doors (4 pcs)
| Remarks: | The “Unit Acceptance Table of Han’s Plaza” signed by Party A or Han’s Plaza with Party B for house handover shall prevail |
| Han’s Plaza Office Towers | 23 | |
Exhibit 10.7
Cooperation Agreement
The Cooperation Agreement is signed by and between the following two parties in Beijing on March 31, 2021.
Party A: Guoxin Xingwang Business Management Co., Ltd.
Unified social credit code: 91110302MA01UUR80T
Address :
Tel. :
Party B: King Eagle (Tianjin) Technology Co., Ltd.
Unified social credit code: 91120118MA074H9P3X
Address: Room 231, Floor 2/Room 335, Floor 3, Comprehensive Building, No. 2, First Street, Airport International Logistics Zone, Tianjin Pilot Free Trade Zone (Airport Economic Zone)
Tel. :
Whereas :
| 1. | Party A is a limited liability company registered in Beijing under the laws of the People's Republic of China., committed to business development and innovation, intelligent equipment research and development and other technology industries, and the scope of business covers high-tech project research and development and several other industries. |
| 2. | Party B is a limited liability company registered in Tianjin in accordance with Chinese laws, and is committed to building a comprehensive service platform of Internet + Big Health. |
| 3. | The parties hereby sign the Agreement to agree on cooperation matters related to the landing and authorization of the smart kiosk ("Smart Kiosk Project "or "Kiosk Project"). |
In consideration of the foregoing, both parties hereto, through friendly negotiation, agree as follows in accordance with the relevant Chinese laws, administrative regulations and rules.
Chapter I Cooperation Contents
Article 1 Responsibilities of Party A
| (1) | Confirmation and notification of the landing areas of the kiosks |
Party A shall confirm the landing areas of the smart kiosks, and shall, after confirming the landing areas of the smart kiosks, send a notice to Party B in a timely manner to determine the allocation number of smart kiosks within the landing areas.
| (2) | Manufacture, installation and placement of the kiosks |
The manufacturing, installation and placement of the kiosks shall be at the expense of Party A and Party B shall not pay any fee.
| (3) | Delivery of the kiosks |
| 1. | Party A shall deliver the kiosks that meet the delivery conditions to Party B for acceptance within [3] months upon Party B's receipt of the above notice. Conditions of delivery refer to: 1. The kiosks have been placed on the ground in accordance with relevant laws, regulations and local policies; 2. The supporting facilities and items of the kiosks are complete and consistent with the acceptance list. 3. The construction and placement of the kiosks have been performed and the necessary legal procedures such as government approval/registration/permission/filing have been completed. |
| 2. | Party A shall send the acceptance list to Party B within one month after Party B receives the aforesaid notice. The acceptance list shall serve as the acceptance criteria. |
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| 3. | Party A shall provide Party B with the kiosk manual when delivering the kiosks to Party B. |
| (4) | Kiosk maintenance |
During the period of cooperation, Party A shall be responsible for the daily maintenance of the kiosks and the supporting facilities. If the kiosks are damaged due to non-human reasons, Party A shall be responsible for the repair and replacement of the kiosks and the supporting facilities thereof. Party B shall use the kiosks in accordance with the operation specifications specified in the kiosk manual, and shall take good care of and use the kiosk correctly. In order to protect the kiosks and the supporting facilities thereof from damage, losses and other risks caused by accidents, Party A shall purchase commercial insurance in full amount for the kiosks. However, if the kiosks and the supporting facilities thereof are damaged or destroyed by fire due to human causes, Party A or the insurer thereof shall have the right to recover the related losses from the responsible person.
Article 2 Responsibilities of Party B
| (1) | Party B shall be responsible for the operation of the kiosks as follows: |
| 1. | Be responsible for the marketing of smart kiosks; |
| 2. | Solicit qualified merchants to settle in, or cooperate with settled merchants to operate smart kiosks; |
| 3. | Operate or entrust a third party to operate the smart kiosks; |
| 4. | Provide services necessary for merchants to settle in, including without limitation to site selection services, government coordination, consulting services and technical services; |
| (2) | Party B shall have the right to operate the kiosks. For this purpose, Party B shall have the right and obligation to independently determine the marketing promotion, settlement, cooperation and operation method of the kiosks and the business arrangements of relevant parties, including without limitation to: |
| 1. | Promoting and publicizing the smart kiosks by themselves or by entrusting a third party (such third party may cooperate with any other party as necessary); |
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| 2. | Operating by themselves, attract investment or entrust a third party to operate (such third party may cooperate with or entrust any other party to make operation), operate kiosks in cooperation with a third party or through other legal means; |
| 3. | Seek for or entrust any third party (such third party may cooperate with any other party as necessary) to seek for or recruit cooperative kiosk operators, independent operators and/or provide them with kiosk settlement and related services; |
| 4. | Under the condition of not violating relevant laws and regulations, decide on other business models and cooperation methods for market promotion, kiosk settlement, kiosk cooperation and kiosk operation. |
| (3) | The scope and items of business of the kiosk shall be legal and compliant. Party B shall report the scope and items of business of the kiosk to Party A in writing for the consent of Party A, so as to avoid the business competition with Party A in the same line. |
| (4) | Party B shall operate lawfully, without violating relevant laws and regulations. Party A shall have the right to request Party B to provide information on matters (behaviors) that occur/will occur in the business activities and are closely related to the interests of Party A, and Party B shall inform Party A of relevant solutions (or similar documents) before the implementation of the aforesaid matters (behaviors). If Party A raises objections to the relevant matters (behaviors) for reasonable reasons, Party B shall cooperate with Party A to make rectification. Party B shall be responsible for the market promotion, investment attraction, cooperation with third parties, product management and business model, for which Party A shall not bear any legal liability. Party B's operation after the delivery of the kiosks has nothing to do with Party A. |
Article 3 Division of Rights and Responsibilities of the Parties
| (1) | Both parties hereto agree that Party A shall have the ownership of the smart kiosks and Party B shall have the operation right of the smart kiosks. |
| (2) | Unless otherwise agreed herein, Party A shall not interfere with Party B's business affairs of the smart kiosks. If Party B has any violation, non-compliance, breach or tort in its business activities, causing any legal liability, it shall have nothing to do with Party A. |
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Chapter II Term of Cooperation
Article 4 The term of cooperation between the parties hereto shall be five years from the effective date of the Agreement. Upon expiration of the term of cooperation, Party B shall have the priority to renew the contract under the same conditions.
Article 5 Within 30 days prior to the expiration of the term of cooperation, if either party hereto need to modify or supplement the contents of cooperation in the future, it shall make a written request and both parties hereto agree to sign a separate written agreement through friendly negotiation.
Article 6 Within 30 days prior to the expiration of the term of cooperation, if either party decides not to renew the Agreement, it shall be notified to the other party in written form. If neither party gives a written notice to extend the term of cooperation or propose to modify or supplement the contents hereof, the cooperation hereunder shall be terminated upon expiration.
Chapter III Rights and Obligations of Party A
Article 7 Rights of Party A
| (1) | Party A shall have the right to charge the smart kiosk fees as agreed herein. |
| (2) | Party A shall have the right to compile and modify the kiosk manual, maintain the operation and management order and overall goodwill of the kiosks, supervise the law-abiding operation of the kiosks and standardize the use of the kiosks. |
Article 8 Obligations of Party A
| (1) | Party A shall perform its contractual obligations in accordance with Article 1 hereof; |
| (2) | Party A shall assist Party B and the merchants proposed for settlement to handle the relevant qualification certificates and licenses required for the operation of the kiosks. If Party A is required to cooperate with Party B in providing the relevant documents for handling the business licenses and other licenses, Party A shall make active assistance and provide such licenses; |
| (3) | During the term of cooperation, if the operation of the kiosks needs to be terminated due to government requisition, commercial development, change of site use or other reasons, Party A shall cooperate with Party B and the originally settled merchants to relocate and assist in relocation. The relocation cost shall be borne by Party A; |
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| (4) | Party A shall issue a special VAT invoice to Party B in full amount. |
Chapter IV Rights and Obligations of Party B
Article 9 Rights of Party B
| (1) | Party B has the right to collect fees from the merchants proposed for settlement in accordance with the Agreement. |
| (2) | Based on the listing plan of Party B, Party B shall have the right to incorporate the earnings of the cooperative operation hereunder into the scope of listing in accordance with the applicable listing rules and accounting standards. |
| (3) | Party B shall conduct unified management of the kiosks after delivery. |
Article 10 Obligations of Party B
| (1) | Party B shall perform its obligations hereunder in accordance with Article 2 hereof. |
| (2) | Party B shall pay the relevant fees on time as agreed herein. |
| (3) | Party B shall conduct the publicity and promotion of the smart kiosk project based on the cooperation hereunder, without violating requirements contrary to the Agreement. |
Chapter V Representations, Warranties and Undertakings
Article 11 Each party to the Agreement makes the following representations, warranties and commitments to the other party:
| (1) | It is an enterprise legal person registered and existing lawfully under the laws of the People's Republic of China; |
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| (2) | It has the right, power and authorization necessary to sign and perform the Agreement, and the Agreement, when signed by it, shall constitute a legal document legally binding on it; |
| (3) | All materials and information delivered or provided by it to the other party are true, accurate and complete, and there is no misleading statement; |
| (4) | Its execution and performance of the Agreement will not violate: 1. any applicable laws to which it is subject; or 2. any document or agreement to which it is a contracting party. |
Chapter VI Collection and Payment of Expenses
Article 12 The expenses for the use and operation of a kiosk shall be RMB [150,000] yuan (in words: RMB [One Hundred and Fifty Thousand] yuan)/[5] years/kiosk.
Article 13 Party B promises that the first batch of pilot projects will be located in Henan Province and Hubei Province (mainly in Zhengzhou and Wuhan) and the number of kiosks in the first batch will be [50], and deposit for [50] kiosks will be paid before [April] [5th], 2021. The deposit for one kiosk will be RMB [45,000] and the total deposit will be RMB [2.25 million] (in words: RMB Two Million Two Hundred and Fifty Thousand Only). The remaining amounts, i.e., RMB [105,000]/kiosk, totaling RMB [5.25 million], shall be paid after the kiosks reaches the acceptance standard and is placed in the designated area (the kiosk to be counted one by one).
Article 14 Party A shall issue a VAT invoice of the full amount to Party B within five working days after the delivery of the kiosks.
Article 15 Payment Collection Account of Party A
Account Name: Guoxin Xingwang Business Management Co., Ltd.
Account number: 321060100100312205
Bank: Xidan Sub-branch, Beijing Branch of Industrial Bank Co., Ltd.
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Article 16 Billing Information of Party B:
Company name: King Eagle (Tianjin) Technology Co., Ltd.
ID number: 91120118MA074H9P3X
Account number: 122912342110301
Opening bank: Tianjin Pilot Free Trade Zone Branch, China Merchants Bank Co., Ltd.
Registered address: Room 231, Floor 2/Room 335, Floor 3, Comprehensive Building, No. 2, First Street, Airport International Logistics Zone, Tianjin Pilot Free Trade Zone (Airport Economic Zone)
Chapter VII Liabilities for Breach
Article 17 After the Agreement is signed, both parties hereto shall perform the obligations agreed herein in good faith. If either party fails to perform or properly perform the obligations hereunder or breaches the representations, warranties and covenants made hereunder, such party shall be deemed to be in breach.
Article 18 Unless otherwise agreed herein, if either party breaches the Agreement, the other party shall have the right to claim compensation for all the economic losses caused to the observing party. The observing party shall have the right to require the breaching party to rectify the breach within 15 days after the occurrence of the breach or within other time periods as notified in writing. If the breaching party still fails to rectify the breach within the time limit, the observing party shall have the right to notify the other party in writing to terminate the future cooperation under the Agreement in addition to the cooperation already occurring in the kiosks.
Article 19 If Party A fails to deliver the kiosks that meet the delivery conditions as agreed herein, Party B shall have the right to notify Party A in writing, give Party A a certain grace period, and require Party A to complete the delivery within the said time limit. If Party A, within the time limit, fails to completely correct the breach (overdue delivery), then Party B has the right to require Party A to perform the Agreement until delivery of kiosks conforming to the delivery requirements or require to terminate the cooperation with Party A regarding the kiosks delayed. In case of termination of the cooperation, Party A shall refund the amounts already collected for such kiosks and pay 20% of the amount of the Agreement as the liquidated damages.
Article 20 If Party B fails to pay the relevant fees as agreed herein, Party A shall have the right to notify Party B in writing, give Party B a certain grace period and require Party B to make the payment within the said period. If Party B fails to make the payment in full within the aforementioned grace period, Party A shall have the right to charge a penalty equal to three thousandths of the unpaid amount per day or terminate the cooperation with Party B with regard to the undelivered kiosks. In case of termination of the cooperation, Party B shall still pay all the amounts for the already delivered kiosks as agreed herein and pay 20% of the amount of the Agreement as the liquidated damages.
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Article 21 If the Agreement cannot be fulfilled due to any reason of either party, one party has the right to inform the other party in writing and give the other party a certain grace period and the other party shall overcome the obstacles and continue to fulfill the Agreement within the said period. If either party fails to continue to perform the Agreement upon the expiration of the grace period, it shall bear all the economic losses of the other party and pay the other party the liquidated damages. For the kiosks that have been actually operated, the observing party may choose to stop the cooperation or continue to perform the Agreement without assuming any liability for breach, and for the kiosks that have not been delivered, the delivery will not be made.
Chapter VIII Effectiveness and Termination
Article 22 The Agreement shall come into force after signed by the authorized representatives of both parties hereto and affixed with the official seal or special seal for contract.
Article 23 After the Agreement comes into force, it shall remain in force until: 1. the term of cooperation under the Agreement expires; 2. both parties agree in writing to terminate the Agreement; 3. the cooperation is terminated in accordance with the Agreement, provided that both parties hereto shall continue to perform the relevant obligations under the Agreement with regard to the existing cooperation of kiosks; 4. it is terminated in accordance with applicable law, whichever occurs earlier.
Article 24 If either party wishes to terminate the Agreement in advance, it shall submit a written application to the other party 30 days in advance. With the consent of the other party, the parties hereto may terminate the Agreement through negotiation.
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Chapter IX General Provisions
Article 25 Confidentiality
| (1) | Both parties hereto shall keep confidential the existence and the contents of the Agreement and any non-public information of each party known during the negotiation, execution and performance hereof (hereinafter referred to as "the confidential information"), and, without the prior written consent of the other party, either party is allowed to use or disclose to any third party any confidential information for purpose outside the purpose hereof, provided that the disclosure by one party pursuant to the relevant laws and regulations or a binding judgment, order or requirement made by any court, stock exchange, regulatory authority or other governmental authority having jurisdiction shall not be subject to such restriction. |
The confidentiality provisions hereof shall survive the termination hereof. If Party B discloses confidential information without authorization in accordance with the provisions of "Confidentiality", Party B shall indemnify Party B at twice the amount agreed herein.
Article 26 Assignment
Except as otherwise provided herein, neither party shall assign its rights or obligations under the Agreement without the prior written consent of the other party. The Agreement shall be binding upon each party and the successors and permitted assigns thereof.
Article 27 Modification
No change, amendment or modification of the Agreement shall be valid unless made in writing in accordance with the applicable laws and validly signed by both parties hereto.
Article 28 Force Majeure
| (1) | Forces majeure refer to all objective events which are uncontrollable, unforeseeable, unavoidable or insurmountable by both parties hereto and which prevent either party from performing the Agreement in whole or in part. Such events include without limitation to earthquakes, typhoons, floods, fires, wars, epidemics, riots or disturbances, violent acts, infectious diseases, orders of any government department, or any other events that cannot be predicted, prevented or controlled, including force majeure events recognized by general international business practices. |
| (2) | In the event of a force majeure event, the performance of the obligations under the Agreement affected by such event shall be suspended during the delay caused by the force majeure event, and the performance period shall be automatically extended for a period equal to the time of suspension without the assumption of any legal liability. |
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| (3) | The party claiming force majeure shall promptly notify the other party in writing and provide sufficient evidence of the occurrence and duration of such force majeure event within 15 days thereafter. The party claiming force majeure shall also use all reasonable efforts to reduce or eliminate the impact of the force majeure on the performance of the Agreement. |
| (4) | If the purpose of the Agreement cannot be realized or the performance of the Agreement cannot be continued due to any force majeure event, either party may terminate the Agreement by giving a written notice to the other party. |
Article 29 Taxes and Expenses
Except as otherwise provided for in the Agreement or as otherwise agreed in writing by both parties hereto, each party hereto shall bear its own taxes and expenses incurred in connection with the negotiation, execution and performance of the Agreement.
Article 30 Governing Law and Dispute Resolution
| (1) | The execution, modification, interpretation and performance of the Agreement shall be governed by the laws of the People's Republic of China. |
| (2) | Any dispute arising out of the performance hereof shall be settled by both parties hereto through negotiation. If the negotiation fails, either party may file a lawsuit with the people's court having jurisdiction at the place where Party A is domiciled. |
Article 31 Text of the Agreement
Matters not covered herein shall be negotiated by both parties hereto and a supplementary agreement shall be signed. The supplementary agreement shall have the same legal effect as the Agreement. The Agreement shall be made in two copies, with each party holding one copy and each copy having the same legal effect.
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Article 32 Notice and Service
| (1) | All notices, documents and materials given or provided to each other in connection with the performance of the Agreement shall be delivered in the form of the communication information set forth in the Agreement. In case of any change, either party shall notify the other party within seven days in advance, otherwise it shall be liable for all the liabilities arising therefrom. |
| (2) | If the document is delivered by a special person, it shall be deemed served on the date of delivery; if it is delivered by registered mail, it shall be deemed served within five working days from the date of mailing; if it is delivered by express delivery, it shall be deemed served within three working days from the date of delivery. If the service is made through e-mail, it shall be deemed served upon arrival to the designated e-mail account. |
| 1. | Address of Party A: |
E-mail address:
| 2. | Address of Party B: |
E-mail address:
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(There is no text below and this is the page for signature.)
Party A: Guoxin Xingwang Business Management Co., Ltd.
Authorized representative (signature):
Signed on:
Party B: King Eagle (Tianjin) Technology Co., Ltd. (seal)
Authorized representative (signature):
Signed on:
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Exhibit 10.8
独家咨询和服务协议
Exclusive Consultant & Service Agreement
本独家咨询和服务协议(下称“本协议”)由以下双方(下称“协议双方”)于 年 月 日在中国天津市签订:
Exclusive and Service Agreement ( refer herein as “Agreement), two parties ( refer herein as “Parties) Signing date: Day Month, Year in Tian Jin.
甲方: 鲲澎（中国）有限公司
Party A : King Eagle (China) Ltd
地址: 北京市北京经济技术开发区荣华南路2号院1号楼27层2702
Address: Beijing Beijing Economic Development Zone Rong Nan Rd, No. 2 Building 1, 27 Floor 2702
乙方: 鲲澎（天津）科技有限公司
Party B: King Eagle (Tian Jin) Technology Ltd
地址: 天津自贸试验区(空港经济区)空港国际物流区第一大街2号(2)综合楼二层231室、综合楼三层335室
Address: Tian Jin Free Trade Zone (Kong Gang Economic Zone) Kong Gang International Logistic Street 1, No. 2 Building 2, 231
鉴于:
| 1. | 甲方是一家在中华人民共和国境内合法成立并有效存续的外商投资企业, 拥有咨询和服务的资源; |
| 2. | Party A is a foreign-invested enterprise legally established and validly existing within the territory of the People's Republic of China, and has consulting and service resources; |
| 3. | 乙方是一家在中国境内注册成立的有限责任公司; |
| 4. | Party B is a limited liability company incorporated in China; |
| 5. | 甲方同意向乙方提供咨询和相关服务, 乙方同意接受甲方提供的咨询和服务。 |
| 6. | Party A agrees to provide consulting and related services to Party B, and Party B agrees to accept the consulting and services provided by Party A. |
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据此, 双方经过友好协商, 本着平等互利的原则, 达成如下协议以资遵守:
Accordingly, the two parties have reached an agreement to comply with the following terms and conditions through the principle of equality and mutual benefit:
| 1. | 咨询和服务: 独占和排他的权益 |
| 2. | Consultation and services: exclusive and exclusive rights |
| 2.1 | 在本协议期间, 甲方同意按本协议的条件作为乙方的独家的咨询和服务提供者向乙方提供有关咨询和服务(具体内容参见附件1)。 |
| 2.2 | During the period of this agreement, Party A agrees to provide Party B with relevant advice and services as Party B’s exclusive consulting and service provider in accordance with the terms of this agreement (see Annex 1 for details). |
| 2.3 | 乙方同意在本协议有效期内接受甲方提供的咨询和服务。考虑到甲方所提供的咨询和服务的价值以及双方的良好的合作关系, 乙方进一步同意, 除非经甲方事先书面同意, 在本协议期间, 乙方不接受任何第三者就本协议所涉及的业务范围提供的咨询和服务。 |
| 2.4 | Party B agrees to accept the consultation and services provided by Party A during the validity period of this agreement. Taking into account the value of the consulting and services provided by Party A and the good cooperative relationship between the two parties, Party B further agrees that, unless Party A agrees in writing in advance, during the period of this agreement, Party B will not accept any third party's involvement in this agreement Consulting and services provided by the business scope. |
| 2.5 | 对所有因履行本协议而产生的任何权利、所有权、权益和知识产权(包括但不限于著作权、专利权、技术秘密、商业机密及其他), 无论是由甲方自行开发、由乙方基于甲方的知识产权或甲方基于乙方的知识产权开发的, 甲方均享有独占和排他的权利和权益, 乙方不得向甲方主张任何权利、所有权、权益和知识产权。 |
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| 2.6 | For all rights, ownership, rights, and intellectual property rights (including but not limited to copyrights, patent rights, technical secrets, trade secrets, and others) arising from the performance of this agreement, whether developed by Party A or by Party B based on A Party A’s intellectual property rights or those developed by Party A based on Party B’s intellectual property rights, Party A enjoys exclusive and exclusive rights and rights, and Party B shall not claim any rights, ownership, rights, and intellectual property rights against Party A. |
但若开发是甲方基于乙方的知识产权进行的, 则乙方须保证该知识产权不存在任何瑕疵, 否则造成甲方损失的, 应由乙方承担。如甲方由此承担向任何第三人的赔偿责任, 在作出该等赔偿后, 甲方有权就其全部损失向乙方进行追偿。
However, if the development is carried out by Party A based on Party B’s intellectual property rights, Party B must ensure that there are no defects in the intellectual property rights, otherwise Party B shall be responsible for losses caused to Party A. If Party A therefore assumes the liability for compensation to any third party, after making such compensation, Party A has the right to recover all its losses from Party B.
| 2.7 | 考虑到双方的良好合作关系, 乙方承诺如其欲与其他企业进行任何业务合作, 须征得甲方同意, 在同等条件下, 甲方或其关联公司有优先合作权。 |
| 2.8 | Taking into account the good cooperative relationship between the two parties, Party B promises that if it wants to conduct any business cooperation with other enterprises, it must obtain the consent of Party A. Under the same conditions, Party A or its affiliates have the priority to cooperate. |
| 3. | 咨询和服务费用(下称“服务费”)的计算和支付 |
| 4. | Payment of consulting and service fees (hereinafter referred to as "service fees") |
| 2.1 | 协议双方同意，对于每一有利润产生的财务季度，乙方应按本协议附件2所列方式确定和支付服务费。 |
| Both parties agree that for each financial quarter where profits are generated, Party B shall determine and pay the service fee in accordance with the method listed in Annex 2 of this agreement |
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| 2.2 | 若乙方未能依照本协议之规定支付服务费和其他费用, 就拖欠的数额, 乙方应向甲方另行支付每日万分之五的违约金。 |
| If Party B fails to pay the service fees and other expenses in accordance with the provisions of this agreement, Party B shall pay Party A a daily penalty of 5% of the default for the amount in arrears. |
| 2.3 | 甲方有权, 在其自行承担费用的前提下, 指派其雇员或中国或其他国家的注册会计师(简称“甲方授权代表”)对乙方的账目进行核查以便审核服务费的计算方法和数额。为此, 乙方应向甲方授权代表提供甲方授权代表所要求的文件, 账目, 记录, 数据等, 以便甲方授权代表审计乙方的账目并确定服务费的数额。除非有非常重大错误, 服务费的数额应以甲方授权代表所确定的数额为准。 |
| 2.4 | Party A has the right to appoint its employees or a certified public accountant in China or other countries (referred to as "Party A’s Authorized Representative") to verify Party B’s accounts at its own expense, in order to verify the calculation method and amount of service fees. To this end, Party B shall provide the authorized representative of Party A with the documents, accounts, records, data, etc. required by the authorized representative of Party A, so that the authorized representative of Party A can audit Party B’s accounts and determine the amount of service fees. Unless there is a very serious error, the amount of the service fee shall be the amount determined by the authorized representative of Party A. |
| 2.5 | 除非双方另行协商一致, 乙方根据本协议向甲方支付的服务费应不经任何扣减或抵销（如银行手续费等）。 |
| 2.6 | Unless the parties agree otherwise, the service fee paid by Party B to Party A under this agreement shall not be deducted or offset (such as bank handling fees, etc.). |
| 2.7 | 此外, 乙方在支付服务费的同时还应向甲方支付其为提供本协议项下的咨询和服务而发生的实际支出, 包括但不限于各项差旅费, 交通费, 印刷费和邮资等。 |
| 2.8 | In addition, Party B shall pay to Party A the actual expenses incurred in providing the consultation and services under this agreement, including but not limited to various travel expenses, transportation expenses, printing fees and postage while paying the service fees. |
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| 5. | 陈述和保证 Statement and Commitment |
| 3.1 | 甲方在此陈述和保证如下: Party A statement and Commitment |
| 3.1.1 | 甲方为按照中国法律合法注册并有效存续的一家公司; |
Party A is a company legally registered and validly existing in accordance with Chinese laws;
| 3.1.2 | 甲方在其公司权力和营业范围之内履行本协议; 已经过必要的公司授权, 并已取得第三方和政府部门的同意及批准, 不违反对其有约束力或有影响的法律或合同限制; |
Party A shall perform this agreement within its company's power and business scope; it has been authorized by the necessary company, and has obtained the consent and approval of third parties and government departments, and does not violate any laws or contractual restrictions that are binding or have an impact on it
| 3.1.3 | 本协议一经签署即应构成对甲方合法、有效、有约束力、执行力的法律文件。 |
Upon signing this agreement shall constitute a legal, effective, binding and enforceable legal document for Party A
| 3.2 | 乙方在此陈述和保证如下: Party B Statement and Commitment |
| 3.2.1 | 乙方是按照中国法律合法注册并有效存续的一家公司; |
| 3.2.2 | Party A is a company legally registered and validly existing in accordance with Chinese laws; |
| 3.2.3 | 乙方在其公司权力和营业范围之内签署并履行本协议, 已经过必要的公司授权, 并已取得第三方或政府部门的同意及批准, 不违反对其具有约束力或有影响的法律或合同限制; |
| 3.2.4 | Party B has signed and performed this agreement within its company's power and business scope, has obtained the necessary company authorization, and has obtained the consent and approval of a third party or government department, and does not violate any binding or impact on it. Legal or contractual restrictions; |
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| 3.2.5 | 本协议一经签署即构成对乙方合法、有效、有约束力、执行力的法律文件。 |
| 3.2.6 | Upon signing this agreement constitutes a legal, effective, binding, and enforceable legal document for Party B |
| 6. | 保密条款 Confidential Terms |
| 6.1 | 甲方及乙方同意对了解或接触到的机密资料和信息(下称“保密信息”。资料和信息的提供方在提供资料和信息时, 应明确以书面方式告知为保密信息。), 尽力采取各种合理的保密措施予以保密; 非经保密信息提供方事先书面同意, 不得向任何第三方披露、给予或转让该等保密信息(包括保密信息接受方与第三方合并、被兼并、被第三方直接或间接控制)。一旦本协议终止, 甲方及乙方应将载有保密信息的任何文件、资料或软件, 归还给保密信息的原所有人或提供方, 或经原所有人或提供方同意后自行予以销毁, 包括从任何有关记忆装置中删除任何保密信息, 并且不得继续使用这些保密信息。甲方及乙方应当采取必要措施将保密信息仅披露给有必要知悉的乙方职员、代理人或专业顾问, 并促使该等乙方职员、代理人或专业顾问遵守本协议项下的保密义务。甲方与乙方、乙方职员、代理人或专业顾问应签署具体的保密协议以兹各方遵照执行。 |
| 6.2 | 6.1 Party A and Party B agree to do their best to the confidential materials and information that they have learned or come into contact with (hereinafter referred to as "confidential information". When providing materials and information, the provider of materials and information should clearly inform in writing that they are confidential information.), Adopt all kinds of reasonable confidentiality measures to keep it confidential; without the prior written consent of the confidential information provider, such confidential information shall not be disclosed, given or transferred to any third party (including the merger of the confidential information recipient with the third party, being merged, or being subject to the third party). Three parties directly or indirectly control). Once this agreement is terminated, Party A and Party B shall return any documents, materials or software containing confidential information to the original owner or provider of the confidential information, or destroy it by themselves with the consent of the original owner or provider, including Delete any confidential information from any relevant memory device, and shall not continue to use such confidential information. Party A and Party B shall take necessary measures to disclose confidential information only to Party B’s employees, agents or professional consultants who need to know, and urge such Party B’s employees, agents or professional consultants to comply with the confidentiality obligations under this agreement. Party A and Party B, Party B’s staff, agents or professional consultants shall sign a specific confidentiality agreement to compliance with. |
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| 6.3 | 上述限制不适用于: Above terms not apply to |
| 6.3.1 | 在披露时已成为公众一般可取得的资料; |
| 6.3.2 | Information that has become generally available to the public at the time of disclosure |
| 6.3.3 | 并非因甲方或乙方的过错在披露后已成为公众一般可取得的资料; |
| 6.3.4 | It is not because of the fault of Party A or Party B that the information has become generally available to the public after the disclosure; |
| 6.3.5 | 甲方或乙方可以证明在披露前其已经掌握, 并且不是从其他方直接或间接取得的资料; |
| 6.3.6 | Party A or Party B can prove that they have information before the disclosure, and that they have not obtained information directly or indirectly from other parties; |
| 6.3.7 | 甲方或乙方依照法律要求, 有义务向有关政府部门、证券监管部门、证券交易所、股票交易机构等披露, 或甲方或乙方因其正常经营所需, 向其直接法律顾问和财务顾问披露上述保密信息。 |
| 6.3.8 | Party A or Party B is obliged to disclose to relevant government departments, securities regulatory authorities, stock exchanges, stock trading institutions, etc., in accordance with legal requirements, or Party A or Party B, due to its normal business needs, to its direct legal counsel and Financial advisors disclose the above confidential information |
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| 6.4 | 协议双方同意, 不论本协议是否变更、解除或终止, 本条款将持续有效。 |
| 6.5 | The parties to the agreement agree that this clause will continue to be effective regardless of whether this agreement is changed, cancelled or terminated. |
| 7. | 赔偿 Compensation |
| 7.1 | 除本协议另有规定外, 如果乙方未全部履行或暂停履行其在本协议的义务, 而且在接到对方的通知起三十日内未纠正上述行为, 或者其陈述与保证不真实的, 则构成违约。 |
| 7.2 | Except as otherwise provided in this agreement, if Party B fails to perform or suspend the performance of its obligations under this agreement, and fails to correct the above behavior within 30 days of receiving the notification from the other party, or if its statements and guarantees are not true, then Constitutes a breach of contract. |
| 7.3 | 若本协议任一方违反本协议或其在本协议中所作出的任何陈述、保证, 守约方可以书面形式通知违约方要求其在收到通知书十日内纠正违约行为, 采取相应措施有效及时地避免损害结果的发生, 并继续履行本协议。若发生损害, 违约方应对守约方作出补偿, 以使得守约方获得合同履行时应得的所有权益。 |
| 7.4 | If any party to this agreement violates this agreement or any statement or guarantee made in this agreement, the observant party may notify the breaching party in writing and request it to correct the breach within ten days of receiving the notice, and take corresponding measures, effective and timely To avoid the occurrence of damage results, and continue to perform this agreement. In the event of damage, the breaching party shall compensate the observant party so that the observant party can obtain all the rights and interests that it deserves when the contract is performed. |
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| 7.5 | 如出于任何一方违反本协议, 致使另一方承担任何费用、责任或蒙受任何损失(包括但不限于公司的利润损失), 违约方应就上述任何费用、责任或损失(包括但不限于因违约而支付或损失的利息以及律师费)赔偿守约方。违约方向守约方支付的补偿金总额应当与因该违约行为产生的损失相同, 上述补偿包括守约方因履约而应当获得的利益, 但该补偿不得超过协议双方的合理预期。 |
| 7.6 | If any party violates this agreement and causes the other party to bear any costs, liabilities or suffer any losses (including but not limited to the company's loss of profits), the breaching party shall pay for any of the above expenses, liabilities or losses (including but not limited to the cause). The interest paid or lost due to breach of contract and attorney fees) compensate the non-compliant party. The total amount of compensation paid by the breaching party to the observing party shall be the same as the loss caused by the breach. The above compensation includes the benefits that the observing party should obtain due to the performance of the contract, but the compensation shall not exceed the reasonable expectations of the parties to the agreement. |
| 7.7 | 若因乙方不按照甲方的指示, 或因不当使用甲方的知识产权或不当技术操作而引致任何人为此提出索赔, 乙方应承担全部责任。若乙方发现任何人未经合法授权而使用甲方的知识产权, 乙方应立即通知甲方并配合甲方所采取的任何行动。 |
| 7.8 | If Party B fails to follow Party A’s instructions, or due to improper use of Party A’s intellectual property rights or improper technical operations, if anyone makes a claim for this, Party B shall bear full responsibility. If Party B finds that anyone is using Party A’s intellectual property rights without legal authorization, Party B shall immediately notify Party A and cooperate with any actions taken by Party A. |
| 7.9 | 若协议双方皆违反本协议, 应按各自违约的程度来确定各自应当支付的补偿金额。 |
| 7.10 | If both parties to the agreement violate this agreement, the amount of compensation to be paid by each shall be determined according to the degree of each breach. |
| 8. | 生效、履行及有效期 |
| 9. | Effectiveness, performance and validity period |
| 6.1 | 本协议于文首标明的日期签署并同时生效。 |
This agreement is signed on the date indicated at the beginning of the text and becomes effective at the same time.
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| 6.2 | 除非甲方提前解除本协议, 否则本协议有效期限为十年, 自本协议生效之日起起算。本协议期满前, 若甲方提出要求, 则双方应根据甲方的要求延长本协议的期限, 延长的有效期应由甲方决定，并依甲方要求另行签订独家咨询和服务协议或继续履行本协议。 |
Unless Party A terminates this agreement in advance, the validity period of this agreement is ten years, starting from the date this agreement takes effect. Before the expiration of this agreement, if Party A makes a request, both parties shall extend the term of this agreement according to Party A’s request. The extended validity period shall be determined by Party A, and shall sign another exclusive consultation and service agreement or continue to perform according to Party A’s request. this agreement
| 10. | 终止 Termination |
| 7.1 | 在本协议有效期内, 如乙方无故提前终止本协议, 则应当赔偿由此给甲方造成的全部损失, 支付已经完成服务的相关服务费。 |
During the validity period of this agreement, if Party B terminates this agreement early without reason, it shall compensate Party A for all losses caused thereby and pay the relevant service fees for the completed services
| 7.2 | 双方协商一致可终止本协议。 |
| 7.3 | Both parties agree to terminate this agreement |
| 7.4 | 在本协议终止后, 协议双方在第4条和第5条项下的权利和义务将继续有效。 |
| 7.5 | After the termination of this agreement, the rights and obligations of the parties to the agreement under Articles 4 and 5 will continue to be valid |
| 11. | 争议的解决 Dispute |
| 8.1 | 在协议双方就本协议项下条款的解释和履行发生争议时, 协议双方应善意地协商解决该争议。协商不成, 任何一方均可将有关争议提交中国国际经济贸易仲裁委员会按照其届时有效的仲裁规则仲裁解决。仲裁地点为北京, 仲裁使用的语言为中文。仲裁裁决应是终局性的, 对协议双方均有拘束力。本条的规定不受本协议的终止或解除的影响。 |
When there is a dispute between the parties to the agreement on the interpretation and performance of the terms under this agreement, the parties to the agreement shall negotiate in good faith to resolve the dispute. If the negotiation fails, either party can submit the relevant dispute to the China International Economic and Trade Arbitration Commission for arbitration in accordance with its then effective arbitration rules. The place of arbitration shall be Beijing, and the language of arbitration shall be Chinese. The arbitration award shall be final and binding on both parties to the agreement. The provisions of this article are not affected by the termination or cancellation of this agreement
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| 8.2 | 除协议双方发生争议的事项外, 协议双方仍应当本着善意的原则按照本协议的规定继续履行各自义务。 |
Except for matters in dispute between the parties to the agreement, the parties to the agreement shall continue to perform their respective obligations in accordance with the provisions of this agreement in good faith.
| 12. | 不可抗力Force Majeure |
| 9.1 | “不可抗力事件”是指超出了一方所能合理控制的范围, 在受影响的一方加以合理的注意之下仍不可避免的任何事件, 其中包括但不限于, 政府行为、自然力、火灾、爆炸、风暴、洪水泛滥、地震、潮汐、闪电或战争。但是, 资信、资金或融资不足不得被视为是超出了一方所能合理控制的事项。受“不可抗力事件”影响而寻求免除本协议项下履行责任的一方应尽快将该等免除责任事宜通知另一方, 并告之其完成履行所需要采取的步骤。 |
"Force majeure event" refers to any event beyond the reasonable control of a party and still unavoidable under the reasonable attention of the affected party, including but not limited to government actions, natural forces, fires, explosions, storms , Flooding, earthquake, tide, lightning or war. However, insufficient credit, funds or financing shall not be regarded as matters beyond the reasonable control of one party. A party seeking to be exempted from performance under this agreement due to a "force majeure event" shall notify the other party as soon as possible of the exemption, and inform it of the steps required to complete the performance
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| 9.2 | 当本协议的履行因前述定义中的“不可抗力”而被延迟或受到阻碍时, 受到不可抗力影响的一方在被延迟或受阻碍的范围内不需为此承担本协议项下的任何责任。受到不可抗力影响的一方应采取适当的措施减少或消除“不可抗力”的影响, 并应努力恢复因“不可抗力”而被延迟或受阻碍的义务的履行。一旦不可抗力事件消除, 协议双方同意以最大努力恢复协议项下的履行。 |
When the performance of this agreement is delayed or hindered by the aforementioned definition of "force majeure", the party affected by the force majeure does not need to bear any responsibility under this agreement within the scope of the delay or hindrance. The party affected by force majeure shall take appropriate measures to reduce or eliminate the effects of "force majeure" and shall strive to resume the performance of obligations that have been delayed or hindered due to "force majeure". Once the force majeure event is eliminated, the parties to the agreement agree to use their best efforts to resume performance under the agreement.
| 13. | 通知 Notice |
协议双方为履行本协议项下的权利、义务所发出的通知, 都应以书面做成, 并以专人递送、挂号邮寄、邮资预付邮寄、认可的速递服务、或图文传真的形式发送到有关一方或协议双方下列的地址。
The notices issued by the parties to the agreement to perform their rights and obligations under this agreement shall be made in writing and sent to the relevant parties in the form of personal delivery, registered mail, postage prepaid mail, approved courier service, or graphic fax. The following addresses of one party or both parties to the agreement
甲方: 鲲澎（中国）有限公司 Party A: King Eagle (China) Ltd
地址: [ ]
Address:
电话: [ ]
Telephone:
收件人: [ ]
Contact:
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乙方: 鲲澎（天津）科技有限公司 Party B: King Eagle (Tian Jin) Technology Ltd
地址: [ ]
Address:
电话: [ ]
Telephone:
收件人: [ ]
Contact:
| 14. | 协议转让 Assignment |
乙方不得将其在本协议项下所享有的权利和承担的义务转让给任何第三方, 除非得到甲方事先书面同意。甲方可以不经乙方同意将其在本协议项下的权利和义务转让给其关联企业, 但应当将上述转让通知乙方。
Party B shall not transfer its rights and obligations under this agreement to any third party, unless Party A's prior written consent is obtained. Party A may transfer its rights and obligations under this agreement to its affiliates without Party B’s consent, but Party B shall notify Party B of the above transfer.
| 15. | 协议的分割性Severability of Agreement |
各方在此确认本协议为各方在平等互利的基础之上达成的公平合理的约定。若本协议项下的任何条款与有关法律不一致而无效或无法强制执行, 则该条款仅在有关法律管辖范围之内无效或无强制执行力, 而不得影响本协议其他条款的法律效力。
The parties hereby confirm that this agreement is a fair and reasonable agreement reached by the parties on the basis of equality and mutual benefit. If any clause under this agreement is inconsistent with the relevant law and is invalid or unenforceable, the clause shall only be invalid or unenforceable within the jurisdiction of the relevant law, and shall not affect the legal validity of other provisions of this agreement
| 16. | 协议的修改、补充 Amendment |
协议双方应以书面协议方式对本协议做出修改和补充。经过协议双方适当签字的有关本协议的修改和补充是本协议的组成部分, 具有与本协议同等的法律效力。
The parties to the agreement shall modify and supplement this agreement in a written agreement. Modifications and supplements to this agreement that have been properly signed by both parties are an integral part of this agreement and have the same legal effect as this agreement.
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| 17. | 管辖法律 Jurisdiction |
本协议的签署、有效性、履行和解释, 以及争议的解决受中国法律管辖, 依中国法律解释。
The signing, validity, performance and interpretation of this agreement, as well as the settlement of disputes, are governed by Chinese laws and interpreted in accordance with Chinese laws
有鉴于此, 协议双方经其授权的代表于文首所述日期签署了本协议, 以昭信守。
In view of this, both parties to the agreement signed this agreement on the date mentioned at the beginning of the text by their authorized representatives, in order to keep it true.
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[此页无正文, 为《独家咨询和服务协议》签署页]
Signature Page Only
甲方: 鲲澎（中国）有限公司 Party A: King Eagle ( China) Ltd (seal)
（印章）
授权代表: _________________
Authorized party:
乙方: 鲲澎（天津）科技有限公司
Party B: King Eagle (Tian Jin) Technology Ltd (seal)
（印章）
授权代表: _________________
Authorized Party:
附件1: Attachment
咨询和服务内容列表
Consultation and service content list
| 1. | 提供业务相关软件的开发与研究服务。 |
| 2. | Provide business-related software development and research services. |
| 3. | 提供业务相关的技术服务、应用及实施，包括但不限于设计、安装、测试全部系 统。 |
| 4. | Provide business-related technical services, applications and implementation, including but not limited to design, installation, and testing of all systems |
| 5. | 提供电脑网络设备的日常维护支持、升级、维护、监控和故障解决以及其他技术服务。 |
| 6. | Provide daily maintenance support, upgrades, maintenance, monitoring and troubleshooting of computer network equipment, and other technical services. |
| 7. | 提供人员岗前，在职，技术培训服务。 |
| 8. | Provide staff pre-job, on-the-job, technical training services |
| 9. | 提供技术开发和技术转让服务。 |
| 10. | Provide technology development and technology transfer services. |
| 11. | 提供公共关系服务。 |
| 12. | Provide Public Relations services |
| 13. | 提供市场调查、研究、咨询服务。 |
| 14. | Provide Market speculation, research, consultant service |
| 15. | 提供制定中短期市场发展，市场计划服务。 |
| 16. | Provide short and long term market development, market planning services |
| 17. | 提供与业务合规性有关的咨询服务。 |
| 18. | Provide business related consultation services |
| 19. | 提供与市场宣传、会员活动有关的组织、策划服务。 |
| 20. | Provide market propaganda, members activities and related organizing and planning services |
| 21. | 提供知识产权许可。 |
| 22. | Provide Intellectual property permit |
| 23. | 提供设备和租赁。 |
| 24. | Provide equipment and rental service |
| 25. | 提供业务经营相关的管理顾问服务及其他业务、技术咨询服务。 |
| 26. | Provide business related management consultation services and related business and tech support |
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附件2: Attachment two
服务费的计算和支付办法
Payment
| 一. | 本协议项下的服务费按照乙方在相应年度税前利润扣除乙方在该年度的上一年度的亏损（如有）、于该年度发生的必要的成本、费用、税费及提取依法必须计提的法定公积金等之后的剩余金额。甲方有权考虑下述因素并通过向乙方出具服务费账单或其他书面方式确定服务费的金额及对服务费进行调整，而无需乙方同意：(a)甲方提供的技术难度以及提供的咨询和其他服务的复杂程度；(b)甲方技术人员提供该等技术服务、咨询及其他服务所需的时间；(c)甲方提供的技术服务、咨询和其他服务的具体内容和商业价值；(d)相同种类服务的市场价格；(e)乙方的经营状况和乙方发展需求情况。上述服务费应于甲方向乙方发出付款指示后，以汇款或双方认可的其它方式划入甲方指定的银行帐户，甲方可不时更改该等付款指示。双方同意，上述服务费的支付原则上不应使任何一方当年经营发生困难，为上述目的，且在实现上述原则的限度内，甲方有权同意乙方延期付款，以避免乙方的任何财务困难；甲方亦有权对服务费作出其认为合理的任何其他调整，但应提前书面通知乙方。 |
| 二. | The service fee under this agreement shall be accrued according to Party B’s profit before tax in the corresponding year after deducting Party B’s losses in the previous year (if any), necessary costs, fees, taxes, and withdrawals incurred in that year. The remaining amount after the statutory provident fund, etc. Party A has the right to consider the following factors and determine the amount of service fee and adjust the service fee by issuing a service fee bill to Party B or other written methods, without Party B’s consent: (a) The technical difficulty provided by Party A and the consultation provided And the complexity of other services; (b) the time required for Party A’s technical personnel to provide such technical services, consulting and other services; (c) the specific content and commercial value of the technical services, consulting and other services provided by Party A; (d) The market price of the same type of service; (e) Party B’s business conditions and Party B’s development needs. The above service fees shall be transferred to the bank account designated by Party A by remittance or other methods approved by both parties after A has issued a payment instruction to Party B. Party A may change such payment instructions from time to time. Both parties agree that, in principle, the payment of the above service fees should not cause any party's business difficulties during the year. For the above purpose, and within the limits of achieving the above principles, Party A has the right to agree to Party B's postponement of payment to avoid any financial difficulties of Party B; Party A also has the right to make any other adjustments to the service fee that it deems reasonable, but it shall notify Party B in advance in writing |
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| 三. | 乙方应于每个财政年度（下称“前财政年度”）结束后的120日内，向甲方提供乙方在前财政年度经审计的合并财务报表，该财务报表应当经由甲方批准的独立注册会计师审计，以及向甲方提供计算该年服务费所需的一切财务及其他资料；甲方在收到乙方提供的前述资料后书面确定该年服务费，并有权在确定该年服务费后的任意时间，向乙方发出书面付款指示。乙方应按照书面付款指示所载的付款期限或在书面付款指示未载明付款期限的情形下、在收到书面付款指示后30日内向甲方支付付款指示中列明的服务费和其他费用（如有）。若乙方未能依照本协议之规定按时足额支付服务费和其他费用（如有），甲方有权要求乙方按照拖欠金额向甲方另行支付年利率为10%的违约利息。 |
| 四. | Party B shall provide Party A with the audited consolidated financial statements of Party B in the previous fiscal year within 120 days after the end of each fiscal year (hereinafter referred to as the "previous fiscal year"). The financial statements shall be independently approved by Party A. Audited by a certified public accountant, and provide Party A with all the financial and other information required to calculate the service fee for the year; Party A shall determine the service fee for the year in writing after receiving the aforementioned information provided by Party B, and has the right to determine the service fee for the year At any time thereafter, send a written payment instruction to Party B. Party B shall pay to Party A the service fees and other fees specified in the payment instruction within 30 days after receiving the written payment instruction in accordance with the payment deadline set forth in the written payment instruction or if the written payment instruction does not specify the payment deadline ( If any). If Party B fails to pay the service fees and other fees (if any) in full and on time in accordance with the provisions of this agreement, Party A has the right to require Party B to pay Party A a default interest of 10% per annum based on the arrears. |
| 三. | 如果甲方认为由于某种原因致使本条中的约定的服务价格确定机制不能适用而需作调整, 乙方应在甲方提出调整收费的书面要求之日后十个工作日内积极并诚信地与甲方进行协商, 以确定新的收费标准或机制。若乙方在收到上述调整通知后未在十个工作日内答复, 则视为默认该等服务费用的调整。应乙方要求, 甲方也应与乙方协商调整服务费用。 |
If Party A believes that due to some reason the agreed service price determination mechanism in this Article is not applicable and needs to be adjusted, Party B shall actively and honestly communicate with Party A within ten working days after Party A’s written request for fee adjustments is made. Negotiations to determine new charging standards or mechanisms. If Party B does not reply within ten working days after receiving the above adjustment notice, it shall be deemed to have tacitly adjusted the service fee. At the request of Party B, Party A shall also negotiate with Party B to adjust the service fee.
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鲲澎（天津）科技有限公司股东出资额
King Eagle (Tian Jin) Technology Ltd Shareholder’s Capital Contribution
| 股东姓名 Name |
出资额（万元） Capital (Ten Thousand ) |
|
刘翠莲 Liu Cui Lian
|
60 600,000 |
|
王智忠 Wang Zhi Zhong |
60 600,000
|
|
张进晶 Zhang Jin Jing |
60 600,000 |
|
胡万凤 Hu Wan Feng |
60 600,000 |
|
张媛媛 Zhang Yuan Yuan |
50 500,000 |
|
滕慧 Teng Hui |
50 500,000 |
|
范占东 Fang Zhan Dong |
50 500,000 |
|
李艳录 Li Yan Lu |
50 500,000 |
|
毛香懿 Mao Xiang Yi |
50 500,000 |
|
李成园 Li Cheng Yuan |
510 5,100,000 |
|
合计 Total |
1000 100,000,000 |
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Exhibit 10.9
股权质押协议
Equity Pledge Agreement
本股权质押协议(下称“本协议”)由下列各方(下称“协议各方”)于 年 月 日在中国天津市签订:
This equity pledge agreement (hereinafter referred to as the "Agreement") was signed by the following parties (hereinafter referred to as the "Parties to the Agreement") in Tianjin, China:
甲方: 鲲澎（中国）有限公司（“鲲澎中国”）
Party A: King Eagle (China) Ltd (refer herein as “King Eagle China)
地址: 北京市北京经济技术开发区荣华南路2号院1号楼27层2702
Address: Beijing Economic Development Zone Rong Hua Nan Rd, No. 2 Building 1, Floor 27, 2702
乙方:
Party B:
刘翠莲，身份证号：【】
Liu Cui Lian, ID No.
地址:【】
Address:
王智忠，身份证号：【】
Wang Zhi Zong, ID No.
地址: 【】
Address:
张进晶，身份证号：【】
Zhang Jin Jing, ID No.
地址: 【】
Address:
胡万凤，身份证号【】
Hu Wan Feng, ID No.
地址: 【】
Address:
张媛媛，身份证号：【】
Zhang Yuan Yuan, ID No.
地址: 【】
Address:
滕慧，身份证号：【】
Teng Hui, ID No.
地址: 【】
Address:
范占东，身份证号：【】
Fan Zhan Dong, ID No.
地址: 【】
Address:
李艳录，身份证号：【】
Li Yan Lu, ID No.
地址: 【】
Address:
毛香懿，身份证号：【】
Mao Xiang Yi, ID No.
地址: 【】
Address:
李成园，身份证号：【】
Li Cheng Yuan, ID No.
地址: 【】
Address:
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鉴于:
As
| 1. | 甲方系一家在中华人民共和国境内注册合法成立并有效存续的外商投资企业; |
| 2. | Party A is a foreign-invested enterprise that is legally established and validly existing in the territory of the People's Republic of China |
| 3. | 鲲澎（天津）科技有限公司( “鲲澎天津”)是一家在中国注册成立的有限责任公司; |
| 4. | King Eagle (Tianjin) Technology Co., Ltd. ("King Eagle Tianjin") is a limited liability company incorporated in China |
| 5. | 乙方各方为鲲澎天津的股东(“出质人”), 其中, 刘翠莲、王智忠、张进晶、胡万凤各持有6%的股权，张媛媛、滕慧、范占东、李艳录、毛香懿各持有5%的股权，李成园持有51%的股权; |
Parties to Party B are shareholders of King Eagle Tianjin ("Pledgors"), of which Liu Cuilian, Wang Zhizhong, Zhang Jinjing, and Hu Wanfeng each hold 6% of the equity, and Zhang Yuanyuan, Teng Hui, Fan Zhandong, Li Yanlu, and Mao Xiangyi each hold 5 % Equity, Li Chengyuan holds 51% equity;
| 6. | 甲方、乙方各方与鲲澎天津于[ ]年[ ]月[ ]日签订了独家咨询和服务协议、股权处置协议、业务经营协议; |
| 7. | Party A, Party B and King Eagle Tianjin signed an exclusive consultation and service agreement, equity disposal agreement, and business operation agreement on Day Month Year |
| 8. | 为了保证甲方从乙方所拥有的鲲澎天津正常收取独家咨询和服务协议项下的服务费, 以及保证股权处置协议、业务经营协议的履行, 出质人分别及共同以其在鲲澎天津中拥有的全部股权作为前述协议的质押担保, 质权人为甲方。 |
| 9. | In order to ensure that Party A normally collects the service fees under the exclusive consultation and service agreement from King Eagle Tianjin, which is owned by Party B, as well as the performance of the equity disposal agreement and business operation agreement, the pledgor shall separately and jointly use it in King Eagle The entire equity owned by Tianjin is used as the pledge guarantee of the aforementioned agreement, and the pledgee is Party A |
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据此, 协议各方经过友好协商, 本着平等互利的原则, 达成如下协议以资遵守:
According to this, the parties to the agreement have reached the following agreement through friendly consultations and based on the principle of equality and mutual benefit to comply with:
| 1. | 定义 Definition |
除非本协议另有规定, 下列词语应按如下定义解释:
Unless otherwise specified in this agreement, the following terms shall be interpreted as defined below:
| 1.1 | 质权: 指本协议第2条所列的全部内容。 |
| 1.2 | Pledge: Refers to all the contents listed in Article 2 of this agreement |
| 1.3 | 股权: 指出质人共同合法持有的其在鲲澎天津的100%股权以及基于该等股权而享有的所有现时和将来的权利和利益。 |
| 1.4 | Equity: Indicate the 100% equity in King Eagle Tianjin jointly and legally held by the pledger and all current and future rights and interests based on such equity |
| 1.5 | 各协议: 指甲方、鲲澎天津及其他相关各方于 年 月 日签订的独家咨询和服务协议、股权处置协议、业务经营协议。 |
| 1.6 | Agreements: Exclusive consultation and service agreements, equity disposal agreements, and business operation agreements signed by the nail party, King Eagle Tianjin and other related parties on the Day Month, Year. |
| 1.7 | 违约事件: 指本协议第7条所列的任何情况。 |
| 1.8 | Event of Default: Refers to any of the circumstances listed in Article 7 of this Agreement. |
| 1.9 | 违约通知: 指甲方根据本协议发出的宣布违约事件的通知。 |
| 1.10 | Notice of breach of contract: A notice issued by the nail party in accordance with this agreement announcing an event of breach of contract |
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| 2. | 质押 Pledge |
| 2.1 | 出质人以其在鲲澎天津中拥有的全部股权质押给甲方, 作为各协议项下甲方权益的担保。 |
| 2.2 | The pledger pledged all its equity in Kunpeng Tianjin to Party A as a guarantee for Party A's rights and interests under each agreement. |
| 2.3 | 本协议项下股权质押所担保的范围为鲲澎天津和(或)出质人在各协议项下所应当向甲方支付的全部费用(包括法律费用)、支出及需要承担的损失, 利息、违约金、赔偿金、实现债权的费用, 以及在任何原因导致各协议全部或部分无效时, 鲲澎天津和出质人应向甲方承担的责任。 |
| 2.4 | The scope of the guarantee for the equity pledge under this agreement is all the expenses (including legal expenses), expenses and losses to be borne and interest that King Eagle Tianjin and/or the pledger shall pay to Party A under each agreement , Liquidated damages, damages, costs for the realization of the creditor’s rights, and the responsibilities that King Eagle Tianjin and the pledgor shall bear to Party A when all or part of the agreements are invalidated for any reason |
| 2.5 | 本协议项下的质权是指甲方所享有的, 以折价、拍卖、变卖出质人质押给甲方的股权而所得价款优先受偿的权利。 |
| 2.6 | The pledge under this agreement is the right of the nail party to enjoy the priority to be paid for the price obtained by discounting, auctioning, and selling the equity pledged by the pledger to Party A. |
| 2.7 | 除非本协议生效后甲方另行明确书面同意, 否则, 仅当鲲澎天津及出质人已适当地履行完毕其在各协议项下的全部义务和责任, 并经甲方书面认可后, 本协议项下的质押方可解除。若鲲澎天津或出质人在各协议规定的期限届满时, 仍未完全履行其在该等协议项下义务或责任的全部或任何部分, 甲方仍享有本协议所规定的质权, 直至上述有关义务和责任以令甲方合理满意的方式完全履行完毕。 |
| 2.8 | Unless Party A otherwise expressly agrees in writing after this agreement comes into force, this will only be done after Kunpeng Tianjin and the pledger have properly performed all their obligations and responsibilities under each agreement and approved by Party A in writing. The pledge under the agreement can be released. If Kunpeng Tianjin or the pledgor fails to fully perform all or any part of its obligations or responsibilities under the agreement when the time limit specified in each agreement expires, Party A still enjoys the pledge rights specified in this agreement until The above-mentioned related obligations and responsibilities have been fully fulfilled in a manner that is reasonably satisfactory to Party A |
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| 3. | 生效 Effect |
| 3.1 | 本质押协议自各方签字盖章之日即为成立, 并在将股权质押记载于股东名册之日起生效。 |
The essential pledge agreement shall be established as of the date when the parties sign and seal, and shall take effect from the date when the pledge of equity is recorded in the register of shareholders
| 3.2 | 质押过程中, 如鲲澎天津未按独家咨询和服务协议交付服务费, 或未履行该等协议项下的其他条款或业务经营协议或股权处置协议项下的任何条款, 在合理通知之后, 甲方有权按本协议的规定行使质权。 |
During the pledge process, if King Eagle Tianjin fails to pay the service fee in accordance with the exclusive consultation and service agreement, or fails to perform other terms under these agreements or any terms under the business operation agreement or equity disposal agreement, after reasonable notice, A Party has the right to exercise the right of pledge in accordance with the provisions of this agreement
| 4. | 质权凭证的占有、保管Possession and custody of pledge certificates |
| 4.1 | 出质人应在本协议签订之日起十个工作日内或各方一致同意的更早时间将其在鲲澎天津的股权出资证明书(正本)交付给甲方保管, 并向甲方提交本协议项下质押已经适当地登记在股东名册上的证明, 办理所有依中华人民共和国法律法规所要求的各项审批、登记备案手续，并提交在工商登记机关办理完毕的股权质押登记证明文件。 |
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| 4.2 | The pledger shall deliver its equity capital contribution certificate (original) in Kunpeng Tianjin to Party A for safekeeping within ten working days from the date of signing this agreement or an earlier time agreed by all parties, and send it to Party A. Submit the proof that the pledge under this agreement has been properly registered on the shareholder register, go through all the approval, registration and filing procedures required by the laws and regulations of the People’s Republic of China, and submit the equity pledge registration documents completed in the industrial and commercial registration authority |
| 4.3 | 质押记载事项发生变化, 依法需进行变更记载的, 甲方与乙方应在记载事项变更之日起五个工作日内作相应变更记载, 并提交相关的变更登记文件。 |
| 4.4 | If the pledge record changes and the change record are required in accordance with the law, Party A and Party B shall make the corresponding change record within five working days from the date of the record change, and submit the relevant change registration documents. |
| 4.5 | 股权质押期间, 出质人应指示鲲澎天津不分配任何股息、红利, 或采取任何利润分配方案; 如出质人就质押股权应取得除股息、红利或其它利润分配方案外的其它任何性质的经济性利益, 出质人应根据甲方要求指示鲲澎天津将有关（变现后的）款项直接汇至甲方指定的银行帐户, 未经甲方事先书面同意, 出质人不得动用。 |
| 4.6 | During the equity pledge period, the pledger shall instruct King Eagle Tianjin not to distribute any dividends, bonuses, or adopt any profit distribution plan; if the pledger shall obtain any other property except dividends, bonuses or other profit distribution plans for the pledge of equity The pledgor shall instruct King Eagle Tianjin to remit the relevant (realized) funds directly to the bank account designated by Party A according to Party A’s request. Without Party A’s prior written consent, the pledgor shall not use it. |
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| 4.4 | 股权质押期间, 如出质人认购鲲澎天津的新注册资本或受让其他出质人持有的鲲澎天津股权(“新增股权”), 则该部分新增股权自动成为本协议项下的质押股权, 出质人应于取得新增股权后10个工作日内完成以该部分新增股权设定质押所需的各项手续。如出质人未能按照前述规定完成有关手续, 甲方有权立即按照本协议第八条的规定实现质权。 |
During the equity pledge period, if the pledger subscribes for King Eagle Tianjin’s new registered capital or transfers King Eagle Tianjin’s equity held by other pledgers (the “new equity”), this part of the newly added equity will automatically become under this agreement The pledger shall complete the procedures required to set up the pledge with the newly added equity within 10 working days after obtaining the newly added equity. If the pledgor fails to complete the relevant procedures in accordance with the foregoing provisions, Party A has the right to immediately realize the pledge rights in accordance with the provisions of Article 8 of this agreement
| 5. | 出质人的声明和保证 Pledgor's declaration and guarantee |
出质人在签署本协议时向甲方做出如下陈述与保证, 并确认甲方系依赖于该等陈述与保证而签署和履行本协议:
The pledgor made the following statements and guarantees to Party A when signing this agreement, and confirmed that Party A relied on these statements and guarantees to sign and perform this agreement:
| 5.1 | 出质人合法持有本协议项下的股权, 并有权以该等股权向甲方提供质押担保。 |
The pledger legally holds the equity under this agreement and has the right to provide a pledge guarantee to Party A with such equit
| 5.2 | 自本协议签署之日起至甲方根据本协议第2.4项的规定享有质权的期间内，在任何时候, 一旦甲方根据本质押协议行使甲方的权利或实现质权时, 不应有来自任何其他方的合法权利要求或正当干预。 |
From the date of signing of this agreement to the period when Party A enjoys the pledge in accordance with the provisions of item 2.4 of this agreement, at any time, once Party A exercises Party A’s rights or realizes the pledge in accordance with the essential pledge agreement, there shall be no Any other party's legal claims or legitimate interference
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| 5.3 | 甲方有权以法律法规及本协议规定的方式行使质权。 |
Party A has the right to exercise the pledge rights in the manner prescribed by laws, regulations and this agreement.
| 5.4 | 其签署本协议和履行其在本协议项下的义务, 已取得所有必需的公司授权且不违反任何适用法律法规的规定, 在本协议的授权代表签字人已得到合法有效的授权。 |
It has signed this agreement and performed its obligations under this agreement, has obtained all necessary company authorizations and does not violate any applicable laws and regulations, and the authorized representative signatory of this agreement has been legally and effectively authorized
| 5.5 | 出质人持有的股权不存在任何其他权利负担或任何形式的第三人担保权益(包括但不限于质押)。 |
The equity held by the pledger does not have any other rights burdens or any form of third party security rights (including but not limited to pledges)
| 5.6 | 不存在与股权有关的任何正在进行中的民事、行政或刑事诉讼、行政处罚或仲裁, 并且不存在将会发生的民事、行政或刑事诉讼、行政处罚或仲裁。 |
There is no ongoing civil, administrative or criminal litigation, administrative penalty or arbitration related to equity, and there is no civil, administrative or criminal litigation, administrative penalty or arbitration that will occur
| 5.7 | 不存在任何与股权相关的应付而未付的税赋、费用或应完成而未完成的法律程序、手续。 |
There are no due but unpaid taxes, fees or legal procedures or procedures that should be completed but not completed related to equity
| 5.8 | 本协议的各条款均是其真实意思的表示, 对其具有法律约束力。 |
Each clause of this agreement is the expression of its true meaning and is legally binding.
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| 6. | 出质人的承诺Pledgor's Commitment |
| 6.1 | 在本协议存续期间, 出质人向甲方承诺, 出质人将: |
During the duration of this agreement, the pledgor promises to Party A that the pledgor will:
| 6.1.1 | 除根据甲方的要求向甲方或甲方指定的人转让股权外, 未经甲方事先书面同意, 不得转让股权, 不得设立或允许存在任何可能影响甲方权利和利益的质押等任何其他权利负担或任何形式的第三人担保权益; |
Except for the transfer of equity to Party A or a person designated by Party A at the request of Party A, the equity shall not be transferred without Party A's prior written consent, and shall not establish or allow any other rights such as pledge that may affect Party A's rights and interests Burden or any form of third party security interest
| 6.1.2 | 遵守并执行所有有关适用的法律、法规的规定, 在收到有关主管机关就质权发出或制定的通知、指令或建议时, 于五个工作日内向甲方出示上述通知、指令或建议, 并按照甲方的合理指示作出行动; |
Comply with and implement all relevant applicable laws and regulations, and upon receipt of notices, instructions or suggestions issued or formulated by relevant competent authorities regarding pledge rights, present the aforementioned notices, instructions or suggestions to Party A within five working days, and Act in accordance with Party A's reasonable instructions;
| 6.1.3 | 将任何可能导致对出质人股权或其任何部分的权利产生影响的事件或收到的通知, 以及可能改变出质人在本协议中的任何义务、或对出质人履行其在本协议中义务可能产生影响的任何事件或收到的相关通知及时通知甲方, 并按照甲方的合理指示作出行动。 |
Any event or notice received that may affect the rights of the pledger’s equity or any part thereof, and may change any of the pledger’s obligations in this agreement, or to the pledger’s performance of the pledge in this agreement Any event that may have an impact on the obligation or relevant notifications received shall notify Party A in a timely manner, and act in accordance with Party A’s reasonable instructions
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| 6.2 | 出质人同意, 甲方按本协议之条款行使甲方的权利, 不应受到出质人或出质人的承继人或受让人或任何其他人的中断或妨害。 |
The pledgor agrees that Party A’s exercise of Party A’s rights in accordance with the terms of this agreement shall not be interrupted or hindered by the pledgor or the pledgor’s successor or assignee or any other person
| 6.3 | 出质人向甲方保证, 为保护或完善本协议对各协议项下出质人和(或) 鲲澎天津义务的担保, 出质人将对鲲澎天津的章程进行一切必要的修改（如适用），诚实签署、并促使其他与质权有利害关系的当事人签署甲方所要求的所有的权利证书、契约、和/或履行并促使其他有利害关系的当事人履行甲方所要求的行为，并为甲方行使质权提供便利, 与甲方或其指定的任何第三方签署所有的有关股权证书的变更文件, 在合理期间内向甲方提供其认为需要的所有有关质权的文件。 |
The pledgor guarantees to Party A that in order to protect or improve the guarantee for the pledger and/or King Eagle Tianjin’s obligations under this agreement, the pledgor will make all necessary changes to King Eagle Tianjin’s articles of association (such as (Applicable), honestly sign and urge other parties interested in the pledge to sign all the rights certificates, contracts, and/or perform and urge other interested parties to perform the actions required by Party A, And to provide convenience for Party A to exercise the pledge right, sign all relevant equity certificate change documents with Party A or any third party designated by it, and provide Party A with all relevant pledge documents that it considers necessary within a reasonable period.
| 6.4 | 出质人向甲方保证, 为了甲方的利益, 出质人将遵守、履行所有的保证、承诺、协议及陈述。如出质人不履行或不完全履行其保证、承诺、协议及陈述, 出质人应赔偿甲方由此遭受的一切损失。 |
The pledgor guarantees to Party A that, for the benefit of Party A, the pledgor will abide by and perform all guarantees, promises, agreements and statements. If the pledgor fails to perform or does not fully perform its guarantees, promises, agreements and statements, the pledgor shall compensate Party A for all losses suffered thereby.
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| 7. | 违约事件 Breach Matters |
| 7.1 | 下列事项均被视为违约事件: |
The following matters are regarded as breach of contract
| 7.1.1 | 鲲澎天津、或其承继人或受让人未能按期足额支付各协议项下的任何应付款项, 或出质人或其承继人或受让人未能履行其在业务经营协议、股权处置协议、独家咨询和服务协议的义务; |
King Eagle Tianjin, or its successors or assigns fail to pay any amounts due under each agreement in full and on time, or the pledger or its successors or assigns fail to perform its business operation agreement or equity disposal Obligations of agreements, exclusive consultations and service agreements;
| 7.1.2 | 出质人在本协议第5条、第6条所作的任何声明、保证或承诺有实质性的误导或错误, 和/或出质人违反本协议第5条、第6条的声明、保证或承诺; |
Any statement, guarantee, or promise made by the pledgor in Article 5 and Article 6 of this agreement is substantially misleading or wrong, and/or the pledger violates Article 5, Article 6 of the agreement, guarantee, or committed to;
| 7.1.3 | 出质人严重违反本协议的任何条款; |
The pledgor seriously violated any clause of this agreement;
| 7.1.4 | 除本协议6.1.1的约定外, 出质人舍弃出质的股权或未获得甲方书面同意而擅自转让出质的股权; |
Except as stipulated in 6.1.1 of this agreement, the pledger abandons the pledged equity or transfers the pledged equity without obtaining the written consent of Party A
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| 7.1.5 | 出质人本身对外的任何借款、担保、赔偿、承诺或其他偿债责任因违约被要求提前偿还或履行或已到期但不能如期偿还或履行, 致使甲方有理由认为出质人履行本协议项下的义务的能力已受到影响, 并且进而影响到甲方利益的; |
Any external borrowing, guarantee, compensation, promise or other debt repayment responsibilities of the pledgor itself are required to be repaid or performed in advance due to breach of contract or have expired but cannot be repaid or performed as scheduled, so that Party A has reason to believe that the pledgor has performed this agreement The ability of the obligations under the item has been affected, and the interests of Party A are further affected;
| 7.1.6 | 出质人不能偿还一般债务或其他欠债, 并且进而影响到甲方利益的; |
The pledger is unable to repay general debts or other debts, and further affect the interests of Party A
| 7.1.7 | 因有关法律颁布使得本协议不合法或出质人不能继续履行本协议项下的义务; |
The promulgation of relevant laws makes this agreement unlawful or the pledgor cannot continue to perform its obligations under this agreement;
| 7.1.8 | 如果本协议可被执行或使之合法或生效所需之任何政府部门同意、许可、批准或授权被撤回、中止、失效或有实质性修改; |
If this agreement can be executed or made legal or effective, any government department's consent, permission, approval or authorization is withdrawn, suspended, invalidated or substantially modified
| 7.1.9 | 出质人因其所拥有的财产出现不利变化, 致使甲方认为出质人履行本协议项下的义务的能力已受到影响; |
Due to adverse changes in the property owned by the pledgor, Party A believes that the ability of the pledgor to perform its obligations under this agreement has been affected
| 7.1.10 | 按有关法律规定甲方不能行使处分质权的其他情况。 |
According to relevant laws and regulations, Party A cannot exercise the right of disposition pledge.
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| 7.2 | 如知道或发现上述第7.1条所述的任何事项或可能导致上述事项的事件已经发生, 出质人应立即以书面形式通知甲方。 |
If it is known or discovered that any of the matters mentioned in Article 7.1 above or events that may lead to the above matters have occurred, the pledgor shall immediately notify Party A in writing.
| 7.3 | 除非本条7.1款所列的违约事项已在甲方感到满意的情况下获得完满解决, 否则甲方可在出质人违约事项发生时或发生后的任何时间以书面形式向出质人发出违约通知, 要求出质人立即支付各协议项下的欠款及其他应付款项, 或者及时履行股权处置协议、业务经营协议。如在发出该等书面通知之日起十日内, 出质人或鲲澎天津未及时纠正其违约行为或采取必需的救济行为, 则甲方有权按本协议第8条的规定行使质权。 |
Unless the breaches listed in paragraph 7.1 of this article have been satisfactorily resolved to the satisfaction of Party A, Party A may issue a written notice of breach to the pledgor at any time after the occurrence of the pledgor’s breach of contract. , Require the pledgor to immediately pay the arrears and other payables under each agreement, or promptly perform the equity disposal agreement and business operation agreement. If the pledgor or King Eagle Tianjin fails to correct its breach of contract or take necessary remedies within ten days from the date of issuing such written notice, Party A shall have the right to exercise the right of pledge in accordance with Article 8 of this agreement.
| 8. | 质权的行使 |
| 8.1 | 在各协议项下的费用和义务尚未全部履行前, 未经甲方书面同意, 出质人不得转让股权。 |
Before the expenses and obligations under each agreement are fully fulfilled, the pledger shall not transfer the equity without the written consent of Party A.
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| 8.2 | 甲方行使质权时应按照本协议第7.3条的规定向出质人发出违约通知。 |
When Party A exercises the right of pledge, it shall issue a notice of breach of contract to the pledgor in accordance with Article 7.3 of this agreement
| 8.3 | 受限于第7.3款的规定, 甲方可在按第7.3条发出违约通知之后的任何时间里行使质权。 |
Subject to the provisions of Article 7.3, Party A may exercise the pledge right at any time after issuing a notice of breach of contract in accordance with Article 7.3
| 8.4 | 甲方有权按照法定程序以本协议项下的全部或部分股权折价, 或以拍卖、变卖该股权的价款优先受偿, 直到将各协议项下的未支付的服务费、其他一切应付款项抵偿完毕、以及股权处置协议、业务经营协议全部履行完毕。 |
Party A has the right to discount all or part of the equity under this agreement in accordance with legal procedures, or receive priority compensation from the auction or sale of the equity, until the unpaid service fees and all other payables under each agreement are offset Completion, and the equity disposal agreement and business operation agreement are all fulfilled
| 8.5 | 甲方依照本协议行使质权时, 出质人不得设置障碍, 并应予以必要的协助, 以使甲方实现其质权。 |
When Party A exercises the pledge rights in accordance with this agreement, the pledgor shall not set up obstacles, and shall provide necessary assistance to enable Party A to realize its pledge rights.
| 9. | 转让 Tranfer |
| 9.1 | 除非经甲方事先书面明确同意, 出质人无权向第三方转让其在本协议项下的任何权利和/或义务。 |
Unless Party A expressly agrees in writing in advance, the pledgor has no right to transfer any of its rights and/or obligations under this agreement to a third party.
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| 9.2 | 本协议对出质人及其继任人均有约束力, 并且对甲方及其承继人或受让人有效。 |
This agreement is binding on the pledgor and its successors, and is valid for Party A and its successors or assigns.
| 9.3 | 甲方可以在任何时候将其在各协议项下的全部或任何权利和义务转让给其指定的任何第三方, 在这种情况下, 受让人应享有和承担本协议项下甲方享有和承担的权利和义务。甲方转让各协议项下的权利和义务时, 应甲方要求, 出质人应就此转让签署有关协议和/或文件。 |
Party A may at any time transfer all or any of its rights and obligations under each agreement to any third party designated by it. In this case, the transferee shall enjoy and bear the rights and obligations of Party A under this agreement. The rights and obligations assumed. When Party A transfers the rights and obligations under each agreement, at the request of Party A, the pledgor shall sign relevant agreements and/or documents for the transfer
| 9.4 | 因转让所导致的质权人变更后, 新质押双方应重新签订质押协议且出质人应负责办理全部有关登记手续。 |
After the pledgee is changed due to the transfer, both parties to the new pledge shall sign a pledge agreement again and the pledger shall be responsible for all relevant registration procedures
| 10. | 手续费及其他费用Handling fees and other fees |
| 10.1 | 一切与本协议有关的费用及实际开支, 其中包括但不限于法律费用、工本费、印花税以及任何其他税收、费用等由甲乙双方各自承担一半。 |
All costs and actual expenses related to this agreement, including but not limited to legal fees, cost, stamp duty, and any other taxes, expenses, etc. shall be borne by each party
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| 11. | 不可抗力Force Majeure |
| 11.1 | 本协议的履行因任何“不可抗力事件”而被延迟或受到阻碍时, 仅就这部分被延迟或被阻碍的履行, 受到不可抗力影响的一方不需对此承担在本协议项下的任何责任。“不可抗力事件”是指超出了一方所能合理控制的范围, 在受影响的一方加以合理的注意之下仍不可避免的任何事件, 其中包括但不限于, 政府行为、自然力、火灾、爆炸、地理变化、风暴、洪水泛滥、地震、潮汐、闪电或战争。但是, 资信、资金或融资不足不得被视为是超出了一方所能合理控制的事项。受“不可抗力事件”影响寻求免除本协议项下的或本协议任何条款项下履行责任的一方应尽快将此项免除责任一事通知另一方并告之其完成履行所要采取的步聚。 |
When the performance of this agreement is delayed or obstructed due to any "force majeure event", the party affected by the force majeure does not need to bear any responsibility under this agreement only for this part of the delayed or obstructed performance. "Force majeure event" refers to any event that is beyond the reasonable control of a party and is still unavoidable under the reasonable attention of the affected party, including but not limited to government actions, natural forces, fires, explosions, and geography. Change, storm, flooding, earthquake, tide, lightning or war. However, insufficient credit, funds or financing shall not be regarded as matters beyond the reasonable control of one party. A party seeking to be exempted from performance under this agreement or under any clause of this agreement affected by the "force majeure event" shall notify the other party of the exemption of liability as soon as possible and inform it of the steps to be taken to complete the performance.
| 11.2 | 受到不可抗力影响的一方不需为此承担在本协议项下的任何责任, 但是只有在受影响的一方尽可行之努力而履行协议的条件下, 寻求免除责任的一方才可获得对此项责任履行的免除, 并且仅以被延迟或受阻碍的那部分履行为限。一旦此类免除责任的原因得到纠正或补救, 各方同意以最大努力恢复本协议项下的履行。 |
The party affected by force majeure does not need to bear any responsibilities under this agreement, but only if the affected party does its best to perform the agreement, the party seeking exemption from liability can be able to perform this responsibility The exemption is limited to the part of the performance that is delayed or hindered. Once the reasons for such exemption of liability are corrected or remedied, the parties agree to use their best efforts to resume performance under this agreement
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| 12. | 法律适用和争议解决Application of law and dispute resolution |
| 12.1 | 本协议的签署、有效性、履行和解释, 以及争议的解决受中华人民共和国法律管辖, 依中华人民共和国法律解释。 |
The signing, validity, performance and interpretation of this agreement, as well as the settlement of disputes, are governed by the laws of the People's Republic of China and interpreted in accordance with the laws of the People's Republic of China
| 12.2 | 在本协议各方就本协议项下条款的解释和履行发生争议时, 各方应善意通过协商解决该争议。协商不成, 任何一方均可将有关争议提交中国国际经济贸易仲裁委员会按照其届时有效的仲裁规则仲裁解决。仲裁地点为北京, 仲裁使用之语言为中文。仲裁裁决应是终局性的, 对各方均有拘束力。 |
When the parties to this agreement have a dispute over the interpretation and performance of the terms under this agreement, the parties shall resolve the dispute through negotiation in good faith. If the negotiation fails, either party can submit the relevant dispute to the China International Economic and Trade Arbitration Commission for arbitration in accordance with its then effective arbitration rules. The place of arbitration shall be Beijing, and the language of arbitration shall be Chinese. The arbitration award shall be final and binding on all parties
| 12.3 | 除各方发生争议的事项外, 各方仍应当本着善意的原则按照本协议的规定继续履行各自义务。 |
Except for matters in dispute between the parties, the parties shall continue to perform their respective obligations in accordance with the provisions of this agreement in good faith.
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| 13. | 通知 Notice |
本协议各方为履行本协议项下的权利、义务所发出的通知, 都应以书面做成, 并以专人递送、挂号邮寄、邮资预付邮寄、认可的速递服务、或图文传真的形式发送到有关一方或各方下列的地址。
The notices issued by the parties to this agreement to perform their rights and obligations under this agreement shall be made in writing and sent in the form of personal delivery, registered mail, postage prepaid mail, approved courier service, or graphic fax To the party concerned or the following address of each party
甲方: 鲲澎（中国）有限公司
Party A: King Eagle (china) Ltd
地址: 北京市北京经济技术开发区荣华南路2号院1号楼27层2702
Address: Beijing Economic Development Zone Rong Hua Nan Rd, No. 2 Building 1, Floor 27, 2702
传真：[ ]
Fax:
电话：[ ]
Phone:
收件人: [ ]
Receiver:
乙方:
Party B:
刘翠莲 Liu Cui Lian
地址: [ ]
Address:
电话: [ ]
Phone:
收件人: 刘翠莲
Receiver:: Liu Cui Lian
19
王智忠Wang Zhi Zhong
地址: [ ]
Address:
电话: [ ]
Phone:
收件人: 王智忠
Receiver: Wang Zhi Zhong
张进晶 Zhang Jin Jing
地址: [ ]
Address:
电话: [ ]
Phone:
收件人: 张进晶
Receiver: Zhang Jin Jing
胡万凤 Hu Wan Feng
地址: [ ]
Address:
电话: [ ]
Phone:
收件人: 胡万凤
Receiver: Hu Wan Feng
张媛媛Zhang Yuan Yuan
地址: [ ]
Address:
电话: [ ]
Phone:
收件人: 张媛媛
Receiver: Zhang Yuan Yuan
滕慧 Teng Hui
地址: [ ]
Address:
电话: [ ]
Phone:
收件人: 滕慧
Receiver: Teng Hui
20
范占东Fan Zhan Dong
地址: [ ]
Address:
电话: [ ]
Phone:
收件人: 范占东
Receiver:
李艳录Li Yan Lu
地址: [ ]
Address:
电话: [ ]
Phone:
收件人: 李艳录
Receiver: Li Yan Lu
毛香懿Mao Xiang Yi
地址: [ ]
Address:
电话: [ ]
Phone:
收件人: 毛香懿
Receiver: Mao Xiang Yi
李成园 Li Chen Yuan
地址: [ ]
Address:
电话: [ ]
Phone:
收件人: 李成园
Receiver: Li Chen Yuan
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| 14. | 附件 Attachment |
本协议所列附件, 为本协议不可分割的组成部分。
The attachments listed in this agreement are an integral part of this agreement.
| 15. | 弃权Waiver |
甲方没有行使或延迟行使本协议项下的任何权利、补救方法、权力或特权时, 不得作为对该权利、补救方法、权力或特权的一项弃权, 甲方对任何权利、补救方法、权力或特权的任何单独或部分行使, 并不排除甲方对任何其它权利、补救方法、权力或特权的行使。本协议所规定的权利、补救方法、权力及特权是累加性的, 且不排除任何法律规定的任何权利、补救方法、权力及特权的适用。
When Party A fails to exercise or delays the exercise of any rights, remedies, powers or privileges under this agreement, it shall not be regarded as a waiver of such rights, remedies, powers or privileges. Or any single or partial exercise of privileges does not preclude Party A from exercising any other rights, remedies, powers or privileges. The rights, remedies, powers and privileges stipulated in this agreement are cumulative and do not exclude the application of any rights, remedies, powers and privileges provided by any law.
| 16. | 其他 others |
| 16.1 | 本协议的任何修改、补充或变更, 均须采用书面形式, 经各方签字盖章后生效。 |
Any modification, supplement or change of this agreement must be in written form and become effective after being signed and sealed by all parties
| 16.2 | 各方在此确认本协议为各方在平等互利的基础之上达成的公平合理的约定。如果本协议项下的任何条款因与有关法律不一致而无效或无法强制执行, 则该条款仅在有关法律管辖范围之内无效或无执行力, 并且不得影响本协议其他条款的法律效力。 |
The parties hereby confirm that this agreement is a fair and reasonable agreement reached by the parties on the basis of equality and mutual benefit. If any clause under this agreement is invalid or unenforceable due to inconsistency with the relevant law, the clause shall only be invalid or unenforceable within the jurisdiction of the relevant law, and shall not affect the legal validity of other provisions of this agreement
| 16.3 | 本协议以中文书就, 正本一式十一份，各方各执一份。 |
This agreement is written in Chinese, eleven originals, and each party holds one copy.
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[此页无正文, 为《股权质押协议》签署页]
Signature Page Only
甲方: 鲲澎（中国）有限公司
Party A : King Eagle (china) Ltd
授权代表: ___________________________
Authorized Representative:
23
[此页无正文, 为《股权质押协议》签署页]
Signature Page Only
| 乙方: | ||
| 刘翠莲 Liu Cui Lian | 王智忠 Wang Zhi Zhong | |
| 张进晶 Zhang Jin Jing | 胡万凤 Hu Wang Feng | |
| 张媛媛Zhang Yuan Yuan | 滕慧 Teng Hui | |
| 范占东 Fan Zhan Dong | 李艳录Li Yan Lu | |
| 毛香懿 Mao Xiang Yi | 李成园 Li Chen Yuan | |
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附件: Attachment
| 1. | 鲲澎天津股东名册。King Eagle Shareholder’s list |
| 2. | 鲲澎（天津）科技有限公司股东出资额。 King Eagle (Tian Jin) Technology Ltd capital contribution |
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Exhibit 10.10
代理协议
Agent Agreement
本代理协议（“本协议”）由下列各方于 年 月 日订立：
Agent Agreement signed on Day Month Year,
甲方：鲲澎（中国）有限公司 Party A: King Eagle (China) Ltd
注册地址： 北京市北京经济技术开发区荣华南路2号院1号楼27层2702
Registration Address: Beijing Economic Development Zone Rong Hua Nan Rd, No. 2 Building 1 27 Floor, 2702
董事长：王文强
Director: Wang Wen Qiang
乙方： 在以下签字的鲲澎（天津）科技有限公司（一家依中国法设立的有限责任公司，“鲲澎天津”）的股东/所有人。
Party B: King Eagle (Tian Jin) Technology Ltd (A shareholder/owner of a limited liability company established under Chinese law, "Kunpeng Tianjin").
鉴于
A 甲方是依据中华人民共和国法律成立的，从事技术服务和商务咨询服务的外商投资有限公司。
Party A is a foreign investment limited company established in accordance with the laws of the People's Republic of China to engage in technical services and business consulting services.
B. 在本协议成立日，乙方是鲲澎天津的股东/所有人并且都合法持有鲲澎天津的股权。乙方合计持有鲲澎天津100%的股权。
On the date of the establishment of this agreement, Party B is the shareholder/owner of King Eagle Tianjin and legally holds equity in King Eagle Tianjin. Party B holds 100% of King Eagle Tianjin's equity in total
C. 乙方期望授予甲方（及甲方指定或授权的人士）作为乙方代理人，于法定最长的期间内在鲲澎天津股东/所有人会议上的投票权利。
Party B expects to grant Party A (and the person designated or authorized by Party A) the right to vote at Kunpeng Tianjin shareholders/owners meeting as the agent of Party B for the longest legal period
鉴于此，各方达成如下协议：
In view of this, the parties reached the following agreement:
| 1. | 乙方在此同意授权甲方不可撤销的许可，以及，在法律允许的最长期限内，行使鲲澎天津股东/所有人的投票权。甲方应当根据中国法和鲲澎天津公司章程行使该投票权。 |
Party B hereby agrees to authorize Party A's irrevocable license and, within the longest period permitted by law, to exercise the voting rights of Kunpeng Tianjin shareholders/owners. Party A shall exercise the voting right in accordance with Chinese law and Kunpeng Tianjin’s articles of association
2. 甲方可以设立或修改关于如何行使乙方在此赋予的权力的相关规则。包括但不限于规定在授权，采取行动，和签署采取行动的文件时所需要的甲方董事人数或比例。甲方必须根据上述规则进行行为。
Party A can establish or modify relevant rules on how to exercise the powers granted by Party B here. Including but not limited to stipulating the number or proportion of Party A’s directors required to authorize, take action, and sign documents to take action. Party A must act in accordance with the above rules.
3. 各方在此认识到，不管公司股权有任何变化，乙方都应当授权甲方任命的人士行使所有乙方股东/所有人投票权权利；乙方不得将其在鲲澎天津中的股东/所有人权益转让给任何个人或其他公司(除非甲方或其他甲方指定的人或者实体)。 乙方了解即使双方或其中一方不再持有鲲澎天津的股权利益，其也将继续履行合同。
The parties hereby recognize that, regardless of any changes in the company’s equity, Party B should authorize the person appointed by Party A to exercise all the voting rights of Party B’s shareholders/owners; Party B shall not transfer its shareholders/owners’ rights and interests in Kunpeng Tianjin To any individual or other company (unless Party A or other persons or entities designated by Party A). Party B understands that even if both parties or one of them no longer hold the equity interest in Kunpeng Tianjin, they will continue to perform the contract.
4. 本协议在各方签订时生效，如果一方为非自然人的，则该方已取得其内部有权机构所有必要正式授权。
This agreement is effective when the parties are signed. If one party is not a natural person, the party has obtained all necessary formal authorizations from its internal authority
5. 乙方向甲方陈述和保证：乙方合法拥有鲲澎天津股权，并且没有任何抵押和抵押担保。除了甲方以外，乙方未有向任何人授予任何股权和作为鲲澎天津股东/所有人的，与乙方的权利一样的授权书。乙方进一步陈述和保证乙方签署或交付本协议不违反适用于乙方的法律，法规，司法决定，行政命令，仲裁裁决，合同或契约。在此认识到如果代理人撤回对相关人士的任命，代理人将在撤销任命和授权的同时，任命其他人士作为代替以便在公司股东/所有人会上行使投票权和其他权利。
Party B represents and warrants to Party A that Party B legally owns Kunpeng Tianjin’s equity and does not have any mortgage or mortgage guarantee. Except for Party A, Party B has not granted anyone any equity and power of attorney as a shareholder/owner of Kunpeng Tianjin, which has the same rights as Party B. Party B further represents and warrants that the signing or delivery of this agreement by Party B does not violate the laws, regulations, judicial decisions, administrative orders, arbitration awards, contracts or contracts applicable to Party B. It is recognized here that if the agent withdraws the appointment of the relevant person, the agent will revoke the appointment and authorization while appointing another person as a substitute in order to exercise voting rights and other rights at the company's shareholders/owners meeting.
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6. 除非甲方提前30天通知可以终止本协议外，本协议非经双方一致同意不得终止。
Unless Party A can terminate this agreement with 30 days' notice, this agreement shall not be terminated without the unanimous consent of both parties.
7. 本协议的任何修改和/或解除都必须采用书面形式。
Any modification and/or cancellation of this agreement must be in writing
8. 本协议的签订，效力，成立和履行适用中华人民共和国法律。
The signing, validity, establishment and performance of this agreement shall be governed by the laws of the People’s Republic of China
9. 本协议一式十一份，每一方持有一份，每一份都具有同等效力。
This agreement is in eleven copies, each party holds one copy, and each copy has the same effect.
10. 如果因本协议产生争议，双方同意通过协商解决。如果双方不能在协商45日后达成一致，应提交中国国际经济贸易仲裁委员会，由该会依据其届时有效的仲裁规则进行仲裁。仲裁应在北京进行，仲裁使用的语言应为中文。仲裁裁决是具有终局效力，能够在具有管辖权的任何法院执行。
If a dispute occur due to this agreement, both parties agree to resolve it through negotiation. If the two parties cannot reach an agreement after 45 days of negotiation, they should submit it to the China International Economic and Trade Arbitration Commission, which will conduct arbitration in accordance with its then effective arbitration rules. The arbitration shall be conducted in Beijing, and the language used in the arbitration shall be Chinese. The arbitration award is final and can be enforced in any court with jurisdiction
[本页无正文，以下为签字页]
No content, signature page only
3
[本页无正文，为《代理协议》之签字页]
本协议各方或者其授权代表签署本协议
The parties to this agreement or their authorized representatives sign this agreement
甲方：鲲澎（中国）有限公司
Party A: King Eagle (China) Ltd
法定代表人/或被授权人(签字)：
Legal representative/Authorized Representative: (signature)
姓名：王文强
Name: Wang Wen Qiang
职务：董事长
Position: Director
| 乙方 | |
| Party B | |
| 刘翠莲Liu Cui Lian | |
| 中华人民共和国身份证号：【】 | |
| China ID card No. |
| 王智忠 Wang Zhi Zhong | |
| 中华人民共和国身份证号：【】 | |
| China ID Card No. |
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[本页无正文，为《代理协议》之签字页]
Signature page only
| 张进晶Zhang Jin Jing | ||
| 中华人民共和国身份证号：【】 | ||
| China ID card No. | ||
| 胡万凤 Hu Wan Feng | ||
| 中华人民共和国身份证号：【】 | ||
| China ID card No. | ||
| 张媛媛 Zhang Yuan Yuan | ||
| 中华人民共和国身份证号：【】 | ||
| China ID Card No. | ||
| 滕慧Teng Hui | ||
| 中华人民共和国身份证号：【】 | ||
| China ID Card No. |
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[本页无正文，为《代理协议》之签字页]
Signature Page Only
| 范占东 Fan Zhan Dong | ||
| 中华人民共和国身份证号：【】 | ||
| China ID Card No. | ||
| 李艳录 Li Yan Lu | ||
| 中华人民共和国身份证号：【】 | ||
| China ID Card No. | ||
| 毛香懿 Mao Xiang Yi | ||
| 中华人民共和国身份证号：【】 | ||
| China ID Card No. | ||
| 李成园 Li Cheng Yuan | ||
| 中华人民共和国身份证号：【】 | ||
| China ID Card No. |
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Exhibit 10.11
股权处置协议
Equity Disposal Agreement
本股权处置协议(下称“本协议”)由下列各方(下称“协议各方”)于 年 月 日在中国天津市签订:
This equity disposal agreement (hereinafter referred to as “this Agreement”) is signed by and between the following parties (hereinafter referred to as “the parties”) in Tianjin, China on Day Month Year)
甲方: 鲲澎（中国）有限公司（“鲲澎中国”）
Party A: King Eagle (china) Ltd ( hereinafter referred to as “King Eagle China”)
地址: 北京市北京经济技术开发区荣华南路2号院1号楼27层2702
Address: 2702, FL 27, Building 1 Rong Nan South Rd, No. 2 Beijing Economic Development Zone, Beijing
乙方:
Party B:
刘翠莲，身份证号：【】
Liu Cui Lian, ID No.
地址:【】
Address:
王智忠，身份证号：【】
Wang Zhi Zhong, ID No.
地址: 【】
Address:
张进晶，身份证号：【】
Zhang Jin Jing, ID No.
地址: 【】
Address:
胡万凤，身份证号【】
Hu Wang Feng, ID. No
地址: 【】
Address:
张媛媛，身份证号：【】
Zhang Yuan Yuan, ID No.
地址: 【】
Address:
滕慧，身份证号：【】
Teng Hui, ID No.
地址: 【】
Address:
范占东，身份证号：【】
Fan Zhan Dong, ID No.
地址: 【】
Address:
李艳录，身份证号：【】
Li Yan Lu, ID No.
地址: 【】
Address:
毛香懿，身份证号：【】
Mao Xiang Yi, ID No.
地址: 【】
Address:
李成园，身份证号：【】
Li Cheng Yuan, ID No.
地址: 【】
Address:
丙方: 鲲澎（天津）科技有限公司( “鲲澎天津”)
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Party C: King Eagle ( Tian Jin) Technology Ltd ( hereinafter referred to as “King Eagle Tian Jin”)
地址: 天津自贸试验区(空港经济区)空港国际物流区第一大街2号(2)综合楼二层231室、综合楼三层335室
Address: Room 335, 231 Building 2, Kong Gang International Logistic No. 1 Rd, Tian Jin Free Trade Experimental Zone ( Kong Gang Economic Zone)
鉴于:
As
| 1. | 甲方系一家在中华人民共和国境内依法注册成立并有效存续的外商投资企业; |
Party A is a foreign-invested enterprise registered and existing in the people’s Republic of China;
| 2. | 丙方是一家在中国注册成立的有限责任公司; |
Party C is a limited liability company incorporated in China
| 3. | 乙方各方为鲲澎天津的股东(合称“授权方”), 其中, 刘翠莲、王智忠、张进晶、胡万凤各持有6%的股权，张媛媛、滕慧、范占东、李艳录、毛香懿各持有5%的股权，李成园持有51%的股权。 |
Party B is the shareholder of King Eagle Tianjin (collectively referred to as the “authorized party”), of which Liu Cuilian, Wang Zhizhong, Zhang Jinjing and Hu Wanfeng each hold 6% equity, Zhang Yuanyuan, Tenghui, fan zhandong, Li Yanlu and Mao Xiangyi each hold 5% equity, and Li Chengyuan holds 51% equity
| 4. | 甲方和乙方之间签署了股权质押协议, 在该协议项下乙方为鲲澎天津履行其在与甲方签署独家咨询和服务协议项下的义务提供担保。为确保该抵押权的安全, 并考虑到甲方所提供给鲲澎天津的技术支持以及各方之间的良好合作关系, 各方达成以下协议。 |
Party A and Party B have signed the equity pledge agreement, under which Party B guarantees King Eagle Tianjin to perform its obligations under the exclusive consultation and service agreement signed with Party A. In order to ensure the security of the mortgage, and in consideration of the technical support provided by Party A to King Eagle Tianjin and the good cooperative relationship between the parties, the parties have reached the following agreement.
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| 一. | 授予选择权 Granting Options |
| 1.1 | 授予 Grant |
本协议各方同意, 自本协议生效之日起, 除非已向甲方披露并经甲方事先明确书面许可, 甲方拥有排他性的选择权, 依照本协议约定, 以行权时中华人民共和国法律法规所允许的最低价格由甲方或其指定的第三方随时购买授权方在鲲澎天津中所持有的全部或部分股权的选择权。乙方同意，作为丙方的股东，在乙方所持有的丙方股权转让给甲方之前，如果乙方从丙方合法获得了股息、红利或剩余财产，则在遵守中国法律的前提下并在缴纳中国法律所要求的税费之后，乙方应在取得该等所得后立即将全部所得支付给甲方。
The parties to this agreement agree that, from the effective date of this agreement, unless it has been disclosed to Party A and with the prior explicit written permission of Party A, Party A shall have the exclusive right of choice, in accordance with the provisions of this agreement, Party A or the third party designated by Party A shall at any time purchase all or part of the equity held by the authorized party in King Eagle Tianjin at the lowest price permitted by the laws and regulations of the people’s Republic of China at the time of exercise. Party B agrees that, as a shareholder of Party C, if Party B legally obtains dividends, dividends or surplus property from Party C before the equity of Party C held by Party B is transferred to Party A, Party B shall, on the premise of complying with Chinese laws and after paying taxes required by Chinese laws, immediately pay all such income to Party A
本协议各方同意, 自本协议生效之日起, 除非已向甲方披露并经甲方事先明确书面许可, 甲方拥有排他性的选择权, 依照本协议约定,以行权时中华人民共和国法律法规所允许的最低价格由甲方或其指定的第三方随时购买鲲澎天津中所持有的全部或部分资产的选择权。
本协议经各方签署并生效后即授予甲方上述选择权, 并且该授权一经授予即在本协议有效期限(包括根据下文第1.2条的任何延长期)内不可撤销或变更。
The parties to this agreement agree that, from the effective date of this agreement, unless it has been disclosed to Party A and with the prior written permission of Party A, Party A has the exclusive option to purchase all or part of the assets held by King Eagle Tianjin at any time by Party A or its designated third party at the lowest price permitted by the laws and regulations of the people’s Republic of China at the time of exercise.
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Party A shall be granted the above option after this agreement is signed and effective by all parties, and the authorization shall be irrevocably or changed during the term of this Agreement (including any extension period according to Article 1.2 below).
| 1.2 | 期限 Validation |
本协议由协议各方于文首标明的日期签署并生效。本协议有效期限为十年, 自本协议生效之日起起算。本协议期满前, 若甲方提出要求, 则各方应根据甲方的要求延长本协议的期限, 并依甲方要求另行签署股权处置协议或继续履行本协议。
This agreement is signed and effective by the parties on the date first above written. This Agreement shall be valid for ten years from the effective date of this agreement. Before the expiration of this agreement, if Party A requests, all parties shall extend the term of this agreement according to Party A’s request, and sign another equity disposal agreement or continue to perform this agreement according to Party A’s request.
| 二. | 行使选择权及交割 Exercise of options and Delivery |
| 2.1 | 行权时间 Exercise Time |
| 2.1.1 | 授权方一致同意, 在中华人民共和国法律法规允许的前提下, 甲方可于本协议签署并生效后任何时间行使本协议项下的部分或全部选择权。 |
The authorized party agrees that, subject to the laws and regulations of the people’s Republic of China, Party A may exercise part or all of the options under this agreement at any time after this agreement is signed and takes effect.
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| 2.1.2 | 授权方一致同意, 甲方的行权次数没有限制, 除非其已经收购并持有了鲲澎天津的全部股权、资产。 |
The authorized party agrees that there is no limit on the number of times party A exercises its rights, unless it has acquired and held all the equity and assets of King Eagle Tianjin.
| 2.1.3 | 授权方一致同意, 甲方可以指定第三方作为其代表行使选择权, 但行权时, 甲方应当事先书面通知授权方。 |
The authorized party agrees that Party A may appoint a third party as its representative to exercise the right of choice, but Party A shall notify the authorized party in writing in advance when exercising the right
| 2.2 | 行权价款的处置 Disposal Exercise Price |
授权方一致同意, 在甲方行权时授权方因此获得的全部行权价款无偿赠送给鲲澎天津, 或者以甲方书面同意的其他方式来实现该等行权价款从授权方到鲲澎天津的转移。
The authorized party agrees that when Party A exercises the right, all the exercise price obtained by the authorized party shall be presented to King Eagle Tianjin free of charge, or the transfer of the exercise price from the authorized party to King Eagle Tianjin shall be realized by other ways agreed by Party A in writing.
| 2.3 | 转让 Transfer Possession |
授权方一致同意, 本协议项下之选择权可部分或全部地由甲方转让给第三方, 该等转让无需再事先取得授权方的同意, 该第三方应当视为本协议的一方签约人按本协议之条件行使选择权, 并承担甲方在本协议项下的权利和义务。
The authorized party agrees that the option under this agreement can be transferred in part or in whole by Party A to a third party without prior consent of the authorized party. The third party shall be regarded as a party to this agreement, and the Contractor shall exercise the option according to the conditions of this Agreement and undertake the rights and obligations of Party A under this agreement.
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| 2.4 | 行权通知 Notice |
若甲方行权, 应于交割日(定义见下文)十个工作日前以书面方式通知授权方, 通知应具体载明如下条款:
If Party A exercises the right, it shall notify the authorized party in writing ten working days prior the delivery date (as defined below), and the notice shall specify the following terms:
| 2.4.1 | 选择权行使后, 股权或资产之有效交割日期(以下简称“交割日”); |
The effective delivery date of the equity or assets after the exercise of the option (hereinafter referred to as the “delivery date”);
| 2.4.2 | 选择权行使后, 股权或资产所应登记的持有人姓名; |
The name of the holder of the equity or assets that should be registered after the exercise of the option;
| 2.4.3 | 从授权人处分别购买的股权数量及其比例，或资产明细及数量; |
The number and proportion of shares purchased from the authorized person, or the details and quantity of assets
| 2.4.4 | 行权价格及其支付方式; |
Exercise price and payment method;
| 2.4.5 | 授权委托书(若由甲方指定的第三方代为行权)。 |
Power of attorney (if the third party designated by Party A exercises the power on behalf of Party A).
协议各方同意, 甲方可随时指定第三方并以该第三方的名义行使选择权、登记股权或资产。
The parties agree that Party A may at any time appoint a third party to exercise the right of option, register the equity or assets in the name of such third party.
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| 2.5 | 转让股权 Equity Tranfer |
甲方每次行使选择权时, 在收到甲方依据本协议第2.4条发出的行权通知之日起十个工作日内:
Each time Party A exercises the option, within 10 working days from the date of receiving the exercise notice issued by Party A in accordance with Article 2.4 of this Agreement
| (1) | 授权方应责成鲲澎天津及时召开股东会会议, 在该会议上, 应通过批准授权方向甲方和(或)其指定的第三方转让股权的股东会决议; |
The authorized party shall instruct King Eagle Tianjin to hold a shareholders’ meeting in time. At the meeting, the resolution of shareholders’ meeting approving the authorized party to transfer the equity to Party A and / or the third party designated by it shall be passed;
| (2) | 授权方应与甲方(或在适用的情况下, 为其指定的第三方)签署与本协议附件1所列的股权转让协议在实质内容上一致的转让协议; |
The authorized party shall sign a transfer agreement with Party A (or, if applicable, the third party designated by it) which is consistent in substance with the equity transfer agreement listed in Annex 1 of this agreement;
| (3) | 乙方各方应签署所有其他所需合同、协议或文件, 取得全部所需的政府批准和同意, 并采取所有所需行动, 在不附带任何担保权益的情况下, 将被购买的股权的有效所有权转移给甲方和(或)其指定的第三方, 并使甲方和(或) 其指定的第三方成为被购买的股权的工商登记在册所有人, 并向甲方或其指定的第三方提交由相关的中国有权机关颁发或备案登记的最新营业执照、章程和其他有关文件, 该等文件应反映鲲澎天津股权变更, 董事和法定代表人的变更等事项。 |
Party B shall sign all other required contracts, agreements or documents, obtain all required government approval and consent, and take all necessary actions to transfer the effective ownership of the Purchased Equity to Party A and / or its designated third party without any security interest, Party A and (or) the third party designated by Party A shall become the registered owner of the Purchased Equity, and submit to Party A or the third party designated by Party A the latest business license, articles of association and other relevant documents issued or registered by relevant Chinese authorities. Such documents shall reflect the changes of equity, directors and legal representatives of King Eagle Tianjin.
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| 2.6 | 转让资产 Asset Transfer |
甲方每次行使选择权时, 在收到甲方依据本协议第2.4条发出的行权通知之日起十个工作日内:
Each time Party A exercises the option, within 10 working days from the date of receiving the exercise notice issued by Party A in accordance with Article 2.4 of this Agreement:
| (1) | 鲲澎天津应及时按照其公司章程规定召开（执行）董事会会议或股东会会议, 在该会议上, 应通过批准鲲澎天津向甲方和(或)其指定的第三方转让资产的决议; |
King Eagle Tianjin shall timely hold (Executive) board meeting or shareholders’ meeting in accordance with its articles of association. At the meeting, King Eagle Tianjin shall pass a resolution approving the transfer of assets to Party A and / or the third party designated by King Eagle Tianjin
| (2) | 鲲澎天津应与甲方(或在适用的情况下, 为其指定的第三方)就相关资产转让签署转让协议; |
King Eagle Tianjin shall sign the transfer agreement with Party A (or the third party designated by it if applicable) for the transfer of relevant assets;
| (4) | 鲲澎天津应签署所有其他所需合同、协议或文件, 取得全部所需的政府批准和同意, 并采取所有所需行动, 在不附带任何担保权益的情况下, 将被购买的资产的有效所有权转移给甲方和(或)其指定的第三方, 并使甲方和(或) 其指定的第三方成为被购买的资产的登记权利人(如适用)。 |
King Eagle Tianjin shall sign all other required contracts, agreements or documents, obtain all required government approval and consent, and take all necessary actions to transfer the effective ownership of the purchased assets to Party A and / or its designated third party without any security interest, And make Party A and / or the third party designated by Party A become the registered purchaser of the purchased assets (if applicable)
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| 三. | 陈述及保证 Statement and Commitment |
| 3.1 | 授权方作出如下陈述及保证: |
The authorized party represents and warrants as follows:
| 3.1.1 | 具有完整的权利及授权签订和履行本协议; |
Have complete right and authorization to sign and perform this Agreement;
| 3.1.2 | 履行本协议并本协议项下之义务并不违反对其具有约束力的法律、法规及其他协议, 且不需要政府部门的批准或授权; |
The performance of this Agreement and the obligations under this Agreement does not violate the binding laws, regulations and other agreements, and does not require the approval or authorization of government departments;
| 3.1.3 | 不存在任何未决的或可能实质性地影响本协议履行的诉讼、仲裁或其他的司法或行政程序; |
There is no litigation, arbitration or other judicial or administrative proceedings pending or likely to substantially affect the performance of this Agreement;
| 3.1.4 | 已经向甲方披露了所有可能对本协议履行产生不利影响的情况; |
It has disclosed to Party A all situations that may adversely affect the performance of this Agreement;
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| 3.1.5 | 没有被宣告破产, 其财务状况稳健良好; |
It has not been declared bankrupt and its financial position is sound
| 3.1.6 | 持有的鲲澎天津股权不存在任何质押、担保, 负债及其他第三方权利负担的情形, 并免受第三者追索，甲乙双方签订的股权质押协议约定除外; |
The equity of King Eagle Tianjin is free from any pledge, guarantee, liability and other third party’s rights and liabilities, and is free from recourse by the third party, except for the equity pledge agreement signed by Party A and Party B
| 3.1.7 | 不会在其持有的鲲澎天津股权上设置任何质押、负债及其他第三方权利负担的情形, 且不会以转让、赠与、质押或其他任何方式向甲方或其指定的第三方以外的其他人士处分其持有的股权; |
It will not set any pledge, liabilities and other third party’s rights and burdens on its equity of King Eagle Tianjin, and will not dispose of its equity to Party A or other persons other than the third party designated by Party A by means of transfer, gift, pledge or any other means
| 3.1.8 | 授予甲方的选择权应当是排他的, 授权方不得以其他任何方式向甲方或其指定的第三方以外的其他人士授予选择权或类似的权利; |
The right of choice granted to Party A shall be exclusive, and the authorized party shall not grant the right of choice or similar rights to any person other than Party A or its designated third party in any other way
| 3.1.9 | 本协议有效期内, 鲲澎天津经营的业务符合法律、法规、规定和其它政府主管部门颁布的管理规定和指南, 并且不存在违反任何上述规定、以致对公司经营的业务或资产构成重大不利影响的情况; |
During the term of this agreement, the business of King Eagle Tianjin complies with the laws, regulations, regulations and other management regulations and guidelines issued by the competent government departments, and there is no violation of any of the above regulations, which will have a significant adverse impact on the business or assets of the company;
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| 3.1.10 | 按照良好的财务和商业标准及惯例, 保持鲲澎天津的存续。审慎及有效地经营其业务和处理事务, 尽其最大努力确保鲲澎天津持续其营运所需要的许可证、执照和批文等, 并且确保此类许可证、执照和批文等不被取消、撤回或宣告无效; |
Maintain the existence of King Eagle Tianjin in accordance with good financial and commercial standards and practices. Prudently and effectively conduct its business and conduct its affairs, and use its best efforts to ensure that King Eagle Tianjin continues to operate with the necessary permits, licenses and approvals, and that such permits, licenses and approvals will not be cancelled, withdrawn or declared invalid;
| 3.1.11 | 应甲方的要求, 向其提供所有关于鲲澎天津的营运及财务资料; |
At the request of Party A, provide all the operation and financial information of King Eagle Tianjin
| 3.1.12 | 在甲方(或其指定的第三方)行使选择权并取得鲲澎天津的全部股权或资产之前, 除非取得甲方(或其指定的第三方)的书面同意, 否则鲲澎天津不得进行如下行为: |
Before Party A (or the third party designated by Party A) exercises the right of option and obtains all equity or assets of King Eagle Tianjin, King Eagle Tianjin shall not do any of the following unless it obtains the written consent of Party A (or the third party designated by Party A)
| (a) | 出售、转让、抵押或以其他方式处置任何资产、业务或收入, 或允许在其上设置任何其他担保权益(正常或日常业务过程中产生的或已向甲方披露并得到甲方事先明确书面同意的除外); |
Sell, transfer, mortgage or otherwise dispose of any asset, business or income, or allow to set up any other security interest on it (except those arising in the normal or ordinary course of business or disclosed to Party A with Party A’s prior explicit written consent); and;
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| (b) | 达成将实质性不利影响其资产、责任、运营、股权及其它合法权利的交易(正常或日常业务过程中产生的或已向甲方披露并得到甲方事先明确书面同意的除外); |
Enter into a transaction that will materially and adversely affect its assets, liabilities, operations, equity and other legitimate rights (except those arising in the course of normal or daily business or disclosed to Party A with Party A’s prior explicit written consent);
| (c) | 以任何形式派发股息、红利予各股东; |
To distribute dividends and bonus to shareholders in any form;
| (d) | 发生、继承、保证或允许存在任何债务, 但(i)正常或日常业务过程中产生而不是通过借款方式产生的债务; (ii)已向甲方披露并得到甲方事先明确书面同意的债务除外; |
Incurs, inherits, guarantees or permits the existence of any debt, but (I) arises in the normal or ordinary course of business and not by way of borrowing money（ II) except for debts that have been disclosed to Party A and have been expressly agreed in writing by Party A in advance;
| (e) | 签订任何重大合同, 但在正常业务过程中签订的合同除外(就本段而言, 如果一份合同价值超过人民币100万元, 即被视为重大合同); |
Enter into any material contract, except in the normal course of business (for the purposes of this paragraph, if the value of a contract exceeds RMB 1 million, it shall be regarded as a material contract);
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| (f) | 通过股东会决议增加或减少鲲澎天津的注册资本, 或另行更改注册资本的结构; |
To increase or decrease the registered capital of King Eagle Tianjin through the resolution of the shareholders’ meeting, or to change the structure of the registered capital separately;
| (g) | 以任何形式补充、更改或修改鲲澎天津的公司章程; |
Supplement, change or modify the articles of association of King Eagle Tianjin in any form
| (h) | 与任何人合并或联合, 或收购任何人或向任何人投资。 |
To merge or associate with any person, or to acquire or invest in any person
| 3.1.13 | 在甲方(或其指定的第三方)行使选择权取得鲲澎天津的全部股权或资产之前, 除甲方(或其指定的第三方)明确书面同意外, 乙方各方不得共同或单方进行如下行为: |
Before Party A (or the third party designated by Party A) exercises the right of option to acquire all equity or assets of King Eagle Tianjin, Party B shall not jointly or unilaterally carry out the following acts unless Party A (or the third party designated by Party A) expressly agrees in writing:
| (a) | 以任何形式补充、更改或修改鲲澎天津的章程性文件, 且该等补充、更改或修改将实质性不利影响鲲澎天津的资产、责任、运营、股权及其它合法权利(为满足法律要求而进行同比例增资的情形除外), 或者可能影响本协议以及甲方、乙方、鲲澎天津签署的其他协议的有效履行; |
Supplement, change or modify the articles of association of King Eagle Tianjin in any form, and such supplement, change or modification will substantially and adversely affect the assets, liabilities, operation, equity and other legal rights of King Eagle Tianjin (except for the case of capital increase in the same proportion to meet the legal requirements), or may affect this Agreement and Party A, Party B and Effective performance of other agreements signed by King Eagle Tianjin;
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| (b) | 促使鲲澎天津达成将实质性不利影响鲲澎天津的资产、责任、运营、股权及其它合法权利的交易(正常或日常业务过程中产生的或已向甲方披露并得到甲方事先明确书面同意的除外); |
Urge King Eagle Tianjin to enter into a transaction that will substantially and adversely affect King Eagle Tianjin’s assets, liabilities, operations, equity and other legal rights (except those arising in the normal or daily business process or which have been disclosed to Party A and obtained Party A’s explicit written consent in advance); and;
| (c) | 促使鲲澎天津的股东会通过分派股息、红利的决议; |
To urge the shareholders’ meeting of King Eagle Tianjin to pass the resolution of dividend distribution;
| (d) | 在本合同生效之日起的任何时间出售、转让、抵押或以其他方式处置任何鲲澎天津的股权的合法或受益权益, 或允许在其上设置任何其他担保权益; |
Sell, transfer, mortgage or otherwise dispose of the legal or beneficial interest of any equity of King Eagle Tianjin at any time since the effective date of this contract, or allow to set any other security interest on it;
| (e) | 促使鲲澎天津股东会批准出售、转让、抵押或以其他方式处置任何股权的合法或受益权益, 或允许在其上设置任何其他担保权益; |
Urge the board of shareholders of King Eagle Tianjin to approve the sale, transfer, mortgage or other disposal of the legal or beneficial interests of any equity, or allow the establishment of any other security interests on it;
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| (f) | 促使鲲澎天津股东会批准鲲澎天津与任何人合并或联合, 或收购任何人或向任何人投资, 或其他任何形式的重组; |
Urge the board of shareholders of King Eagle Tianjin to approve the merger or association of King Eagle Tianjin with any person, or the acquisition or investment of any person, or any other form of restructuring;
| (g) | 自行结业、清算或解散鲲澎天津。 |
Self-Liquidating, liquidation or dissolution of King Eagle Tianjin
| 3.1.14 | 在甲方(或其指定的第三方)行使选择权取得鲲澎天津的全部股权或资产之前, 乙方各方承诺: |
Before Party A (or its designated third party) exercises the right of option to acquire all equity or assets of King Eagle Tianjin, Party B undertakes that:
| (a) | 立即书面通知甲方发生或可能发生的任何关于其所拥有的股权的诉讼、仲裁或行政程序, 或者可能对该等股权产生任何不利影响的情形; |
Immediately notify Party A in writing of any litigation, arbitration or administrative proceedings that have occurred or may occur with respect to the equity owned by Party A, or any circumstance that may have any adverse effect on such equity;
| (b) | 促使鲲澎天津股东会审议批准本协议规定的被购买的股权的转让, 促使鲲澎天津修改其公司章程以反映股权自乙方各方向甲方和(或)其指定的第三方的转移, 以及本协议所述的其他变更事项, 并立即向中国的有权机关申请批准(如法律要求该等批准)、办理变更登记, 促使鲲澎天津通过股东会决议批准任命甲方和(或)其指定的第三方所指派的人士为新董事和新法定代表人; |
Urge the shareholders’ meeting of King Eagle Tianjin to examine and approve the transfer of the Purchased Equity specified in this agreement, urge King Eagle Tianjin to amend its articles of association to reflect the transfer of equity from Party B to Party A and / or its designated third party, and other changes described in this agreement, and immediately apply to the competent authorities in China for approval (if such approval is required by law) and change registration, Urge King Eagle Tianjin to approve the appointment of Party A and / or the third party designated by Party A as the new director and new legal representative through the resolution of the shareholders’ meeting;
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| (c) | 为保持其对股权的合法、有效的所有权, 签署所有必要或适当的文件, 采取所有必要或适当的行动和提出所有必要或适当的控告或对所有索偿进行必要和适当的抗辩; |
In order to maintain its legal and effective ownership of the equity, sign all necessary or appropriate documents, take all necessary or appropriate actions and make all necessary or appropriate complaints or make all necessary and appropriate defenses against all claims
| (d) | 经甲方随时要求, 应向其指定的第三方在任何时间无条件地并立即转让其股权, 并放弃其对另一现有股东进行上述股权转让所享有的优先购买权; |
Upon Party A’s request at any time, Party A shall transfer its equity unconditionally and immediately to the third party designated by Party A at any time, and give up its preemptive right to another existing shareholder for the above equity transfer;
| (e) | 严格遵守本合同及乙方各方与甲方共同或分别签订的其他合同的各项规定, 切实履行该等合同项下的各项义务, 并不进行任何足以影响该等合同的有效性和可执行性的作为/不作为。 |
Strictly abide by the provisions of this contract and other contracts jointly or separately signed by Party B and Party A, earnestly perform the obligations under such contracts, and do not do any act / omission that may affect the validity and enforceability of such contracts.
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| 3.2 | 承诺 Commitment |
授权方向甲方承诺, 授权方承担因股权转让所产生的所有费用, 并办理甲方和(或)其指定的第三方成为鲲澎天津股东之所有必须的手续。手续包括但不限于协助甲方取得政府部门对股权转让相关的必要批准, 向相关的工商管理部门递交股权转让协议、股东会决议等文件, 以及修改公司章程、股东名册以及其他公司章程性文件。
The authorized party undertakes to Party A that the authorized party shall bear all expenses arising from the equity transfer and go through all necessary procedures for Party A and / or its designated third party to become a shareholder of King Eagle Tianjin. The procedures include, but are not limited to, assisting Party A to obtain necessary approval from government departments for equity transfer, submitting equity transfer agreement, resolutions of shareholders’ meeting and other documents to relevant industrial and commercial administration departments, and amending articles of association, register of shareholders and other articles of Association documents
| 3.3 | 乙方各方特此在本合同签署之日和每一个交割日向甲方共同及个别陈述和保证如下: |
three point three Party B hereby represents and warrants to party a jointly and severally on the date of signing this contract and each delivery date as follows:
| (1) | 其具有签订和交付本合同和其为一方的、根据本合同为每一次转让被购买的股权而签订的任何股权转让协议(各称为“转让协议”), 以及履行其在本合同和任何转让协议项下的义务的权力和能力。本合同和其是一方的各转让协议一旦签署后, 将对其构成合法、有效及具有约束力的义务并可按照其条款对其强制执行; |
It has the power and ability to enter into and deliver this contract and any equity transfer agreement (each referred to as the “transfer agreement”) to which it is a party for each transfer of the Purchased Equity under this contract, and to perform its obligations under this contract and any transfer agreement. Once signed, this contract and each assignment agreement to which it is a party will constitute legal, valid and binding obligations, and can be enforced in accordance with its terms;
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| (2) | 无论是本合同或任何转让协议的签署和交付还是其在本合同或任何转让协议项下的义务的履行均不会: (i)导致违反任何有关的中国法律法规; (ii)与其章程或其他组织文件相抵触; (iii)导致违反其是一方或对其有约束力的任何合同或文据; (iv)导致违反有关向它颁发的任何许可或批准的授予和(或)继续有效的任何条件; 或(v)导致向它颁发的任何许可或批准中止或被撤销或附加条件; |
Neither the signing and delivery of this contract or any assignment agreement nor the performance of its obligations under this contract or any assignment agreement will: (I) result in violation of any relevant Chinese laws and regulations（II) conflict with its articles of association or other organizational documents（III) result in a breach of any contract or instrument to which it is a party or by which it is bound（IV) result in a breach of any conditions relating to the grant and / or continued validity of any license or approval granted to it; Or (V) causes any license or approval granted to it to be suspended or revoked or subject to conditions;
| (3) | 乙方各方对鲲澎天津的所有股权拥有良好和可出售的所有权。乙方各方在上述股权上没有设置任何担保权益; |
Party B shall have good and marketable ownership of all equity of King Eagle Tianjin. Party B does not have any security interest in the above equity;
| (4) | 鲲澎天津没有任何未偿还债务, 除(i)在其正常的业务过程中发生的债务, 及(ii)已向甲方披露及经甲方事先明确书面同意的债务除外; |
King Eagle Tianjin has no outstanding debts, except (I) debts incurred in the normal course of its business, and (II) debts disclosed to Party A and with the prior explicit written consent of Party A;
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| (5) | 鲲澎天津遵守适用于股权和资产的收购的所有法律和法规; |
King Eagle Tianjin complies with all laws and regulations applicable to the acquisition of equity and assets;
| (6) | 目前没有正在进行或悬而未决或可能发生的与鲲澎天津股权、资产有关的或与鲲澎天津有关的诉讼、仲裁或行政程序。 |
At present, there are no ongoing or pending litigation, arbitration or administrative procedures related to the equity and assets of King Eagle Tianjin or King Eagle Tianjin.
| 3.4 | 鲲澎天津作出如下陈述及保证: |
King Eagle Tianjin represents and warrants as follows:
| 3.4.1 | 具有完整的权利及授权签订和履行本协议; |
It has complete right and authorization to sign and in compliance with this agreement
| 3.4.2 | 履行本协议并本协议项下之义务并不违反对其具有约束力的法律、法规及其他协议, 且不需要政府部门的批准或授权; |
The implementation of this Agreement and its obligations under its terms does not violate the binding laws, regulations and other agreements, and does not require the approval or authorization of government departments
| 3.4.3 | 不存在任何未决的或可能实质性地影响本协议履行的诉讼、仲裁或其他的司法或行政程序; |
There is no litigation, arbitration or other judicial or administrative proceedings pending or likely to substantially affect the performance of this Agreement;
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| 3.4.4 | 已经向甲方披露了所有可能对本协议履行产生不利影响的情况; |
Party B has disclosed to Party A all situations that may adversely affect the performance of this agreement
| 3.4.5 | 没有被宣告破产, 其财务状况稳健良好; |
It has not been declared bankrupt and its maintained sound healthy financial condition
| 3.4.6 | 除已向甲方披露者外，鲲澎天津资产上不存在任何质押、担保, 负债及其他第三方权利负担的情形, 并免受第三者追索，甲乙双方签订的股权质押协议约定除外; |
Except for those disclosed to Party A, there is no pledge, guarantee, liability or other third party’s burden on the assets of King Eagle Tianjin, and it is free from recourse of the third party, except for the equity pledge agreement signed by Party A and Party B
| 3.4.7 | 未经甲方事先书面同意，不会在其持有的资产上设置任何质押、抵押、负债及其他第三方权利负担的情形, 且不会以转让、赠与、抵押、质押或其他任何方式向甲方或其指定的第三方以外的其他人士处分其持有的资产; |
Without Party A’s prior written consent, it will not set any pledge, mortgage, liability and other third party’s rights and burdens on the assets it holds, and will not dispose of the assets it holds to any person other than Party A or the third party designated by Party A by means of transfer, gift, mortgage, pledge or any other means
| 3.4.8 | 授予甲方的选择权应当是排他的, 鲲澎天津不得以其他任何方式向甲方或其指定的第三方以外的其他人士授予选择权或类似的权利; |
The right of option granted to Party A shall be exclusive, and King Eagle Tianjin shall not grant the right of option or similar rights in any other way to any person other than Party A or its designated third party;
21
| 3.4.9 | 本协议有效期内, 鲲澎天津经营的业务符合法律、法规、规定和其它政府主管部门颁布的管理规定和指南, 并且不存在违反任何上述规定、以致对公司经营的业务或资产构成重大不利影响的情况; |
During the term of this agreement, the business of King Eagle Tianjin complies with the laws, regulations, regulations and other management regulations and guidelines issued by the competent government departments, and there is no violation of any of the above regulations, which will have a significant adverse impact on the business or assets of the company
| 3.4.10 | 按照良好的财务和商业标准及惯例, 保持鲲澎天津的存续。审慎及有效地经营其业务和处理事务, 尽其最大努力确保鲲澎天津持续其营运所需要的许可证、执照和批文等, 并且确保此类许可证、执照和批文等不被取消、撤回或宣告无效; |
Maintain the existence of King Eagle Tianjin in accordance with good financial and commercial standards and practices. Prudently and effectively conduct its business and conduct its affairs, and use its best efforts to ensure that King Eagle Tianjin continues to operate with the necessary permits, licenses and approvals, and that such permits, licenses and approvals will not be cancelled, withdrawn or declared invalid;
| 3.4.11 | 应甲方的要求, 向其提供所有关于鲲澎天津的营运及财务资料; |
At the request of Party A, provide all the operation and financial information of King Eagle Tianjin
| 3.4.12 | 采取一切合理及必要的措施及经营鲲澎天津业务，努力促使鲲澎天津资产的保值、增值。 |
Take all reasonable and necessary measures to manage King Eagle Tianjin business and strive to maintain and increase the value of King Eagle Tianjin assets
22
| 四. | 税收 Taxation |
本协议履行中各方所产生的税赋由各方自行承担。
The taxes generated by each party during the exercise of this Agreement shall be borne by each party
| 五. | 违约 Breach Agreement |
| 5.1 | 若乙方或丙方违反本协议或其在本协议中所作出的任何陈述、保证, 甲方可以书面形式通知违约方要求其在收到通知书十日内纠正违约行为, 采取相应措施有效及时地避免损害结果的发生, 并继续履行本协议。若发生损害, 违约方应对甲方作出补偿, 以使得甲方获得合同履行时应得的所有权益。 |
If Party B or Party C violates this agreement or any of its representations and guarantees in this agreement, Party A may notify the defaulting party in writing, requiring it to correct the breach within ten days after receiving the notice, take corresponding measures to effectively and timely avoid the occurrence of damage, and continue to perform this agreement. In case of any damage, the breaching party shall compensate Party A so that Party A can obtain all the rights and interests it deserves when performing the contract.
| 5.2 | 如乙方或丙方不能依据上述5.1条的约定在收到通知后十日内纠正其违约行为, 甲方有权要求违约方应就甲方因违约方遭受的任何费用、责任或损失(包括但不限于因违约而支付或损失的利息以及律师费)赔偿甲方。同时, 甲方有权执行本协议附件之股权转让协议将乙方持有的股权转让于甲方和(或)其指定的第三方。 |
If Party B or Party C fails to correct the breach within ten days after receiving the notice in accordance with the above-mentioned 5.1, Party A has the right to require the breaching party to compensate Party A for any expenses, liabilities or losses (including but not limited to the interest paid or lost by Party A due to the breach of contract and the attorney’s fees). Meanwhile, Party A has the right to implement the equity transfer agreement attached to this agreement to transfer the equity held by Party B to Party A and / or the third party designated by Party A
23
| 六. | 管辖法律及争议解决 Jurisdiction and Disputes |
| 6.1 | 管辖之法律 Jurisdiction Law |
中华人民共和国法律为本协议之适用法律, 包括但不限于本协议之完成、履行、效力及解释。
The laws of the people’s Republic of China shall be applicable to this agreement, including but not limited to the completion, performance, validity and interpretation of this agreement.
| 6.2 | 友好协商 Friendly Negotiation |
若因本协议之解释或履行产生争议, 协议各方应当通过友好协商或中间第三方调解来解决该争议。若争议无法通过上述方式解决, 应于上述相关讨论开始之日起30日内将争议提交仲裁机关解决。
In case of any dispute arising from the interpretation or performance of this agreement, the parties shall settle the dispute through friendly negotiation or mediation by an intermediate third party. If the dispute cannot be settled by the above-mentioned means, it shall be submitted to the arbitration authority for settlement within 30 days from the date of the above-mentioned relevant discussion
| 6.3 | 仲裁 Arbitration |
因本协议产生的任何争议应当提交中国国际经济贸易仲裁委员会(北京)按其仲裁规则仲裁。仲裁地为北京。仲裁裁决为最终的, 对协议各方皆具有约束力。
Any dispute arising from this Agreement shall be submitted to China International Economic and Trade Arbitration Commission (Beijing) for arbitration in accordance with its arbitration rules. The place of arbitration shall be Beijing. The arbitration award shall be final and binding on all parties.
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| 七. | 保密 Confidential |
| 7.1 | 保密信息 Confidential Information |
本协议及其附件之内容应当保密。协议各方不得将本协议之任何信息向任何第三方披露(事先获得协议各方书面同意的除外)。本条款在本协议终止后仍然有效。
The contents of this Agreement and its attachments shall be kept confidential. The parties shall not disclose any information of this agreement to any third party (except with the prior written consent of the parties). This clause shall survive the termination of this agreement.
| 7.2 | 例外 Exceptions |
若依据法律、法院判决、仲裁裁决以及政府管理机关、证券监管部门、证券交易所、股票交易机构的决定或要求应当披露保密信息的, 则该信息的披露不应视为对上述7.1条的违反。
If confidential information should be disclosed in accordance with laws, court decisions, arbitration awards and decisions or requirements of government authorities, securities regulatory authorities, stock exchanges and stock exchange institutions, the disclosure of such information shall not be deemed as a violation of Article 7.1 above
| 八. | 其他 Others |
| 8.1 | 全部协议 Completion of the Agreement |
各方在此确认本协议为各方在平等互利的基础之上达成的公平合理的约定。本协议构成协议各方关于协议所涉及主题的全部, 先前的所有讨论、协商及协议若与本协议不一致, 以本协议为准。本协议应由协议各方以书面方式修改。本协议的附件为本协议的组成部分, 与本协议具有相同的效力。
The parties hereby confirm that this agreement is a fair and reasonable agreement reached by the parties on the basis of equality and mutual benefit. This Agreement constitutes all the parties to the agreement on the subject matter involved in the agreement. If any previous discussions, negotiations and agreements are inconsistent with this agreement, this Agreement shall prevail. This Agreement shall be amended by the parties in writing. The annex to this agreement is an integral part of this Agreement and has the same effect as this Agreement
25
| 8.2 | 通知 Notice |
| 8.2.1 | 本协议各方为履行本协议项下的权利、义务所发出的通知, 都应以书面做成, 并以专人递送、挂号邮寄、邮资预付邮寄、认可的速递服务、或图文传真的形式发送到有关一方或各方下列的地址: |
All notices given by the parties to this Agreement for the performance of their rights and obligations under this Agreement shall be made in writing and sent by hand delivery, registered mail, prepaid mail, recognized courier service, or fax to the following addresses of the party or parties concerned:
甲方: 鲲澎（中国）有限公司
Party A: King Eagle (china) Ltd
地址: 北京市北京经济技术开发区荣华南路2号院1号楼27层2702
Address: 2702, 27FL, Building 1 Rong Hua South Rd, No. 2 Beijing Economic Development Zone, Beijing
传真：[ ]
Fax:
电话：[ ]
Phone:
收件人: [ ]
Receiver:
| 乙方: |
Party B:
刘翠莲 Liu Cui Lian
| 地址: | [ ] |
26
| Address |
电话: [ ]
Phone:
收件人: 刘翠莲
Receiver: Liu Cui Lian
王智忠Wang Zhi Zhong
| 地址: | [ ] |
| Address: |
电话: [ ]
Phone:
收件人: 王智忠
Receiver: Wang Zhi Zhong
张进晶 Zhang Jin Jing
| 地址: | [ ] |
| Address: |
电话: [ ]
Phone:
收件人: 张进晶
Receiver: Zhang Jin Jing
胡万凤 Hu Wan Feng
| 地址: | [ ] |
| Address: |
电话: [ ]
Phone:
收件人: 胡万凤
Receiver: Hu Wan Feng
张媛媛 Zhang Yuan Yuan
| 地址: | [ ] |
| Address: |
电话: [ ]
Phone:
收件人: 张媛媛
Receiver: Zhang Yuan Yuan
27
滕慧 Teng Hui
| 地址: | [ ] |
| Address: |
电话: [ ]
Phone:
收件人: 滕慧
Receiver: Teng Hui
范占东 Fan Zhan Dong
| 地址: | [ ] |
| Address: |
电话: [ ]
Phone:
收件人: 范占东
Receiver: Fan Zhan Dong
李艳录 Li Yan Lu
| 地址: | [ ] |
| Address: |
电话: [ ]
Phone:
收件人: 李艳录
Receiver: Li Yan Lu
毛香懿 Mao Xiang Yi
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| 地址: | [ ] |
| Address: |
电话: [ ]
Phone:
收件人: 毛香懿
Receiver: Mao Xiang Yi
李成园 Li Chen Yuan
| 地址: | [ ] |
| Address: |
电话: [ ]
Phone:
收件人: 李成园
Receiver: Li Cheng Yuan
丙方: 鲲澎（天津）科技有限公司
Party C: King Eagle (Tian Jin) Technology Ltd
地址: 天津自贸试验区(空港经济区)空港国际物流区第一大街2号(2)综合楼二层231室、综合楼三层335室
Address: Room 335, 231 Building 2, Kong Gang International Logistic No. 1 Rd, Tian Jin Free Trade Experimental Zone ( Kong Gang Economic Zone)
传真: [ ]
Fax:
电话: [ ]
Phone:
收件人: [ ]
Receiver:
| 8.2.2 | 通知及信函于以下情况时应当视为送达: |
A notice or letter shall be deemed to have been served under the following circumstances
| 8.2.2.1 | 若以传真方式送达, 以传真上显示的日期记录为准, 但是当该传真晚于下午5点或于送达地的非工作日送达, 则应当以显示的日期记录的下一工作日为送达日; |
If the fax is delivered by fax, the date record on the fax shall prevail. However, if the fax is delivered later than 5 pm or on a non working day in the place of delivery, the next working day of the date record on the fax shall be the date of delivery;
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| 8.2.2.2 | 若以专人送达(包括特快专递), 则以签收日为准; |
If it is delivered by hand (including express mail), the date of receipt shall prevail;
| 8.2.2.3 | 若以挂号信的方式送达, 则以挂号信回执上日期后的第15日为准。 |
If it is delivered by registered mail, the 15th day after the date on the receipt of the registered mail shall prevail.
| 8.2.3 | 约束力 Restrictions |
本协议对协议各方皆具有约束力。
This Agreement shall be binding on all parties
| 8.3 | 语言 Language |
本协议一式十二份, 以中文书写, 协议各方各执一份。
This agreement is made in twelve copies, written in Chinese, with each party holding one copy
| 8.4 | 日及工作日 Days and Working days |
本协议中所指的“日”按日历上的日期; 本协议所指的“工作日”为周一至周五。
“Day” referred to in this Agreement shall be the date on the calendar; The “working days” referred to in this Agreement are from Monday to Friday
| 8.5 | 标题 Headings |
本协议各标题仅为方便阅读, 不可作为协议解释之用。
The headings of this Agreement are for convenience only and shall not be used for the interpretation of this agreement
30
| 8.6 | 附则 Supplementary |
授权方在本协议下对甲方的义务、承诺和责任均为单独和共同的, 且授权方相互承担连带责任。就甲方而言, 授权方中任何一方的违约即自动构成授权方的违约.
The obligations, promises and liabilities of the authorized party to Party A under this Agreement are separate and joint, and the authorized parties shall bear joint and several liabilities. As far as Party A is concerned, the default of any one of the authorized parties will automatically constitute the default of the authorized party
| 8.7 | 未决事项 Pending Issues |
就本协议未规定之事项, 协议各方应通过协商按中华人民共和国法律解决。
For matters not specified in this agreement, the parties shall settle them through negotiation in accordance with the laws of the people’s Republic of China
31
[此页无正文, 为《股权处置协议》签署页]
Signature Page Only
甲方: 鲲澎（中国）有限公司
Party A: King Eagle (China) Ltd
授权代表: ______________________
Authorized Representative:
[ ]
32
[此页无正文, 为《股权处置协议》签署页]
Signature Page Only
| 乙方: Party B | ||
| 刘翠莲 Liu Cui Lian | 王智忠 Wang Zhi Zhong | |
| 张进晶 Zhang Jin Jing | 胡万凤 Hu Wan Feng | |
| 张媛媛 Zhang Yuan Yuan | 滕慧 Teng Hui | |
| 范占东 Fan Zhan Dong | 李艳录 Li Yan Lu | |
| 毛香懿 Mao Xiang Yi | 李成园 Li Chen Yuan |
33
[此页无正文, 为《股权处置协议》签署页]
Signature Page Only
丙方:
Party C:
鲲澎（天津）科技有限公司
King Eagle (Tian Jin) Technology Ltd
授权代表: _______________________
Authorized Representative:
[ ]
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附件1: 股权转让协议
Attachment 1: Equity Transfer Agreement
股权转让协议
Equity Transfer Agreement
本股权转让协议(下称“本协议”)由以下各方于[ ]年[ ]月[ ]日在天津签订:
This equity transfer agreement (hereinafter referred to as “this Agreement”) is signed by and between the following parties in Tianjin on the day of
甲方:鲲澎（中国）有限公司
Party A: King Eagle (china) Ltd
地址: 北京市北京经济技术开发区荣华南路2号院1号楼27层2702
Address: 2702, 27 Fl, Building 1, Rong Hua South Rd, No. 2 Beijing Economic Development zone, Beijing
乙方:
Party B:
刘翠莲，身份证号：【】
Liu Cui Lian, ID No.
地址:【】
Address:
王智忠，身份证号：【】
Wang Zhi Zhong, ID No.
地址: 【】
Address:
张进晶，身份证号：【】
Zhang Jin Jing, ID No.
地址: 【】
Address:
胡万凤，身份证号【】
Hu Wan Feng, ID No.
地址: 【】
35
Address:
张媛媛，身份证号：【】
Zhang Yuan Yuan, ID No.
地址: 【】
Address:
滕慧，身份证号：【】
Teng Hui, ID No.
地址: 【】
Address:
范占东，身份证号：【】
Fan Zhan Dong, ID No.
地址: 【】
Address:
李艳录，身份证号：【】
Li Yan Lu, ID No.
地址: 【】
Address:
毛香懿，身份证号：【】
Mao Xiang Yi, ID No.
地址: 【】
Address:
李成园，身份证号：【】
Li Cheng Yuan, ID No.
地址: 【】
Address:
丙方: 鲲澎（天津）科技有限公司( “鲲澎天津”)
Party C: King Eagle (Tian Jin) Technology Ltd ( hereinafter referred to as “King Eagle Tian Jin”)
36
地址: 天津自贸试验区(空港经济区)空港国际物流区第一大街2号(2)综合楼二层231室、综合楼三层335室
Address: Room 231,335, Building 2, Kong Gang International Logistic Zone No. 1 Street, Tian Jin Free Trade Experimental Zone (Kong Gang Economic Zone)
在本合同中, 甲方、乙方和丙方以下各称“一方”, 合称“各方”。
In this contract, Party A, Party B and Party C are hereinafter referred to as “party” and collectively as “parties”.
鉴于:
As
| 1. | 甲方是一家在中华人民共和国(下称“中国”)注册成立并存续的外商投资企业; |
Party A is a foreign-invested enterprise registered and existing in the people’s Republic of China (hereinafter referred to as “China”);
| 2. | 丙方是一家在中国天津市注册的全内资公司, 目前, 乙方合计持有丙方100%的股权(下称“有关股权”); 和 |
Party C is a wholly domestic company registered in Tianjin, China. At present, Party B holds 100% equity of Party C (hereinafter referred to as “relevant equity”); and
| 3. | 乙方愿意遵照其和甲方于[ ]年[ ]月[ ]日签署的《股权处置协议》的相关规定, 在甲方和(或)其指定的第三方行使其选择权之时, 向甲方和(或)其指定的第三方转让其所持有的丙方的部分或全部股权, 甲方和(或)其指定的第三方同意受让该股权(下称“股权转让”)。 |
Party B is willing to transfer part or all of Party C’s equity to Party A and / or its designated third party when Party A and / or its designated third party exercise its option in accordance with the relevant provisions of the equity disposal agreement signed by Party A and Party A on [] and Party A and / or its designated third party agree to transfer the equity (hereinafter referred to as “equity transfer”).
据此, 双方协商一致, 达成如下协议:
37
Accordingly, the two parties have reached the following agreement through consultation:
| 1. | 股权转让 Equity Transfer |
| 1.1 | 乙方同意将有关股权转让给甲方, 其中乙方中的刘翠莲、王智忠、张进晶、胡万凤各转让6%的股权，乙方中的张媛媛、滕慧、范占东、李艳录、毛香懿各转让5%的股权，乙方中的李成园转让51%的股权，甲方同意接受该等转让。转让完成后,甲方持有丙方100%的股权。 |
Party B agrees to transfer the relevant equity to Party A. among Party B, Liu Cuilian, Wang Zhizhong, Zhang Jinjing and Hu Wanfeng each transfer 6% equity; among Party B, Zhang Yuanyuan, Tenghui, fan zhandong, Li Yanlu and Mao Xiangyi each transfer 5% equity; among Party B, Li Chengyuan transfers 51% equity. Party A agrees to accept such transfer. After the transfer, Party A holds 100% of the equity of Party C.
| 1.2 | 作为股权转让的对价, 甲方应按照第2条的规定向乙方中的刘翠莲、王智忠、张进晶、胡万凤各支付人民币____元, 向乙方中的张媛媛、滕慧、范占东、李艳录、毛香懿各支付人民币____元,向乙方中的李成园支付人民币____元。 |
As consideration for equity transfer, Party A shall pay RMB to Liu Cuilian, Wang Zhizhong, Zhang Jinjing and Hu Wanfeng of Party B in accordance with Article 2____ To Zhang Yuanyuan, Teng Hui, fan zhandong, Li Yanlu and Mao Xiangyi of Party B____ To Li Chengyuan, one of Party B____ Yuan.
| 1.3 | 乙方同意本条下的股权转让行为, 并且愿意并将促使丙方的其他股东(除乙方外)愿意为此签署包括股东会决议和放弃优先购买有关股权的函件等在内的必要文件和协助办理股权转让的其他必要手续。 |
Party B agrees to the equity transfer under this article, and is willing and will urge other shareholders of Party C (except Party B) to sign necessary documents including the resolution of the shareholders’ meeting and the letter of giving up preemptive purchase of relevant equity, and assist in handling other necessary procedures for equity transfer
38
| 1.4 | 乙方和丙方应共同和分别的负责采取所有必要的行动, 包括但不限于签署本协议、通过股东会决议、章程修正案等内容, 以实现股权从乙方到甲方的转移, 并且负责在甲方根据《股权处置协议》的规定发出行权通知之日起十个工作日内办理完毕所有政府批准或工商登记备案手续, 使甲方成为该等股权的登记在册所有人。 |
Party B and Party C shall be jointly and separately responsible for taking all necessary actions, including but not limited to signing this agreement, passing resolutions of the shareholders’ meeting, amendments to the articles of association, etc., to realize the transfer of equity from Party B to Party A, And shall be responsible for completing all government approval or industrial and commercial registration and filing procedures within 10 working days from the date Party A issues the notice of exercise in accordance with the provisions of the equity disposal agreement, so as to make Party A the registered owner of such equity.
| 2. | 股权转让款的支付 Equity Transfer Payment |
| 2.1 | 甲方在其签署本协议之日后5个工作日内向刘翠莲、王智忠、张进晶、胡万凤各支付人民币____元, 向张媛媛、滕慧、范占东、李艳录、毛香懿各支付人民币____元,向李成园支付人民币____元。 |
Party A shall pay RMB to Liu Cuilian, Wang Zhizhong, Zhang Jinjing and Hu Wanfeng within 5 working days after signing this agreement____ Yuan to Zhang Yuanyuan, Teng Hui, fan zhandong, Li Yanlu and Mao Xiangyi____ Yuan to Li Chengyuan____ Yuan.
| 2.2 | 乙方在收到第2.1条所述的每笔付款的5个工作日内向甲方出具适当的收款凭证。 |
Party B shall issue appropriate receipt to Party A within 5 working days after receiving each payment mentioned in Article 2.1.
| 3. | 声明与保证 Proclamation and Commitment |
| 3.1 | 本协议的各方分别声明与保证如下: |
Each party hereby represents and warrants as follows:
| (a) | 该方是合法成立并且存续的公司或者具有完全民事行为能力的个人, 具有完整的权力和能力签署并履行本协议和实现本协议的目的所需的与本协议相关的其他文件; |
The party is a legally established and existing company or an individual with full capacity for civil conduct, and has complete power and ability to sign and perform this Agreement and other documents related to this agreement required to achieve the purpose of this Agreement;
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| (b) | 该方已采取, 或将采取所有必要的行动, 以适当和有效地授权本协议及其它所有与本协议项下交易有关的文件的签署、交付和履行, 且该等签署、交付和履行不违反任何有关的法律法规和政府规定, 并且不侵犯任何第三方的合法权利和利益。 |
Such party has taken or will take all necessary actions to properly and effectively authorize the signing, delivery and performance of this Agreement and all other documents related to the transactions under this agreement, and such signing, delivery and performance does not violate any relevant laws, regulations and government regulations, and does not infringe the legitimate rights and interests of any third party
| 3.2 | 乙方和丙方共同和分别向甲方声明和保证如下: |
Party B and Party C jointly and separately declare and guarantee to Party A as follows:
| (a) | 乙方目前合法、有效的持有丙方100%的股权, 乙方对该股权的取得和持有并不违反任何法律法规或政府决定, 也未侵犯任何第三方的利益和权利; |
Party B currently legally and effectively holds 100% of the equity of Party C. Party B’s acquisition and holding of the equity does not violate any laws and regulations or government decisions, nor does it violate the interests and rights of any third party;
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| (b) | 丙方是根据中国法律适当成立和有效存续的有限责任公司, 其具有完整的权利能力和行为能力, 有权拥有、处置及经营其资产和业务, 并开展其目前正在进行或计划进行的业务。丙方已经取得从事其营业执照所述的所有业务的全部许可证、资格证书或其它政府部门批准、核准、备案或登记手续; |
Party C is a limited liability company duly established and validly existing in accordance with the laws of China, which has complete rights and behavioral capabilities, has the right to own, dispose and operate its assets and business, and to carry out its business which is currently in progress or planned. Party C has obtained all the licenses, qualification certificates or other governmental departments’ approval, approval, filing or registration procedures for all the business described in its business license;
| (c) | 丙方自成立以来并未有过任何违反有关法律法规或政府规定的行为; |
Party C has not violated any relevant laws and regulations or government regulations since its establishment;
| (d) | 乙方持有的丙方股权上不存在任何担保权益或任何其它第三方权利，甲乙双方另有约定的除外; |
There is no security interest or any other third party rights in the equity of Party C held by Party B, unless otherwise agreed by both parties
| (e) | 该方并未遗漏向甲方提供任何可能影响其签订本协议的决定的, 有关丙方或其业务的文件或信息; |
This party has not omitted to provide Party A with any documents or information about Party C or its business that may affect its decision to enter into this Agreement;
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| (f) | 在股权转让完成之前, 该方不会以任何作为或不作为的方式授权或使得在本协议签署之日已经发行的股权之外发行或承诺发行新的股权, 不会对丙方的注册资本或股东结构进行任何形式的变更。 |
Prior to the completion of the equity transfer, such party will not authorize or cause to be issued or promised to issue new equity in addition to the equity already issued on the date of signing this agreement by any act or omission, and will not change the registered capital or shareholder structure of Party C in any form
| 4. | 生效和有效期 Validation |
本协议于文首标明的日期签署并同时生效。
This agreement is signed and effective on the date first above written.
| 5. | 争议的解决 Disputes |
在各方就本协议项下条款的解释和履行发生争议时, 各方应善意地协商解决该争议。若在一方提出协商解决争议的要求之后30日内, 双方仍未达成解决争议的协议, 任何一方均可将有关争议提交中国国际经济贸易仲裁委员会按照其现行的仲裁规则仲裁解决。仲裁地点在北京; 仲裁使用之语言为中文。仲裁裁决应是终局性的, 对双方均有拘束力。
In case of any dispute between the parties on the interpretation and performance of the terms under this agreement, the parties shall negotiate in good faith to resolve the dispute. If both parties fail to reach an agreement on the settlement of the dispute within 30 days after one party’s request for the settlement of the dispute through negotiation, either party may submit the dispute to China International Economic and Trade Arbitration Commission for arbitration in accordance with its current arbitration rules. The place of arbitration shall be Beijing; The language of arbitration shall be Chinese. The arbitration award shall be final and binding on both parties.
| 6. | 适用法律 Validity |
本协议的效力、解释和强制执行适用中国法律。
The validity, interpretation and enforcement of this Agreement shall be governed by the laws of China.
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| 7. | 协议的修改、补充 Amendment, Supplementary |
各方以书面协议方式对协议做出修改和补充。经过各方适当签字的有关本协议的修改协议和补充协议是本协议的组成部分, 具有与本协议同等的法律效力。
The parties shall amend and supplement the agreement by written agreement. The Amendment Agreement and supplementary agreement on this agreement properly signed by all parties are an integral part of this Agreement and have the same legal effect as this agreement.
| 8. | 协议的分割性 The divisibility of protocol |
如果本协议项下的任何条款因与有关法律不一致而无效或无法强制执行, 则该条款仅在有关法律管辖范围之内无效或无强制力, 并且不得影响本协议其他条款的法律效力。
If any provision of this agreement is invalid or unenforceable due to inconsistency with the relevant law, it shall be void or unenforceable only within the relevant legal jurisdiction and shall not affect the legal effect of other provisions of this agreement
| 9. | 协议的附件 Agreement Attachment |
本协议的任何附件为本协议不可分割部分, 具有与本协议同等的法律效力。
Any annex to this agreement is an integral part of this Agreement and has the same legal effect as this agreement.
| 10. | 其他 Others |
| 10.1 | 本协议以中文书就, 一式十二份，各方各执一份。 |
This agreement is made in Chinese in 12 copies, one for each party.
| 10.2 | 如甲方指定任何第三方行使选择权, 则本股权转让协议提及甲方之处, 应根据情况, 指甲方和(或)其指定的第三方。 |
If Party A designates any third party to exercise the option, Party A and / or the third party designated by Party A shall, as the case may be, refer to Party A in this equity transfer agreement
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[以下无正文]
No Content
[此页无正文,
为《股权转让协议》签署页]
Signature Page Only
甲方:鲲澎（中国）有限公司
Party A: King Eagle (china) Ltd
授权代表: ___________________
Authorized Representative:
[ ]
44
[此页无正文, 为《股权转让协议》签署页]
Signature Page Only
| 乙方: | ||
| Party B: | ||
| 刘翠莲 Liu Cui Lian | 王智忠 Wang Zhi Zhong | |
| 张进晶 Zhang Jin Jing | 胡万凤 Hu Wan Feng | |
| 张媛媛 Zhang Yuan Yuan | 滕慧 Teng Hui | |
| 范占东 Fan Zhan Dong | 李艳录 Li Yuan Lu | |
| 毛香懿Mao Xiang Yi | 李成园 Li Cheng Yuan |
45
[此页无正文, 为《股权转让协议》签署页]
Signature Page Only
丙方:
Party C
鲲澎（天津）科技有限公司
King Eagle (Tian Jin) Technology Ltd
授权代表: _______________________
Authorized Representative:
[ ]
46
Exhibit 10.12
Business Operation Agreement
Business Operation Agreement
This business operation agreement (hereinafter referred to as the “Agreement”) was signed by the following parties (hereinafter referred to as the “Parties to the Agreement”) in Tianjin, China:
Party A: Kunpeng (China) Co., Ltd. (“Kunpeng China”)
Address: 2702, 27th Floor, Building 1, No. 2, Ronghua South Road, Beijing Economic and Technological Development Zone, Beijing
To
Party B: Kunpeng (Tianjin) Technology Co., Ltd. (“Kunpeng Tianjin”)
Address: Tianjin Free Trade Pilot Zone (Airport Economic Zone), Airport International Logistics Zone, No. 2 First Avenue (2), Room 231, 2nd Floor, Comprehensive Building, Room 335, 3rd Floor, Comprehensive Building
Party C:
Liu Cuilian, ID number: 【】
Address:【】
Wang Zhizhong, ID number: 【】
Address: 【】
Zhang Jinjing, ID number: 【】
Address: 【】
Hu Wanfeng, ID number【】
Address: 【】
Zhang Yuanyuan, ID number: 【】
Address: 【】
Teng Hui, ID number: 【】
Address: 【】
Fan Zhandong, ID number: 【】
Address: 【】
Li Yanlu, ID number: 【】
Address: 【】
Mao Xiangyi, ID number: 【】
Address: 【】
Li Chengyuan, ID number: 【】
Address: 【】
Given:
1. Party A is a foreign-invested enterprise legally established and validly existing within the territory of the People’s Republic of China;
2. Party B is a limited liability company incorporated in China;
3. Party A and Party B have established a business relationship by signing the “Exclusive Consultation and Service Agreement” and other agreements; Party B shall make various payments to Party A under these agreements. Therefore, Party B will pay to them in their daily business activities. Party A’s ability to make corresponding payments has a substantial impact;
4. Parties to Party C are shareholders of Party B (hereinafter referred to as “shareholders”), of which Liu Cuilian, Wang Zhizhong, Zhang Jinjing, and Hu Wanfeng each hold 6% of the equity, and Zhang Yuanyuan, Teng Hui, Fan Zhandong, Li Yanlu, and Mao Xiangyi each hold 5%. Li Chengyuan holds 51% of the equity.
Based on this, the parties to the agreement have reached the following agreement to comply with them through friendly consultations based on the principle of equality and mutual benefit:
1. Obligation of Omission
In order to ensure that Party B fulfills the various agreements signed with Party A and various obligations to Party A, the shareholders hereby confirm and agree that Party B will not proceed unless it obtains the prior written consent of Party A or other parties designated by Party A. Any transaction that may materially affect its assets, business, personnel, obligations, rights, or company operations, including but not limited to the following:
1.1 Carrying out any activities beyond the normal business scope of the company or operating the company’s business in a consistent and usual manner with the past.
1.2 Borrow or assume any debts from any third party.
1.3 Change or dismiss any company directors or replace any senior management personnel of the company.
1.4 Sell or acquire or otherwise dispose of any assets or rights in excess of RMB 200,000 to any third party, including but not limited to any intellectual property rights.
1.5 To provide guarantees or provide any other forms of guarantees to any third party for its assets or intellectual property rights or to place any other burden of rights on the company’s assets.
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1.6 Amend the company’s articles of association or change the company’s business scope.
1.7 Change the company’s normal business procedures or modify any major company internal rules and regulations.
1.8 Assign the rights and obligations under this agreement to any third party.
1.9 Make major adjustments to its business operation model, marketing strategy, operation policy or customer relationship.
1.10 Dividends and dividends are distributed in any form.
2. Operation management and personnel arrangements
2.1 Party B and shareholders hereby agree to accept and strictly implement the recommendations provided by Party A on the employment and dismissal of company employees, the company’s daily operation and management, and the company’s financial management system from time to time.
2.2 Party B and the shareholders hereby agree that the shareholders will elect persons designated by Party A to serve as directors (including executive directors) of Party B in accordance with the procedures prescribed by laws, regulations and the company’s articles of association, and urge those elected directors to elect the company in accordance with the persons recommended by Party A The chairman of the board (if applicable), and will appoint the personnel designated by Party A as the general manager, chief financial officer and other senior management personnel of Party B.
2.3 If the directors/executive directors or senior management personnel designated by Party A leave Party A, whether they resign voluntarily or are dismissed by Party A, they will lose their qualifications to hold any position in Party B at the same time. In this case, the shareholders will immediately dismiss any positions held by the above-mentioned persons in Party B, and immediately elect and hire other personnel designated by Party A to assume such positions.
2.4 For the purpose of Article 2.3 above, the shareholders will take all necessary internal and external procedures of the company to complete the above-mentioned dismissal and appointment procedures in accordance with the provisions of the law, the company’s articles of association and this agreement.
2.5 The shareholders hereby agree that at the same time as the signing of this agreement, they will sign a power of attorney with the content as Annex I of this agreement. According to the power of attorney, the shareholders will irrevocably authorize the personnel designated by Party A to exercise their shareholders’ rights on their behalf, and in Party B The shareholders’ meeting exercises all shareholders’ voting rights in the name of shareholders. The shareholders further agree that they will replace the authorized person specified in the above power of attorney at any time in accordance with the requirements of Party A.
3. Other agreements
3.1 If any agreement between Party A and Party B terminates or expires, Party A will have the right to decide whether to terminate all agreements between Party A and Party B, including but not limited to exclusive consultation and service agreements.
3
3.2 In view of the fact that Party A and Party B have established a business relationship by signing exclusive consultation and service agreements and other agreements, Party B’s daily business activities will have a substantial impact on its ability to make corresponding payments to Party A. The shareholders agree that any dividends, dividend distributions, or any other income or benefits (regardless of their specific form) obtained from Party B as a shareholder of Party B shall be paid to Party A immediately without any conditions. Or transfer free of charge and provide or take all documents or all actions required to realize such payment or transfer in accordance with Party A’s requirements.
4. All agreements and agreement modifications
4.1 This agreement and all the agreements and/or documents referred to or expressly contained in this agreement constitute all agreements reached between the parties on the subject matter of this agreement, and replace all oral and written statements of the previous parties regarding the subject matter of this agreement. Agreements, contracts, understandings and communications.
4.2 Any modification to this agreement will only be effective after the parties have signed a written agreement. The modification agreement and supplementary agreement related to this agreement that have been properly signed by all parties are an integral part of this agreement and have the same legal effect as this agreement.
5. Governing Law
The signing, validity, performance and interpretation of this agreement, as well as the settlement of disputes, are governed by the laws of the People’s Republic of China and interpreted in accordance with the laws of the People’s Republic of China.
6. Dispute Resolution
6.1 When the parties to this agreement have a dispute over the interpretation and performance of the terms of this agreement, the parties shall resolve the dispute through negotiation in good faith. If the negotiation fails, either party can submit the relevant dispute to the China International Economic and Trade Arbitration Commission for arbitration in accordance with its then effective arbitration rules. The place of arbitration shall be Beijing, and the language of arbitration shall be Chinese. The arbitration award shall be final and binding on all parties.
6.2 Except for matters in dispute between the parties, the parties shall continue to perform their respective obligations in accordance with the provisions of this agreement in accordance with the principles of good faith.
7. Notification
The notices issued by the parties to this agreement to perform their rights and obligations under this agreement shall be made in writing and sent in the form of personal delivery, registered mail, postage prepaid mail, approved express delivery service, or graphic fax To the party concerned or the following address of each party.
Party A: Kunpeng (China) Co., Ltd.
Address: 2702, 27th Floor, Building 1, No. 2, Ronghua South Road, Beijing Economic and Technological Development Zone, Beijing
4
Fax: []
Phone: []
Recipient: []
Party B: Kunpeng (Tianjin) Technology Co., Ltd.
Address: Tianjin Free Trade Pilot Zone (Airport Economic Zone), Airport International Logistics Zone, No. 2 First Avenue (2), Room 231, 2nd Floor, Comprehensive Building, Room 335, 3rd Floor, Comprehensive Building
Fax: []
Phone: []
Recipient: []
Party C:
Liu Cuilian
Address: []
Phone: []
Recipient: Liu Cuilian
Wang Zhizhong
Address: []
Phone: []
Recipient: Wang Zhizhong
Zhang Jinjing
5
Address: []
Phone: []
Recipient: Zhang Jinjing
Hu Wanfeng
Address: []
Phone: []
To: Hu Wanfeng
Zhang Yuanyuan
Address: []
Phone: []
Recipient: Zhang Yuanyuan
Teng Hui
Address: []
Phone: []
To: Teng Hui
Fan Zhandong
Address: []
Phone: []
Recipient: Fan Zhandong
Li Yanlu
Address: []
Phone: []
Recipient: Li Yanlu
Mao Xiangyi
Address: []
Phone: []
To: Mao Xiangyi
Li Chengyuan
Address: []
Phone: []
Recipient: Li Chengyuan
8. Effectiveness of the agreement, time limit and others
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8.1 This agreement involves Party A’s written consent, recommendation, designation, and other decisions that have a significant impact on Party B’s daily operations shall be made by Party A’s board of directors/executive directors.
8.2 This agreement is signed and effective by the parties to the agreement on the date indicated at the beginning of the text. Unless Party A cancels this agreement in advance, the validity period of this agreement is ten years, counting from the date this agreement takes effect. Before the expiration of this agreement, if Party A makes a request, both parties shall extend the term of this agreement according to Party A’s request, and sign another business operation agreement or continue to perform this agreement in accordance with Party A’s request.
8.3 During the validity period of this agreement, Party B and shareholders shall not terminate this agreement in advance. Party A has the right to terminate this agreement at any time by sending a written notice to Party B and shareholders 30 days in advance.
8.4 The parties hereby confirm that this agreement is a fair and reasonable agreement reached by the parties on the basis of equality and mutual benefit. If any terms and provisions of this agreement are deemed illegal or unenforceable due to applicable laws, then the terms shall be deemed to have been deleted from this agreement and become invalid, but the other terms of this agreement are still valid and shall be considered Because this clause was not included from the beginning. The parties shall negotiate with each other to replace the deleted clauses with legal and effective clauses acceptable to both parties.
8.5 Any party’s failure to exercise any rights, powers or privileges under this agreement shall not be treated as a waiver. The single or partial exercise of any right, power or privilege shall not exclude the exercise of any other right, power or privilege.
8.6 In view of this, the parties have signed this agreement on the date mentioned at the beginning of the text by their authorized representatives in order to abide by it.
[No text below]
[This page has no text, it is the signature page of the Business Operation Agreement]
Party A: Kunpeng (China) Co., Ltd.
Authorized representative:
Party B: Kunpeng (Tianjin) Technology Co., Ltd.
Authorized representative:
[This page has no text, it is the signature page of the Business Operation Agreement]
Party C:
Liu Cuilian Wang Zhizhong
Zhang Jinjing Hu Wanfeng
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Zhang Yuanyuan Teng Hui
Fan Zhandong Li Yanlu
Mao Xiangyi Li Chengyuan
Annex 1: Power of Attorney
Power of attorney
Kunpeng (Tianjin) Technology Co., Ltd. (“Kunpeng Tianjin”) shareholders Liu Cuilian, Wang Zhizhong, Zhang Jinjing, Hu Wanfeng, Zhang Yuanyuan, Teng Hui, Fan Zhandong, Li Yanlu, Mao Xiangyi and Li Chengyuan hold 100% of Kunpeng Tianjin. I am Liu Cuilian Agree to authorize the shareholder rights corresponding to the 6% of Kunpeng Tianjin equity held by me to Kunpeng (China) Co., Ltd. (“Kunpeng China”), and hereby irrevocably authorize the authorized person in this power of attorney The following rights are exercised during the validity period:
Authorize the authorized person to represent me in my own name as a 6% equity shareholder of Kunpeng Tianjin to exercise all my shareholder rights in accordance with the law and the company’s articles of association, including but not limited to: the right to propose a shareholder meeting , Accept any notices about the convening of the shareholders meeting and procedures, participate in the Kunpeng Tianjin shareholders meeting and exercise all the voting rights of the shareholders as 6% equity holders (including the appointment and appointment of Kunpeng Tianjin shareholders’ meeting as my authorized representative Director, General Manager, Chief Financial Officer and other senior management of Peng Tianjin
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