Item
1.02. Termination of Material Definitive Agreement.
On
May 19, 2017, the Board of Directors (the “Board”) of XcelMobility Inc. (the “Company”) unanimously approved
the termination of the legal relations and contractual agreements pursuant to which the Company, through its wholly-owned subsidiary,
Shenzhen CC Power Investment Consulting Co. Ltd. (“CC Investment”), acquired contractual control over the business
operations and affairs of Shenzhen CC Power Corporation, a company organized under the laws of the People’s Republic of
China (“CC Power”).
On
August 22, 2011, CC Investment entered into the following contractual agreements with CC Power and Xili Wang, the sole shareholder
of CC Power at the time and a former executive officer of the Company: (1) an Entrusted Management Service Agreement, pursuant
to which CC Investment agreed to provide, and CC Power agreed to accept, exclusive management services for the business and operations
of CC Power, (2) a Technical Services Agreement, pursuant to which CC Investment agreed to provide, and CC Power agreed to accept,
exclusive technical services for the business and operations of CC Power, (3) an Exclusive Purchase Option Agreement, pursuant
to which Ms. Wang granted CC Investment an irrevocable and exclusive option to purchase the equity and/or assets of CC Power for
nominal consideration, (4) a Loan Agreement, pursuant to which CC Investment agreed to lend 10,000,000 RMB to Ms. Wang to use
solely for the business and operations of CC Power, and (5) an Equity Pledge Agreement, pursuant to which Ms. Wang pledged all
the equity interests in CC Power to guarantee the obligations of Ms. Wang and CC Power (and the rights and benefits of CC Investment)
under the Entrusted Management Service Agreement, the Technical Services Agreement, the Exclusive Purchase Option Agreement and
the Loan Agreement.
On
August 25, 2016, Zhixiong Wei, the Chairman of the Board and Chief Executive Officer of the Company, acquired 100% of the equity
interest in CC Power from Xili Wang pursuant to an Agreement on Equity Transfer. In connection with the change in ownership of
CC Power, CC Investment entered into a new set of controlling agreements with CC Power and Mr. Wei, as the sole shareholder of
CC Power, including an Entrusted Management Service Agreement, a Technical Services Agreement, an Exclusive Purchase Option Agreement,
a Loan Agreement, and an Equity Pledge Agreement, on substantially the same terms and conditions set forth in the original controlling
agreements. Pursuant to an Assignment and Novation Agreement dated August 25, 2016, by and among CC Power, CC Investment, Ms.
Wang and Mr. Wei, the parties acknowledged that the new CC Power controlling agreements replaced the original controlling agreements
in their entirety, meaning that as of August 25, 2016, Ms. Wang assigned to Mr. Wei all of her rights as the CC Power shareholder
under the controlling agreements, and Mr. Wei assumed all of the obligations of the CC Power shareholder under such agreements.
As a result of the Assignment and Novation Agreement, the original controlling agreements were terminated and replaced in their
entirety by the new set of controlling agreements among CC Investment, CC Power and Mr. Wei.
The
Board’s decision to terminate the controlling agreements and legal relations among CC Investment, CC Power, and Ms. Wang
and Mr. Wei, as the former and current shareholders of CC Power, was a result of CC Power’s continuing operational losses
and lack of working capital to maintain and grow its business. As a result of the Board’s decision, the Company will no
longer have contractual control over, or legal relations with, CC Power. Mr. Wei, as the sole shareholder of CC Power, will have
control over the business and affairs of CC Power, and will be solely responsible for determining whether to maintain or terminate
the business and operations of CC Power, including any related expenses. In connection with the termination of these agreements,
the parties have agreed that all outstanding loans and obligations among the Company, its subsidiaries, CC Power, Mr. Wei and
Ms. Wang have been waived, and that no party will make any claim against any other party for any amount owed under the 2011 controlling
agreements or the 2016 controlling agreements.