Item
1.01 Entry into a Material Definitive Agreement.
On
April 9, 2021, the Registrant entered into a Stock Purchase Agreement (the “Agreement”) to acquire three private hospitals
in the People’s Republic of China (the “PRC”), Wuzhou Qiangsheng Hospital (“Qiangsheng”) in the southeast
region of the PRC, Suzhou Eurasia Hospital (“Eurasia”) in the central region of the PRC and Yunan Yuxi Minkang Hospital (“Minkang”)
in the southwest region of the PRC. Qiangsheng, Eurasia and Minkang are owned by the same owners. Qiangsheng has 20 hospital beds and
68 employees, including 10 doctors, 26 nurses, 14 other medical staff and 18 non-medical staff, and is a general hospital locally known
for its OB/GYN and Chinese traditional medicine specialties. Eurasia has 30 hospital beds and 42 employees, including 11 doctors, 12
nurses, 4 other medical staff and 15 non-medical staff. Minkang has 120 hospital beds and 118 employees, including 28 doctors, 55 nurses,
12 other medical staff and 23 non-medical staff, and is a general hospital locally known for its OB/GYN and Chinese traditional medicine
specialties.
Pursuant
to the Agreement, the Registrant will purchase all the issued and outstanding shares of capital stock in Qiangsheng, Eurasia and Minkang,
for an aggregate consideration of RMB 162,000,000 (approximately $24,923,077). Cash in the amount of RMB 20,000,000 (approximately US$3,076,923)
and 4,000,000 shares of common stock of the Registrant, the value of which was agreed by the parties to be RMB 78,000,000 or US$12,000,000,
will be delivered at closing as partial consideration for the purchase of the three hospitals. The balance of the purchase price in
the amount of RMB 64,000,000 (approximately US$9,846,153) (the “Earnout Amount”) is subject to post-closing adjustments based
on the performance of the three hospitals in 2021 and 2022.
If
the aggregate net profit of the three hospitals in 2021 equals or exceeds the net profit target, which is RMB 10,000,000 (approximately
US $1,538,461) prorated based on the closing date of the transaction, 50% of the Earnout Amount will be payable to the sellers. If the
net profit target is not met, a reduced Earnout Amount will be payable based on the ratio of the actual aggregate net profit to the net
profit target. The sellers will receive 50% (or a smaller portion) of the Earnout Amount subject to the hospitals reaching similar performance
targets in 2022.
The
closing of the Agreement is expected to take place in late April 2021, subject to necessary regulatory approvals.
The
foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the Agreement,
which is filed as Exhibit 4.1 hereto, and is incorporated herein by reference.