Item
1.01. Entry into a Material Definitive Agreement.
Private
Placement in November
On
November 21, 2019, Bat Group, Inc. (the “Company”) entered into a certain securities purchase agreement (the
“SPA”) with certain “non-U.S. Persons” (the “Purchasers”) as defined in Regulation
S of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to which the Company
agreed to sell an aggregate of 2,000,000 shares (the “Shares”) of its common stock, par value $0.001 per share
(“Common Stock”), at a per share purchase price of $0.80 (the “Offering”). The net proceeds
to the Company from such Offering will be approximately $1,600,000.
The
parties to the SPAs have each made customary representations, warranties and covenants, including, among other things, (a) the
Purchasers are “non-U.S. Persons” as defined in Regulation S and are acquiring the Shares for the purpose of investment,
(d) the absence of any undisclosed material adverse effects, and (e) the absence of legal proceedings that affect the completion
of the transaction contemplated by the SPA.
The
SPA is subject to various conditions to closing, including, among other things, (a) Nasdaq approval of the listing of the Share
Consideration and (b) the parties’ representations and warranties are true and correct.
The
net proceeds of the Offering shall be used by the Company in connection with the Company’s entry into the commodities trading
business, general corporate purposes, working capital, or other related business as approved by the board of directors of the
Company.
The
form of the SPA is filed as Exhibit 10.1 to this Current Report on Form 8-K and such document is incorporated herein by reference.
The foregoing is only a brief description of the material terms of the SPA, and does not purport to be a complete description
of the rights and obligations of the parties thereunder and is qualified in its entirety by reference to such exhibit.
Entry
into VIE Agreements
On
November 22, 2019, Hao Limo Technology (Beijing) Co., Ltd., a wholly owned subsidiary of the Company (“Hao Limo”),
entered into a set of variable interest entity agreements (the “VIE Agreements”) with Shenzhen Huamucheng Trading
Co., Ltd. (“Huamucheng”) and certain shareholders of Huamucheng (“Huamucheng Shareholders”),
who collectively hold 100% of Huamucheng. Currently Huamucheng does not have any substantive operation. The Company intends to
conduct a new commodity trading business via Huamucheng.
Each
of the VIE Agreements is described in detail below:
Exclusive
Business Cooperation Agreement
Pursuant
to an exclusive business cooperation agreement by and between Hao Limo and Huamucheng, Hao Limo agrees to provide Huamucheng with
complete technical support, business support and related consulting services during the term of the agreement and Huamucheng agrees
not to engage any other party for the same or similar consultation services without Hao Limo’s prior consent. Huamucheng
agrees to pay Hao Limo service fees substantially equal to all of its net income, subject to any requirement by PRC law and its
articles of association. The term of the exclusive business cooperation agreement is 10 years. Hao Limo may terminate the agreement
at any time with a 30-day advance written notice to Huamucheng.
Share
Pledge Agreement
Hao
Limo, Huamucheng and the Huamucheng Shareholders entered into a share pledge agreement, pursuant to which Huamucheng Shareholders
pledged all of their equity interest in Huamucheng to Hao Limo in order to guarantee the performance of Huamucheng’s obligations
under the exclusive business cooperation agreement between Hao Limo and Huamucheng. During the term of the pledge, Hao Limo is
entitled to any and all dividends declared on the pledged equity interest of Huamucheng. The share pledge agreement terminates
upon full payment of consulting and service fees and termination of Huamucheng’s contractual obligations under the exclusive
business cooperation agreement between Hao Limo and Huamucheng.
Exclusive
Option Agreement
Pursuant
to an exclusive option agreement by and among Hao Limo, Huamucheng and Huamucheng Shareholders, the Huamucheng Shareholders have
irrevocably granted Hao Limo an exclusive option to purchase at any time, in part or in whole, their equity interests in Huamucheng
for a purchase price equal to the capital paid by Huamucheng Shareholders, pro-rated for purchases of less than all their equity
interests. The exclusive option agreement has a term of ten years and can be renewed by Hao Limo at its discretion.
Powers
of Attorney
Each
of the Huamucheng Shareholders has entered into a power of attorney pursuant to which each of the Huamucheng Shareholders has
irrevocably authorized Hao Limo to act on his or her behalf as the exclusive agent and attorney with respect to all rights of
such individual as a shareholder, including but not limited to: (a) attending shareholders’ meetings; (b) exercising all
the shareholder’s rights, including voting, that shareholders are entitled to under PRC law and the Articles of Association
of Huamucheng, including but not limited to the sale, transfer, pledge or disposition of the equity interests of Huamucheng owned
by such shareholder; and (c) designating and appointing on behalf of the shareholders the legal representative, executive director,
supervisor, chief executive officer and other senior management members of Huamucheng. The power of attorney shall be irrevocable
and continuously valid from the date of execution of the power of attorney, so long as the respective shareholder remains to be
a shareholder of Huamucheng.
Timely
Reporting Agreement
The
Company and Huamucheng have entered into a timely reporting agreement pursuant to which Huamucheng agrees to make its officers
and directors available to us and promptly provide all information required by us so that we can make necessary SEC and other
regulatory reports in a timely fashion.
The
foregoing description of the VIE Agreements do not purport to be complete and is qualified in their entirety by reference to the
complete text of the VIE Agreements, which are filed hereto as Exhibits 10.2 to 10.7.
Loan
Agreement
On
November 26, 2019, Tianxing Haoche (Beijing) Technology Co., Ltd. (“Tianxing”), a wholly-owned subsidiary of
the Company, and Guangzhou Chengji Investment Development Co., Ltd. (the “Lender”), entered into a loan agreement
(the “Loan Agreement”). Under the Loan Agreement, the Lender will lend to Tianxing up to $1,300,000 (the “Loan”)
The
Loan has an annual interest rate of 8% and a maturity date of February 26, 2020.
The
Loan Agreement also contains customary provisions, including using the Loan only for the specified use of proceeds in the Loan
Agreement, not using the Loan for any illegal activities, and an agreement to settle any potential disputes through negotiation
and mediation.
Tianxing
intends to use the proceeds from the Loan for its daily operations to expand its business as well as to start the commodities
trading business.
An
unofficial translation of the Loan Agreement is filed as Exhibit 10.8 to this Current Report on Form 8-K and such document is
incorporated herein by reference. The foregoing is only a brief description of the material terms of the SPA, and does not purport
to be a complete description of the rights and obligations of the parties thereunder and is qualified in its entirety by reference
to such exhibit.