Item
5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
On
March 5, 2020, Xiaogang Zhu resigned as a member of the Board of Directors of the Company; Mr. Zhu was also the Chairman of the
Audit Committee, as well as a member of the Compensation, Nominating and Corporate Governance Committees. Mr. Zhu’s resignation
was not due to any disagreements with management of the Company or any of its operations, policies or practices.
On
March 6, 2020, Zhongli Liu was appointed as a member of the Board of Directors of the Company. Mr. Liu was also appointed as the
Chairman of the Audit Committee and a member of the Compensation, Nominating and Corporate Governance Committees.
Mr.
Zhongli Liu has more than 20 years of finance experience at enterprise management, company listing, corporate governance, mergers
and acquisitions, capital operations, equity investment. He served as the inspector to be in charge of securities inspection at
Shaanxi Supervision Bureau of China Securities Regulatory Commission from 1999 to September 2019. He worked as the head of department
of economics and management, professor, chief of scientific research at Xi’an Finance And Economics University from 1984
to 1998. Since July 2017, he served as the independent director of the Board at China Haiseng Fresh Fruit Juice Co., Ltd. (00359.HK).
Mr. Liu studied industrial economy management at Xi’an Jiaotong University from September 1978 to July 1982 and was awarded
his his bachelor’s degree of finance in 1982. He studied planning economics at Renmin University of China from 1982 to 1984
and was awarded his master’s degree of finance in 1984.
Based
on its investigation, the Board determined that Mr. Liu is “independent” under the independence requirements of The
NASDAQ Stock Market LLC and Rule 10A-3 under the Securities Exchange Act of 1934, and he does not have any relationship that would
interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Based
on its review, the Board also determined that Mr. Liu qualifies as a “Non-Employee Director” as defined by Rule 16b-3
under the Securities Exchange Act of 1934, as amended, and an “outside director” under Section 162(m) of the Internal
Revenue Code and related regulations. Further, the Board has determined that Mr. Liu is an "audit committee financial expert"
as defined by applicable SEC rules and has the requisite financial sophistication as defined under the applicable Nasdaq rules
and regulations.
In
connection with the appointment, the Company executed a Director Agreement with Mr. Liu pursuant to which the Company will compensate
Mr. Liu for his services as a director in the amount of 50,000 RMB per month quarter. The agreement also contains customary confidentiality
and non-compete provisions. The foregoing description of the Director Agreement is not complete and is qualified in its entirety
by reference to the full text of the Director Agreement, a copy of which is attached hereto as Exhibit 10.29.
Other
than as described above, there are no arrangements or understandings between Mr. Liu and any other person pursuant to which he
was appointed as a director of the Company. In addition, there are no family relationships between Mr. Liu and any of the Company’s
other officers or directors. Further, there are no transactions since the beginning of our last fiscal year, or any currently
proposed transaction, in which the Company is a participant, the amount involved exceeds $120,000, and in which Mr. Liu had, or
will have, a direct or indirect material interest.