Item 1.01 Entry into a Material Definitive Agreement.
In an effort to continue to expand our business in the health care industry, on
July 19, 2022, we, Aixin Life International, Inc. ("we", "us" or the "Company"),
entered into an Equity Transfer Agreement (the "Transfer Agreement") with Yunnan
Sheng Shengyan Technology Co., Ltd. and Chen Yun (collectively, the "Sellers"),
the holders of all of the outstanding equity of Yunnan Runcansheng Technology
Co., Ltd ("Yunnan Runcansheng').
Pursuant to the Transfer Agreement, we have agreed to purchase all of the
outstanding equity of Yunnan Runcansheng from the Sellers for RMB 45082600. In
contemplation of the transaction, Yunnan Runcansheng will prepare a balance
sheet based upon its books and records as of December 31, 2021. Consummation of
the acquisition is subject to the completion of an audit of the financial
statements of Yunnan Runcansheng showing that the net worth of Yunnan
Runcansheng as of December 31, 2021, is no less than 1,530,000 RMB. In addition,
if the net worth of Yunnan Runcansheng as of December 31, 2021, as shown by the
audit is less than 97% of the net worth on the balance sheet as of that date
initially prepared by Yunnan Runcansheng, the purchase price shall be reduced by
the amount of the deficiency. In addition, the Transfer Agreement provides that
we will be the beneficiary of any profit generated by Yunnan Runcansheng
commencing January 1, 2022, and bear any loss it incurs from and after such
date.
Upon execution of the Transfer Agreement, we paid the Sellers a deposit of
5,000,000 RMB which is refundable under certain conditions as provided in the
Transfer Agreement. In addition to payment of the deposit, upon signing of the
Transfer Agreement we deposited 15,000,000 RMB in a bank account controlled by
us which is not to be used by us until completion of the registration of the
transfer of the equity of Yunnan Runcansheng to us in accordance with applicable
regulations or the termination of the Transfer Agreement by either us or the
Sellers. In contemplation of the transaction, Yunnan Runcansheng will prepare
financial statements in accordance with Generally Accepted Accounting Principles
in the United States consistent with its books and records as of December 31,
2021. Within five (5) days of the completion of the registration of the transfer
of 100% of the equity of Yunnan Runcansheng to us, we will make a second payment
of 33,000,000 RMB to the Sellers. If the audit of Yunnan Runcansheng's financial
statements as of December 31, 2021, is completed prior to completion of the
transfer of the equity interests, we will pay 17,000,000 RMB to the Sellers as
an advance against the 33,000,000 RMB due upon completion of the transfer. The
Sellers shall complete the transfer of all licenses, seals, books and records of
Yunnan Runcansheng within five days of the completion of the transfer of the
equity interests, and within five (5) days of the completion of such transfers,
we shall pay the Sellers 7,082,600 RMB, unless the purchase price has been
reduced as provided by the Transfer Agreement, in which event we will pay such
reduced amount.
In connection with the Transfer Agreement we will enter into a five year
consulting agreement with Chen Yun, one of the owners and a manager of Yunnan
Runcansheng. The agreement will provide for an annual fee to Mr. Yun of 100,000
RMB and for a grant of options to purchase 500,000 shares of our common stock.
The options shall be exercisable until May 31, 2030, at a price of $6.00 per
share and the right to exercise the options shall vest as to 100,000 each year
commencing June 1, 2023, and continuing until June 1, 2027. In addition, each of
the Sellers has agreed not to compete with Yunnan Runcansheng during the period
commencing as of the closing and ending June 30, 2027.
Yunnan Runcangsheng. was established in April, 2020, and is headquartered in
Luquan Yi and Miao Autonomous County, Kunming City, Yunnan Province. Its website
is https://www.qcc.com/firm/589ffa77bb60511a44795bcd042f052a.html. It is focused
on promoting a healthy lifestyle through the use of foods believed to promote
well-being, health foods, modernized versions of traditional Chinese medical
products and plant extracts. Yunnan Runcangsheng cultivates many of the raw
materials used in its products, compounds the materials into easy to transport
and use pre-packaged foods and distributes the products at the wholesale level.
As life-styles in China evolve, work pressures increase and the ingestion of
meats and other western style foods increases, Yunnan Runcangsheng seeks to
design and market products intended to combat the increase in obesity,
hypertension, insomnia and physical ailments associated with such changes.
The Transfer Agreement contains customary representations, warranties, and
covenants of the parties and post-closing indemnities. The representations and
warranties set forth in the Agreement generally survive for 18 months following
the closing.
We and Yunnan Runcansheng are currently working to complete the necessary audit
of its financial statements which we anticipate will be finished in September.
We anticipate closing the acquisition shortly thereafter.
A copy of the Transfer Agreement is attached as an exhibit to this report on
Form 8-K. The foregoing description of the Transfer Agreement does not purport
to be complete and is qualified in its entirety by reference to the Transfer
Agreement.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of business acquired.
The financial statements required by Rule 8-04 of Regulation S-X will be filed
by amendment to this Current Report on Form 8-K as soon as practicable, but in
no event later than 71 calendar days after the date on which this Current Report
on Form 8-K was required to be filed.
(b) Pro forma financial information
The pro forma financial information required pursuant to Rule 8-05 and Article
11 of Regulation S-X will be filed by amendment to this Current Report on Form
8-K as soon as practicable, but in no event later than 71 calendar days after
the date on which this Current Report on Form 8-K was required to be filed.
Exhibit No. Description
10.1 Equity Transfer Agreement among the Company, Chen Yun and Yunnan
Sheng Shengyuan Technology Co., Ltd.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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AIXIN LIFE INTERNATIONAL, INC. 