Announcement on Signing the Capital and Income Rights Agreement with Pharmgate Inc.
The Board of Directors and all members of the Board of Directors guarantee that the content of this announcement is true, accurate, and complete, and that there are no false records, misleading statements, or material omissions therein.
I. Overview
Golden Agri-Bio Technology Co., Ltd. (hereinafter referred to as "Golden Agri-Bio" or "the Company") held the 29th meeting of the Fourth Board of Directors on November 15, 2019, and the 2019 Second Extraordinary General Meeting of Shareholders on December 2, 2019, respectively, and deliberated and passed the "Proposal on Increasing Capital to Controlled Subsidiary Pharmgate Inc." (hereinafter referred to as the "Proposal"). The shareholders of Pharmgate Inc. (hereinafter referred to as "Pharmgate Company"), namely Golden Agri-Bio, Colin Gray, and Jianhong Chen, signed the "Capital Increase Agreement of Pharmgate Inc." (hereinafter referred to as the "Capital Increase Agreement"). The main content of the "Capital Increase Agreement" is that "Colin Gray and Jianhong Chen will gradually inject capital within a 6-year period. Within 6 years, Colin Gray and Jianhong Chen can enjoy a 15% income right (of which: Colin Gray 10%, Jianhong Chen 5%). The income enjoyed within 6 years will be used as the source for increasing paid-in capital. Colin Gray and Jianhong Chen can also prepay in cash. Colin Gray and Jianhong Chen, as core management personnel of Pharmgate Company, should strive to operate to achieve sufficient income for capital increase. If the operating goals are not met within 6 years, the income actually attributable to Colin Gray and Jianhong Chen will be calculated as the amount of paid-in capital. Thereafter, income rights can only be enjoyed based on the actually paid-in capital. The 6-year period starts from January 1, 2020, to December 31, 2025." For specific details, please refer to the relevant announcements disclosed by the company on the Giant Information Network (http://www.cninfo.com.cn) on November 16, 2019, and December 3, 2019.
The signing of the "Capital Increase Agreement" is mainly to increase the registered capital of Pharmgate Company, enhance its market competitiveness, and improve its financial structure. At the same time, as Pharmgate Company is in a development stage and requires good cash flow to guarantee its operations, no profit distribution will be made by Pharmgate Company from January 1, 2020, to December 31, 2025. As of December 31, 2025, the undistributed profits of Pharmgate Company totaled 21,925.04 million yuan. Therefore, influenced by the above reasons, as of now, Colin Gray and Jianhong Chen have not been able to make capital contributions in accordance with the "Capital Increase Agreement."