SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 22, 2020
(Exact name of registrant as specified in its charter)
(State or other jurisdiction
20th Floor, Tower B, Guorui Plaza
1 Ronghua South Road, Technological Development Zone
Beijing, People’s Republic of China 100176
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: +86 10-56145240
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
|☐||Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)|
|☐||Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)|
|☐||Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))|
|☐||Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))|
Securities registered pursuant to Section 12(b) of the Act:
|Title of each class||Trading Symbol(s)||Name of each exchange on which registered|
|Common Stock, $0.001 par value||DTSS||The NASDAQ Stock Market LLC|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Item 1.01. Entry into a Material Definitive Agreement.
On October 22, 2020, Datasea, Inc. (the “Company”) entered into a common stock purchase agreement (the “Purchase Agreement”) with Triton Funds LP (“Triton”). Pursuant to the Purchase Agreement, subject to certain conditions set forth in the Purchase Agreement, Triton is obligated to purchase up to $2 million of the Company’s common stock from time to time through December 31, 2020.
Each time the Company wishes to issue and sell common stock to Triton under the Purchase Agreement, the Company is required to provide Triton with a purchase notice (the “Purchase Notice”), which Purchase Notice sets forth the total number of shares of common stock that the Company elects to sell to Triton (the “Purchased Shares”). The total purchase price to be paid by Triton at each closing will be determined by multiplying the number of Purchased Shares to be sold by the Company in the Purchase Notice by the purchase price per share, which will be 90% of the lowest closing price of the Company’s common stock during the five business days prior to closing; provided, however, in no event will Triton be obligated to purchase common stock for an aggregate offering price greater than $2 million, and subject to a valuation cap for the Company of $80 million. Notwithstanding anything contained elsewhere in this Agreement to the contrary, the Company shall not effect any sales to Triton, and Triton shall not have the right to purchase hereunder, to the extent that after giving effect to such sales, Triton (together with its affiliates, and any other persons acting as a group together with Triton or any of Triton affiliates, and together with any other contemporaneous equity or debt-linked transactions that may be aggregated into and deemed as one single transaction under the rules and regulations of the Nasdaq Stock Market), would beneficially own in excess of 19.99% of the outstanding shares of the Company’s common stock. The Company is precluded from submitting a purchase notice to Triton in the event the closing price of $1.65 per share as reported on the Nasdaq Stock Market.
The total number of the shares to be purchased under the Agreement shall not exceed 523,596 shares, or 2.5% of the Company’s outstanding shares of common stock on the Agreement’s execution date, subject to the 9.9% beneficial ownership limitation of the Company’s shares of common stock outstanding by Triton.
Closing for sales of common stock will occur no later than three business days following the date on which the Purchased Shares are received by Triton’s custodian. In addition, the Company has agreed to (i) at the time of the CSPA execution remit $10,000 to Triton, and (ii) at the initial closing pay $5,000 to Triton, to reimburse Triton’s expenses related to the transaction.
The shares were offered, and will be issued, pursuant to the Prospectus Supplement, dated October 22, 2020, to the Prospectus included in the Company’s Registration Statement on Form S-3 (Registration No. 333-239183) filed with the Securities and Exchange Commission on June 15, 2020.
The foregoing description of the Purchase Agreement is qualified in its entirety by reference to Exhibit 10.1 attached hereto and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
|5.1||Schiff Hardin LLP Legal Opinion.|
|10.1||Common Stock Purchase Agreement.|
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: October 22, 2020
|By:||/s/ Zhixin Liu|
|Title:||Chief Executive Officer|
October 22, 2020
20th Floor, Tower B, Guorui Plaza
1 Ronghua South Road, Technological Development Zone
Beijing, People’s Republic of China
|Re:||Registration Statement on Form S-3|
Ladies and Gentlemen:
We have acted as counsel to Datasea, Inc., a Delaware corporation (the “Company”) in connection with the Common Stock Purchase Agreement dated October 22, 2020 (the “CSPA”) by and between the Company and Triton Funds LP (the “Investor”), relating to the sale by the Company to the Investor of up to $2,000,000 of shares (the “Shares”) of the Company’s common stock, par value $0.001 per share.
In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of the following:
|1.||Certificate of Incorporation of the Company, as amended,|
|2.||Bylaws of the Company, as amended,|
|4.||Registration Statement on Form S-3 (Registration No. 333-239183) as filed by the Company with the Securities and Exchange Commission (the “Commission”) on June 15, 2020 (as such registration statement became effective on June 25, 2020, the “Registration Statement”) pursuant to the Securities Act,|
|5.||The prospectus supplement filed with the Commission on October 22, 2020, pursuant to Rule 424(b)(5) promulgated under the Securities Act (the “Prospectus Supplement”), together with the base prospectus dated June 15, 2020,|
|6.||Written consent of the Board of Directors of the Company approving the Purchase Agreement, and|
|7.||Such statutory provisions, certificates and other documents as we have deemed appropriate or necessary as a basis for the opinions hereinafter expressed.|
We have also examined such other documents and considered such legal matters as we have deemed necessary and relevant as the basis for the opinion set forth below. With respect to such examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as reproduced or certified copies, and the authenticity of the originals of those latter documents.
Based upon the foregoing and in reliance thereon and subject to the limitations, qualifications and exceptions set forth herein, we are of the opinion that the Shares, when issued and sold by the Company against payment therefor and in accordance with the terms of the CSPA, will be validly issued, fully paid and nonassessable.
This opinion is limited to the Federal law of the United States and the General Corporation Law of the State of Delaware, and we express no opinion as to the laws of any other jurisdiction. This opinion is rendered pursuant to Item 601(b)(5)(i) of Regulation S-K under the Act. The opinions expressed in this opinion letter are as of the date of this opinion letter only and as to laws covered hereby only as they are in effect on that date, and we assume no obligation to update or supplement such opinions to reflect any facts or circumstances that may come to our attention after that date or any changes in law that may occur or become effective after that date. The opinions herein are limited to the matters expressly set forth in this opinion letter, and no opinion or representation is given or may be inferred beyond the opinions expressly set forth in this opinion letter.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference made to this firm in the Registration Statement under the heading “Legal Matters” in the prospectus contained in the Registration Statement. In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Securities and Exchange Commission promulgated thereunder. This opinion may be used only in connection with the offer and sale of the Securities while the Registration Statement is effective.
|/s/ Schiff Hardin LLP|
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the “Agreement”), dated as of October 22, 2020 (the “Execution Date”), is entered into by and between DATASEA INC., a Nevada corporation (the “Company”), and Triton Funds LP, a Delaware limited partnership (the “Investor”).
WHEREAS, upon the terms and subject to the conditions contained herein, the Investor agrees to purchase, and the Company agrees to sell, up to Two Million Dollars ($2,000,000) of common stock, par value $0.001 per share (the “Common Stock”), of the Company, which shares of Common Stock shall be registered under the Securities Act of 1933, as amended (“1933 Act”) pursuant to an effective Registration Statement on Form S-3.
NOW THEREFORE, in consideration of the foregoing recital, which shall be considered an integral part of this Agreement, the covenants and agreements set forth hereafter, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Investor hereby agree as follows:
For all purposes of and under this Agreement, the following terms shall have the respective meanings below, and such meanings shall be equally applicable to the singular and plural forms of such defined terms.
“1934 Act” shall mean the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the SEC thereunder, all as the same will then be in effect.
“Business Day” shall mean any day on which the Principal Market for the Purchased Shares is open for trading from the hours of 9:30 am until 4:00 pm eastern time.
“Closing” shall mean the date that is no later than three (3) Business Days after the Purchase Notice Date.
“Commitment Period” shall mean the period beginning on the Business Day immediately following the Execution Date and ending on the expiration of this Agreement.
“Principal Market” shall mean the New York Stock Exchange, the NYSE Amex, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the OTC Markets, whichever is the market on which the Common Stock is listed.
“Purchase Notice” shall mean the written notice sent to the Investor by the Company, which Purchase Notice shall state the total amount of Purchased Shares that the Company intends to sell to the Investor pursuant to the terms of this Agreement based on the formula set forth in Section 2.1 hereof.
“Purchased Shares” shall mean shares of Common Stock issued pursuant to the terms of this Agreement.
“Investment Amount” shall mean the total dollar amount to be sold by the Company at the Closing, not to exceed Two Million Dollars ($2,000,000).
“Investment Fee” shall mean $10,000 that Issuer will pay Investor upon execution of Closing Documents and $5,000 of the Investment Amount that will be retained by the Investor on the initial Closing.
“Registration Statement” means the Registration Statement on Form S-3 filed with the SEC on June 15, 2020, (SEC registration number 333-239183), and declared effective on June 25, 2020, registering the Purchased Shares issuable hereunder.
“SEC” shall mean the U.S. Securities and Exchange Commission.
“Valuation Cap” shall mean the market capitalization of the Company on the Execution Date; calculated by multiplying 20,943,846 by 3.81973779 – for the avoidance of doubt, Eighty Million Dollars ($80,000,000).
PURCHASE AND SALE OF COMMON STOCK
2.1 PURCHASE AND SALE OF PURCHASED SHARES. Subject to the terms and conditions set forth herein, the Company shall sell to the Investor, and the Investor shall purchase from the Company, that number of Purchased Shares equal to the Investment Amount which shall be calculated based on the total number of Purchased Shares set forth in the Purchase Notice delivered to Investor as more particularly set forth in Section 2.2 below, multiplied the 90% of the lowest closing price of the Company’s Common Stock as reported by the Principal Market during the five (5) Business Days prior to Closing; not to exceed the Valuation Cap. Notwithstanding anything contained elsewhere in this Agreement to the contrary, the Company shall not effect any sales to the Investor, and the Investor shall not have the right to purchase hereunder, to the extent that after giving effect to such sales, the Investor (together with the Investor’s affiliates, and any other persons acting as a group together with the Investor or any of the Investor’s affiliates, and together with any other contemporaneous equity or debt-linked transactions that may be aggregated into and deemed as one single transaction under the rules and regulations of the Nasdaq Stock Market), would beneficially own in excess of 19.99% of the outstanding shares of the Company’s common stock.
2.2 PURCHASE PRICE FLOOR. The Company shall not submit a purchase notice under this Agreement where the Purchased Shares would be less than the Floor Price. “Floor Price” means closing price of $1.65 per share of the Common Stock, as reported on the Principal Market, which price shall be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction.
2.3 DELIVERY OF PURCHASE NOTICE. Subject to the terms and conditions herein, the Company may deliver the Purchase Notice to the Investor during the Commitment Period setting forth the total number of Purchased Shares to be purchased by Investor, which Purchase Notice shall be in the form attached hereto as Exhibit A and incorporated herein by reference. The total number of Purchased Shares to be purchased by Investor on the Purchase Notice shall not exceed 2.5% of the Issuer’s outstanding shares of the Company’s common stock on the Execution Date; calculated by multiplying 20,943,846 by 0.025 – for the avoidance of doubt, 523,596 shares.
2.4 CONDITIONS TO INVESTOR’S OBLIGATIONS. Notwithstanding anything to the contrary in this Agreement, the Investor shall not be obligated to purchase any Purchased Shares at the Closing unless each of the following conditions are satisfied:
|(i)||the Registration Statement shall remain effective and available for sale of the Purchased Shares at all times until the Closing;|
|(ii)||at the Closing, the Common Stock shall have been listed or quoted for trading on the Principal Market and shall not have been suspended from trading, at any time, after the Execution Date and the Company shall not have been notified of any pending or threatened proceeding or other action to suspend the trading of the Common Stock;|
|(iii)||no injunction shall have been issued and remain in force, or action commenced by a governmental authority which has not been stayed or abandoned, prohibiting the purchase or the issuance of the Purchased Shares; and|
|(iv)||the issuance of the Purchased Shares will not violate any requirements of the Principal Market.|
If any of the events described in clauses (i) through (iv) above occurs prior to the Closing, then the Investor shall have no obligation to purchase the Purchased Shares set forth in the Purchase Notice.
2.5 MECHANICS OF PURCHASE OF PURCHASED SHARES BY INVESTOR. The Closing of the purchase of the Purchased Shares set forth in the Purchase Notice shall occur no later than three (3) Business Days following the receipt by Investor’s custodian of the Purchased Shares (the “Purchase Notice Date”); it being understood that Investor shall deliver the Purchase Notice to Investor’s custodian on the Purchase Notice Date. The Investor shall deliver the Investment Amount (less the Investment Fee) by wire transfer of immediately available funds to an account designated by the Company set forth in the Purchase Notice. In addition, on or prior to the Closing, each of the Company and Investor shall deliver to each other all documents, instruments and writings required to be delivered or reasonably requested by either of them pursuant to this Agreement in order to implement and effect the transactions contemplated herein.
2.6 LIMITATION ON AMOUNT OF OWNERSHIP. Notwithstanding anything to the contrary in this Agreement, in no event shall the Investor be entitled to purchase that number of Purchased Shares, which when added to the sum of the number of shares of Common Stock beneficially owned (as such term is defined under Section 13(d) and Rule 13d-3 of the 1934 Act), by the Investor, would exceed 9.9% of the number of shares of Common Stock outstanding on the Purchase Notice Date, as determined in accordance with Rule 13d-1(j) of the 1934 Act.
2.7 COMPLIANCE WITH PRINCIPAL MARKET RULES. The Company shall not sell any shares of Common Stock under this Agreement and the Investor shall not have the right or the obligation to purchase shares of Common Stock under this Agreement to the extent that after giving effect to such purchase the "Exchange Cap" shall be deemed to be reached and, therefore, in the aggregate with any other issuance(s) by the Company, to be in violation of the rules and regulations of the Principal Market. The "Exchange Cap" shall be deemed to have been reached if, at any time prior to the shareholders of the Company approving the transaction contemplated by this Agreement, upon a purchase under this Agreement, the Purchased Shares issuable pursuant to such purchase would exceed 19.99% of the outstanding shares of Common Stock as of the date of this Agreement. The Company shall not be required to issue any Purchase Shares under this Agreement whatsoever if such issuance would breach the Company's obligations under the rules or regulations of the Principal Market on which the Company’s securities are then listed for trading and with which rules or regulations the Company is then required to comply.
INVESTOR’S REPRESENTATIONS, WARRANTIES AND COVENANTS
By executing this Agreement, the Investor represents, warrants and agrees that:
3.1 POWER AND AUTHORITY. The undersigned has full power and authority to act on behalf of and bind the Investor to its obligations as set forth herein and making these representations, warranties and agreements. This Agreement has been duly and validly authorized, executed and delivered on behalf of the Investor and is a valid and binding agreement of the Investor enforceable against the Investor in accordance with its terms, subject as to enforceability to general principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.
3.2 EFFECTIVE REGISTRATION STATEMENT. The Purchased Shares are being offered pursuant to the Registration Statement and Investor is solely relying on the Registration Statement and all periodic filings made by the Company under the 1934 Act (“SEC Filings”), in determining whether to purchase the Purchased Shares.
3.3 REVIEW OF SEC FILINGS; NO LEGAL ADVICE FROM THE COMPANY. Investor has had full opportunity to read and review the Registration Statement, the documents incorporated therein by reference, and consult with an attorney regarding such Registration Statement. The Investor understands that its investment in the Purchased Shares involves a high degree of risk. The Investor (i) is able to bear the economic risk of an investment in the Purchased Shares including a total loss, (ii) has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the proposed investment and (iii) has had an opportunity to ask questions of and receive answers from the officers of the Company concerning the financial condition and business of the Company and others matters related to an investment in the Purchased Shares,
3.4 ACCURACY OF REPRESENTATIONS. The information provided herein and these representations, warranties and agreements are accurate and complete, and shall remain so until the undersigned notifies the Company otherwise.
3.5 NO SHORT SALES. The Investor represents and warrants to the Company that at no time has any of the Investor, its agents, representatives or affiliates engaged in or effected, in any manner whatsoever, directly or indirectly, any (i) "short sale" (as such term is defined in Section 242.200 of Regulation SHO of the Exchange Act) of the Common Stock or (ii) hedging transaction, which establishes a net short position with respect to the Common Stock.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed on the Company’s SEC Filings, the Company represents and warrants to the Investor that:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly organized and validly existing in good standing under the laws of the State of Nevada and has the requisite corporate power and authorization to own its properties and to carry on its business as now being conducted. Both the Company and the companies it owns or controls (“Subsidiaries”) are duly qualified to do business and are in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. As used in this Agreement, “Material Adverse Effect” means a change, event, circumstance, effect or state of facts that has had or is reasonably likely to have, a material adverse effect on the business, properties, assets, operations, results of operations, financial condition or prospects of the Company and its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements and instruments to be entered into in connection herewith, or on the authority or ability of the Company to perform its obligations under the Agreement.
4.2 AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS.
|(i)||The Company has the requisite corporate power and authority to enter into the Agreement and to issue the Purchased Shares in accordance with the terms hereof and thereof.|
|(ii)||The execution and delivery of the Agreement by the Company and the consummation by it of the transactions contemplated hereby and thereby, including without limitation the issuance of the Purchased Shares pursuant to this Agreement, have been duly and validly authorized by the Company’s Board of Directors and no further consent or authorization is required by the Company, its Board of Directors, or its shareholders.|
|(iii)||The Agreements have been duly and validly executed and delivered by the Company.|
|(iv)||The Agreements constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors’ rights and remedies.|
4.3 ISSUANCE OF SHARES. The Company has reserved the amount of Purchased Shares included in the Registration Statement for issuance pursuant to the Agreement, which have been duly authorized and reserved (subject to adjustment pursuant to the Company’s covenant set forth in Section 5.5 below) pursuant to this Agreement. Upon issuance in accordance with this Agreement, the Purchased Shares will be validly issued, fully paid for and non-assessable and free from all taxes, liens and charges with respect to the issuance thereof. In the event the Company cannot register a sufficient number of Purchased Shares for issuance pursuant to this Agreement, the Company will use its best efforts to authorize and reserve for issuance the number of Purchased Shares required for the Company to perform its obligations hereunder as soon as reasonably practicable.
4.4 INSURANCE. Each of the Company’s Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company reasonably believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any of its Subsidiaries has been refused any insurance coverage sought or applied for and neither the Company nor its Subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.
4.5 DILUTIVE EFFECT. The Company’s executive officers and directors have studied and fully understand the nature of the transactions contemplated by this Agreement and recognize that the issuance of the Purchased Shares will have a dilutive effect on the shareholders of the Company. The Board of Directors of the Company has concluded, in its good faith business judgment, and with full understanding of the implications, that such issuance is in the best interests of the Company. The Company specifically acknowledges that, subject to such limitations as are expressly set forth in the Agreement, its obligation to issue shares of Common Stock pursuant to this Agreement is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.
COVENANTS OF THE COMPANY
5.1 BEST EFFORTS. The Company shall use all commercially reasonable efforts to timely satisfy each of the conditions set forth in this Agreement.
5.2 REPORTING STATUS. Until one of the following occurs, the Company shall file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status, or take an action or fail to take any action, which would terminate its status as a reporting company under the 1934 Act: (i) this Agreement terminates pursuant to Section 8 and the Investor has the right to sell all of the Purchased Shares, or (ii) the date on which the Investor has sold all the Purchased Shares.
5.3 USE OF PROCEEDS. The Company will use the proceeds from the sale of the Purchased Shares for general corporate and working capital purposes and acquisitions or assets, businesses or operations or for other purposes that the Board of Directors, in good faith deem to be in the best interest of the Company.
5.4 FINANCIAL INFORMATION. During the Commitment Period, the Company agrees to make available to the Investor via EDGAR or other electronic means the following documents and information on the forms set forth: (i) its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K and any Registration Statements or amendments filed pursuant to the 1933 Act; (ii) copies of any notices and other information made available or given to the shareholders of the Company generally, contemporaneously with the making available or giving thereof to the shareholders; and (iii) within two (2) calendar days of filing or delivery thereof, copies of all documents filed with, and all correspondence sent to, the Principal Market, any securities exchange or market, or the Financial Industry Regulatory Association, unless such information is material nonpublic information.
5.5 RESERVATION OF PURCHASED SHARES. The Company shall take all action necessary to at all times have authorized and reserved the amount of Purchased Shares included in the Registration Statement for issuance pursuant to the Agreement. In the event that the Company determines that it does not have a sufficient number of authorized shares of Common Stock to reserve and keep available for issuance as described, the Company shall use all commercially reasonable efforts to increase the number of authorized shares of Common Stock by seeking shareholder approval for the authorization of such additional shares.
5.6 LISTING. The Company shall maintain the listing of all of the Purchased Shares on the Principal Market and each other national securities exchange and automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and shall maintain, such listing of all Purchased Shares issuable under the terms of the Agreement. Neither the Company nor any of its Subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market (excluding suspensions of not more than one (1) Business Day resulting from business announcements by the Company). The Company shall promptly provide to the Investor copies of any notices it receives from the Principal Market regarding the continued eligibility of the Common Stock for listing on such automated quotation system or securities exchange. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 5.6.
5.7 CORPORATE EXISTENCE. The Company shall use all commercially reasonable efforts to preserve and continue the corporate existence of the Company.
5.8 NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION. The Company shall promptly notify the Investor upon the occurrence of any of the following events in respect of a Registration Statement or related prospectus in respect of an offering of the Purchased Shares: (i) receipt of any request for additional information by the SEC or any other federal or state governmental authority during the period of effectiveness of the Registration Statement for amendments or supplements to the Registration Statement or related prospectus; (ii) the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Purchased Shares for sale in any jurisdiction or the initiation or notice of any proceeding for such purpose; (iv) the happening of any event that makes any statement made in such Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in the Registration Statement, related prospectus or documents so that, in the case of a Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the related prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (v) the Company’s reasonable determination that a post-effective amendment or supplement to the Registration Statement would be appropriate, and the Company shall promptly make available to Investor any such supplement or amendment to the related prospectus.
5.9 TRANSFER AGENT. The Company shall deliver instructions to its transfer agent to issue Purchased Shares to the Investor that are issued to the Investor pursuant to the Agreement.
5.10 ACKNOWLEDGEMENT OF TERMS. The Company hereby represents and warrants to the Investor that: (i) it is voluntarily entering into this Agreement of its own free will, (ii) it is not entering this Agreement under economic duress, (iii) the terms of this Agreement are reasonable and fair to the Company, and (iv) the Company has had independent legal counsel of its own choosing review this Agreement, advise the Company with respect to this Agreement, and represent the Company in connection with this Agreement.
5.11 TERMINATION. The Company shall have the right at any time for any reason effective upon one (1) business day prior written notice to terminate the Agreement.
This Agreement shall expire upon the earlier to occur of: (x) that date when the Investor has purchased an aggregate of Two Million Dollars ($2,000,000) in Purchased Shares pursuant to this Agreement, or (y) December 31, 2020. Any and all Purchased Shares issuable to Investor, or penalties or other amounts, if any, due under this Agreement shall be immediately payable and due Investor upon expiration of this Agreement.
In consideration of the parties mutual obligations set forth in the Agreement, the Company (the “Indemnitor”) shall defend, protect, indemnify and hold harmless the Investor and all of the investor’s shareholders, officers, directors, employees, counsel, and direct or indirect investors and any of the foregoing person’s agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and reasonable expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (I) any misrepresentation or breach of any representation or warranty made by the Indemnitor or any other certificate, instrument or document contemplated hereby or thereby; (II) any breach of any covenant, agreement or obligation of the Indemnitor contained in the Agreement or any other certificate, instrument or document contemplated hereby or thereby; or (III) any cause of action, suit or claim brought or made against such Indemnitee by a third party and arising out of or resulting from the execution, delivery, performance or enforcement of the Agreement or any other certificate, instrument or document contemplated hereby or thereby, except insofar as any such misrepresentation, breach or any untrue statement, alleged untrue statement, omission or alleged omission is made in reliance upon and in conformity with information furnished to Indemnitor which is specifically intended for use in the preparation of any such Registration Statement, preliminary prospectus, prospectus or amendments to the prospectus. To the extent that the foregoing undertaking by the Indemnitor may be unenforceable for any reason, the Indemnitor shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. The indemnity provisions contained herein shall be in addition to any cause of action or similar rights Indemnitor may have, and any liabilities the Indemnitor or the Indemnitees may be subject to.
GOVERNING LAW; DISPUTES SUBMITTED TO ARBITRATION
8.1 LAW GOVERNING THIS AGREEMENT. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state or federal courts located in Los Angeles, California. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The parties executing this Agreement and other agreements referred to herein or delivered in connection herewith on behalf of the Company agree to submit to the in personam jurisdiction of such courts and hereby irrevocably waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.
8.2 LEGAL FEES; AND MISCELLANEOUS FEES. Except as otherwise set forth in the Agreement (including the Investment Fee), each party shall pay the fees and expenses of its advisers, counsel, the accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. Any attorneys’ fees and expenses incurred by either the Company or the Investor in connection with the preparation, negotiation, execution and delivery of any amendments to this Agreement or relating to the enforcement of the rights of any party, after the occurrence of any breach of the terms of this Agreement by another party or any default by another party in respect of the transactions contemplated hereunder, shall be paid on demand by the party which breached this Agreement and/or defaulted, as the case may be. The Company shall pay all stamp and other taxes and duties levied in connection with the issuance of any Purchased Shares.
8.3 SURVIVAL. The representations and warranties of the Company and the Investor contained in this Agreement shall survive the Commitment Period and the expiration of this Agreement.
8.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investor, including by merger or consolidation. The Investor may not assign its rights or obligations under this Agreement.
NON-DISCLOSURE OF NON-PUBLIC INFORMATION
The Company shall not disclose non-public information to the Investor.
[Signature page to follow]
IN WITNESS WHEREOF, the Investor and the Company have caused this Agreement to be duly executed as of the date first written above.
|TRITON FUNDS LP|
|By:||/s/ Jared Alexandria|
|By:||/s/ Zhixin Liu|
|Title:||Chief Executive Officer and President|
Date: _____, 2020
TRITON FUNDS LP,
This is to inform you that as of today the Company hereby elects to exercise its right pursuant to this Agreement to require you to purchase _____ Purchased Shares for an Investment Amount not to exceed Two Million Dollars ($2,000,000). The Company’s wire instructions are as follows:
[Insert Wire Instructions]
The total Investment Amount and price per Purchased Shares shall be calculated in accordance with the terms and conditions set forth in Section II of the Agreement.
|Title:||Chief Executive Officer and President|
Datasea Enters into Common Stock Purchase Agreement with Triton Funds
New York — October 23, 2020 — Datasea Inc. (NASDAQ: DTSS) (“Datasea” or the “Company”), a technology company engaged in providing smart security solutions and developing education-related technologies in China, has entered into a common stock purchase agreement (“Agreement”) with investment firm Triton Funds LP (“Triton”), where Triton is obligated to purchase up to $2.0 million of the Company’s common stock from time-to-time through December 31, 2020.
As part of the Agreement, each time Datasea wishes to sell its common stock, it will first provide Triton with a purchase notice, which sets forth the total number of common stock the Company intends to sell. The purchase price for Triton would then be 90% of the lowest closing price of Datasea’s common stock during the five business days prior to closing.
The total number of shares to be purchased under the Agreement will not exceed 523,596 shares, or 2.5% of the Company’s outstanding shares of common stock, subject to the 9.9% beneficial ownership limitation of the Company’s shares of common stock held by Triton, to the $2.0 million cap under the Agreement, and to a valuation cap for the Company of $80 million. Datasea is also precluded from submitting a purchase notice to Triton in the event the closing price of $1.65 per share as reported on the Nasdaq Stock Market.
Datasea intends to use any net proceeds from the sale of its common stock to Triton for general corporate and working capital purposes.
The shares are offered pursuant to an effective “shelf” registration statement on Form S-3, as amended (SEC No. 333-239183) which was filed with, and subsequently was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on June 25, 2020. The offering will be made only by means of a prospectus supplement, which together with accompanying base prospectus, will be filed with the Securities and Exchange Commission and available on the SEC’s website at http://www.sec.gov.
About Datasea Inc.
Datasea is a technology company in China engaged in providing smart security solutions and developing education-related technologies. Datasea leverages its proprietary technologies, intellectual property, innovative products and market intelligence to provide comprehensive and optimized security solutions and education-related technologies to its clients. For additional company information, please visit: www.dataseainc.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target," "going forward," "outlook" and similar statements. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond Datasea's control, which may cause Datasea's actual results, performance or achievements (including, without limitation, the performance and related results of operations arising from Datasea’s contracts and products addressed in this press release), Datasea’s ability to maintain and generate any revenue from the agreements subject of this press release, to differ materially and in an adverse manner from anticipated results contained or implied in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in Datasea's filings with the U.S. Securities and Exchange Commission, which are available at www.sec.gov. Datasea does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under the law.
Investor Relations Contact:
Gateway Investor Relations
Matt Glover and John Yi