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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): September 28, 2022

 

Code Chain New Continent Limited

(Exact name of Company as specified in charter)

 

Nevada   001-37513   47-3709051
(State or other jurisdiction
of incorporation)
  (Commission File No.)   (IRS Employer
Identification No.)

 

No 119 South Zhaojuesi Road
2nd Floor, Room 1
Chenghua District, Chengdu, Sichuan, China 610047

(Address of Principal Executive Offices) (Zip code)

 

+86-028-84112941

(Company’s Telephone number, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Company under any of the following provisions (see General Instruction A.2. below):

 

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© under the Exchange Act (17 CFR 240.13(c))

 

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. 

  

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, par value $0.0001   CCNC   Nasdaq Capital Market

 

 

 

 

 

 

Item 1.02 Termination of a Material Definitive Agreement.

 

As previously disclosed in the current reports on Form 8-K of Code Chain New Continent Limited (the “Company”) filed on January 3, 2020 and January 11, 2021, Tongrong Technology (Jiangsu) Co., Ltd., a then indirect subsidiary of the Company (“Tongrong WFOE”), Sichuan Wuge Network Games Co., Ltd. (“Wuge”), and shareholders of Wuge (the “Wuge Shareholders”) entered into a share purchase agreement, pursuant to which the Company issued a total of 4,000,000 shares of common stock of the Company (the “Shares”) to the Wuge Shareholders in exchange for Tongrong WFOE, Wuge and the Wuge Shareholders entering into certain Technical Consultation and Services Agreement., Equity Pledge Agreement, Equity Option Agreement, Voting Rights Proxy and Financial Support Agreement, which was assigned by Tongrong WFOE to Makesi IoT Technology (Shanghai) Co., Ltd., an indirect subsidiary of the Company (“Makesi WFOE”) in January 2021 (such agreements, as assigned, the “VIE Agreements”) . The VIE Agreements established a “Variable Interest Entity” (VIE) structure, and pursuant to which the Company treated Wuge as a consolidated affiliated entity and consolidated the financial results and balance sheet of Wuge in the Company’s consolidated financial statements under U.S. GAAP.

 

On September 28, 2022, Makesi WFOE entered into a termination agreement (the “Termination Agreement”) with Wuge and the Wuge Shareholders to terminate the VIE Agreements and to cancel the Shares, based on the average closing price of $0.237 per share of the Company during the 30 trading days immediately prior to the date of the Termination Agreement. As a result of such termination, the Company will no longer treat Wuge as a consolidated affiliated entity or consolidate the financial results and balance sheet of Wuge in the Company’s consolidated financial statements under U.S. GAAP.

 

The foregoing description of the Termination Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the voting rights proxy and financial support agreement, which is filed as Exhibit 10.1.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.   Description
10.1   Termination Agreement, dated September 28, 2022
99.1   Unaudited pro forma condensed consolidated financial statements of the Company
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

1

 

 

SIGNATURES

 

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.

 

  CODE CHAIN NEW CONTINENT LIMITED
   
Date: September 30, 2022 By: /s/ Wei Xu
  Name: Wei Xu
  Title: Chief Executive Officer, President and Chairman of the Board

 

 

2

 

 

Exhibit 10.1

 

终止协议

TERMINATION AGREEMENT

 

本终止协议(“本协议”) 由以下各方于2022年9月28日在中华人民共和国(“中国”)上海市签订:

THIS TERMINATION AGREEMENT (this “Agreement”), dated as of September 28, 2022, is entered into, in Shanghai, People’s Republic of China (“PRC” or “China”) by and among:

 

甲方: 马可思物联技术(上海)有限公司

地址: 上海市徐汇区中山西路2020号502A40室

Party A: Makesi IoT Technology (Shanghai) Co., Ltd.

Address: Room 502A40, No 2020 Zhongshanxi Road, Xuhui District, Shanghai, China

 

乙方: 四川物格网络游戏有限公司

地址: 四川省成都市成华区荆泰二路11号1层1号

Party B: Sichuan Wuge Network Games Co., Ltd.

Address: No.1, 1st floor, No.11 Jingtaier Road, Chenghua District, Chengdu, Sichuan Province, China

 

丙方: 以下签字的乙方股东

Party C: The undersigned shareholders of Party B

 

(甲方、乙方和丙方,合称“各方”,各自称“一方”)。

(Party A, Party B and Party C collectively, the "Parties", and each a "Party").

 

WHEREAS

鉴于

 

A.2020年1月3日,乙方、丙方和第三方签署了《股权处分合同》、《股权质押合同》和《股东表决权委托及财务支持协议》,乙方和第三方签署《技术咨询与服务协议》(上述协议合称“原控制协议”);2021年1月11日,甲方、乙方、丙方和第三方签署了《股权处分合同之让与协议》、《股权质押合同之让与协议》和《股东表决权委托及财务支持协议之让与协议》,甲方、乙方和第三方签署《咨询服务协议之让与协议》(上述协议合称“让与协议”,与原控制协议,合称“控制协议”)。

On January 3, 2020, Party B, Party C and certain third party entered into an Equity Option Agreement, Equity Pledge Agreement and Voting Rights Proxy and Financial Supporting Agreement, and Party B and certain third party entered into Technical Consultation and Service Agreement, such agreements, collectively, Original Control Agreements; on January 11, 2021, Party A, Party B, Party C and certain third party entered into an Agreement to Assign Equity Option Agreement, Agreement to Assign Equity Pledge Agreement and Agreement to Assign Voting Rights Proxy and Financial Supporting Agreement, and Party A, Party B and certain third party entered into an Agreement to Assign Technical Consultation and Service Agreement, such agreements, collectively, Assign Agreements, together with Original Control Agreement, collectively the "Control Agreements";

 

B.各方有意终止所有控制协议项下的权利与义务。

Each of the Parties intends to terminate all of the rights and obligations Control Agreements.

 

 

 

 

现,因此,各方同意如下:

NOW, THEREFORE, the Parties hereby agree as follows:

 

1.            本协议中的定义词语或术语具有控制协议相同的含义。如果本协议和控制协议有冲突,本协议优先。

Words and expressions defined in the Control Agreements shall have the same meanings when used herein. In the event of any conflict between this Agreement and the Control Agreements, this Agreement shall control.

 

2.            各方同意自各方签署本协议时终止控制协议。

The Parties agree to terminate the Control Agreements taking effect on the execution of this Agreement by the Parties.

 

3.            丙方同意在签署本协议后15天内,将2020年1月24 日由Code Chain New Continent Limited,甲方的间接母公司,发给丙方的作为签署控制协议对价的共四百万股的Code Chain New Continent Limited的普通股取消,基于本协议签字日前三十(30)个交易日的平均价$0.237。 

Party C agree to cause a total of 4,000,000 shares of common stock of Code Chain New Continent Limited, an indirect parent company of Party A, based on the average closing price of $0.237 of the Company during the thirty (30) trading days immediately prior to the date hereof, which were issued to Party C and their assigns on January 24, 2020 as consideration for entering into the Control Agreement, to be cancelled within fifteen (15) days from the date of this Agreement.

 

4.            本协议应自各方签署起生效,并且,与此同时,各方控制协议项下权利与义务终止,包括但不限于甲方、乙方和丙方的所有权利与义务。

This Agreement shall become effective upon the execution by all Parties, and the rights and obligations of each of the Parties therein shall be simultaneously terminated, including without limitation all rights of obligations of each of Party A, Party B and Party C under Control Agreements.

 

5.            本协议可以通过传真、电传、可移植文档(PDF)(或其他电子传输方式)签署六(6)份,每一份都应被视为原件,共同组成一份相同的交易文书。

This Agreement may be executed and delivered by facsimile, telecopy, portable document format (“PDF”) (or other electronically transmitted) signature and in six (6) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

6.            本合同的订立、效力、解释、履行、修改和终止以及争议解决均适用中国正式公布并可公开得到的法律。对中国正式公布并可公开得到的法律没有规定的事项,将适用国际法律原则和惯例。

The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the formally published and publicly available laws of China. Matters not covered by formally published and publicly available laws of China shall be governed by international legal principles and practices.

 

7.            因解释和履行本合同而发生的任何争议,本合同各方应首先通过友好协商的方式加以解决。如果在一方向其他方发出要求协商解决的书面通知后三十(30)天之内争议仍然得不到解决,则任何一方均可将有关争议提交给位于上海的中国国际经济贸易仲裁委员会上海分会,由该委员会按照其仲裁规则仲裁解决。仲裁应在上海进行,使用之语言为中文。仲裁裁决是终局性的,对各方均有约束力。

In the event of any dispute with respect to the construction and performance of this Agreement, the Parties shall first resolve the dispute through friendly negotiations. In the event the Parties fail to reach an agreement on the dispute within thirty (30) days after either Party's request to the other Parties for resolution of the dispute through negotiations, either Party may submit the relevant dispute to the Shanghai Branch of China International Economic and Trade Arbitration Commission for arbitration, in accordance with its Arbitration Rules. The arbitration shall be conducted in Shanghai, and the language used in arbitration shall be Chinese. The arbitration award shall be final and binding on all Parties.

 

[本页其余部分刻意留为空白]

[The Remainder of this page is intentionally left blank]

 

 2

 

 

[签字页]

[SIGNATURE PAGES]

 

 

兹证明,本协议由各方或者各方的法定代表人签订。

 IN WITNESS WHEREOF this Agreement is duly executed by each Party or its legal representatives.

 

甲方马可思物联技术(上海)有限公司
PARTY A:Makesi IoT Technology (Shanghai) Co., Ltd.

法定代表人/或被授权人(签字)

  Legal/Authorized Representative: /s/ Wei Xu  

姓名: 徐蔚

Name: XU, Wei

职务:执行董事

Title: Executive Director

 

乙方:四川物格网络游戏有限公司
PARTY B: Sichuan Wuge Network Games Co., Ltd.

法定代表人/或被授权人(签字)

  Legal/Authorized Representative: /s/ Bibo Lin  

姓名: 林碧波

Name: LIN, Bibo

职务:执行董事

Title: Executive Director

 

Signature Pages of Termination Agreement

 

 3

 

 

[SIGNATURE PAGES]

签字页

乙方:

PARTY C :

 

四川物格网络游戏有限公司的股东:

Shareholders of Sichuan Wuge Network Games Co., Ltd.:

 

签字: /s/ Wei Xu  

By:

姓名: 徐蔚

Name: XU, Wei

 

签字: /s/ Bibo Lin  

By:

姓名: 林碧波

Name: LIN, Bibo

 

江苏凌空网络股份有限公司

Jiangsu Lingkong Network Joint Stock Co., Ltd.

 

法定代表人/或被授权人(签字):  /s/ Wei Xu  

Legal/Authorized Representative:

姓名: 徐蔚

Name: XU, Wei

职务:执行董事

Title: Executive Director

 

安徽数字人网络科技有限公司

Anhui Shuziren Network Technology Co., Ltd.

 

法定代表人/或被授权人(签字): /s/ Wei Xu  

Legal/Authorized Representative:

姓名: 徐蔚

Name: XU, Wei

职务: 执行董事

Title: Executive Director

 

Signature Pages of Termination Agreement

 

 

4

 

 

Exhibit 99.1

 

CODE CHAIN NEW CONTINENT LIMITED AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED DECONSOLIDATED BALANCE SHEETS

AT JUNE 30, 2022

 

   CCNC   less:       CCNC 
   CONS   WUGE   ADJUSTMENTS   DECONS 
ASSETS                
CURRENT ASSETS                
Cash and cash equivalents  $13,283,031    13,080,250    -   $202,781 
Other receivables, net   845,858    2,700,627    1,925,919    71,150 
Other receivable - related party   391,347    391,347    -    - 
Inventories   6,494    6,494    -    - 
Prepayments   1,639,131    1,639,131    -    - 
Total current assets   16,165,861    17,817,849    1,925,919    273,931 
                     
PLANT AND EQUIPMENT, NET   244,094    244,094    -    - 
                     
RIGHT-OF-USE ASSETS   13,740    13,740    -    - 
                     
OTHER ASSETS                    
Prepayments for purchases of equipment   12,949,328    -    -    12,949,328 
Intangible assets, net   145    145    -    - 
Deferred tax assets   -    -    -    - 
Total other assets   12,949,473    145         12,949,328 
                     
Total assets  $29,373,168    18,075,828    1,925,919   $13,223,259 
                     
LIABILITIES AND SHAREHOLDERS’ EQUITY                    
                     
CURRENT LIABILITIES                    
Accounts payable  $3,304,867    3,304,867    -   $- 
Other payables and accrued liabilities   5,076,310    3,045,879    3,120,288    5,150,719 
Other payables - related parties   466,407    -    -    466,407 
Customer deposits   4,699,464    4,699,464    -    - 
Lease liabilities - current   7,098    7,098    -    - 
Taxes payable   2,971,979    2,971,979    -    - 
Total current liabilities   16,526,125    14,029,287    3,120,288    5,617,126 
                     
OTHER LIABILITIES                    
Lease liabilities - noncurrent   5,530    5,530    -    - 
Total other liabilities   5,530    5,530    -    - 
                     
Total liabilities   16,531,655    14,034,817    3,120,288    5,617,126 
                     
COMMITMENTS AND CONTINGENCIES                    
                     
SHAREHOLDERS’ EQUITY                    
Preferred stock, $0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of  June 30, 2022 and December 31, 2021, respectively   -              - 
Common stock, $0.0001 par value, 200,000,000 shares authorized, 46,109,617 and 46,077,110 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively   4,611    -    (400)   4,211 
Subscription receivable                    
Additional paid-in capital   74,272,259         (947,600)   73,324,659 
Stock subscriptions receivable   (16,403,618)             (16,403,618)
Accumulated deficit   (45,401,397)   3,721,166    (246,369)   (49,368,932)
Accumulated other comprehensive income   369,658    319,845    -    49,813 
Total shareholders’ equity   12,841,513    4,041,011    (1,194,369)   7,606,133 
                     
Total liabilities and shareholders’ equity  $29,373,168    18,075,828    1,925,919   $13,223,259 

  

1

 

 

CODE CHAIN NEW CONTINENT LIMITED AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED DECONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

FOR THE SIX MONTHS ENDED JUNE 30, 2022

 

   CCNC   less:       CCNC 
   CONS   WUGE   ADJUSTMENTS   DECONS 
REVENUES                
Wuge digital door signs  $7,616,615   $7,616,615   $-   $- 
    -    -    -    - 
TOTAL REVENUES   7,616,615    7,616,615    -    - 
                     
COST OF REVENUES                    
Wuge digital door signs   5,527,950    5,527,950    -    - 
TOTAL COST OF REVENUES   5,527,950    5,527,950    -    - 
                     
GROSS PROFIT   2,088,665    2,088,665    -    - 
                     
OPERATING EXPENSES (INCOME)                    
Selling, general and administrative   8,341,973    1,605,935    -    6,736,038 
Provision for (recovery of) doubtful accounts   12,949,329    -    -    12,949,329 
TOTAL OPERATING EXPENSES (INCOME)   21,291,302    1,605,935    -    19,685,367 
                     
INCOME FROM OPERATIONS   (19,202,637)   482,730    -    (19,685,367)
                     
OTHER INCOME (EXPENSE)                    
Interest income   65,251    65,251    -    - 
Interest expense   (935)   (935)   -    - 
Investment income   -    -    -      
Other income (expense), net   70,830    70,830    -    - 
                     
Total other income (expense), net   135,146    135,146    -    - 
                     
LOSS BEFORE INCOME TAXES FROM CONTINUING OPERATIONS   (19,067,491)   617,876    -    (19,685,367)
                     
PROVISION FOR INCOME TAXES   314,787    314,787    -    - 
                     
LOSS (INCOME) FROM CONTINUING OPERATIONS   (19,382,278)   303,089    -    (19,685,367)
                     
Discontinued operations:                    
Income from discontinued operations, net of taxes   -    -    -    - 
Loss on disposal, net of taxes   -    -    (246,369)   (246,369)
                     
Net Loss (income)   (19,382,278)   303,089    (246,369)   (19,931,736)
                     
OTHER COMPREHENSIVE INCOME                    
Foreign currency translation adjustment   (935)   204,195    -    (205,130)
                     
COMPREHENSIVE LOSS (INCOME)  $(19,383,213)  $507,284    (246,369)  $(20,136,866)
                     
WEIGHTED AVERAGE NUMBER OF COMMON SHARES                    
Basic and diluted on proforma basis   41,065,559    -    (4,000,000)   37,065,559 
                     
Earnings per share from continuing operations                    
Basic and diluted   (0.47)   -    -    (0.53)
                     
Earnings per share from discontinued operations                    
Basic and diluted   -    -    -    - 
                     
Earnings per share available to common shareholders                    
Basic and diluted on a proforma basis  $(0.47)  $-    -   $(0.54)

  

2

 

 

CODE CHAIN NEW CONTINENT LIMITED AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

FOR THE SIX MONTHS ENDED JUNE 30, 2021

 

   CCNC   less:       CCNC 
   CONS   WUGE   ADJUSTMENTS   DECONS 
REVENUES                
Wuge digital door signs  $6,876,290   $6,876,290   $-   $- 
                     
TOTAL REVENUES   6,876,290    6,876,290    -    - 
                     
COST OF REVENUES                    
Wuge digital door signs   158,686    158,686    -    - 
                     
TOTAL COST OF REVENUES   158,686    158,686    -    - 
                     
GROSS PROFIT   6,717,604    6,717,604    -    - 
                     
OPERATING EXPENSES (INCOME)                    
Selling, general and administrative   26,896,267    5,647,171    -    21,249,096 
TOTAL OPERATING EXPENSES   26,896,267    5,647,171    -    21,249,096 
                     
LOSS FROM OPERATIONS   (20,178,663)   1,070,433    -    (21,249,096)
                     
OTHER INCOME (EXPENSE)                    
Interest income   19,362    18,867    -    495 
Interest expense   -    -    -    - 
Investment income   -    -    -    - 
Other income (expense), net   1,816,443    6,120    -    1,810,323 
Total other (expense), net   1,835,805    24,987    -    1,810,818 
                     
LOSS BEFORE INCOME TAXES FROM CONTINUING OPERATIONS   (18,342,858)   1,095,420    -    (19,438,278)
                     
PROVISION FOR INCOME TAXES   -    -    -    - 
                     
LOSS FROM CONTINUING OPERATIONS   (18,342,858)   1,095,420    -    (19,438,278)
                     
Discontinued operations:                    
Income(loss) from discontinued operations, net of taxes   23,571    -    (246,369)   (222,798)
Loss on disposal, net of taxes   (11,234,496)   -    -    (11,234,496)
                     
Net loss (income)   (29,553,783)   1,095,420    (246,369)   (30,895,572)
                     
OTHER COMPREHENSIVE LOSS                    
Foreign currency translation adjustment   (739,444)   172,498    -    (911,942)
                     
COMPREHENSIVE LOSS (INCOME)  $(30,293,227)  $1,267,918   $(246,369)  $(31,807,514)
                     
WEIGHTED AVERAGE NUMBER OF COMMON SHARES                    
Basic and diluted on a proforma basis   34,681,765    -    (4,000,000)   30,681,765 
                     
Earnings per share from continuing operations                    
Basic and diluted   (0.53)   -    -    (0.63)
                     
Earnings per share from discontinued operations   (0.32)   -    -    (0.37)
Basic and diluted                    
                     
Earnings per share available to common shareholders                    
Basic and diluted on a proforma basis  $(0.85)  $-   $-   $(1.01)

  

3

 

 

CODE CHAIN NEW CONTINENT LIMITED AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Note 1 – Summary of significant accounting policies

 

Basis of presentation

 

These proforma financial statements, accompanying notes, and related disclosures have been prepared on an as-if basis assuming that the disposition transaction between the Company, Wuge, and Wei Xu has been in effect since the beginning of the period presented. The financial position and results of operations are deconsolidated using historical financial statements. Actual deconsolidated results may have differed from those presented herein. The information included in this Form 8-K should be read in conjunction with information included in the Company’s annual report on Form 10-Q for the six months ended June 30, 2022, filed with the Securities and Exchange Commission on August 22, 2022.

 

Use of estimates and assumptions

 

The preparation of the accompanying proforma financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company’s proforma financial statements include the useful lives of intangible assets, deferred revenues and plant and equipment, impairment of long-lived assets, collectability of receivables, inventory valuation allowance, present value of lease liabilities and realization of deferred tax assets. Actual results could differ from these estimates.

 

Foreign currency translation and transaction

 

The reporting currency of the Company is the U.S. dollar. The Company’s subsidiaries and VIEs in China conduct businesses in the local currency, Renminbi (RMB), as its functional currency. Assets and liabilities are translated at the unified exchange rate as quoted by the People’s Bank of China at the end of the period. The statement of income accounts is translated at the average translation rates and the equity accounts are translated at historical rates. Translation adjustments resulting from this process are included in accumulated other comprehensive income. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

 

The PRC government imposes significant exchange restrictions on fund transfers out of the PRC that are not related to business operations. These restrictions have not had a material impact on the Company because it has not engaged in any significant transactions that are subject to the restrictions.

 

NOTE 2 – PROFORMA ADJUSTMENTS

 

Entry No.  Description  Dr.   Cr. 
1  Common stock   400     
   Additional paid in capital  $947,600      
   Other receivables, net  $1,925,919      
   Loss on disposal, net of taxes   246,369      
   Other payables and accrued liabilities      $3,120,288 
   De-consolidation adjustment including removal of  loss on inter-company balances written off between CCNC and Wuge.