EShallGo Inc. Raises $1M via Convertible Debentures

TL;DR

EShallGo Inc. just sold $1M in convertible debt due next year to an accredited investor.

AI Summary

On November 29, 2024, EShallGo Inc. entered into a Securities Purchase Agreement with an accredited investor, referred to as the Debenture Holder. This agreement involves the placement of Convertible Debentures with an aggregate principal amount of $1,000,000. The Debentures have a maturity date of November 28, 2025, which is 364 days after the issuance of the first Debenture.

Why It Matters

This financing provides EShallGo Inc. with capital through convertible debt, which could impact its future share structure and financial obligations.

Risk Assessment

Risk Level: medium — Convertible debentures can dilute existing shareholders if converted, and the company is taking on debt with a relatively short maturity.

Key Numbers

• $1.0M — Convertible Debentures (Aggregate principal amount raised by EShallGo Inc.)

Key Players & Entities

• EShallGo Inc. (company) — Filer of the report and issuer of the debentures
• November 29, 2024 (date) — Date of the Securities Purchase Agreement
• November 28, 2025 (date) — Maturity date of the Debentures
• $1,000,000 (dollar_amount) — Aggregate principal amount of the Convertible Debentures

FAQ

Key Financial Figures

• $5,000,000 — the aggregate principal amount of up to $5,000,000 at a purchase price equal to 95% of the
• $1,500,000 — 24 when we issued a first Debenture for $1,500,000. The second closing of a Debenture in t
• $2,000,000 — closing of a Debenture in the amount of $2,000,000 shall occur upon the filing of an initi
• $25,000 — me due diligence and structuring fee of $25,000 at the first closing. During the perio
• $4.756 — pany’s Class A ordinary shares at $4.756. After 50 calendar days form the issuan
• $0.78954 — e conversion price may not be less than $0.78954 (the “Floor Price”). The De
• $1,000,000 — be in an amount equal to the sum of (i) $1,000,000 of the principal or the outstanding pri

Filing Documents

• tm2429846d1_6k.htm (6-K) — 17KB
• tm2429846d1_ex2-1.htm (EX-2.1) — 125KB
• tm2429846d1_ex10-1.htm (EX-10.1) — 186KB
• tm2429846d1_ex10-2.htm (EX-10.2) — 85KB
• 0001104659-24-124143.txt ( ) — 413KB

From the Filing

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 For the month of November 2024 Commission File Number: 001-42154 ESHALLGO INC No. 37, Haiyi Villa, Lane 97, Songlin Road Pudong New District Shanghai, China 200120 (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F Form 40-F On November 29, 2024, ESHALLGO INC (the “Company”) entered into a securities purchase agreement (the “Securities Purchase Agreement”) with an accredited investor (the “Debenture Holder”) to place Convertible Debentures (the “Debentures,” each, a “Debenture”) with a maturity date (the “Maturity Date”) of November 28, 2025, which is 364 days after the issuance of the first Debenture, in the aggregate principal amount of up to $5,000,000 at a purchase price equal to 95% of the principal amount (the “Transaction”), provided that in case of an event of default, the Debentures may become, at the Debenture Holder’s election, immediately due and payable. The Debentures bear an interest rate of 5% per annum which shall be increased to 18% per annum in the event of default. Pursuant to the securities purchase agreement, the Debentures will be issued in a private placement pursuant to an exemption from the registration requirements pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Regulation D thereunder. The Company also entered into a registration rights agrement (the “Registration Rights Agrement”), date November 29, 2024, pursuant to which the Company agreed to register for resale the Class A ordinary shares issuable pursuant to the Debentures with the U.S. Securities and Exchange Commission (the “SEC”) within 21 days from the date of the Registration Rights Agrement. The initial closing of the Transaction occurred on November 29, 2024 when we issued a first Debenture for $1,500,000. The second closing of a Debenture in the amount of $2,000,000 shall occur upon the filing of an initial registration statement (the “Registration Statement”) with the SEC registering the resale of the Class A ordinary shares upon conversion of the Debentures by the Debenture Holder. The third closing of a Debenture in the amount of $1,500,000 shall occur upon effectiveness of the Registration Statement as declared by the SEC. In addition, the Company agreed to pay to the Debenture Holder (i) a commitment fee equal to 1% of the principal amount upon the effectiveness of the Registration Statement, either in cash or by the issuance to the Debenture Holder of such number of Class A ordinary shares that is equal to the commitment fee divided by the closing bid price of the Class A ordinary shares as of the date of the Securities Purchase Agreement, and (ii) a one-time due diligence and structuring fee of $25,000 at the first closing. During the period from the issuance date of each Debenture and ending on the 50th calendar day after such issuance date, the Debenture Holder may convert the Debenture in its sole discretion to Company’s Class A ordinary shares at $4.756. After 50 calendar days form the issuance date and ending on the Maturity Date, the Debenture Holder may convert the Debenture in its sole discretion to Company’s Class A ordinary shares at any time at the lower of $4.756 or 93% of the lowest daily VWAP for the Ordinary Shares during the 5 consecutive trading days immediately preceding the conversion date, provided that the conversion price may not be less than $0.78954 (the “Floor Price”). The Debenture Holder may not convert any portion of a Debenture if such conversion would result in the Debenture Holder beneficially owning more than 4.99% of Company’s then issued and outstanding shares, provided that such limitation may be waived by the Debenture Holder with 65 days’ prior written notice. Any time after the issuance of a Debenture that the daily VWAP is less than the Floor Price for a period of 5 consecutive trading days in a period of 7 consecutive trading days or that a Registration Default (as defined in the Debenture) occurs (the last such day of each such occurrence, an “ Amortization Event ”), the Company shall make monthly payments beginning on the 10th trading day after the Amortization Event date and continuing on the same day of each successive calendar month. Each monthly payment shall be in an amount equal to the sum of (i) $1,000,000 of the principal or the outstanding principal if the principal is less than such amount plus, (ii) the payment premium of 10% in respect of such amount in (i), and (iii) accrued and unpaid interest hereunder as of each pay

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