Urban Tea Announces Entry into Share Purchase Agreement to Acquire 80% Equity Interests in Guokui Management Inc.

Rhea-AI Summary

Urban Tea Inc. (NASDAQ: MYT) announced a share purchase agreement to acquire 80% of Guokui Management Inc. for $400,000. Based in New York, Guokui operates CROP CIRCLE, a casual street food restaurant featuring traditional Chinese guokui. The acquisition positions MYT to own the CROP CIRCLE trademark in the U.S. and aligns with its strategy to expand its brand presence in the American market. CFO Kan Lu expressed optimism about the deal, highlighting the aim to enhance brand awareness and explore future restaurant openings.

Positive

• Acquisition of 80% stake in Guokui Management Inc. for $400,000 enhances brand presence in the U.S.
• Ownership of CROP CIRCLE trademark opens avenues for market expansion and brand awareness.
• Strategic alignment with plans to introduce traditional Chinese cuisine to the U.S. market.

Negative

• None.

CHANGSHA, China, Sept. 23, 2020 /PRNewswire/ -- Urban Tea Inc. (the "Company," "we" or "Urban Tea") (NASDAQ: MYT), a premier retailer of specialty teas and baked goods based in Hunan, China, announced today that it has entered into a share purchase agreement (the "Agreement"), pursuant to which the Company agreed to pay $400,000 in cash to acquire 80% of the equity interest in Guokui Management Inc. ("Guokui"). Guokui is incorporated under the laws of New York State and has been operating CROP CIRCLE, a casual street food restaurant in New York City, since August 2020. The Agreement also includes details of how the two parties may collaborate in the future.

Upon closing of the transaction contemplated by the Agreement, MYT will own the registered trademark of "CROP CIRCLE" in the United States and operate the Crop Circle restaurant, which features guokui, an oval shaped baked flatbread with various filling selections, a popular street snack originating from northern China's Shaanxi Province. CROP CIRCLE also provides other meals combining classic and modern styles. MYT currently owns the trademark "MENO" and operates MENO, a modern tea and coffee shop with a small curated food menu. The ownership of these two restaurants marks the implementation of MYT's initial brand strategy in the United States. Going forward, the Company plans to deepen its roots in the US market based on the restaurants' operating performances.

Ms. Kan Lu, CFO of Urban Tea, commented: "The signing of the Agreement enables the Company to better navigate the casual food and drink market in NYC. Through building brand awareness and launching new restaurants, the partnership with Guokui shareholders will take our expansion plan on an exciting journey. We remain committed to our common core values of providing culturally inspired food that is loved by customers in America. With Guokui's management team, we look forward to opening more restaurants and bringing traditional Chinese cuisine to more guests across the U.S."

About Urban Tea, Inc. 

Urban Tea, Inc. is an emerging specialty tea product distributer and retailer headquartered in Changsha City, Hunan Province, China. Through its wholly owned subsidiary, Mingyuntang (Shanghai) Tea Limited which controls Hunan Ming Yun Tang Brand Management Co., Ltd. and Hunan 39 Pu Tea Co., Ltd., the Company currently market a wide range of trendy tea drinks, light meals, and pastries targeting China's new urban generation in Hunan province. Our products are focused on not only their taste but also their aesthetic presentation and health benefits. Our products are currently being offered via our own stores. For more information, please visit: http://ir.h-n-myt.com/investor.

Forward-Looking Statements

This press release contains certain statements that may include "forward-looking statements." All statements other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the uncertainty about the spread of the COVID-19 virus and the impact it will have on the Company's operations, the demand for the Company's products, supply chains, local government's regulation of restaurants, and economic activity in general. These and other risks and uncertainties are detailed in the risk factors discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on the SEC's website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these risk factors. Other than as required under the applicable securities laws, the Company does not assume a duty to update these forward-looking statements.

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SOURCE Urban Tea Inc.

FAQ

What is the acquisition agreement Urban Tea entered into regarding Guokui?

Urban Tea agreed to acquire 80% of Guokui Management Inc. for $400,000, allowing them to operate the CROP CIRCLE restaurant in New York.

How will the acquisition of Guokui benefit Urban Tea?

The acquisition will enhance Urban Tea's brand presence in the U.S. and enable them to introduce traditional Chinese street food to American customers.

When was the acquisition agreement with Guokui announced?

The acquisition agreement was announced on September 23, 2020.

What is the significance of owning the CROP CIRCLE trademark for Urban Tea?

Owning the CROP CIRCLE trademark allows Urban Tea to legally operate and expand the restaurant brand in the U.S. market.

What type of food does the CROP CIRCLE restaurant offer?

CROP CIRCLE offers guokui, a traditional Chinese baked flatbread, alongside other meals that combine classic and modern styles.