Eshallgo (EGHGO) Secures $5 Million through Convertible Debenture Offering

Eshallgo Inc ("Eshallgo" or the "Company") (NasdaqCM: EHGO), one of the leading office solution providers in China, today announced that it has entered into a securities purchase agreement (the "Securities Purchase Agreement") with an accredited investor to issue convertible debentures (the "Debentures") in an aggregate principal amount of up to $5,000,000. The Debentures bear an annual interest rate of 5%, increasing to 18% in the event of default, and will mature on November 28, 2025.

The initial closing of $1,500,000 occurred on November 29, 2024. The second closing of $2,000,000 will occur upon the filing of an initial registration statement with the U.S. Securities and Exchange Commission (the "SEC") registering the resale of the Class A ordinary shares upon conversion of the Debentures. The third closing of $1,500,000 will occur upon the effectiveness of the registration statement.

During the first 50 calendar days after issuance, the Debentures may be converted into Class A ordinary shares at a fixed price of $4.756 per share. After 50 days, the investor may in its discretion elect to convert the Debentures at the lower of $4.756 or 93% of the lowest daily VWAP during the five consecutive trading days preceding the conversion date, subject to a Floor Price of $0.78954. If the daily VWAP of the Company's shares falls below the Floor Price for five consecutive trading days within a seven-day period, or if a registration default occurs (each, an "Amortization Event"), the Company will be subject to monthly payments of up to $1,000,000 of the principal amount plus a 10% premium and accrued interest beginning on the 10th trading day after the Amortization Event.

The Company has also agreed to pay a 1% commitment fee upon the effectiveness of the registration statement, payable in cash or Class A ordinary shares 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 a one-time due diligence and structuring fee of $25,000, which was paid at the initial closing.

The Debentures were issued as a private placement under an exemption from registration 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 agreement, agreeing to file an initial registration statement with the SEC within 21 days to register for resale the Class A ordinary shares underlying the Debentures.

The full terms of the Securities Purchase Agreement, the Debentures, and the Registration Rights Agreement are described in the Company's report on Form 6-K filed with the SEC.

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