QDMI QDM International Inc (QB)

As previously disclosed, pursuant to the Share Exchange Agreement entered into on October 21, 2020 by and among QDM International Inc. (the “Company”), QDM Holdings Limited, a British Virgin Islands company (“QDM BVI”), and Huihe Zheng, the sole shareholder of QDM BVI who is also the Company’s principal stockholder and serves as the Company’s Chairman, Chief Executive Officer and President, the Company acquired all the issued and outstanding capital stock of QDM BVI in exchange for the issuance to Huihe Zheng 900,000 shares of a newly designated Series C Convertible Preferred Stock, par value $0.0001 per share (“Series C Preferred Shares”) of the Company.

The Certificate of Designation of Series C Preferred Shares provides that each Series C Preferred Share is convertible, at any time and from time to time from and after October 21, 2020, at the option of the holder and without the payment of additional consideration by the holder, into shares of common stock of the Company at an initial conversion rate of 1-for-11. On May 17, 2021, upon receipt of a conversion notice from Huihe Zheng, the Company issued 4,049,254 shares (the “Conversion Shares”) of the Company’s common stock, par value $0.0001 per share, upon conversion of an aggregate of 368,114 Series C Preferred Shares at a conversion ratio of 1-for-11, pursuant to the terms of the Certification of Designation. Following the issuance of the Conversion Shares, the Company had an aggregate of 6,238,553 shares of common stock issued and outstanding. The issuance of shares of common stock upon conversion of the Series C Preferred Shares was deemed to be exempt from registration under the Securities Act of 1933, as amended, or the Securities Act, in reliance on Section 3(a)(9) of the Securities Act. The recipient of the shares represented its intention to acquire such shares for investment only and not with a view to, or for sale in connection with, any distribution thereof..