NEW YORK - ETAO International Co., Ltd. (NASDAQ:ETAO), a Cayman Islands-based digital healthcare group, has announced a shareholder-approved 1 for 20 reverse stock split of its ordinary shares, set to take effect on March 26, 2024. The company also reported an increase in authorized shares and changes to its share capital structure.
Upon the reverse stock split's effectiveness, ETAO shareholders will receive one new ordinary share for every twenty shares they currently hold. The company's shares are expected to begin trading on a split-adjusted basis with the opening of the market on March 26, 2024. While the reverse stock split is intended to increase the per-share trading price of ETAO's ordinary shares, the company acknowledges that it cannot guarantee the post-split share price will maintain the 1-for-20 ratio, remain above the pre-split price, or be sustained for any length of time.
In conjunction with the reverse split, ETAO's authorized issued share capital will consist of 150 million Class A ordinary shares and 50 million Class B ordinary shares, both with a par value of US$0.002, and 50 million preferred shares at the same par value. Following the reclassification, all ordinary shares except those owned by CEO and Chairman Mr. Wensheng Liu will become Class A ordinary shares, while Mr. Liu's holdings will convert to Class B ordinary shares, which carry 30 votes each compared to one vote per Class A share. This alteration will increase Mr. Liu's total voting power from 48.5% to 86.7%.
ETAO's Class A ordinary shares will continue to be listed on the Nasdaq Capital Market under the ticker "ETAO." The company has also adopted amended and restated articles and memorandum of association relative to these changes.
The reverse stock split will proportionally adjust the number of shares underlying ETAO's outstanding stock options and restricted shares, as well as the relevant exercise prices. Fractional shares resulting from the split will be rounded up to the nearest whole share.
ETAO will introduce a new share certificate for the reverse stock split. Shareholders will receive a letter of transmittal from ETAO's transfer agent, Continental Stock Transfer & Trust Company, with instructions for exchanging their old certificates. Shareholders are advised not to send their old stock certificates until they receive this letter. Those holding shares through brokers or nominees will receive instructions from their respective institutions.
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