Bit Brother Announces 1 for 1,000 Reverse Share Split

Rhea-AI Summary

Bit Brother Limited (BTB) has approved a 1 for 1,000 reverse split of its Class A and Class B ordinary shares, expected to become effective on January 10, 2024. The reverse split is expected to reduce the outstanding Class A ordinary shares from approximately 3.8 Billion to 3.8 Million. Stock options, restricted shares, and equity incentive plans will be proportionally adjusted. Shareholders will receive new share certificates and fractional shares will be rounded up to the nearest whole share.

Insights

Financial Analyst

A reverse stock split is a financial maneuver that consolidates the number of existing shares of a company into fewer, proportionally more valuable shares. Bit Brother Limited's decision to implement a 1 for 1,000 reverse split suggests an attempt to increase the nominal trading price of its shares, which is a common strategy for companies seeking to satisfy exchange listing requirements or to improve the stock's image among investors.

The immediate effect of such a split is a reduction in the number of shares outstanding, in this case from 3.8 billion to approximately 3.8 million Class A ordinary shares. While this does not inherently change the market capitalization of the company, it can have psychological effects on investors and may impact liquidity and volatility. It's important to note that such corporate actions do not improve the underlying fundamentals of the company and may be viewed as a short-term cosmetic fix.

For current shareholders, the value of their holdings will not change, but the number of shares they own will decrease. This can affect the perception of ownership and may have tax implications. Additionally, the adjustment of stock options and restricted shares will maintain the value of these instruments, but the reduced number of shares could affect their marketability.

Market Research Analyst

The reverse split by Bit Brother Limited indicates a strategic move to potentially elevate the company's stock profile. Historically, reverse splits have been associated with companies facing delisting threats due to low share prices. By consolidating shares, Bit Brother is likely aiming to attract a different class of investors and possibly reduce the downward pressure on its stock caused by short selling.

However, the market's reception to reverse splits is mixed. Some investors may interpret the move as a red flag, indicating that the company is in distress. Others might see it as a positive step towards restructuring. The company's inability to guarantee post-split price stability is noteworthy, as it underscores the inherent uncertainty in how the market will react. Investors will closely monitor the price post-split to ascertain the true market sentiment towards the company's future prospects.

It's also significant to consider the timing of the split and its announcement, as these factors can influence investor expectations and the stock's subsequent performance. The market will be looking for signals of confidence from the company, such as improvements in financial health or strategic initiatives that may accompany the reverse split.

Legal Expert

The legal implications of a reverse stock split like the one Bit Brother Limited is undertaking are multifaceted. Firstly, the company has clarified that there will be no changes to its Amended and Restated Articles and Memorandum of Association, indicating that the reverse split is purely a capital structure adjustment rather than a fundamental change in the company's governance or operations.

For shareholders, the exchange of share certificates will be administratively handled by VStock Transfer LLC, with specific instructions provided to both registered shareholders and those holding shares in street name. The rounding up of fractional shares to the nearest whole share is a standard practice to simplify the consolidation process and avoid the complexities of dealing with fractional ownership. This approach also slightly benefits shareholders who would otherwise receive less than one share.

From a regulatory standpoint, the company must ensure compliance with exchange listing requirements and securities laws, including proper disclosure and equitable treatment of shareholders. The role of the transfer agent is critical in ensuring that the reverse split is executed smoothly and that shareholders are adequately informed throughout the process.

CHANGSHA, China, Jan. 8, 2024 /PRNewswire/ -- Bit Brother Limited (the "Company," "we" or "Bit Brother") (NASDAQ: BTB), today announced that a 1 for 1,000 reverse split of its Class A ordinary shares and Class B ordinary shares was approved by the Company's board of directors on November 14, 2023 and is expected to become effective on or around January 10, 2024.

Upon the effectiveness of the reverse share split, Bit Brother shareholders will receive one new Class A ordinary share of Bit Brother for every thousand shares they hold. Bit Brother's Class A ordinary shares are expected to begin trading on a split-adjusted basis when the market opens on January 10, 2024.

The reverse share split is expected to lead Bit Brother's Class A ordinary shares to trade at approximately one thousand times the price per share at which it trades prior to the effectiveness of the reverse share split. Bit Brother, however, cannot assure that the price of its Class A ordinary shares after the reverse split will reflect the 1 for 1,000 reverse split ratio, that the price per share following the effective time of the reverse split will be maintained for any period of time, or that the price will remain above the pre-split trading price.

There will be no changes to Bit Brother's Amended and Restated Articles and Memorandum of Association in connection with the reverse share split. As of January 8, 2024, there were approximately 3.8 Billion of Bit Brother's Class A ordinary shares outstanding. Effecting the 1 for 1,000 reverse split will reduce that amount to approximately 3.8 Million Class A ordinary shares outstanding.

Treatment of Stock Options and Restricted Shares

The number of ordinary shares into which Bit Brother's outstanding stock options and restricted shares as well as the options' relevant exercise price per share will be proportionally adjusted to reflect the reverse split. The number of shares authorized for issuance under Bit Brother's equity incentive plans will also be proportionally reduced to reflect the reverse split.

Fractional Shares

Any fractional shares that would have resulted because of the Reverse Split will be rounded up to the nearest whole share.

New Ordinary Share Certificates

Bit Brother will adopt a new share certificate in connection with the implementation of the reverse share split. Bit Brother's transfer agent, VStock Transfer LLC, will manage the exchange of share certificates. Shareholders of record will receive a letter of transmittal providing instructions for the exchange of their old certificates as soon as practicable following the effectiveness of the reverse split. Shareholders should not send in their old stock certificates until they receive a letter of transmittal from VStock Transfer LLC. Shareholders who hold their shares through a securities broker or nominee (i.e., in "street name") will be contacted by their brokers or nominees with any instructions.

For more information, shareholders and securities brokers should contact VStock Transfer LLC at 212-828-8436.

About Bit Brother Limited

Bit Brother Ltd is a multifaceted corporation with operations spanning business management in China and blockchain and cryptocurrency ventures in the United States. Within the U.S. jurisdiction, the company strategically manages and integrates cryptocurrency mining facilities. With a dedicated team of specialists, company has successfully expanded two mining ventures and is committed to further growth. For more information, please visit: www.bitbrother.com.

Forward-Looking Statements Disclaimer 

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 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 Bit Brother Limited

FAQ

What is the reverse split approved by Bit Brother Limited (BTB)?

Bit Brother Limited (BTB) has approved a 1 for 1,000 reverse split of its Class A and Class B ordinary shares.

When is the reverse split expected to become effective for Bit Brother Limited (BTB)?

The reverse split is expected to become effective on January 10, 2024.

How will the reverse split affect the outstanding Class A ordinary shares for Bit Brother Limited (BTB)?

The reverse split is expected to reduce the outstanding Class A ordinary shares from approximately 3.8 Billion to 3.8 Million.

What adjustments will be made for stock options, restricted shares, and equity incentive plans due to the reverse split for Bit Brother Limited (BTB)?

The number of ordinary shares into which Bit Brother's outstanding stock options and restricted shares as well as the options' relevant exercise price per share will be proportionally adjusted. The number of shares authorized for issuance under Bit Brother's equity incentive plans will also be proportionally reduced to reflect the reverse split.

How will shareholders receive new share certificates after the reverse split for Bit Brother Limited (BTB)?

Bit Brother Limited (BTB) will adopt a new share certificate in connection with the implementation of the reverse share split. Shareholders of record will receive a letter of transmittal providing instructions for the exchange of their old certificates as soon as practicable following the effectiveness of the reverse split.