Lion Announces Plan to Implement ADS Ratio Change

Rhea-AI Summary

Lion Group Holding (NASDAQ: LGHL) has announced plans to change its American Depositary Shares (ADS) ratio from 1:50 to 1:2,500 Class A ordinary shares, effective March 26, 2025. This change will function as a one-for-fifty reverse ADS split, aimed at regaining compliance with Nasdaq's minimum bid price requirement.

The transition requires holders of certificated ADSs to surrender their certificates for cancellation and exchange, while uncertificated ADS holders in DRS and DTC systems will have automatic exchanges. No fees will be charged for the exchange process, and fractional new ADSs will be sold with proceeds distributed to applicable holders.

The company will continue trading under 'LGHL' on Nasdaq Capital Market. While the trading price is expected to increase proportionally, Lion notes there's no guarantee the post-change price will equal or exceed fifty times the pre-change price.

Positive

• Potential to regain Nasdaq minimum bid price compliance
• No fees charged to shareholders for ADS exchange process

Negative

• Company needs to implement reverse split to maintain Nasdaq listing compliance
• No guarantee that post-split ADS price will maintain proportional value

Insights

Financial Analyst

Lion Group's announced ADS ratio change is effectively a 1:50 reverse split, a clear attempt to regain compliance with Nasdaq's minimum bid price requirement of $1.00. With a current price of $0.1015 and micro-cap status ($2.26M market cap), this maneuver is a standard but concerning tactic employed by companies facing potential delisting.

The mechanics are straightforward - each 50 existing ADSs will be exchanged for 1 new ADS, automatically processing on March 26th. While this artificially elevates the trading price, it's important to understand this does not change the underlying company value or market capitalization. Investors will own fewer shares at a proportionally higher price.

Reverse splits typically signal financial distress and often trigger additional selling pressure after implementation. The extreme ratio (1:2500 at the ordinary share level) indicates severe price deterioration and suggests management's concern about maintaining their listing status. Though necessary for Nasdaq compliance, this technical maneuver doesn't address the fundamental issues that led to the price decline in the first place.

This development raises significant questions about Lion Group's financial health and operating performance. For current shareholders, while their ownership percentage remains unchanged, fractional shares will be liquidated and paid in cash - potentially creating minor tax implications. Historical market data shows companies implementing reverse splits frequently underperform following such actions, as they often fail to address the root causes of their valuation challenges.

HONG KONG, March 21, 2025 /PRNewswire/ -- Lion Group Holding Ltd. ("Lion" or "the Company") (NASDAQ: LGHL), operator of an all-in-one trading platform that offers a wide spectrum of products and services, today announced that it plans to change the ratio of its American Depositary Shares ("ADSs") to its Class A ordinary shares (the "ADS Ratio"), par value US$0.0001 per share, from the current ADS Ratio of one (1) ADS to fifty (50) Class A ordinary share, to a new ADS Ratio of one (1) ADS to two thousand and five hundred (2,500) Class A ordinary shares (the "ADS Ratio Change"). The Company anticipates that the ADS Ratio Change will be effective on or about March 26, 2025 (the "Effective Date").

For the Company's ADS holders, the change in the ADS Ratio will have the same effect as a one-for-fifty reverse ADS split and is intended to enable the Company to regain compliance with the Nasdaq minimum bid price requirement. On the Effective Date, registered holders of company ADSs held in certificated form will be required on a mandatory basis to surrender their certificated ADSs to the depositary bank for cancellation and will receive one (1) new ADS in exchange for every fifty (50) existing ADSs then-held. Holders of uncertificated ADSs in the Direct Registration System ("DRS") and in The Depository Trust Company ("DTC") will have their ADSs automatically exchanged and need not take any action. The exchange of every fifty (50) existing ADSs for one (1) new ADS will occur automatically, with existing ADSs being cancelled and new ADSs being issued by the depositary bank on the Effective Date.

Lion's ADSs will continue to be traded under the ticker symbol "LGHL" on the Nasdaq Capital Market. No fees will be charged to ADS holders, for both certificated or uncertificated ADSs, in connection with the exchange of existing ADSs for new ADSs.  No fractional new ADSs will be issued in connection with the change in the ADS Ratio. Instead, fractional entitlements to new ADSs will be aggregated and sold by the depositary bank and the net cash proceeds from the sale of the fractional ADS entitlements (after deduction of fees, taxes and expenses) will be distributed to the applicable ADS holders by the depositary bank. The ADS Ratio Change will have no impact on Lion's underlying Class A ordinary shares, and no Class A ordinary shares will be issued or cancelled in connection with the ADS Ratio Change.

As a result of the change in the ADS Ratio, Lion's ADS trading price is expected to increase proportionally, although the Company can give no assurance that the ADS trading price after the ADS Ratio Change will be equal to or greater than fifty (50) times the ADS trading price before the change.

About Lion Group Holding Ltd.

Lion Group Holding Ltd. (Nasdaq: LGHL) operates an all-in-one, state-of-the-art trading platform that offers a wide spectrum of products and services, including (i) total return service (TRS) trading, (ii) contract-for-difference (CFD) trading, (iii) Over-the-counter (OTC) stock options trading, and (iv) futures and securities brokerage. Additional information may be found at http://ir.liongrouphl.com.

Forward-Looking Statements

This press release contains, "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Lion's actual results may differ from their expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," "may," "will," "could," "should," "believes," "predicts," "potential," "might" and "continues," and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, but are not limited to, statements about: Lion's goals and strategies; our ability to retain and increase the number of users, members and advertising customers, and expand its service offerings; Lion's future business development, financial condition and results of operations; expected changes in Lion's revenues, costs or expenditures; the impact of COVID-19; competition in the industry; relevant government policies and regulations relating to our industry; general economic and business conditions globally and in China; and assumptions underlying or related to any of the foregoing. Lion cautions that the foregoing list of factors is not exclusive. Lion cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Lion does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based, subject to applicable law. Additional information concerning these and other factors that may impact our expectations and projections can be found in Lion's periodic filings with the SEC, including Lion's Annual Report on Form 20-F for the fiscal year ended December 31, 2023. Lion's SEC filings are available publicly on the SEC's website at www.sec.gov.

Contacts

Lion Group Holding Ltd.
Tel: +852 2820 9011
Email: ir@liongrouphl.com

View original content:https://www.prnewswire.com/news-releases/lion-announces-plan-to-implement-ads-ratio-change-302407556.html

SOURCE Lion Group Holding Ltd.

FAQ

What is the new ADS ratio for Lion Group (LGHL) and when will it be effective?

Lion Group's new ADS ratio will change from 1:50 to 1:2,500 Class A ordinary shares, effective March 26, 2025.

Why is Lion Group (LGHL) implementing an ADS ratio change?

The ADS ratio change is intended to help Lion Group regain compliance with Nasdaq's minimum bid price requirement.

How will the LGHL ADS ratio change affect existing shareholders?

Shareholders will receive 1 new ADS for every 50 existing ADSs. Certificated holders must surrender their ADSs, while uncertificated holders will have automatic exchanges.

Will LGHL shareholders incur any fees from the ADS ratio change?

No, Lion Group will not charge any fees to ADS holders for the exchange of existing ADSs for new ADSs.