WiMi Hologram Cloud Inc. to Hold Extraordinary General Meeting on March 25, 2025

Rhea-AI Summary

WiMi Hologram Cloud Inc. (WIMI) has announced an extraordinary general meeting (EGM) scheduled for March 25, 2025, in Beijing. The company plans to terminate its ADS Deposit Agreement with JPMorgan Chase Bank on April 2, 2025. Key proposals include:

1. A share consolidation at a ratio of 1:20, where every 20 existing shares will be consolidated into one share, with the par value changing from US$0.0001 to US$0.002.

2. ADS holders will receive one consolidated Class B ordinary share for every ten ADSs held if the share consolidation is approved. If not approved, they will receive two existing Class B ordinary shares for each ADS.

3. Following the consolidation, a share capital increase from US$50,000 to US$1,500,000 is proposed, significantly expanding the number of authorized shares across all share classes.

Positive

• None.

Negative

• Termination of ADS program could reduce stock liquidity and accessibility for US investors
• Share consolidation (reverse split) typically indicates underlying financial concerns
• Significant share capital increase could lead to future dilution

Insights

Corporate Finance Analyst

The announced corporate restructuring represents a complex series of changes that will fundamentally alter WiMi's capital structure and trading mechanisms. The termination of the ADR program, combined with a significant 1:20 share consolidation, signals potential strategic shifts and raises important considerations for investors.

The ADR termination process will force current ADS holders to convert their holdings into Class B ordinary shares at a rate of 2 ordinary shares per ADS. This mandatory conversion, coupled with the proposed share consolidation, means ADS holders will ultimately receive 1 consolidated Class B share for every 10 ADSs previously held. This complex conversion structure may impact trading liquidity and create temporary market inefficiencies.

The proposed increase in authorized share capital from $50,000 to $1.5 million is particularly noteworthy. This 30-fold increase in authorized capital suggests the company may be positioning itself for future capital raising activities or strategic transactions. The expanded authorization would provide significant flexibility for potential future issuances, though this could also raise dilution concerns.

Several critical implications warrant investor attention:

• The share consolidation could potentially improve the stock's marketability by raising the per-share price, though this is merely a mathematical adjustment without fundamental value change
• The termination of the ADR program may reduce U.S. investor accessibility and could impact trading volume
• The treatment of fractional shares through aggregation and market sale could result in forced liquidation for some holders
• The substantial increase in authorized shares creates significant potential for future dilution

The timing and mandatory nature of these changes, particularly the ADR termination, suggests possible strategic repositioning or regulatory considerations driving these decisions. The complexity of the simultaneous share consolidation and ADR termination requires careful attention from current shareholders to understand their post-restructuring position and voting rights.

BEIJING, Feb. 24, 2025 /PRNewswire/ -- WiMi Hologram Cloud Inc. (Nasdaq: WIMI) ("WiMi" or the "Company"), a leading AR services provider in China, today announced that it will (i) terminate the Deposit Agreement dated March 20, 2020, among the Company, JPMorgan Chase Bank N.A. (the "Depositary"), and the holders of American depositary shares (the "ADSs") from time to time, effective April 2, 2025, and (ii) hold its extraordinary general meeting of shareholders (the "EGM") at Room#1508, 4th Building, Zhubang 2000 Business Center, No. 97, Balizhuang Xili, Chaoyang District, Beijing on March 25, 2025 at 9:00 a.m. Beijing Time. The Company's board of directors has fixed February 24, 2025, as the record date (the "Record Date") for determining the shareholders entitled to receive notice of the extraordinary general meeting or any adjournment or postponement thereof. Holders of the Company's Class A ordinary shares (the "Class A ordinary shares") and Class B ordinary shares (the "Class B ordinary shares"), par value US$0.0001 per share (collective, the "ordinary shares") of record at the close of business on the Record Date are entitled to attend and vote at the EGM. Holders of American Depositary Shares (the "ADSs") who wish to exercise their voting rights for the underlying Class B ordinary shares must act through JPMorgan Chase Bank, N.A., the depositary of the Company's ADS program.

On or about February 24, 2025, the Depositary of the Company's American depositary receipts (the "ADRs"), will distribute to all holders and beneficial owners of the Company's ADRs a notification regarding the termination of ADR facility for the Company's ADSs pursuant to the Deposit Agreement. The effective date of the termination of the Deposit Agreement will be April 2, 2025 (the "Effective Date"). On the Effective Date, holders of ADSs will have their ADSs automatically cancelled and would be entitled to receive the corresponding underlying Deposited Securities (the "Mandatory Exchange") at a rate of two (2) Class B ordinary shares for each ADS cancelled, subject to further adjustment in accordance with the share consolidation (defined below) described below.

Subject to shareholder approval at the EGM and concurrent to the Mandatory Exchange, a consolidation of the Company's Shares at a ratio of one (1) consolidated ordinary share for every twenty (20) existing ordinary share (the "share consolidation").  If the share consolidation is approved, on the Effective Date, former ADS holders should expect to receive one (1) consolidated Class B ordinary share for every ten (10) ADS previously held.  If the share consolidation is not approved or delayed, on the Effective Date, former ADS holders should expect to receive two (2) existing Class B ordinary shares for every one (1) ADS previously held.

At the EGM, shareholders will be asked for vote on the following proposals:

(i)    With effect from 5 P.M. on April 2, 2025, Eastern time, (a) every twenty (20) Class A ordinary shares of a par value of US$0.0001 each in the Company's issued and unissued share capital be and are hereby consolidated into one (1) Class A ordinary share (each a "consolidated Class A share") of a par value of US$0.002, and such consolidated Class A shares shall have the same rights and subject to the same restrictions as the Class A ordinary shares as set out in the Company's currently effective Second Amended and Restated Memorandum and Articles of Association (the "M&A"), (b) every twenty (20) Class B ordinary shares of a par value of US$0.0001 each in the Company's issued and unissued share capital be and are hereby consolidated into one (1) Class B ordinary share (each a "consolidated Class B share") of a par value of US$0.002, and such consolidated Class B shares shall have the same rights and subject to the same restrictions as the Class B ordinary shares as set out in the Company's M&A, and (c) every twenty (20) undesignated shares of a par value of US$0.0001 each in the Company's unissued share capital be and are hereby consolidated into one (1) share of a par value of US$0.002 (collectively, the "share consolidation"), such that immediately following the share consolidation, the authorized share capital of the Company shall be changed

FROM 

US$50,000 divided into 500,000,000 shares comprising (i) 25,000,000 Class A ordinary shares of a par value of US$0.0001 each; (ii) 275,000,000 Class B ordinary shares of a par value of US$0.0001 each; and (iii) 200,000,000 shares of a par value of US$0.0001 each of such class or classes (however designated) as the board of directors may determine;

TO

US$50,000 divided into 25,000,000 shares comprising (i) 1,250,000 Class A ordinary shares of a par value of US$0.002 each; (ii) 13,750,000 Class B ordinary shares of a par value of US$0.002 each; and (iii) 10,000,000 shares of a par value of US$0.002 each of such class or classes (however designated) as the board of directors may determine, and no fractional shares be issued in connection with the share consolidation and the Company's transfer agent would aggregate all fractional shares and sell them as soon as practicable after the effective time of the share consolidation at the then-prevailing prices on the open market, on behalf of those shareholders who would otherwise be entitled to receive a fractional share as a result of the share consolidation.

(ii)    Immediately following the share consolidation, the authorized share capital of the Company be increased

FROM US$50,000 divided into 25,000,000 shares comprising (i) 1,250,000 Class A ordinary shares of a par value of US$0.002 each; (ii) 13,750,000 Class B ordinary shares of a par value of US$0.002 each; and (iii) 10,000,000 shares with a par value of US$0.002 each of such class or classes (however designated) as the board of directors may determine.

TO US$1,500,000 divided into 750,000,000 shares comprising (i) 37,500,000 Class A ordinary shares of a par value of US$0.002 each; (ii) 412,500,000 Class B ordinary shares of a par value of US$0.002 each; and (iii) 300,000,000 shares with a par value of US$0.002 each of such class or classes (however designated) as the board of directors may determine.

(the "share capital increase".)

(iii)    any one or more of Directors of the Company be and is/are hereby authorized to do all such acts and things and execute all such documents, which are ancillary to the share consolidation and share capital increase and of administrative nature, on behalf of the Company, including under seal where applicable, as he/they consider necessary, desirable or expedient to give effect to the foregoing arrangements for the share consolidation and share capital increase; the Company's registered office provider be instructed to make all necessary filings with the Companies Registry in the Cayman Islands in connection with the share consolidation and share capital increase; and the Company's share registrar be instructed to update the register of members of the Company and that upon the surrender to the Company of the existing share certificates (if any) that they be cancelled and that any Director be instructed to prepare, sign, seal and deliver on behalf of the Company new share certificates accordingly.

Shareholders and ADS holders may obtain a copy of the Company's annual report, free of charge, from the Company's website at http://ir.wimiar.com/ and from the SEC's website at www.sec.gov, or by contacting WiMi Hologram Cloud Inc., Room#1508, 4th Building, Zhubang 2000 Business Center, No. 97, Balizhuang Xili, Chaoyang District , telephone: +86-10-5338-4913, email: Pr@wimiar.com 

About WIMI Hologram Cloud Inc.

WiMi Hologram Cloud, Inc.(NASDAQ:WIMI), whose commercial operations began in 2015, operates an integrated holographic AR application platform in China and has built a comprehensive and diversified holographic AR content library among all holographic AR solution providers in China. Its extensive portfolio includes 4,654 AR holographic contents. The company has also achieved a speed of image processing that is 80 percent faster than the industry average. While most peer companies may identify and capture 40 to 50 blocks of image data within a specific space unit, WiMi collects 500 to 550 data blocks.

Safe Harbor Statement

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. Further information regarding these and other risks is included in the Company's annual report on Form 20-F and current report on Form 6-K and other documents filed with the SEC. All information provided in this press release is as of the date of this press release, and the Company does not undertake any obligation to update any forward-looking statement, except as required under applicable laws.

For more information, please visit http://ir.wimiar.com/. 

 

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SOURCE WiMi Hologram Cloud Inc.

FAQ

When will WIMI terminate its ADS program?

WIMI will terminate its ADS Deposit Agreement with JPMorgan Chase Bank on April 2, 2025.

What is the share consolidation ratio proposed by WIMI?

WIMI proposes a share consolidation ratio of 1:20, where every 20 existing shares will be consolidated into one share.

How many shares will WIMI ADS holders receive after the consolidation?

If the share consolidation is approved, ADS holders will receive one consolidated Class B ordinary share for every ten ADSs held. If not approved, they will receive two existing Class B ordinary shares for each ADS.

What is the proposed share capital increase for WIMI?

WIMI proposes to increase its share capital from US$50,000 to US$1,500,000, expanding the number of authorized shares.

When is WIMI's extraordinary general meeting (EGM)?

WIMI's EGM is scheduled for March 25, 2025, at 9:00 a.m. Beijing Time.