DEF 14C: WeTrade Group to Acquire 20% Stake in Future Dao via Share Issuance, Bypassing Stockholder Vote

WeTrade Group is set to acquire a 20% stake in Future Dao, a blockchain technology company, by issuing 3,940,000 shares of its common stock to Future Dao's existing shareholders, a move approved by the majority stockholders via written consent.

Summary

• WeTrade Group Inc. is informing its stockholders about a corporate action where it will acquire a 20% stake in Future Dao Group Holding Limited.
• The acquisition will be executed through WeTrade's subsidiary, Next Investment Group Limited, purchasing 2,000 ordinary shares of Future Dao at $6,698 per share, totaling $13,396,000.
• The purchase price will be paid by issuing 3,940,000 shares of WeTrade common stock to the sellers, valued at $3.4 per share.
• The transaction was approved by WeTrade's Board of Directors and a majority of its stockholders via written consent on February 26, 2024, bypassing a formal stockholder meeting.
• This action complies with Nasdaq Rule 5635(a), which requires stockholder approval for the issuance of common stock exceeding 20% of outstanding shares in connection with an acquisition.
• The company believes the acquisition will increase its holdings of Bitcoin assets and strengthen its position in the Bitcoin mining field.
• The Information Statement is being mailed to stockholders on or about March 18, 2024, with the transaction not becoming effective until 20 days after the mailing date.

Sentiment

Score: 6

Explanation: The document is neutral in tone, primarily providing information about a corporate action. While the company expresses optimism about the acquisition, there are also acknowledged risks associated with Future Dao's limited operating history and the volatile nature of the cryptocurrency market.

Positives

• WeTrade believes the acquisition will increase its holdings of Bitcoin assets.
• Future Dao's mining experience and new energy technologies will complement WeTrade's cryptocurrency asset holdings.
• Future Dao's solutions in mine management and energy utilization will help secure a stable, low-cost Bitcoin source for WeTrade.

Negatives

• The issuance of 3,940,000 shares will dilute the ownership of existing WeTrade stockholders.
• Future Dao has a limited operating history, which presents risks regarding its profitability and future performance.
• Future Dao may need to raise additional capital, which could lead to further dilution or increased debt.

Risks

• Future Dao's limited operating history poses risks to its profitability and ability to predict future results.
• The need for additional capital by Future Dao could lead to dilution or increased debt for WeTrade.
• The development and acceptance of digital asset networks are subject to various factors that are difficult to evaluate.
• Negative publicity and increased regulatory actions in the cryptocurrency industry could adversely affect the value of Bitcoin and blockchain technology.

Future Outlook

The company anticipates that the acquisition of Future Dao will strengthen its position in the Bitcoin mining field and increase its holdings of cryptocurrency assets.

Management Comments

• The Board believes it is in the best interest of the Company to consummate the Transaction in order to increase its holdings of Bitcoin assets and strengthen its layout in the Bitcoin mining field.

Industry Context

The acquisition reflects a trend of companies seeking to expand their presence in the blockchain and cryptocurrency sectors, particularly in Bitcoin mining. This move positions WeTrade to capitalize on the growing interest and investment in digital assets.

Comparison to Industry Standards

• Comparable companies in the Bitcoin mining space, such as Marathon Digital Holdings and Riot Platforms, are also actively pursuing strategies to increase their mining capacity and efficiency.
• The valuation of WeTrade's shares at $3.4 for the transaction is a key metric, and its premium to the average trading price in the days leading up to the agreement suggests a positive outlook on the deal's potential.
• However, the lack of board seats for WeTrade in Future Dao post-acquisition is unusual compared to typical acquisitions, where the acquiring company often seeks board representation to influence strategy.

Stakeholder Impact

• Existing stockholders will experience dilution due to the issuance of new shares.
• The acquisition could potentially benefit stakeholders if it strengthens WeTrade's position in the Bitcoin mining industry.
• The risks associated with Future Dao's operations could negatively impact stakeholders if the acquisition does not perform as expected.

Next Steps

• The transaction will become effective 20 calendar days after the Information Statement is first mailed to the Stockholders.
• WeTrade will make arrangements with brokerage firms and other custodians, nominees and fiduciaries who are record holders of the Company's Common Stock for the forwarding of this Information Statement to the beneficial owners of the Company's Common Stock.

Key Dates

Keywords

WeTrade Group, Future Dao, acquisition, blockchain, Bitcoin, share issuance, Nasdaq Rule 5635(a), stockholder approval, dilution