ETAO Announces Termination of Contractual Arrangements with Seven VIEs

NEW YORK, Oct. 12, 2023 /PRNewswire/ -- ETAO International Co. Ltd. announces its plan of reorganization to dispose seven of its twelve consolidated affiliates subsidiaries to trim its operations and improve profitability. On October 11, 2023, pursuant to the terms of the Exclusive Business Cooperation Agreement, ETao Healthcare, the Company's indirectly subsidiary in China, notified Zhichao Medical Technology (Hunan) Co., Ltd., Beijing DNurse Technology Co., Ltd., Kang Ning (Heng Yang) Healthcare Management Co., Ltd., Tianlun (Guiyang) Buyun Buyu Hospital Co., Ltd., Qianhu Medical Management (Jiangxi) Co., Ltd., Chain Workshop (Beijing) Co., Ltd., Baihui (Beijing) Biotech Co., Ltd. and each of their respective equity holders of the immediate termination of the Exclusive Business Cooperation Agreement, the Exclusive Option Agreement, the Share Pledge Agreement, the Timely Reporting Agreement and the Powers of Attorney ("VIE Agreements"). ETao Healthcare is entitled to collect the accrued and unpaid Service Fee, which is 85% of the Monthly Net Income of each disposed VIE pursuant to the term of the Exclusive Business Cooperation Agreement.

Upon termination of the above-referenced VIE agreements, ETAO retains control over these five VIEs, namely, Changsha Zhenghe Orthopaedics Hospital Co., Ltd., Changxing Zhizhou Hospital Co., Ltd., Civil Hospital (Mengzhou City) Co., Ltd., Hangzhou Six Dimension Dental Medical Technology Co. Ltd. and Alliance Insurance Brokerage Co., Ltd.

None of the seven disposed VIEs had incurred any profit and have an aggregate net loss of $7.5 million for the fiscal year ended December 31, 2022. The disposition makes is easier for us to streamline our business activities, focus on its core competitiveness and accelerate the integration process, which is expected to decrease our expense and increase revenue in the long run.  

About ETAO International Group

ETAO International Group ("ETAO"), a Cayman Islands company, aims to be the leading digital healthcare group providing telemedicine, hospital care, primary care, pharmacy, and health insurance covering all life stages of patients. ETAO became a public company listed in Nasdaq through merging with Mountain Crest Acquisition Corp. III (MCAE) on Feb 21, 2023. "ETAO" brand means "Best Medical Way" with transformative medical care and unparalleled service. As a holding company with no material operations of its own, ETAO conducts substantially all of the operations through five variable interest entities ("VIEs") located in China, which have entered into a series of the VIE Agreements with certain indirect subsidiaries of ETAO. For accounting purposes, ETAO is the primary beneficiary of the VIEs' business operations through the VIE Agreements, which enable ETAO to consolidate the financial results in its consolidated financial statements under U.S. GAAP for four of the VIEs and for the one remaining VIE, in which ETAO does not own a majority interest, its financial statements will not be consolidated with the financial statements of ETAO. ETAO aims to provide best-in-class internet medical services, such as artificial intelligence and big data technologies, to improve health care delivery and quality in specialized clinics and hospital settings. ETAO's is in the process of building a platform that is seamlessly integrated based on its ability to combine technology and health sciences.

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SOURCE ETAO International Co., Ltd.

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