ETAO International Group executed a term sheet to acquire Mountain Crest Acquisition Corp. III (NasdaqCM:MCAE) from a group of shareholders in a reverse merger transaction on December 14, 2021. ETAO International Group entered into a definitive merger agreement to acquire Mountain Crest Acquisition Corp. III from a group of shareholders for $2.5 billion in a reverse merger transaction on January 27, 2022. Under the terms of the transaction, Mountain Crest Acquisition will issue 250 million shares as consideration to the shareholders of ETAO. The transaction values ETAO International Group at a pro forma fully diluted enterprise value of approximately $2.5 billion with existing ETAO shareholders rolling over 100% of their equity into equity of the combined company. On June 7, 2022, ETAO and Mountain entered into an amendment to agreement and plan of merger that reduced the total consideration from $2.5 billion to $1 billion. Thus, in consideration of the merger, Mountain will issue 100 million ordinary shares to the shareholders of ETAO in exchange for 100% of the issued and outstanding ordinary shares of ETAO.

The transaction is expected to provide up to $304 million of cash proceeds, including a fully committed $250 million PIPE at $10 per share thought-leading investor China SME Investment Group that is scheduled to close simultaneously with the business combination transaction and up to $54 million of cash held in the trust account of Mountain Crest Acquisition Corp. III assuming no redemptions by Mountain Crest III shareholders. Separately, ETAO has also received commitments through a separate private placement of $51 million expected to close prior to February 15, 2022. Funds from the deal will be used by ETAO to improve healthcare delivery amenities in its clinics and hospitals and also towards its internet-based medical services. With the transaction, ETAO International Group will become publicly traded. Upon completion, the combined company will operate as ETAO and securities are expected to be listed on NYSE under the symbol “ETAO.” Upon completion, combined company will change its name to Etao International Co., Ltd. and the surviving corporation's Board of Directors shall consist of six (6) directors, comprised of the ETAO's board members and one (1) additional director, to be designated by sponsor. Sponsor's designee shall be Suying Liu, or such other person agreed to between Sponsor and ETAO.

The transaction is subject to approval by ETAO's stockholders; Mountain Crest III's stockholders; regulatory and governmental approvals, including if applicable, the expiration or termination of any waiting periods under the HSR Act; SEC having declared the registration statement with respect to the transaction effective; Mountain Crest shall have at least $5,000,001 in net tangible assets as of the closing; third party consents; execution of ancillary agreements; aggregate cash proceeds available from the PIPE Financing shall be not less than an aggregate of $200 million; initial listing application including the shares issuable upon closing shall have been approved for listing on NYSE; and other customary closing conditions. Certain holders of company ordinary shares entered into a support agreement pursuant to which such holders agreed to, among other things, approve the merger agreement and the proposed business combination. The transaction has been unanimously approved by the Boards of Directors of ETAO and Mountain Crest III. The proposed business combination is expected to be completed in the summer of 2022. The shareholders meeting of MCAE is scheduled on November 9, 2022 to approve to extend the date by which MCAE has to consummate a business combination from November 20, 2022 to February 20, 2023. As of November 17, 2022, the shareholders of MCAE has approved to extend the date by which it has to complete a business combination to February 20, 2023. On February 7, 2023, Mountain Crest shareholders approved the transaction and the transaction was also approved by EIG's stockholders. EIG's management team, led by Founder and Chief Executive Officer, Wilson Liu, will lead the combined company, along with Chief Financial Officer, David Muson.

Revere Securities LLC is acting as capital markets advisor to Mountain Crest III. Jay Kaplowitz, Arthur Marcus, Jennifer Trowbridge, Michael Savage and Huan Lou of Sichenzia Ross Ference LLP is acting as legal counsel to ETAO in the transaction. Mitch Nussbaum, Ronelle Porter, Andrei Sirabionian, Joan Guilfoyle, Shahrooz Shahnavaz of Loeb & Loeb LLP is acting as legal counsel and due diligence provider to Mountain Crest III. Francis Wolf and Mark Zimkind of Continental Stock Transfer & Trust Company acted as transfer agent and Advantage Proxy, Inc. acted as proxy solicitation agent to Mountain Crest Acquisition. Beijing Haohan Tianyu Investment Consulting Co., Ltd. acted as financial advisor and due diligence provider to MCAE. Maples and Calder (Cayman) acted as legal advisor to ETAO. MCAE shall make a payment to BHTIC of an aggregate M&A Fee equivalent to 3% of the pre-money equity value of ETAO in shares of the post-transaction combined company to be issued upon closing of the Transaction at $10 per share. MCAE has agreed to pay Advantage Proxy a fee of $7,500, plus disbursements.

ETAO International Group completed the acquisition of Mountain Crest Acquisition Corp. III (NasdaqCM:MCAE) from a group of shareholders in a reverse merger transaction on February 17, 2023.