VOTING
SECURITIES AND PRINCIPAL SHAREHOLDERS
We
determined the shareholders of record for purposes of this shareholder action at the close of business on May 1, 2023 (the “Record
Date”). At that date, there were issued and outstanding 58,366,569 shares of JRSIS Health Care Corporation common stock, each of
which entitles the holder thereof to one vote. There are no other classes of voting stock authorized.
The
following table sets forth the number of shares of common stock owned by each person who, as of the Record Date, owned beneficially more
than 5% of the outstanding common stock, as well as the ownership of such shares by each member of the JRSIS Health Care Corporation
Board of Directors and the shares beneficially owned by its officers and directors as a group.
| Name
of Beneficial Owner | |
Amount
and Nature of Beneficial Ownership(1) | | |
Percentage
of Class | |
| Zhong Zhuowei | |
| 47,130,000 | | |
| 80.75 | % |
| Huang Zhifei | |
| 0 | | |
| -- | |
| Chen Zhuowen | |
| 0 | | |
| -- | |
| All officers and directors
as a group (3 persons) | |
| 47,130,000 | | |
| 80.75 | % |
| (1) | Ownership
is of record and beneficial unless otherwise noted. |
AMENDMENT
OF THE CERTIFICATE OF INCORPORATION
TO
EFFECT A REVERSE SPLIT OF THE COMMON STOCK
The
Board of Directors of the Company has adopted a resolution to amend the certificate of incorporation so as to effect a reverse split
of the Company’s common stock in a ratio of 1-for-10 (the “Reverse Split”). Zhong Zhuowei, the holder of shares representing
a majority of the voting power of the Company’s outstanding stock, has given his written consent to the resolution.
Our
Board of Directors believes it is in our best interest to implement the reverse stock split. We have determined that we must seek both
additional funding and other business relationships, including the addition of key personnel, in order for our Company to prosper. We
believe that the overall economy and, thus, the prospect for advantageous business relationships is presently strong. While we have not
yet committed to any specific plans or agreements, we believe that the currently large number of issued and outstanding shares may negatively
affect the consummation of any such relationship and that a smaller number of issued and outstanding shares will assist in attracting
funding sources or business partners on terms that will be most beneficial to us and our shareholders. As a consequence, the Board and
our majority shareholder have approved resolutions providing for a reverse split of our common stock on a basis of one share for every
ten shares presently outstanding.
Under Florida corporation law, the consent of the holder of a majority
of the voting power is effective as shareholders’ approval. We will file the Amendment with the Secretary of State of Florida on
or after June 14, 2023, and it will become effective on the date of such filing (the “Effective Date”). The Amendment to the
Certificate of Incorporation provides that each ten shares of common stock outstanding on the Effective Date will be exchanged for one
post-Reverse Split share of Company common stock (“New Common Stock”).
After
the Reverse Split, there will be 94,163,343 common shares available for issuance. The Board of
Directors will be authorized to issue the additional common shares without having to obtain the approval of the Company’s
shareholders. Florida law requires that the Board use its reasonable business judgment to assure that the Company obtains “fair
value” when it issues shares. Nevertheless, the issuance of the additional shares would dilute the proportionate interest of current
shareholders in the Company. The issuance of the additional shares could also result in the dilution of the value of shares now outstanding,
if the terms on which the shares were issued were less favorable than the contemporaneous market value of the Company’s common
stock.
The
Reverse Split, with the resulting increase in the number of shares available for issuance, is not being done for the purpose of impeding
any takeover attempt. Nevertheless, the power of the Board of Directors to provide for the issuance of shares of common stock without
shareholder approval has potential utility as a device to discourage or impede a takeover of the Company. In the event that a non-negotiated
takeover were attempted, the private placement of stock into “friendly” hands, for example, could make the Company unattractive
to the party seeking control of the Company. This would have a detrimental effect on the interests of any shareholder who wanted to tender
his or her shares to the party seeking control or who would favor a change in control.
Reverse
Split Procedures; Fractional Shares
On
the Effective Date of the Reverse Split, the outstanding certificates representing shares of the Company’s common stock will be
automatically converted into certificates representing shares of post-reverse common stock (“New Common Stock”). It is not
necessary for a shareholder to obtain a replacement certificate in order to be registered in the record books of the corporation as the
owner of the appropriate number of shares of New Common Stock. Every shareholder who wishes to receive a replacement certificate, however,
may do so by surrendering to the Transfer Agent his certificate representing shares of pre-Reverse Split common stock and paying the
Transfer Agent’s standard fee. In exchange, he will receive a replacement certificate representing the appropriate number of shares
of New Common Stock. The name and address of the Transfer Agent are:
VStock
Transfer, LLC
18
Lafayette Place
Woodmere,
New York 11598
212-828-8436
To
avoid the existence of fractional shares of our common stock, a stockholder who would otherwise hold a fractional share as a result of
the Reverse Stock Split will be entitled to receive one full share of common stock in lieu of such fractional shares upon surrender of
his stock certificates to our transfer agent.
AMENDMENT
OF THE ARTICLES OF INCORPORATION
TO
AUTHORIZE BLANK CHECK PREFERRED STOCK
On May 1, 2023, the JRSIS Health Care Corporation Board of Directors
approved an amendment to JRSIS Health Care Corporation’s Articles of Incorporation to increase the authorized capital stock to include,
with the 100,000,000 shares of common stock already authorized, 2,000,000 shares of preferred stock, par value $.001 per share. The preferred
shares will be “blank check” shares, meaning that the Board of Directors will have the authority to determine the rights,
preferences and limitations associated with the shares, without having to seek a vote of shareholders. On May 1, 2023, the holder of a
majority of the voting power of the outstanding voting stock gave his written consent to the amendment. The amendment will be filed and
become effective on or after June 14, 2023.
The
Board of Directors and the majority shareholder have approved the authorization of preferred stock in order to provide JRSIS Health Care
Corporation with flexibility in pursuing its long-term business objectives. The primary reasons for the increase are:
| ● | Management
may utilize the additional shares in connection with its acquisition of additional business
enterprises. |
| ● | Management
may utilize the additional shares in connection with other corporate acquisitions, joint
venture arrangements, or for other corporate purposes, including the solicitation and compensation
of key personnel. |
| ● | Management
expects that in the future it will pursue opportunities to obtain the capital that JRSIS
Health Care Corporation will need in order to operate a business successfully. A reserve
of both common and preferred shares available for issuance from time-to-time will enable
JRSIS Health Care Corporation to entertain a broad variety of financing proposals. |
After
the Effective Date, the Board of Directors will be authorized to issue 2,000,000 shares of Preferred Stock without having to obtain the
approval of JRSIS Health Care Corporation’s shareholders. The Board will have the authority to provide for the issuance of the
Preferred Stock in one or more series, and to establish the number of shares in each series and the designation, relative rights, preferences
and limitations of the shares in each series. Florida law requires that the Board use its reasonable business judgment in determining
the rights and preferences of the Preferred Stock, as well as the consideration the Company will receive in exchange for issuing the
shares. Nevertheless, preferred stock often has rights and preferences greater than those associated with common stock. Therefore, the
issuance of the Preferred Stock by JRSIS Health Care Corporation could be disadvantageous to holders of our common stock in one or more
of the following ways:
| ● | The
issuance of Preferred Stock could diminish the value of common shares now outstanding, if
the rights and preferences associated with the Preferred Stock exceeded those associated
with JRSIS Health Care Corporation common stock. |
| ● | The
issuance of Preferred Stock that was convertible into common stock could result in the dilution
of the value of common shares now outstanding, if the conversion price were less than the
current market price of our common stock. |
| ● | The
issuance of Preferred Stock with preferential voting rights could diminish the voting power
of the holders of the common stock. |
The
amendment of the Articles of Incorporation is not being done for the purpose of impeding any takeover attempt. Nevertheless, the power
of the Board of Directors to provide for the issuance of shares having rights and preferences to be determined by the Board without shareholder
approval has potential utility as a device to discourage or impede a takeover of JRSIS Health Care Corporation In the event that a non-negotiated
takeover were attempted, the private placement of preferred stock into “friendly” hands, or the issuance of preferred stock
upon terms very favorable to the preferred shareholder, for example, could make JRSIS Health Care Corporation unattractive to the party
seeking control of JRSIS Health Care Corporation This would have a detrimental effect on the interests of any shareholder who wanted
to tender his or her shares to the party seeking control or who would favor a change in control.
No
Dissenters Rights
Under
Florida law, shareholders are not entitled to dissenters’ rights with respect to the amendment of the Articles of Incorporation
to implement the Reverse Split and to increase the authorized capital stock.
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