Item
1.01 Entry into a Material Definitive Agreement.
As previously disclosed, on January 31, 2022,
Mountain Crest Acquisition Corp. III, a Delaware corporation (“MCAE”), entered into that certain Agreement and
Plan of Merger, as amended by that certain Amendment to the Merger Agreement, dated as of June 7, 2022 (the “Merger Agreement”),
by and among MCAE, Etao International Group, a Cayman Islands corporation (the “Company”), and Wensheng Liu,
in his capacity as the Company Shareholders’ Representative (the “Shareholders’ Representative”),
pursuant to which, among other things, (1) MCAE will merge with and into a to be formed Cayman Islands company (“Purchaser”),
with the Purchaser being the surviving corporation in the merger (the “Redomestication Merger”) and (2) the
Company will merge with and into a to be formed Cayman Islands company and the wholly owned subsidiary of the Purchaser (“Merger
Sub”), with the Company as the surviving corporation in the merger (the “Acquisition Merger”),
and, after giving effect to the Acquisition Merger, the Company being a wholly owned subsidiary of Purchaser and the Purchaser will change
its name to Etao International Co., Ltd. (collectively, the “Business Combination”). The Merger Agreement provides,
that the outside date for the closing of the Business Combination was October 5, 2022 (the “Outside Date”).
All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Merger Agreement.
On June 30, 2022, MCAE formed ETAO International
Co., Ltd., as a wholly owned subsidiary and a Cayman Islands exempted company to be the Purchaser under the Merger Agreement. Also on
June 30, 2022, MCAE formed ETAO Merger Sub, Inc., as a wholly owned subsidiary of ETAO International Co., Ltd. and a Cayman Islands exempted
company to be the Merger Sub under the Merger Agreement. On July 26, 2022, MCAE, the Company, the Shareholders’ Representative,
ETAO International Co., Ltd. and ETAO Merger Sub, Inc., entered into a Joinder Agreement to the Merger Agreement, that expressly amended
and modified the Merger Agreement, by admitting ETAO International Co., Ltd. and ETAO Merger Sub, Inc. as parties to the Merger Agreement
and fully binding them to all of the covenants, terms, representation, warranties, rights, obligations and conditions of the Merger Agreement
applicable to such party as though an original party thereto.
The foregoing summary of the Joinder Agreement
does not purport to be complete and is qualified in its entirety by reference to the actual Joinder Amendment which is filed with this
Current Report on Form 8-K as Exhibit 2.1 and is incorporated herein by reference.
Item
1.02 Termination of a Material Definitive Agreement.
As previously disclosed, in connection with the
proposed Merger, MCAE and the Company obtained a commitment from SME Investment Group Co., Ltd. (the “Subscriber”)
to purchase 250,000 ordinary shares of the Purchaser in connection with the Closing (the “PIPE Shares”), for
an aggregate cash amount of $250,000,000 at a purchase price of $10.00 per share, in a private placement (the “PIPE”).
Such commitment was made by way of a Subscription Agreement, dated January 26, 2022 (the “PIPE Subscription Agreement”),
by and among MCAE and the Subscriber. On July 25, 2022, MCAE and the Subscriber terminated the PIPE Subscription
Agreement by mutual consent by executing a Mutual Termination Agreement, dated as of July 25, 2022. Pursuant to the Mutual Termination
Agreement, the PIPE Subscription Agreement is void and of no further force and effect, and all rights and obligations of the parties thereunder
have terminated.
The foregoing summary of the Mutual
Termination Agreement does not purport to be complete and is qualified in its entirety by reference to the actual Mutual
Termination Agreement which is filed with this Current Report on Form 8-K as Exhibit 2.2 and is incorporated herein by reference.
IMPORTANT NOTICES
Important Notice Regarding Forward-Looking
Statements
This Current Report on Form 8-K contains certain
“forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, both
as amended. Statements that are not historical facts, including statements about the pending transactions described above, and the parties’
perspectives and expectations, are forward-looking statements. Such statements include, but are not limited to, statements regarding the
proposed transaction, including the anticipated initial enterprise value and post-closing equity value, the benefits of the proposed transaction,
integration plans, expected synergies and revenue opportunities, anticipated future financial and operating performance and results, including
estimates for growth, the expected management and governance of the combined company, and the expected timing of the transactions. The
words “expect,” “believe,” “estimate,” “intend,” “plan” and similar expressions
indicate forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to various
risks and uncertainties, assumptions (including assumptions about general economic, market, industry and operational factors), known or
unknown, which could cause the actual results to vary materially from those indicated or anticipated.
The forward-looking statements are based on the
current expectations of the management of MCAE and the Company, as applicable, and are inherently subject to uncertainties and changes
in circumstances and their potential effects and speak only as of the date of such statement. There can be no assurance that future developments
will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions
that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements
including: risks related to the Company’s businesses and strategies; the ability to complete the proposed business combination due
to the failure to obtain approval from MCAE’s stockholders or satisfy other closing conditions in the definitive merger agreement;
the amount of any redemptions by existing holders of MCAE’s common stock; the ability to recognize the anticipated benefits of the
business combination; other risks and uncertainties included under the header “Risk Factors” in the Form 10-K for the year
ended December 31, 2021 filed by MCAE on March 7, 2022, the Registration Statement to be filed by MCAE, the final prospectus of MCAE for
its initial public offering, dated May 17, 2021; and in MCAE’s other filings with the SEC. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or
anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements.
Forward-looking statements relate only to the date they were made, and MCAE, the Company and their subsidiaries undertake no obligation
to update forward-looking statements to reflect events or circumstances after the date they were made except as required by law or applicable
regulation.
Additional Information and Where to Find It
In connection with the transaction described herein,
MCAE and and/or its subsidiaries will file relevant materials with the Securities and Exchange Commission (the “SEC”), including
the Registration Statement on Form F-4 and a proxy statement (the “Registration Statement”). The Registration Statement will
include a proxy statement to be distributed to holders of MCAE’s common stock in connection with MCAE’s solicitation of proxies
for the vote by MCAE shareholders with respect to the proposed transaction and other matters as described in the Registration Statement,
as well as the prospectus relating to the offer of securities to be issued to the Company’s stockholders in connection with the
proposed business combination. After the Registration Statement has been filed and declared effective, MCAE will mail a definitive proxy
statement, when available, to its stockholders. Investors and security holders and other interested parties are urged to read the Registration
Statement, any amendments thereto and any other documents filed with the SEC carefully and in their entirety when they become available
because they will contain important information about MCAE, the Company and the proposed business combination. Additionally, MCAE will
file other relevant materials with the SEC in connection with the business combination. Copies of these documents may be obtained free
of charge at the SEC's web site at www.sec.gov. Securityholders of MCAE are urged to read the Registration Statement and the other relevant
materials when they become available before making any voting decision with respect to the proposed business combination because they
will contain important information. The Registration Statement and proxy statement, once available, may also be obtained without charge
at the SEC’s website at www.sec.gov or by writing to MCAE at 311 West 43rd Street, 12th Floor, New York, NY 10036. INVESTORS AND
SECURITY HOLDERS OF MCAE ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS
IN CONNECTION WITH THE TRANSACTIONS THAT MCAE WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT MCAE, THE COMPANY AND THE TRANSACTIONS.
Participants in Solicitation
MCAE, the Company and their respective directors
and executive officers may be deemed participants in the solicitation of proxies with respect to the proposed business combination under
the rules of the SEC. Securityholders may obtain more detailed information regarding the names, affiliations, and interests of certain
of MCAE’s executive officers and directors in the solicitation by reading MCAE’s Registration Statement and other relevant
materials filed with the SEC in connection with the proposed business combination when they become available. Information about MCAE’s
directors and executive officers and their ownership of MCAE common stock is set forth in MCAE’s Form 10-K for the year ended December
31, 2021, as modified or supplemented by any Form 3 or Form 4 filed with the SEC since the date of that filing. Other information regarding
the interests of MCAE’s participants in the proxy solicitation, which in some cases, may be different than those of their stockholders
generally, will be set forth in the Registration Statement relating to the proposed business combination when it becomes available. These
documents can be obtained free of charge at the SEC's web site at www.sec.gov.
The Company and its directors and executive officers
may also be deemed to be participants in the solicitation of proxies from the stockholders of MCAE in connection with the proposed business
combination. A list of the names of such directors and executive officers and information regarding their interests in the proposed business
combination will be included in the Registration Statement for the proposed business combination.
No Offer or Solicitation
This Current Report on Form 8-K is not a proxy
statement or solicitation of a proxy, consent or authorization with respect to any securities or in respect of the transactions described
above and shall not constitute an offer to sell or a solicitation of an offer to buy the securities of MCAE or the Company, nor shall
there be any sale of any such securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior
to registration or qualification under the securities laws of such state or jurisdiction. No offering of securities shall be made except
by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, or an exemption therefrom.
