Brainhole Technology Limited Announces Major Transaction: Further Disposal of TeraWulf Shares

Key Highlights

• Major Transaction: Brainhole Technology Limited (Stock Code: 2203) has disposed of 212,300 shares of TeraWulf Inc. in the open market on 4 March 2026 for approximately US\$3.2 million (HK\$24.5 million), excluding transaction costs.
• Aggregate Disposal: This follows a previous disposal of 126,000 TeraWulf Shares on 3 November 2025, bringing the total disposed within 12 months to 338,300 shares for an aggregate consideration of approximately US\$5.1 million (HK\$39.6 million).
• Listing Rules: The aggregated disposals constitute a “major transaction” under Chapter 14 of the Hong Kong Listing Rules, as the applicable percentage ratios exceed 25% but are less than 75%.
• Shareholder Approval: Written shareholder approval was obtained from Yoho Bravo Limited, which holds approximately 74.96% of the issued share capital. No extraordinary general meeting will be convened.
• Financial Impact: The Group expects to recognize a gain of about US\$0.2 million (HK\$1.4 million) from the further disposal, based on the difference between the sale proceeds and acquisition costs.
• Use of Proceeds: Approximately US\$2.4 million (HK\$18.9 million) has been allocated for the acquisition of shares in Applied Optoelectronics, Inc. and AXT, Inc., with the remaining US\$0.8 million (HK\$5.6 million) intended for working capital and other investments.
• TeraWulf Financials: TeraWulf reported revenue of US\$140.1 million in 2024 and US\$168.4 million in 2025, but net losses of US\$72.4 million and US\$661.4 million, respectively. Its net asset value dropped from US\$244.4 million to US\$140.4 million over the period.
• Open Market Transaction: The disposal was executed at an average price of US\$14.86 per share (HK\$115.64), and the identities of counterparties are not known but confirmed as independent third parties.
• Circular to Shareholders: A circular detailing the transaction and required disclosures will be sent to shareholders within 15 business days after announcement (by 25 March 2026).

Details for Investors

Brainhole Technology Limited has strategically disposed of a substantial holding in TeraWulf Inc., a Nasdaq-listed digital asset technology company specializing in digital asset mining and high-performance computing. The move allows Brainhole to reallocate resources and diversify its investment portfolio, including new investments in Applied Optoelectronics, Inc. and AXT, Inc.

The transaction was classified as a major transaction under Hong Kong Listing Rules due to the percentage ratios involved, triggering strict reporting, announcement, and shareholder approval requirements. However, given the controlling stake held by Yoho Bravo Limited, written approval was sufficient, and no general meeting will be called.

The financial impact is positive, with a projected gain on disposal and proceeds being redeployed for further investment and working capital. Investors should note that the disposal was made at prevailing market prices and was deemed fair and reasonable by the Board.

TeraWulf’s financial performance, marked by significant losses and declining net asset value, may have influenced the decision to exit further holdings. The company’s business in digital asset mining remains volatile, and Brainhole’s shift could reflect a cautious approach amid sector uncertainties.

Shareholder Considerations & Price Sensitivity

• The disposal represents a major change in Brainhole’s investment strategy, potentially impacting future earnings and risk profile.
• The redeployment of funds into new technology stocks and for working capital suggests an active portfolio management stance, which may affect market perception and share value.
• No shareholders are required to abstain from voting; the controlling shareholder’s approval ensures the transaction proceeds without delay.
• TeraWulf’s ongoing financial losses and asset decline could be viewed as negative, but Brainhole’s gain on disposal and portfolio diversification may be positive for share valuation.
• The announcement and subsequent circular may lead to increased investor scrutiny and possible share price movement, depending on market reaction to the company’s investment strategy.

Conclusion

This major disposal, immediate gain, and strategic portfolio reallocation are significant developments for Brainhole Technology Limited, with clear implications for shareholders. The transaction and its rationale, coupled with the financial details of TeraWulf and new investments, are potentially price sensitive and could influence the share price depending on investor sentiment and market response.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consult professional advisers before making investment decisions. The information is based on the company announcement and may be subject to change or interpretation.

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