ETHK Labs Inc. Announces Reclassification of B-Soft Acquisition as Major Transaction

Key Investor Highlights

• Acquisition of B-Soft (Target Company) Reclassified: ETHK Labs Inc. has reclassified its acquisition of shares and voting rights in B-Soft as a major transaction under Chapter 14 of the Hong Kong Listing Rules, after an initial misinterpretation. This change is triggered by the consolidation of B-Soft’s financials into ETHK Labs group, with applicable percentage ratios exceeding 25% but less than 100%.
• Regulatory Non-Compliance and Remedial Actions: The company acknowledges it did not initially comply with rules requiring a shareholder circular and approval for major transactions. ETHK Labs will convene an Extraordinary General Meeting (EGM) by April 2026 to rectify this and seek shareholder approval.
• Strengthened Internal Controls: Immediate steps have been taken to enhance internal review processes, require finance and company secretary department involvement, consult external advisers, and provide training to directors and relevant personnel on compliance with Listing Rules.
• Strategic Rationale for Acquisition: ETHK Labs expects substantial synergies from integrating B-Soft’s healthcare IT with its in-vitro diagnostics (IVD) business, leveraging complementary data assets, channel networks, R&D partnerships, and ecosystem integration, which should enhance value creation and market positioning.
• B-Soft’s Financials and Impairment Losses: B-Soft reported a significant operating loss of RMB162.99 million in 2024, mainly due to RMB101.10 million goodwill impairment and RMB139.33 million impairment on trade receivables. Excluding these, B-Soft would have reported an operating profit of RMB77.44 million. Management views these impairments as non-recurring, with expected improvement in receivables recoverability.
• Integration and Growth Prospects: B-Soft will act as the central HIT platform within ETHK Labs’ IVD ecosystem, enabling efficient integration of diagnostic products, AI solutions, and hospital workflows. The group expects improved operational efficiency, customer retention, and scalable deployment across its network of over 1,700 tertiary hospitals in China.
• Risk Factors: The company notes risks of further goodwill impairment if acquired businesses deteriorate or fail to integrate effectively, but reassures that 2024 impairments arose from conservative valuation assumptions rather than structural business deterioration.
• Enhanced Internal Control Policies: ETHK Labs has implemented new procedures for transaction assessment, requiring finance and company secretary review, Board approval, and external consultation before execution of notifiable transactions, reducing risk of future compliance breaches.
• Timeline: The company expects to dispatch the shareholder circular no later than 17 April 2026 and hold the EGM in April 2026.
• Key Parties: The Vendor is Mr. Ge Hang; the Private Fund involved is Jinfuyuan (Hainan) Private Fund Management Partnership, with ultimate beneficial owners Mr. Cui Jianhua (61%) and Mr. Liu Rui (39%). Both are independent third parties.

Details Shareholders Must Know and Possible Price Sensitive Information

• Transaction Reclassification: The correction from a discloseable to a major transaction is a material event that may affect investor confidence, as it reflects greater integration and consolidation of B-Soft into ETHK Labs, potentially impacting future financial results.
• Regulatory Compliance: The company’s initial non-compliance and remedial actions, including shareholder approval, may affect perceptions of governance but signal a commitment to regulatory adherence.
• Financial Impact: The significant impairment losses in B-Soft’s 2024 results are one-off in nature. Investors should note management’s expectation of improved recoverability and the absence of structural business deterioration.
• Strategic Integration: The acquisition enhances ETHK Labs’ position in the digital healthcare and diagnostics market. The integration of B-Soft’s HIT platform with ETHK Labs’ IVD products and AI solutions may drive future revenue growth and strengthen competitive advantages.
• Enhanced Ecosystem: B-Soft will serve as the core information system layer within ETHK Labs’ IVD ecosystem, vital for deploying diagnostic tools and AI applications in hospitals. This integration is expected to improve operational efficiency, customer stickiness, and facilitate scalable deployments.
• Risks of Future Impairments: If macroeconomic conditions worsen or integration fails, further goodwill impairment may occur, negatively impacting future profits.
• EGM and Shareholder Approval: The upcoming EGM and circular are critical events. Shareholders will have the opportunity to approve and rectify the acquisition, which is a necessary step for compliance and may be price sensitive.
• Forward-Looking Statements: The announcement contains forward-looking statements regarding synergies, integration, and financial improvement, subject to risks and uncertainties.

Comprehensive Chronology & Remedial Measures

• Initial discussions for acquisition began on 10 November 2025, with agreements executed on 12 and 14 November 2025.
• Announcement was published after SZSE approval on 16 November 2025. Share transfer was completed on 10 February 2026.
• Remedial measures include immediate supplemental announcement, dispatching a circular by 17 April 2026, holding an EGM in April 2026, strengthened internal controls, and additional training for directors and company secretary.

Conclusion & Outlook

The reclassification of ETHK Labs’ acquisition of B-Soft as a major transaction, coupled with the expected integration and ecosystem synergies, marks a significant strategic shift that could materially impact the company’s future performance and share value. While recent financial losses in B-Soft are explained as non-recurring, the long-term prospects hinge on successful integration, improved operational efficiency, and robust internal controls. Investors should closely monitor the upcoming EGM, regulatory compliance measures, and progress in post-acquisition integration.

Disclaimer: This article is provided for informational purposes only and does not constitute investment advice. Forward-looking statements are subject to risks and uncertainties. Readers should not rely solely on this article for investment decisions and are advised to consult their own financial advisers. The actual outcomes may differ from those discussed herein. ETHK Labs Inc. and the reporter assume no responsibility to update, correct, or supplement this article.

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