AtlasClear Holdings Inc

PROPOSAL 6

APPROVAL OF AN AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A RECLASSIFICATION AND CONVERSION OF EACH OUTSTANDING SHARE OF COMMON STOCK INTO ONE-THIRD OF A SHARE OF COMMON STOCK (E.G. A 1-FOR-3 REVERSE STOCK SPLIT) IN THE FORM ATTACHED AS ANNEX 1 AND TO AUTHORIZE OUR BOARD OF DIRECTORS TO IMPLEMENT OR ABANDON THE AMENDMENT NO LATER THAN NOVEMBER 30, 2025 (THE “REVERSE STOCK SPLIT PROPOSAL”)

Overview

Our Board of Directors has adopted a resolution authorizing us to submit to our stockholders a proposed amendment to our amended and restated certificate of incorporation (the “Proposed Reverse Stock Split Amendment”) which contemplates a reverse stock split of shares of our outstanding Common Stock, at an exchange ratio of 1-for-3. Stockholder approval of the amendment will authorize our Board of Directors, in its discretion, to effect a reverse stock split, at that exchange ratio at any time (but in no event later than November 30, 2025).

On October 21, 2024, our stockholders approved four proposed amendments to our Amended and Restated Certificate of Incorporation that gave our Board of Directors discretion to effect a reverse stock split at the exchange ratio of 1-for-30 (e.g., Amendment 1), at the exchange ratio of 1-for-40 (e.g., Amendment 2), at the exchange ratio of 1-for-50 (e.g., Amendment 3), or at the exchange ratio of 1-for-60 (e.g., Amendment 4) and to abandon the other amendments at any time prior to the effectiveness of its filing with the Secretary of State of the State of Delaware notwithstanding the authorization of the amendment(s) by the stockholders and without further action by the stockholders in accordance with Section 242(c) of the General Corporation Law of Delaware. Our Board of Directors has approved, and currently intends to effect, a reverse stock split at the exchange ratio of 1-for-60 by no later than October 25, 2025.

Our Board of Directors is now seeking stockholder approval of the Proposed Reverse Stock Split Amendment at an exchange ratio of 1-for-3 to provide further flexibility if, in the Board’s discretion, an additional reverse stock split is deemed necessary after implementing the 1-for-60 reverse stock split. Providing our Board of Directors with discretion to file the Proposed Reverse Stock Split Amendment to effect an additional reverse stock split, if needed, will provide our Board with maximum flexibility to react to current market conditions, or market conditions that may develop after the 1-for-60 reverse stock split is implemented, and to therefore maximize our chances of achieving the purposes of the reverse stock splits, and to act in the best interests of our Company and stockholders.

To effect the proposed reverse stock split, we would file the Proposed Reverse Stock Split Amendment. Any fractional share resulting from the exchange ratio for the proposed reverse stock split will be rounded up to the next whole number such that in lieu of fractional shares, each stockholder who would have otherwise been entitled to receive a fractional share of Common Stock will instead receive a whole share of Common Stock as a result of the proposed reverse stock split. The par value of our Common Stock would remain unchanged at $0.0001 per share. The proposed reverse stock split would become effective upon the filing of the Proposed Reverse Stock Split Amendment approved by our Board of Directors and stockholders with the Secretary of State of the State of Delaware. Our Board may elect, in its discretion, not to implement the Proposed Reverse Stock Split Amendment, even if this Proposal 6 to effect the proposed reverse stock split is approved by our stockholders. In that case, the Proposed Reverse Stock Split Amendment would be abandoned.

Purposes of a Reverse Stock Split

Our Board is submitting the amendment proposal to our stockholders for approval with the primary intent of increasing the market price of our Common Stock to enhance our ability to meet the continued listing requirements of the NYSE American and to make our Common Stock more attractive to a broader range of institutional and other investors.

Many institutional investors have policies prohibiting them from holding stocks in their own portfolios which trade at prices below certain levels, which may reduce the number of potential institutional investors who would purchase shares of our Common Stock if our Common Stock continues to trade at its current market price. The anticipated increased price per share that would be effected by a reverse stock split is expected to be attractive to many institutional investors.

In addition, our Board of Directors recognizes that because of the current price per share of our Common Stock, analysts at many leading brokerage firms are reluctant to recommend our Common Stock to their clients, or monitor the activity of our stock. A variety of brokerage house policies and practices tend to discourage individual brokers within those firms from dealing in stocks that trade at a price per share below certain levels. Some of those policies and practices pertain to the payment of brokers’ commissions and to time-consuming procedures that function to make the handling of such stocks unattractive to brokers from an economic standpoint. Additionally, because brokers’ commissions on such stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the current share price of our Common Stock could result in an individual stockholder paying transaction costs that represent a higher percentage of total share value than would be the case if our share price were higher. This factor also may limit the willingness of institutions to purchase our Common Stock.

In our Board of Director’s view, these factors have contributed to a relatively low level of interest in our Company on the part of investment analysts, brokers and professionals and individual investors, which tends to depress the market for our Common Stock.

Furthermore, by potentially increasing our stock price, a reverse stock split would reduce the risk that our Common Stock could be delisted from the NYSE American. Under Section 1003(f)(v) of the NYSE American Company Guide, in the event of a common stock selling for a substantial period of time at a low price per share, NYSE American will consider delisting that stock. Our Common Stock has been traded below one dollar since July 11, 2024. Reducing the number of outstanding shares of our Common Stock should, absent other factors, increase the per share market price of our Common Stock. The Board believes it is in the best interest of the Company and its stockholders to effectuate the reverse stock split to increase the trading price of our Common Stock.

Our Board of Directors has considered the potential harm to us and our stockholders should NYSE American delist our Common Stock. Delisting could adversely affect the liquidity of our Common Stock since alternatives, such as the OTC Bulletin Board and the pink sheets, are generally considered to be less efficient markets. An investor likely would find it less convenient to sell, or to obtain accurate quotations in seeking to buy, our Common Stock on an over-the-counter market. Many investors likely would not buy or sell our Common Stock due to difficulty in accessing over-the-counter markets, policies preventing them from trading in securities not listed on a national exchange or for other reasons.

Our Board of Directors believes that a reverse stock split is a potentially effective means for us to avoid, or at least mitigate, the likely adverse consequences of our Common Stock being delisted from the NYSE American by producing the immediate effect of increasing the bid price of our Common Stock.

In consideration of the foregoing, our Board of Directors has proposed having the discretion to effect the proposed reverse stock splits as a means of increasing the market price per share of our Common Stock.

Factors Influencing the Board of Directors’ Discretion in Implementing a Reverse Stock Split

Our Board currently intends to implement the proposed 1-for-3 reverse stock split if it is deemed necessary after the previously approved 1-for-60 reverse stock split has been implemented, if this Proposal 6 is approved by our stockholders and it believes that such an action is in the best interests of our Company and stockholders. Such determination will be based on factors such as existing and expected marketability and liquidity of our Common Stock; prevailing market conditions; and the likely effect on the market price of our Common Stock. Our Board of Directors also will consider factors such as the historical and projected performance of our Common Stock; our projected performance; prevailing market and industry conditions; and general economic trends; and will place emphasis on the expected closing price of our Common Stock over the short and longer period following the effectiveness of a reverse stock split.

No further action on the part of our stockholders would be required to either implement or abandon the proposed reverse stock split. Notwithstanding approval of the proposed reverse stock split by the stockholders, our Board may, in its discretion, determine to delay the effectiveness of the implementation or abandonment of the proposed reverse stock split, but in no event later than November 30, 2025.

Potential Effects of a Reverse Stock Split

The immediate effect of the implementation of a reverse stock split would be to reduce the number of shares of our outstanding Common Stock and is intended to increase the trading price of our Common Stock. However, we cannot predict the specific effect of any reverse stock split upon the market price of our Common Stock. Based on the data we have reviewed leading up to the amendment proposal, it appears that sometimes a reverse stock split improves stock performance and sometimes it does not, and sometimes a reverse stock split improves overall market capitalization and sometimes it does not. We cannot assure you that the trading price of our Common Stock after a reverse stock split will rise in proportion to the reduction in the number of shares of our Common Stock outstanding as a result of such reverse stock split. Also, we cannot assure you that a reverse stock split would lead to a sustained increase in the trading price of our Common Stock. The trading price of our Common Stock may change due to a variety of factors, such as our operating results and other factors related to our business and general market conditions.

As a summary and for illustrative purposes only, the following table reflects the approximate number of shares of our Common Stock that would be outstanding as a result of the proposed 1-for-3 reverse stock split following the implementation of the previously approved 1-for-60 reverse stock split, based on 23,275,171 shares of our Common Stock outstanding as of the Record Date, without accounting for fractional shares:

The resulting decrease in the number of shares of our Common Stock outstanding could potentially impact the liquidity of our Common Stock on the NYSE American, especially in the case of larger block trades.

Effects on Ownership by Individual Stockholders

Stockholders should recognize that if the proposed reverse stock split is effected, they will own a smaller number of shares of our Common Stock than they currently own (approximately equal to the number of shares owned immediately prior to the reverse stock split divided by sixty, then divided by three, after giving effect to immaterial adjustments that may result from the treatment of fractional shares as described below). Except for such immaterial adjustments that may result from the treatment of fractional shares, a reverse stock split would not affect any stockholder’s percentage ownership interests in our Company or proportionate voting power.

Effect on Warrants and Other Securities

As a result of a reverse stock split, all outstanding warrants entitling their holders to purchase or obtain or convert into shares of our Common Stock would be adjusted, as required by the terms of these securities. In particular, such adjustments would reduce the number of shares of our Common Stock issuable upon the exercise of warrants proportionately based upon the reverse stock split ratio selected by our Board of Directors and, with respect to such warrants, proportionately increase by the same factor the exercise price per share of such warrants. The number of shares of our Common Stock that may be purchased upon exercise of other securities convertible into, or exercisable or exchangeable for, shares of our Common Stock, and the exercise or conversion prices for these securities, will also be ratably adjusted in accordance with their terms upon effectiveness. A reverse stock split would not affect any of the other rights currently accruing to holders of our Common Stock or warrants or other securities convertible into our Common Stock.

Other Effects on Outstanding Shares

If our Board of Directors implements a reverse stock split, then the rights and preferences of the outstanding shares of our Common Stock would remain the same after a reverse stock split. Each whole share of our Common Stock outstanding after a reverse stock split would continue to be fully paid and nonassessable.

While we intend that a reverse stock split will result in an increase in the market price of our Common Stock, a reverse stock split may not increase the market price of our Common Stock in proportion to the reduction in the number of shares of our Common Stock outstanding or result in a permanent increase in the market price of our Common Stock (which depends on many factors, including our performance, prospects and other factors that may be unrelated to the number of shares outstanding).

If a reverse stock split is effected and the market price of our Common Stock declines, the percentage decline as an absolute number and as a percentage of our overall market capitalization may be greater than would occur in the absence of a reverse stock split. Furthermore, the liquidity of our Common Stock could be adversely affected by the reduced number of shares that would be outstanding after a reverse stock split. In addition, a reverse stock split will likely increase the number of our stockholders who own “odd-lots” (less than 100 shares). Stockholders who hold “odd-lots” typically will experience an increase in the cost of selling their shares, as well as potentially greater difficulty in effecting such sales. Brokerage commissions and other costs of transactions in odd-lots are generally higher than the costs of transactions in “round-lot” even multiples of 100 shares.

Our Common Stock is currently registered under Section 12(b) of the Securities Exchange Act of 1934. As a result, we are subject to the periodic reporting and other requirements of the Securities Exchange Act. A reverse stock split would not affect the registration of our Common Stock under the Securities Exchange Act or the listing of our Common Stock on the NYSE American. If a reverse stock split is effected, our Common Stock would continue to be listed on the NYSE American under the symbol “ATCH,” although it would be considered a new listing with a new CUSIP number.

Authorized Shares of Common Stock

A reverse stock split would not affect the numbers of authorized shares of our Common Stock and preferred stock, which would remain at 100,000,000 and 1,000,000, respectively, subject to our stockholders approval of the Authorized Share Increase Proposal. Accordingly, if we decide to implement a reverse stock split, the number of authorized but unissued shares of our Common Stock would increase. Such increased shares of Common Stock available for issuance may be used from time to time for corporate purposes such as raising additional capital, acquisitions of companies or assets and sales of stock or securities convertible into Common Stock.

Procedure for Effecting a Reverse Stock Split and Exchange of Stock Certificates

If our stockholders approve the proposed reverse stock split proposal, our Board of Directors may elect whether or not to effect the proposed reverse stock split at any time, but in no event later than November 30, 2025. A reverse stock split would be implemented by filing the appropriate amendment to our amended and restated certificate of incorporation with the Secretary of State of the State of Delaware, and such reverse stock split would become effective on the date the filing is accepted by the Secretary of State of the State of Delaware.

If a reverse stock split is effected, stockholders holding certificated shares may exchange their stock certificates for new book entry shares, representing the appropriate number of shares of our Common Stock resulting from such reverse stock split (“New Shares”). Our transfer agent, Continental Stock Transfer and Trust Company, would act as the exchange agent for purposes of implementing the exchange of stock certificates for New Shares.As soon as practicable after the effective date of a reverse stock split, stockholders and holders of securities convertible into our Common Stock will be notified of the effectiveness of such reverse stock split. Each stockholder of record on the effective date of a reverse stock split will receive a letter of transmittal from our transfer agent advising of the procedure for surrendering stock certificates representing the number of shares of our Common Stock prior to such reverse stock split (“Old Stock Certificates”) for certificates or book entries representing the New Shares. Pursuant to applicable rules of the NYSE American, a stockholder’s Old Stock Certificates representing shares of our Common Stock cannot be used for either transfers or deliveries made on the NYSE American; thus a stockholder must exchange Old Stock Certificates representing shares of our Common Stock for the New Shares in order to do so.

YOU SHOULD NOT DESTROY YOUR OLD STOCK CERTIFICATES. ALSO, YOU SHOULD

NOT SURRENDER YOUR OLD STOCK CERTIFICATES UNTIL YOU ARE REQUESTED TO DO SO.

As soon as practicable after the surrender to our transfer agent of an Old Stock Certificate, together with a duly executed letter of transmittal and any other documents the transfer agent may specify, the transfer agent will deliver to the person in whose name such Old Stock Certificate had been issued certificates or book entries representing the New Shares.

Until surrendered as contemplated herein, each Old Stock Certificate shall be deemed at and after the effective date of a reverse stock split to represent that reduced number of full shares of our Common Stock resulting from such reverse stock split.

Any stockholder whose Old Stock Certificate has been lost, destroyed or stolen will be entitled to a certificate or book entry representing the relevant New Shares after complying with the requirements that we and our transfer agent customarily apply in connection with lost, destroyed or stolen stock certificate.

No service charges, brokerage commission or transfer taxes will be payable by any holder of an Old Stock Certificate, except that if any certificate or book entry representing the relevant New Shares are to be issued in a name other than that in which the Old Stock Certificate is registered, it will be a condition of such issuance that (i) the person requesting such issuance must pay any applicable transfer taxes or establish to our satisfaction that such taxes are not payable; (ii) the transfer complies with all applicable federal and state securities laws; and (iii) the surrendered certificate is properly endorsed and otherwise in proper form for transfer.

Stockholders who hold uncertificated shares, either as existing holders of book entry shares or as beneficial owners through brokerage or other “street name” accounts, would not be required to take any further actions. They will have their holdings electronically adjusted to give effect to a reverse stock split by our transfer agent (through the Direct Registration System) or, for beneficial owners, by their brokers, banks or other nominees which hold the shares in “street name” for their benefit.

All shares underlying warrants would be automatically adjusted on the effective date of a reverse stock split.

Fractional Shares

No fractional shares will be issued in connection with the reverse stock split. Instead, the fractional shares of Common Stock created as a result of the reverse stock split will be rounded up to the next whole number such that in lieu of fractional shares, each stockholder who would have otherwise been entitled to receive a fractional share of Common Stock shall instead receive a whole share of Common Stock as a result of the reverse stock split. Each holder of Common Stock will hold the same percentage of the outstanding Common Stock immediately following the reverse stock split as that stockholder did immediately before the reverse stock split, except for adjustments due to fractional shares.

Accounting Consequences

The par value of our Common Stock would remain unchanged at $0.0001 per share after implementing a reverse stock split. As a result of the implementation of a reverse stock split, the Common Stock value on our consolidated balance sheet will be reduced in proportion to the size of such reverse stock split, and additional paid-in capital will be increased by the same amount. Our stockholders’ equity, in the aggregate, will remain unchanged.

United States Federal Income Tax Consequences

The following summary describes certain material U.S. federal income tax consequences of the reverse stock split to holders of our Common Stock. This summary addresses the tax consequences only to a beneficial owner of our Common Stock that is a citizen or individual resident of the United States, a corporation organized in or under the laws of the United States or any state thereof or the District of Columbia or otherwise subject to U.S. federal income taxation on a net income basis in respect of our Common Stock (a “U.S. holder”). This summary does not address all of the tax consequences that may be relevant to any particular stockholder, including tax considerations that arise from rules of general application to all taxpayers or to certain classes of taxpayers or that are generally assumed to be known by investors. This summary also does not address the tax consequences to persons that may be subject to special treatment under U.S. federal income tax law or persons that do not hold our Common Stock as “capital assets” (generally, property held for investment). This summary is based on the provisions of the Internal Revenue Code of 1986, as amended, U.S. Treasury regulations, administrative rulings and judicial authority, all as in effect as of the date hereof. Subsequent developments in U.S. federal income tax law, including changes in law or differing interpretations, which may be applied retroactively, could have a material effect on the U.S. federal income tax consequences of the Reverse Stock Split.Each stockholder should consult his, her or its own tax advisor regarding the U.S. federal, state, local and foreign income and other tax consequences of the reverse stock split.

If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our Common Stock, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. Partnerships that hold our Common Stock, and partners in such partnerships, should consult their own tax advisors regarding the U.S. federal income tax consequences of the reverse stock split.

The reverse stock split should be treated as a recapitalization for U.S. federal income tax purposes. Therefore, no gain or loss should be recognized by a U.S. holder upon the reverse stock split. Accordingly, the aggregate tax basis in the Common Stock received pursuant to the reverse stock split should equal the aggregate tax basis in the Common Stock surrendered and the holding period for the Common Stock received should include the holding period for the Common Stock surrendered.

Votes Required

The affirmative vote of the holders of a majority of the outstanding capital stock entitled to vote thereon will be required to approve Proposal 1.

No Appraisal Rights

No appraisal rights are available under the General Corporation Law of the State of Delaware or under our Amended and Restated Certificate of Incorporation or amended and restated bylaws in connection with this proposal.

Annex Relating to Proposal 6

The form of amendment to our Amended and Restated Certificate of Incorporation which is approved by voting “for” Proposal 6, is attached to this proxy statement as Annex 1.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL 6, THE REVERSE STOCK SPLIT PROPOSAL.