CEA Industries Inc. Announces Reverse Stock Split to be Effective June 7, 2024; Publicly Traded Warrant Adjustment
CEA Industries announced a 1-for-12 reverse stock split effective June 7, 2024. Each twelve shares of common stock will be converted into one share. Publicly traded common stock purchase warrants will also be adjusted, allowing each 12 warrants to acquire one share at a revised price of $60.00. The reverse split aims to maintain the company's Nasdaq listing. However, there is no assurance that the stock price will reflect the reverse split ratio or remain above the pre-split price. Shares will trade on a split-adjusted basis from June 7, 2024, with new CUSIP number 86887P309. Fractional shares will be rounded up to the next whole share.
- Reverse stock split aims to maintain Nasdaq listing.
- Shares will trade on a split-adjusted basis starting June 7, 2024.
- Fractional shares will be rounded up to the next whole share, benefiting investors with small holdings.
- No assurance that post-split stock price will reflect the reverse split ratio.
- No guarantee that stock price will remain above the pre-split trading price.
- Shareholders may face uncertainty due to stock price volatility post-split.
Insights
The reverse stock split by CEA Industries Inc. is mainly aimed at maintaining compliance with the Nasdaq Capital Market’s listing requirements, which often include a minimum share price. By consolidating twelve shares into one, the company intends to boost its stock price, potentially making it more appealing to institutional investors who might be restricted from buying stocks below a certain price.
Short-term implications: In the short-term, stock splits don't inherently change the underlying value of the company. However, they can influence investor perception. If investors read this as a positive move towards strengthening the company’s market position, there might be temporary upticks in stock price due to increased buying.
Long-term implications: Over the long-term, the success of this move depends on the company’s operational performance. If they manage to continue meeting or exceeding earnings expectations, the reverse split could be beneficial. However, if not, the stock price might decline back to pre-split levels or lower.
Investor risks: Investors should note the company’s own caution that they cannot guarantee the stock price will remain elevated post-split. This maneuver is often seen as a red flag indicating the stock has been underperforming and there is a risk it might continue to do so if underlying business challenges remain unaddressed.
From a market research standpoint, reverse stock splits are often employed by companies facing delisting threats due to low stock prices. By implementing a 1-for-12 reverse split, CEA Industries aims to prevent such delisting, maintaining investor interest and confidence.
Market sentiment: Historically, market reactions to reverse stock splits can be mixed. While some investors might see it as a positive restructuring effort, others might perceive it as a sign of ongoing or previous financial struggles. Therefore, investor sentiment might be volatile around the implementation date.
Competitor analysis: It’s insightful to compare this move with industry peers. If competitors aren’t resorting to similar measures, it might suggest differing financial health or strategic priorities. Investors should consider how CEA Industries’ actions align with broader industry trends and whether similar companies have successfully navigated post-split scenarios.
Warrant adjustments: The adjustment of publicly traded warrants is crucial. For warrant holders, the new terms might affect the attractiveness of exercising these instruments. Investors holding or considering warrants should carefully evaluate the new exercise price and their own expectations of the company's future stock performance.
Louisville, Colorado, June 04, 2024 (GLOBE NEWSWIRE) -- CEA Industries Inc. (the “Company”) (NASDAQ: CEAD) announced that it approved a 1-for-12 reverse stock split of the outstanding shares of common stock and corresponding adjustment to the publicly traded common stock purchase warrants.
Pursuant to the reverse stock split, each twelve (12) shares of the Company’s outstanding common stock,
The Company will continue to be subject to periodic reporting and other requirements under the Securities and Exchange Act and the common stock and common stock purchase warrants will continue to be listed on the Nasdaq Capital Market “CEAD” and “CEADW,” respectively.
Tony McDonald, Chairman and CEO of the Company, indicated that the purpose of the reverse stock split is to maintain the Company’s listing of its common stock and publicly traded common stock purchase warrants on the Nasdaq Capital Market. The Company, however, cannot assure that the price of its common stock after the reverse stock split will reflect the reverse split ratio, that the price per share following the reverse split will be maintained for any period of time, or that the price will remain above the pre-split trading price.
Shares of the Company’s common stock have been assigned a new CUSIP number (86887P309). The common stock purchase warrants will retain their current CUSIP number.
The common stock is expected to begin trading on a split-adjusted basis, beginning on Friday, June 7, 2024.
No fractional shares will be issued and any fractional shares resulting from the reverse stock split will be rounded up to the next whole share. Stockholders holding shares of CEAD common stock at registered brokerage firms should consult with their broker for further information on their account. Stockholders who hold shares with our transfer agent will receive information in the mail about their accounts over the next few days.
About CEA Industries Inc.
CEA Industries Inc. (www.ceaindustries.com) provides a suite of complementary and adjacent offerings to the controlled environment agriculture industry. The Company’s comprehensive solutions, when aligned with industry operators’ product and sales initiatives, support the development of the global ecosystem for indoor cultivation.
Forward Looking Statements
This press release may contain statements of a forward-looking nature relating to future events. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. These statements reflect our current beliefs, and a number of important factors could cause actual results to differ materially from those expressed in this press release, including the factors set forth in “Risk Factors” set forth in our annual and quarterly reports filed with the Securities and Exchange Commission (“SEC”), and subsequent filings with the SEC. Please refer to our SEC filings for a more detailed discussion of the risks and uncertainties associated with our business, including but not limited to the risks and uncertainties associated with our business prospects and the prospects of our existing and prospective customers; the inherent uncertainty of product development; regulatory, legislative and judicial developments, especially those related to changes in, and the enforcement of, cannabis laws; increasing competitive pressures in our industry; and relationships with our customers and suppliers. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. The reference to CEA’s website has been provided as a convenience, and the information contained on such website is not incorporated by reference into this press release.
Investor Contact:
Sean Mansouri, CFA
Elevate IR
info@ceaindustries.com
(720) 330-2829
FAQ
What is the effective date of CEA Industries' reverse stock split?
What is the ratio for CEA Industries' reverse stock split?
How will the CEAD stock purchase warrants be adjusted?
Will CEA Industries' stock continue to be listed on Nasdaq after the reverse stock split?
What is the new CUSIP number for CEAD common stock post-split?
What happens to fractional shares in the reverse stock split?
Can the reverse stock split impact the stock price of CEAD?
