ZW Data Action Technologies Inc. Announces Reverse Stock Split

Rhea-AI Summary

ZW Data Action Technologies Inc. (Nasdaq: CNET) has announced a 1-for-4 reverse stock split of its common stock, effective September 30, 2024. The company's shares will continue trading on Nasdaq under the symbol 'CNET' with a new CUSIP number 98880R 307. This move will reduce the authorized shares from 50,000,000 to 12,500,000 and correspondingly decrease the issued and outstanding shares.

The reverse split aims to regain compliance with Nasdaq's $1.00 minimum bid price requirement. Stockholders' ownership percentages and voting power will remain largely unchanged, except for minor adjustments due to fractional shares. No fractional shares will be issued, and stockholders who would receive fractional shares will instead receive one whole share.

Stockholders with electronic holdings need not take action, while those holding paper certificates may send them to the company's transfer agent, Empire Stock Transfer, for new certificates.

Positive

• Potential to regain compliance with Nasdaq's $1.00 minimum bid price requirement
• Maintenance of Nasdaq listing, ensuring continued market visibility and liquidity

Negative

• Reduction in the number of outstanding shares, which may impact liquidity
• Possible negative market perception of companies implementing reverse stock splits

Insights

Financial Analyst

The announced 1-for-4 reverse stock split is a significant move by ZW Data Action Technologies to address its listing compliance issues with Nasdaq. This action is primarily aimed at boosting the stock price above the $1.00 minimum bid requirement, which is important for maintaining its Nasdaq listing. While reverse splits don't inherently change a company's value, they can have mixed implications:

• Positive aspects: Maintaining Nasdaq listing provides better liquidity and visibility for investors. It may also attract institutional investors who have minimum price thresholds.
• Concerns: Reverse splits are often viewed negatively by the market, as they can signal financial distress. The reduced share count might lead to decreased liquidity in the short term.

Investors should note that this move doesn't address underlying business challenges. The company's market cap of about $4 million suggests it's a micro-cap stock, which carries higher risks. While the split may provide temporary relief, long-term viability will depend on improved financial performance and growth strategies.

Market Research Analyst

ZW Data's reverse stock split reflects broader trends in the small-cap tech sector, where companies often struggle to maintain Nasdaq listings amid challenging market conditions. Key points for investors:

• The 1-for-4 ratio is relatively moderate, potentially minimizing negative market perception compared to more drastic ratios.
• Post-split, the company's float will be significantly reduced, which could lead to increased volatility.
• Historical data shows mixed long-term outcomes for companies post-reverse split, with many failing to sustain price improvements.

The company's focus on online advertising and data analytics puts it in a competitive, fast-evolving sector. Investors should closely monitor ZW Data's ability to leverage its reduced share count to attract new capital and fund growth initiatives. The success of this move will largely depend on the company's ability to demonstrate improved fundamentals and execute on its business strategy in the coming quarters.

BEIJING, Sept. 25, 2024 (GLOBE NEWSWIRE) -- ZW Data Action Technologies Inc. (Nasdaq: CNET) (“ZW Data” or the “Company”), an integrated online advertising, precision marketing, data analytics, and other value-added services company, announced today that its Board of Directors has approved a reverse stock split of its common stock, par value $0.001 per share (the “Common Stock”) at a ratio of 1-for-4 (the “Reverse Stock Split”). The Reverse Stock Split will take effect on September 30, 2024, and the shares of the Company will trade on a post-split basis on Nasdaq under the Company’s existing trading symbol “CNET,” at the market open on September 30, 2024, upon Nasdaq’s approval. The new CUSIP number following the Reverse Stock Split will be 98880R 307.

Under Nevada Revised Statutes (“NRS”) Section 78.207, the Company may decrease its authorized shares of Common Stock and correspondingly decrease the number of issued and outstanding shares of Common Stock by resolution adopted by the Board of Directors, without obtaining the approval of the stockholders. The Reverse Stock Split will be effected by the Company filing a Certificate of Change (the “Certificate”) pursuant to NRS Section 78.209 with the Secretary of State of the State of Nevada. As a result of the filing of the Certificate, the number of shares of the Company’s authorized Common Stock will be reduced from 50,000,000 shares to 12,500,000 shares and the issued and outstanding number of shares of the Common Stock will be correspondingly decreased.

When the Reverse Stock Split becomes effective, the total number of shares of Common Stock held by each stockholder of the Company will be converted automatically into the number of shares of Common Stock equal to (i) the number of issued and outstanding shares of Common Stock held by each such stockholder immediately prior to the Reverse Stock Split, divided by (ii) 4, with such resulting number of shares rounded up to the nearest whole share. The Company will issue one whole share of the post-Reverse Stock Split Common Stock to any stockholder who otherwise would have received a fractional share as a result of the Reverse Stock Split. As a result, no fractional shares will be issued in connection with the Reverse Stock Split and no cash or other consideration will be paid in connection with any fractional shares that would otherwise have resulted from the Reverse Stock Split.

The Reverse Stock Split has no effect on the par value of the Company’s Common Stock or authorized shares of preferred stock. Immediately after the Reverse Stock Split, each stockholder’s percentage ownership interest in the Company and proportional voting power will remain unchanged, except for minor changes and adjustments that will result from the treatment of fractional shares. The rights and privileges of the holders of shares of Common Stock will be substantially unaffected by the Reverse Stock Split.

The Reverse Stock Split is primarily being effected to regain compliance with the $1.00 minimum bid price required for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2).

Stockholders who are holding their shares in electronic form at brokerage firms do not need to take any action, as the effect of the Reverse Stock Split will automatically be reflected in their brokerage accounts. Stockholders holding paper certificates may (but are not required to) send the certificates to the Company’s transfer agent and registrar, Empire Stock Transfer. Empire Stock Transfer will issue a new stock certificate reflecting the Reverse Stock Split to each requesting stockholder.

About ZW Data Action Technologies Inc.

Established in 2003 and headquartered in Beijing, China, ZW Data Action Technologies Inc. (the “Company”) offers online advertising, precision marketing, data analytics and other value-added services for enterprise clients. Leveraging its fully integrated services platform, proprietary database, and cutting-edge algorithms, ZW Data Action Technologies delivers customized, result-driven business solutions for small and medium-sized enterprise clients in China. The Company also develops blockchain and artificial intelligence enabled web/mobile applications and software solutions for clients. More information about the Company can be found at: http://www.zdat.com/.

Forward-looking Statement

This release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements give our current expectations, opinion, belief or forecasts of future events and performance. A statement identified by the use of forward-looking words including “will,” “may,” “expects,” “projects,” “anticipates,” “plans,” “believes,” “estimate,” “should,” and certain of the other foregoing statements may be deemed forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including market and other conditions. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company’s filings with the SEC. Investors and security holders are urged to read these documents free of charge on the SEC’s web site at http://www.sec.gov. The Company undertakes no obligation to update any such forward-looking statements after the date hereof to conform to actual results or changes in expectations, except as required by law.

For more information, please contact:
ZW Data Action Technologies Inc.
Email: wanmeng@chinanet-online.com
Phone: +86 13522831530

FAQ

What is the reverse stock split ratio announced by ZW Data Action Technologies (CNET)?

ZW Data Action Technologies (CNET) announced a 1-for-4 reverse stock split, effective September 30, 2024.

Why is ZW Data Action Technologies (CNET) implementing a reverse stock split?

The primary reason for the reverse stock split is to regain compliance with Nasdaq's $1.00 minimum bid price requirement for continued listing on The Nasdaq Capital Market.

How will the reverse stock split affect CNET's authorized shares?

The reverse stock split will reduce ZW Data Action Technologies' authorized shares of Common Stock from 50,000,000 to 12,500,000.

Will CNET shareholders need to take any action due to the reverse stock split?

Shareholders holding shares electronically do not need to take any action. Those holding paper certificates may send them to the company's transfer agent, Empire Stock Transfer, for new certificates.