Edible Garden Announces Reverse Stock Split of the Company’s Common Stock
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Insights
A reverse stock split, such as the one Edible Garden is implementing, typically indicates an effort to boost the stock's market price and ensure compliance with exchange listing requirements. In this case, the 1-for-20 ratio suggests a significant consolidation of shares to prop up the price. From a financial perspective, while the market capitalization remains unaffected, the liquidity of the stock may decrease as the number of shares in circulation is reduced.
Investors should note that while the percentage ownership remains the same, the market's perception of such a move can vary. Some may view it positively, as it could avoid delisting from a major exchange like Nasdaq, while others may interpret it as a sign of underlying issues within the company. Furthermore, the adjustment to warrants and equity awards will maintain their value, but the attractiveness of these instruments could be impacted by the stock's performance post-split.
In the context of controlled environment agriculture (CEA), Edible Garden's reverse stock split reflects broader industry trends where companies are striving for financial stability and investor appeal. The CEA sector is capital-intensive and a higher share price post-split may improve perceptions of financial health and potentially attract institutional investors.
However, the effectiveness of reverse splits in the long term is debatable. Companies in this industry need to balance financial engineering with operational success. Stakeholders should look beyond the reverse split and focus on Edible Garden's ability to innovate, manage costs and maintain sustainable growth in a competitive market. The true test will be the company's subsequent financial performance and ability to leverage its position in organic and sustainable produce.
From a legal standpoint, the reverse stock split follows shareholder approval and board discretion within the previously agreed range, showcasing proper corporate governance. The unchanged par value and the proportionate adjustment of warrants and equity awards are standard procedures to maintain equity value and contractual obligations.
Investors should be aware of the legal implications of fractional share rounding, which can lead to minor changes in total outstanding shares. Additionally, the new CUSIP number is a routine update reflecting changes in the capital structure. These legal formalities, while often viewed as procedural, are critical for ensuring transparency and regulatory compliance.
BELVIDERE, NJ, April 02, 2024 (GLOBE NEWSWIRE) -- Edible Garden AG Incorporated (“Edible Garden” or the “Company”) (Nasdaq: EDBL, EDBLW), a leader in controlled environment agriculture (CEA), locally grown, organic and sustainable produce and products, today announced a planned reverse stock split of its shares of common stock at a ratio of 1-for-20. The reverse stock split will take effect as of 12:01 a.m. ET, on Friday, April 5, 2024, and shares of Edible Garden will trade on a post-split basis on Nasdaq under the existing trading symbol, “EDBL,” at the market open on April 5, 2024.
At the Company’s special meeting of stockholders held November 6, 2023, stockholders approved an amendment to the Company’s certificate of incorporation to implement a reverse stock split in a range of 1-for-5 to 1-for-50, and granted the board of directors the authority to implement and determine the exact split ratio within such range, which was subsequently set by the board at 1-for-20. Following the reverse stock split, the new CUSIP number of the common stock will be 28059P303, with the par value per share of common stock remaining at
Jim Kras, CEO of Edible Garden, commented, “The reverse split is being implemented because we believe it will allow us to meet Nasdaq’s minimum bid price requirements, among other listing requirements. We also believe that the increased market price of the common stock that is expected as a result of implementing the reverse stock split could improve the marketability of the Company’s shares.”
When the reverse stock split becomes effective, every 20 shares of the Company’s issued and outstanding common stock will be combined into one share of common stock. Each stockholder’s percentage ownership interest in Edible Garden will remain unchanged after the reverse stock split. Any fractional shares resulting from the reverse stock split will be rounded up to the nearest whole share of common stock. The reverse stock split will not reduce the number of authorized shares of common stock.
ABOUT EDIBLE GARDEN®
Edible Garden AG Incorporated is a leader in controlled environment agriculture (CEA), locally grown, organic and sustainable produce and products backed by Zero-Waste Inspired® next generation farming. Offered at over 5,000 stores in the US, Edible Garden is disrupting the CEA and sustainability technology movement with its safety-in-farming protocols, use of sustainable packaging, patented GreenThumb software and self-watering in-store displays. The Company currently operates its own state-of-the-art greenhouses and processing facilities in Belvidere, New Jersey and Grand Rapids, Michigan, and has a network of contract growers, all strategically located near major markets in the U.S. Its proprietary GreenThumb 2.0 patented (US Nos.: US 11,158,006 B1, US 11,410,249 B2 and US 11,830, 088 B2) software optimizes growing in vertical and traditional greenhouses while seeking to reduce pollution-generating food miles. Its patented Self-Watering display (US No: US D1,010,365 S) enables retailers to present plants in their prime, reducing waste and offering superior products to consumers. Edible Garden is also a developer of ingredients and proteins, providing an accessible line of plant and whey protein powders under the Vitamin Way® and Vitamin Whey® brands. In addition, the Company offers a line of sustainable food flavoring products such as Pulp gourmet sauces and chili-based products. For more information on Edible Garden go to https://ediblegardenag.com/.
Forward-Looking Statements
This press release contains forward-looking statements, including with respect to the timing, implementation, and success of the reverse stock split, and performance as a public company. The words “believe,” “expect,” “plan,” “seek,” “will,” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including market and other conditions and the Company’s ability to achieve its growth objectives. 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.
Investor Contacts:
Crescendo Communications, LLC
212-671-1020
EDBL@crescendo-ir.com
FAQ
What is the reason behind Edible Garden's planned reverse stock split?
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Will the reverse stock split affect the number of authorized shares of common stock?
