Iveda Solutions, Inc. Announces Reverse Stock Split to be Effective September 17, 2024; Publicly Traded Warrant Adjustment

Rhea-AI Summary

Iveda Solutions (NASDAQ: IVDA) has announced a 1-for-8 reverse stock split of its common stock, effective September 17, 2024. This move will reduce the company's outstanding and authorized shares, with each 8 shares being combined into 1. The publicly traded common stock purchase warrants (NASDAQ: IVDAW) will also be adjusted, with 8 warrants now required to acquire one share at a revised price of $34.00 per share. The company's authorized common stock will decrease from 37,500,000 to 4,687,500 shares.

CEO David Ly stated that the primary goal is to maintain IVDA's listing on the Nasdaq Capital Market. However, the company cannot guarantee that the post-split stock price will reflect the split ratio or remain above pre-split levels. Trading on a split-adjusted basis is expected to begin on September 17, 2024, with no fractional shares issued.

Positive

• Potential to maintain Nasdaq Capital Market listing
• Reduction in number of outstanding shares, potentially increasing per-share value

Negative

• No guarantee of maintaining stock price above pre-split levels
• Possible investor confusion or negative sentiment towards reverse splits
• Reduction in total market capitalization if stock price doesn't adjust proportionally

Insights

Financial Analyst

Iveda Solutions' 1-for-8 reverse stock split is a critical move to maintain its Nasdaq listing, but it's not necessarily positive for investors. The split reduces outstanding shares, potentially boosting the stock price artificially. However, this doesn't change the company's fundamental value. The warrant adjustment to $34.00 per share ($4.25 per warrant) is significant, as it may impact their attractiveness to investors.

Importantly, CEO David Ly's statement acknowledges the uncertainty of maintaining the post-split price. This candid admission is noteworthy, as it hints at potential underlying financial challenges. Investors should closely monitor Iveda's financials and market performance post-split to gauge its effectiveness in addressing Nasdaq compliance issues and overall company health.

Market Research Analyst

This reverse stock split reflects Iveda Solutions' struggle to meet Nasdaq's minimum bid price requirement, a common issue for small-cap companies. While it may temporarily boost the stock price, it doesn't address fundamental business challenges. The reduction in authorized shares from 37,500,000 to 4,687,500 could limit future financing options, potentially impacting growth strategies.

Investors should be cautious, as reverse splits often signal financial distress. Historical data shows that many companies performing reverse splits underperform the market in the following year. The warrant adjustment could also deter potential investors due to the higher exercise price. Moving forward, Iveda needs to demonstrate strong financial performance and growth to justify its continued Nasdaq listing and attract investor confidence.

Legal Expert

From a legal perspective, Iveda Solutions' reverse stock split and warrant adjustment are compliant with securities regulations. The company has properly disclosed the details and rationale, fulfilling its obligations to shareholders and the SEC. The continuation of periodic reporting under the Securities Exchange Act maintains transparency.

However, the statement that they "cannot assure" the stock price will reflect the split ratio or remain above pre-split levels is a important legal disclaimer. This protects the company from potential shareholder litigation if the stock price fails to perform as hoped. Investors should note that while the mechanics of the split are straightforward, the underlying financial health of the company remains the key factor in its future performance and regulatory compliance.

MESA, Ariz.--(BUSINESS WIRE)-- Iveda Solutions, Inc. (the “Company”) (NASDAQ: IVDA) announced that it has approved a 1-for-8 reverse stock split of the outstanding and authorized shares of its common stock and corresponding adjustment to the publicly traded common stock purchase warrants.

Pursuant to the reverse stock split, each eight (8) shares of the Company’s outstanding common stock, $0.00001 par value per share, will be automatically combined and converted into one (1) outstanding share of common stock. In addition, the current publicly traded common stock purchase warrants (NASDAQ:IVDAW) will be proportionately adjusted under the current terms of the warrant agreement so that each 8 warrants will be entitled to acquire one share of common stock at a revised purchase price per share of $34.00 ($4.25 per warrant) The split will also reduce the number of the Company’s authorized common stock from 37,500,000 shares to 4,687,500 shares.

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 “IVDA” and “IVDAW,” respectively.

David Ly, 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 (46583A 303). 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 Tuesday, September 17, 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 IVDA 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 be adjusted automatically as a book entry.

About Iveda Solutions®

Iveda (NASDAQ: IVDA) provides global solutions for cloud-based video AI search and surveillance technologies that protect the people, places, and things that matter most. Iveda’s technology delivers instant intelligence to existing infrastructure, enabling cities and organizations worldwide to seamlessly enter the fifth industrial revolution. Iveda operates at the forefront of the digital transformation of cities across the globe, using IoT platforms with smart sensors and devices to support public safety, security, elderly care, energy efficiency, and environmental preservation. Headquartered in Mesa, Arizona, with a subsidiary in Taiwan, Iveda is publicly traded under the ticker symbol “IVDA.”

Forward Looking Statements

This press release contains forward-looking statements that reflect the Company's current expectation regarding future events. Actual events could differ materially and substantially from those projected herein and depend on a number of factors. Certain statements in this release, and other written or oral statements made by Iveda Solutions, Inc., are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond the Company's control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. These forward-looking statements include, but are not limited to, the statements concerning the completion of the offering, the satisfaction of customary closing conditions related to the offering, the anticipated use of proceeds therefrom and the receipt of stockholder approval. Except as required by law, the Company assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Important factors that could cause actual results to differ materially from the Company's expectations include, but are not limited to, market and other conditions and those factors that are disclosed under the heading "Risk Factors" and elsewhere in documents filed by the company from time to time with the United States Securities and Exchange Commission.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240913037794/en/

Olivia Civiletto Erwin

iveda@dottedlinecomm.com

Source: Iveda Solutions, Inc.

FAQ

What is the reverse stock split ratio for Iveda Solutions (IVDA) announced for September 17, 2024?

Iveda Solutions (IVDA) announced a 1-for-8 reverse stock split, effective September 17, 2024. This means every 8 shares of common stock will be combined into 1 share.

How will the reverse split affect Iveda Solutions' (IVDA) publicly traded warrants?

The publicly traded warrants (IVDAW) will be adjusted so that 8 warrants will be required to acquire one share of common stock at a revised purchase price of $34.00 per share ($4.25 per warrant).

What is the main reason for Iveda Solutions (IVDA) implementing this reverse stock split?

The primary purpose of the reverse stock split is to maintain Iveda Solutions' (IVDA) listing of its common stock and publicly traded common stock purchase warrants on the Nasdaq Capital Market.

When will Iveda Solutions (IVDA) stock begin trading on a split-adjusted basis?

Iveda Solutions (IVDA) stock is expected to begin trading on a split-adjusted basis on Tuesday, September 17, 2024.