Ostin Technology Group Announces Effective Date of Reverse Share Split

Rhea-AI Summary

Ostin Technology Group (Nasdaq: OST) has announced a 1-for-10 reverse share split effective December 26, 2024. The split will reduce outstanding Class A ordinary shares from approximately 18.1 million to 1.81 million. The company's shareholders approved this action at an extraordinary general meeting on November 25, 2024.

The initiative aims to regain compliance with Nasdaq's minimum bid price requirement of $1.00 per share. The company will maintain its "OST" ticker symbol, though with a new CUSIP number (G67927114). The company has also amended its Memorandum of Association to adjust the par value to $0.001 per share. Shareholders entitled to fractional shares will have their holdings rounded up to the nearest whole share.

Positive

• Strategic move to maintain Nasdaq listing compliance
• No shareholder dilution as shares are merely consolidated
• Favorable treatment of fractional shares (rounded up)

Negative

• Indicates stock price has fallen below Nasdaq minimum requirements
• May signal company's struggle to maintain market value

Insights

Financial Markets Expert

The announced 1-for-10 reverse stock split represents a critical financial maneuver for Ostin Technology Group, primarily aimed at maintaining its Nasdaq listing status. The reduction from 18.1 million to 1.81 million shares artificially inflates the stock price by a factor of 10, potentially bringing OST above the important $1 minimum bid requirement. While reverse splits don't fundamentally change a company's market value, they often signal underlying financial distress.

Historical market data shows that companies implementing reverse splits frequently underperform post-split, as the move is typically perceived as a red flag by institutional investors. The timing, just before year-end, suggests urgency in meeting compliance requirements. The rounding up of fractional shares, while seemingly minor, could create slight discrepancies in market capitalization calculations and affect small retail positions disproportionately.

For retail investors: Think of this like exchanging ten $1 bills for one $10 bill - you still have the same value, but now it's packaged differently. However, this repackaging often indicates deeper financial challenges that warrant careful scrutiny.

Corporate Governance Analyst

The structural mechanics of this reverse split reveal significant governance implications. The amendment to the Memorandum of Association, adjusting the par value to $0.001 per share, indicates a comprehensive capital structure reorganization. The shareholder approval secured on November 25th demonstrates proper corporate procedure, but the compressed timeline between approval and implementation (December 26, 2024) suggests mounting pressure from regulatory compliance deadlines.

The new CUSIP number (G67927114) signifies a fundamental security identifier change, impacting clearing and settlement processes. This technical aspect requires immediate attention from custodians and clearinghouses to ensure smooth trading transition. The decision to round up fractional shares, while shareholder-friendly, could create minor dilution effects that warrant monitoring.

Nanjing, China, Dec. 19, 2024 (GLOBE NEWSWIRE) -- Ostin Technology Group Co., Ltd. ("the Company") (Nasdaq: OST), a leading supplier of display modules and polarizers based in China, today announced that it has resolved to effect a reverse share split of the Company’s ordinary shares, with the split ratio set at 1-for-10 (the “The Reverse Share Split”). The Reverse Share Split was approved by the Company’s shareholders at an extraordinary general meeting held on November 25, 2024. The Company’s Class A ordinary shares will begin trading on an adjusted basis, reflecting the Reverse Share Split, on December 26, 2024, under the existing ticker symbol “OST.” The new CUSIP number for the Company’s Class A ordinary shares will be G67927114.

Upon the effectiveness of the Reverse Share Split, every ten shares of the Company’s issued and outstanding Class A ordinary shares as of the effective date will automatically be combined into one Class A ordinary share. This adjustment will reduce the total number of outstanding Class A ordinary shares of the Company from approximately 18.1 million to approximately 1.81 million.

In conjunction with the Reverse Share Split, the Company also amended its Memorandum of Association to proportionately reduce the number of authorized shares for issuance and to adjust the par value of the post-reverse share split ordinary shares to $0.001 per share.

The Reverse Share Split is part of the Company’s efforts to regain compliance with Nasdaq Marketplace Rule 5550(a)(2) related to the minimum bid price of at least $1.00 per share of the Company’s ordinary shares.

No fractional shares will be issued; instead, shareholders who would otherwise be entitled to a fractional share will have their entitlement rounded up to the nearest whole share.

Further details regarding the reverse share split and the associated changes to the Company’s share capital can be found in the Company’s notice of extraordinary general meeting, filed with the Securities and Exchange Commission on November 8, 2024.

About Ostin Technology Group Co., Ltd.

Founded in 2010, the Company is a supplier of display modules and polarizers in China. The Company designs, develops, and manufactures TFT-LCD display modules in a wide range of sizes and customized sizes which are mainly used in consumer electronics, outdoor LCD displays, and automotive displays. The Company also manufactures polarizers used in the TFT-LCD display modules.

For more information, please visit http://ostin-technology.com/index.html

Forward-Looking Statement

This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, underlying assumptions, and other statements that are other than statements of historical facts. When the Company uses words such as "may, "will, "intend," "should," "believe," "expect," "anticipate," "project," "estimate" or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company's expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company's goals and strategies; the Company's forecast on market trends; the Company's future business development; the demand for and market acceptance for new products; expectation to receive customer orders for new products; the anticipated timing for the marketing and sales of new products; changes in technology; the Company's ability to attract and retain skilled professionals; client concentration; and general economic conditions affecting the Company's industry and assumptions underlying or related to any of the foregoing and other risks contained in reports filed by the Company with the SEC. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company's filings with the SEC, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

For more information, please contact:

Ostin Technology Group Co., Ltd.
ir@austinelec.com

Investor Relations:

Janice Wang
Wealth Financial Services LLC
Phone: +86 13811768599 +1 628 283 9214
Email: services@wealthfsllc.com

FAQ

When will OST's 1-for-10 reverse stock split take effect?

The reverse stock split will take effect on December 26, 2024, when OST's Class A ordinary shares will begin trading on an adjusted basis.

How many shares will OST have outstanding after the reverse split?

After the 1-for-10 reverse split, OST's outstanding Class A ordinary shares will reduce from approximately 18.1 million to 1.81 million.

What happens to fractional shares in OST's reverse split?

Shareholders entitled to fractional shares will have their holdings rounded up to the nearest whole share.

Why is OST implementing a reverse stock split?

OST is implementing the reverse split to regain compliance with Nasdaq Marketplace Rule 5550(a)(2), which requires a minimum bid price of $1.00 per share.

Will OST's ticker symbol change after the reverse split?

No, OST will continue trading under the same ticker symbol 'OST', though with a new CUSIP number G67927114.