Phunware Announces Reverse Stock Split
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Insights
The decision by Phunware, Inc. to implement a 1-for-50 reverse stock split is a strategic move to address the company's compliance with Nasdaq's minimum bid price requirement. This action is indicative of the company's current valuation challenges and the need to stabilize its share price. From a financial perspective, reverse splits are often perceived negatively by the market as they can signal underlying issues with the company's performance or growth prospects. However, the immediate effect of reducing the number of shares outstanding can lead to a higher stock price, potentially attracting institutional investors who may have mandates against investing in lower-priced stocks.
It is crucial to note that while the reverse stock split does not inherently change the company's market capitalization, it could lead to a temporary increase in volatility as the market adjusts to the new price levels. Investors should closely monitor the company's operational performance post-split to determine if the move is purely cosmetic or if it aligns with a broader strategic plan to improve business fundamentals.
Phunware's reverse stock split is a tactical measure aimed at addressing market perceptions and meeting exchange listing requirements. In the broader context of Location Based SaaS solutions, the move may be interpreted by the market as an attempt to align the company's stock profile with industry standards. The adjustment of outstanding securities, including stock options and warrants, is a standard procedure in reverse splits, but it's important for stakeholders to understand the potential implications for employee compensation and investor dilution.
Long-term, the effectiveness of such a split will largely depend on the company's ability to leverage its enterprise cloud platform for mobile engagement and monetization. The market will be observing whether this structural change will be accompanied by improved revenue streams or strategic partnerships that could reinforce investor confidence. The adjustment in stockholder percentages, albeit minimal due to the rounding up of fractional shares, should also be communicated transparently to maintain shareholder trust.
In the context of securities law and corporate governance, Phunware's board of directors has exercised its discretion, as authorized by the shareholders, to effectuate the reverse stock split. This action reflects the board's fiduciary duty to maintain the company's listing status and pursue strategies that might enhance shareholder value. The legal process involves adjusting the CUSIP number—an identifier for the securities—which is a routine aspect of such corporate actions.
From a legal standpoint, it's also pertinent to note that the reverse split does not modify the rights or preferences of the common stock, ensuring that the company adheres to its obligations towards its shareholders. The rounding up of fractional shares to the nearest whole share is a fair practice that minimizes the impact on shareholders who might otherwise lose out due to the consolidation of shares.
AUSTIN, Texas, Feb. 23, 2024 (GLOBE NEWSWIRE) -- Phunware, Inc. (Nasdaq: PHUN, “Phunware” or the “Company”), the pioneer of patented Location Based SaaS solutions and other products that offer the only fully integrated enterprise cloud platform for mobile that enables brands to engage, manage and monetize anyone anywhere, today announced that on February 26, 2024, the Company will implement a 1-for-50 reverse stock split of its issued and outstanding common stock, par value
The Company's Board of Directors (the "Board") approved implementation of the reverse stock split upon the authorization granted by the Company's stockholders at the annual meeting held on December 20, 2023, whereby the Company's stockholders approved a proposal to grant the Company's Board the discretion to affect a reverse stock split at a ratio of not less than one-for-ten (1:10) and not more than one-for-fifty (1:50), with such ratio to be determined by the Board. The reverse stock split is intended to increase the market price per share of the Company's common stock to regain compliance with the minimum bid continued listing requirement of The Nasdaq Capital Market. All outstanding securities entitling their holders to purchase shares of common stock or acquire shares of common stock of the Company, including stock options and warrants, will be adjusted as a result of the reverse stock split, as required by the terms of those securities.
As a result of the reverse stock split, every 50 shares of common stock issued and outstanding as of the effective date will be automatically combined into one share of common stock. No fractional shares will be issued as a result of the reverse stock split. Stockholders of record who would otherwise be entitled to receive a fractional share will automatically be entitled to the rounding up of the fractional share to the nearest whole share. The reverse stock split will not change the par value of the common stock or modify the rights or preferences of the common stock. Immediately after the reverse stock split becomes effective, the Company will have approximately 8 million shares of common stock issued and outstanding. The reverse split affects all stockholders uniformly and will not alter any stockholder's percentage interest in the Company's equity, except to the extent that the reverse split would result in some stockholders owning a fractional share as described above. The Company's transfer agent, Continental Stock Transfer & Trust Company, is acting as the exchange agent and transfer agent for the reverse stock split. Stockholders holding their shares in book-entry form or in brokerage accounts need not take any action in connection with the reverse stock split. Beneficial holders are encouraged to contact their bank, broker or custodian with any procedural questions.
About Phunware
Phunware’s mission is to achieve unparalleled connectivity and monetization through widespread adoption of Phunware technologies, by leveraging brands, mobile consumers, partners and digital asset holders and market participants. With the activation of our recent Phunware 3.0 initiative, Phunware believes it is poised to expand its software products and services audience and verticals, utilize and monetize our patents and other intellectual property rights and interests, and update and reintroduce our digital asset ecosystem for existing holders and new market participants.
Safe Harbor / Forward-Looking Statements
This press release includes forward-looking statements. All statements other than statements of historical facts contained in this press release, including statements regarding our future results of operations and financial position, business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “expose,” “intend,” “may,” “might,” “opportunity,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. For example, Phunware is using forward-looking statements when it discusses the timing of closing of the offering and its intended use of proceeds from such offering.
The forward-looking statements contained in this press release are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in our filings with the SEC, including our reports on Forms 10-K, 10-Q, 8-K and other filings that we make with the SEC from time to time. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward- looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These risks and others described under “Risk Factors” in our SEC filings may not be exhaustive.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this press release. In addition, even if our results or operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods.
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Phunware PR & Media Inquiries: Email: PRESS@phunware.com Phone: (512) 693-4199
Phunware Investor Relations:
Matt Glover and John Yi, Gateway Group, Inc.
Email: PHUN@gateway-grp.com Source: Phunware, Inc.
Source: Phunware, Inc.
FAQ
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