Smith Micro Announces 1-for-8 Reverse Stock Split
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Insights
The decision by Smith Micro Software, Inc. to implement a 1-for-8 reverse stock split is a strategic move often seen in the market. This action usually aims to boost the stock's price per share, often to meet the minimum bid price requirements for exchanges like Nasdaq. It's a signal that the company is taking necessary steps to maintain its listing, which can be interpreted as a commitment to corporate governance and investor relations.
However, the reverse split does not change the fundamental value of the company; it merely adjusts the number of shares outstanding and the stock price. Investors should be aware that while the optics of a higher share price might seem positive, the underlying issues that led to the price decline may still persist. It's essential to examine the company's financial health, market position and growth prospects to determine if the reverse split is part of a broader turnaround strategy or a short-term fix.
From a financial perspective, the reverse stock split will reduce the number of shares outstanding from approximately 76.8 million to 9.6 million, which could lead to increased volatility due to a lower float. While this might not directly affect the market capitalization, it can have implications for liquidity and the stock's marketability. Investors should monitor the stock's performance closely following the reverse split to gauge market reaction and liquidity implications.
Furthermore, the proportional adjustment of warrants and equity awards is a necessary measure to preserve the incentives and value for stakeholders. These adjustments ensure that the economic terms of these instruments remain intact, which is important for maintaining shareholder confidence and retaining talent within the company.
Legally, a reverse stock split is a permissible corporate action when approved by shareholders, as seen with Smith Micro Software, Inc. It is important to note that the company has taken steps to ensure that no fractional shares will be issued, offering rounding up to the nearest whole share instead. This is a shareholder-friendly practice that avoids the need to cash out fractional shares, which can sometimes result in nominal losses for the shareholders.
The company's adherence to providing clear instructions for stockholders holding physical stock certificates through its transfer agent, Computershare, reflects a commitment to transparency and proper handling of the reverse split process. This is an important aspect as it minimizes confusion and potential legal challenges that could arise from mishandled corporate actions.
The Reverse Split will automatically convert every eight current shares of the Company’s common stock, whether issued and outstanding or held by the Company as treasury stock, into one share of fully paid and nonassessable common stock. No fractional shares will be issued in connection with the Reverse Split. Stockholders of record who would otherwise be entitled to receive a fractional share of the Company’s common stock following the Reverse Split will be entitled to rounding up of the fractional share to the nearest whole number.
The Reverse Split will reduce the aggregate number of shares of outstanding Common Stock from approximately 76,805,280 shares to approximately 9,600,660 shares (based on outstanding shares as of April 2, 2024). The total authorized number of shares will remain unchanged. The terms of all outstanding warrants currently exercisable for shares of Common Stock, and all equity awards granted under the Company’s equity plans, including the per share exercise price of options and the number of shares issuable under such options, will be proportionally adjusted to maintain their economic value, subject to adjustments for any fractional shares as described above. In addition, the total number of shares of common stock that may be the subject of future grants under the Company’s equity plans, as well as any plan limits on the size of such grants will be adjusted and proportionally decreased as a result of the Reverse Split.
Stockholders holding their shares electronically in book-entry form are not required to take any action to receive post-Reverse Split shares. Stockholders owning shares through a bank, broker, or other nominee will have their positions automatically adjusted to reflect the Reverse Split, subject to brokers’ particular processes, and will not be required to take any action in connection with the Reverse Split. For those stockholders holding physical stock certificates, the Company’s transfer agent, Computershare, will send instructions for exchanging those certificates for shares held electronically in book-entry form or for new certificates, in either case representing the post-Reverse Split number of shares, including the impact of any rounding to the nearest whole number of shares in lieu of fractional shares, if applicable.
About Smith Micro Software, Inc.
Smith Micro develops software to simplify and enhance the mobile experience, providing solutions to some of the leading wireless service providers around the world. From enabling the digital family lifestyle to providing powerful voice messaging capabilities, Smith Micro’s solutions enrich today’s connected lifestyles while creating new opportunities to engage consumers via smartphones and consumer IoT devices. The Smith Micro portfolio also includes a wide range of products for creating, sharing, and monetizing rich content, such as visual voice messaging, optimizing retail content display and performing analytics on any product set. For more information, visit www.smithmicro.com.
Smith Micro and the Smith Micro logo are registered trademarks or trademarks of Smith Micro Software, Inc. All other trademarks and product names are the property of their respective owners.
Forward-Looking Statements
Certain statements in this press release are forward-looking statements regarding future events or results within the meaning of the Private Securities Litigation Reform Act, including statements related to our financial prospects, goals and other projections of our outlook or performance and our future business plans, and statements using such words as “expect,” “anticipate,” “believe,” “plan,” “intend,” “could,” “will” and other similar expressions. Forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate, including the Company’s expectations regarding the effect of the Reverse Split and its continued listing on Nasdaq.
Among the important factors that could cause or contribute to such differences are customer concentration, given that the majority of our sales depend on a few large customer relationships and the loss of any of them could materially and negatively affect our business, delay or failure of our customers to accept and deploy our products and services or new or upgraded versions thereof, delay or failure of our customers’ end users to adopt our products and services or new or upgraded versions thereof, our reliance on third party operating systems for the proper operation and delivery of our solutions and any barriers to our use of such third party technology, our reliance on third party application stores for the distribution of our software applications to users and any barriers to such distribution, including any delay or failure of such third party to approve new versions of our applications or their implementation and/or application of policies that may be harmful to our business, unanticipated delays or obstacles in our development and release cycles, the degree to which competing business needs may affect our allocation of resources to planned projects, the risk of harm to our business resulting from our recent and any future cost reduction efforts, our ability to attract and retain key technical personnel that are essential to our product development and support efforts, changes in demand for our products from our customers and their end users, changes in requirements for our products imposed by our customers or by the third party providers of software and/or platforms that we use, our ability to effectively integrate, market and sell acquired product lines, new and changing technologies and customer acceptance and timing of deployment of those technologies, and our ability to compete effectively with other software and technology companies. These and other factors discussed in our filings with the Securities and Exchange Commission, including our filings on Forms 10-K and 10-Q, could cause actual results to differ materially from those expressed or implied in any forward-looking statements. The forward-looking statements contained in this release are made on the basis of the views and assumptions of management, and we do not undertake any obligation to update these statements to reflect events or circumstances occurring after the date of this release.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240403257459/en/
PR INQUIRIES:
Smith Micro Software
Paula Yurkovich
+1 (412) 260-1259
pr2@smithmicro.com
IR INQUIRES:
Smith Micro Software
Charles Messman
+1 (949) 362-5800
IR@smithmicro.com
Source: Smith Micro Software, Inc.
FAQ
What is the purpose of the reverse stock split announced by Smith Micro Software, Inc. (SMSI)?
When will the reverse stock split of Smith Micro Software, Inc. (SMSI) take effect?
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What will happen to outstanding warrants and equity awards after the reverse stock split of Smith Micro Software, Inc. (SMSI)?
Do stockholders holding shares electronically need to take any action after the reverse stock split of Smith Micro Software, Inc. (SMSI)?
