Sonoma Pharmaceuticals Announces 1-for-20 Reverse Split of Outstanding Common Stock

Rhea-AI Summary

Sonoma Pharmaceuticals (NASDAQ:SNOA) announced a 1-for-20 reverse split of its outstanding common stock, effective August 29, 2024, at 5:00 pm EDT. Trading on the adjusted basis will begin on August 30, 2024. This move aims to maintain the company's Nasdaq Capital Market listing by meeting the $1.00 minimum bid price requirement before September 16, 2024.

Key points:

• Common stock will reduce from ~20 million to ~1 million shares
• Authorized shares will increase from 24 million to 50 million
• No fractional shares will be issued; cash will be given in lieu
• Proportional adjustments to stock options and equity-compensation plans
• New CUSIP number will be issued

CEO Amy Trombly emphasized the importance of maintaining Nasdaq listing for business confidence and opportunities.

Positive

• Potential to maintain Nasdaq Capital Market listing, which could enhance investor confidence and business opportunities
• Increase in authorized shares from 24 million to 50 million, providing more flexibility for future capital raising or strategic transactions

Negative

• Risk of not meeting the $1.00 minimum bid price requirement for 10 consecutive trading days by September 16, 2024, despite the reverse split
• Significant reduction in the number of outstanding shares, which may impact liquidity
• Potential shareholder dilution due to the increase in authorized shares

Insights

Financial Analyst

Sonoma Pharmaceuticals' 1-for-20 reverse stock split is a strategic move to maintain Nasdaq listing. This decision, while potentially increasing share price, doesn't change the company's underlying value or market capitalization. The reduction from 20 million to 1 million outstanding shares could improve liquidity and attract institutional investors. However, the need for this action suggests financial challenges. The increase in authorized shares from 24 million to 50 million provides flexibility but may lead to future dilution. Investors should monitor post-split trading closely, as maintaining the $1 minimum bid price is important for continued Nasdaq listing. This move is a short-term solution to a deeper issue of market perception and financial performance.

Market Research Analyst

This reverse split reflects broader market trends where smaller biotech firms struggle to maintain listings. Sonoma's move is reactive rather than proactive, potentially signaling weak market position. The split may temporarily boost share price, but without fundamental business improvements, it's a cosmetic fix. The increase in authorized shares to 50 million suggests potential future capital raises, which could further dilute shareholders. Investor sentiment might waver, as reverse splits are often viewed negatively. However, maintaining Nasdaq listing is important for visibility and liquidity. The success of this strategy hinges on Sonoma's ability to leverage its Microcyn® technology and improve financial performance in the near term.

Legal Expert

From a legal perspective, Sonoma has followed proper procedures by obtaining shareholder approval and board authorization for the reverse split and increase in authorized shares. This compliance is important to avoid potential shareholder disputes. The company's transparency about the split's purpose - maintaining Nasdaq listing - is commendable and aligns with SEC disclosure requirements. However, the disclaimer that there's no assurance of meeting Nasdaq requirements post-split is a key legal protection for the company. Investors should note that while the split itself doesn't trigger legal issues, failure to meet Nasdaq requirements could lead to delisting, potentially resulting in shareholder litigation. The cash-in-lieu provision for fractional shares is a standard and legally sound approach to handle split-related complications.

BOULDER, CO / ACCESSWIRE / August 28, 2024 / Sonoma Pharmaceuticals, Inc. (NASDAQ:SNOA), a global healthcare leader developing and producing patented Microcyn^® technology based stabilized hypochlorous acid (HOCl) products for a wide range of applications, including wound care, eye, oral and nasal care, dermatological conditions, podiatry, and animal health care, today announced the timing for a 1-for-20 reverse split of its outstanding common stock which will be effected on August 29, 2024 at 5:00 pm EDT. Sonoma common stock will begin trading on The Nasdaq Capital Market on a 1-for-20 adjusted basis when the market opens on August 30, 2024. The reverse stock split was previously approved by the Company's stockholders at the Company's Annual Meeting held on August 14 and August 23, 2024. The Company's Board of Directors approved the implementation of a reverse stock split and determined the reverse stock split ratio on August 23, 2024.

Amy Trombly, Sonoma's Chief Executive Officer said, "This reverse stock split is necessary to maintain our listing on the Nasdaq Capital Market. We believe that maintaining our listing on Nasdaq strengthens the confidence of our business partners and suppliers, the interest of investors, and the availability of business development opportunities."

At the effective time of the reverse stock split, every twenty shares of Sonoma's issued and outstanding common stock will be automatically converted into one newly issued and outstanding share of common stock, without any change in the par value per share. No fractional shares will be issued. Instead of receiving a fractional share, investors will receive cash in lieu at the closing price of the common stock on August 29, 2024.

Sonoma's common stock outstanding will change from approximately 20 million to approximately one million. Proportional adjustments will be made to Sonoma's stock options and equity-compensation plans. The reverse stock split will have no effect on the Company's authorized shares of common stock, which will be increased from 24,000,000 to 50,000,000 effective August 29, 2024 at 5:00 pm EDT, as also approved by the Company's stockholders and Board of Directors.

The Company's common stock will continue to trade on The Nasdaq Capital Market under the symbol "SNOA." A new CUSIP number will be issued to Sonoma's common stock after the reverse stock split becomes effective.

The reverse stock split is intended to increase the per share trading price of the Company's common stock to satisfy the $1.00 minimum bid price requirement for continued listing on The Nasdaq Capital Market. In order to maintain the Company's listing on Nasdaq, the Company's common stock must have a closing bid price of $1.00 or more for a minimum of 10 consecutive trading days prior to September 16, 2024. There can be no assurance that the reverse stock split will have the desired effect of raising the closing bid price of the Company's common stock to meet such requirement.

Once the reverse stock split becomes effective, stockholders holding shares through a brokerage account or in book-entry form will have their shares automatically adjusted to reflect the 1:20 reverse stock split. Existing stockholders holding common stock certificates will receive a Letter of Transmittal from the Company's transfer agent, Computershare, Inc. with specific instructions regarding the exchange of shares.

About Sonoma Pharmaceuticals, Inc.

Sonoma Pharmaceuticals is a global healthcare leader for developing and producing stabilized hypochlorous acid (HOCl) products for a wide range of applications, including wound, eye, oral and nasal care, dermatological conditions, podiatry, animal health care and non-toxic disinfectants. Sonoma's products are clinically proven to reduce itch, pain, scarring, and irritation safely and without damaging healthy tissue. In-vitro and clinical studies of HOCl show it to safely manage skin abrasions, lacerations, minor irritations, cuts, and intact skin. Sonoma's products are sold either directly or via partners in 55 countries worldwide and the company actively seeks new distribution partners. The company's principal office is in Boulder, Colorado, with manufacturing operations in Guadalajara, Mexico. European marketing and sales are headquartered in Roermond, Netherlands. More information can be found at www.sonomapharma.com. For partnership opportunities, please contact busdev@sonomapharma.com.

Forward-Looking Statements

Except for historical information herein, matters set forth in this press release are forward-looking within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including statements about the commercial and technology progress and future financial performance of Sonoma Pharmaceuticals, Inc. and its subsidiaries (the "company"). These forward-looking statements are identified by the use of words such as "continue," "develop," "anticipate," "expect" and "expand," among others. Forward-looking statements in this press release are subject to certain risks and uncertainties inherent in the company's business that could cause actual results to vary, including such risks that regulatory clinical and guideline developments may change, scientific data may not be sufficient to meet regulatory standards or receipt of required regulatory clearances or approvals, clinical results may not be replicated in actual patient settings, protection offered by the company's patents and patent applications may be challenged, invalidated or circumvented by its competitors, the available market for the company's products will not be as large as expected, the company's products will not be able to penetrate one or more targeted markets, revenues will not be sufficient to meet the company's cash needs, fund further development, as well as uncertainties relative to the COVID-19 pandemic and economic development, varying product formulations and a multitude of diverse regulatory and marketing requirements in different countries and municipalities, and other risks detailed from time to time in the company's filings with the Securities and Exchange Commission. The company disclaims any obligation to update these forward-looking statements, except as required by law.

Sonoma Pharmaceuticals™ and Microcyn^® are trademarks or registered trademarks of Sonoma Pharmaceuticals, Inc. All other trademarks and service marks are the property of their respective owners.

Media and Investor Contact:

Sonoma Pharmaceuticals, Inc.
ir@sonomapharma.com

Website: www.sonomapharma.com

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SOURCE: Sonoma Pharmaceuticals, Inc.

View the original press release on accesswire.com

FAQ

What is the reverse stock split ratio for Sonoma Pharmaceuticals (SNOA)?

Sonoma Pharmaceuticals (SNOA) announced a 1-for-20 reverse stock split, effective August 29, 2024, at 5:00 pm EDT.

When will Sonoma Pharmaceuticals (SNOA) start trading on the adjusted basis after the reverse split?

Sonoma Pharmaceuticals (SNOA) will begin trading on the adjusted basis when the market opens on August 30, 2024.

Why is Sonoma Pharmaceuticals (SNOA) implementing a reverse stock split?

Sonoma Pharmaceuticals (SNOA) is implementing the reverse stock split to maintain its listing on the Nasdaq Capital Market by meeting the $1.00 minimum bid price requirement.

How will the reverse split affect Sonoma Pharmaceuticals' (SNOA) outstanding shares?

The reverse split will reduce Sonoma Pharmaceuticals' (SNOA) outstanding common stock from approximately 20 million to approximately 1 million shares.