LONGMONT, CO - S&W Seed Company (NASDAQ:SANW), an agricultural firm specializing in crop production, announced a reverse stock split of its common stock at a ratio of 1-for-19, set to take effect after market hours on Thursday, October 17, 2024. The decision, determined by the company's Board of Directors following stockholder approval at a Special Meeting on September 26, 2024, is aimed at consolidating shares and will be implemented at 5:00 p.m. Eastern Time on the effective date.
The reverse stock split will convert every 19 existing shares of issued and outstanding common stock into one share, maintaining the current par value. This action will also proportionally adjust the exercise price and the number of shares available under the company's stock options, restricted stock units, and warrants. Consequently, there will be a proportional decrease in the number of shares reserved for future issuance under these instruments, and the number of shares allocated for issuance under the company's equity compensation plans will similarly be reduced.
Fractional shares will not be issued as a result of the reverse stock split. Instead, shareholders will receive one whole share in lieu of any fractional share that would have been due. The adjustment is designed to be equitable for all stockholders and will not alter any individual's percentage ownership of the company, except in cases where rounding up to the nearest whole share results in a slight increase.
Trading of S&W Seed Company's common stock on a split-adjusted basis is expected to commence on The Nasdaq Capital Market at the opening of the market on Friday, October 18, 2024. The company has announced that the common stock will have a new CUSIP number, 785135302, post-split.
In other recent news, the U.S. Supreme Court has decided to review Mexico's lawsuit against American gun manufacturers and wholesalers, including Smith & Wesson and Interstate Arms. The case accuses these companies of contributing to illegal firearms trafficking to Mexican drug cartels. A lower court's refusal to dismiss Mexico's suit was appealed by Smith & Wesson and Interstate Arms, leading to the Supreme Court's involvement. The lawsuit claims that the companies' distribution system facilitated firearms dealers to work with "straw" purchasers, who then trafficked the guns into Mexico.
Meanwhile, S&W Seed Co has received approval from its shareholders for a reverse stock split, a strategic step often employed by companies to boost the market price of their shares. The exact ratio and timing of the reverse stock split will be determined by the Board of Directors.
Furthermore, S&W Seed Co's Australian subsidiary has entered voluntary administration due to insolvency risks. This has led to a cross-default under S&W's Loan and Security Agreement with CIBC Bank USA. However, S&W Seed Company received a waiver from CIBC for the event of default.
Lastly, a U.S. District Judge in Boston has largely dismissed Mexico's $10 billion lawsuit against American gun manufacturers. The lawsuit, initiated by Mexico in 2021, aimed to hold U.S. gun manufacturers accountable for the trafficking of firearms to drug cartels across the U.S.-Mexico border. The remaining defendants in the case are Smith & Wesson Brands Inc. and the wholesaler Witmer Public Safety Group.
InvestingPro Insights
S&W Seed Company's decision to implement a reverse stock split comes at a challenging time for the company, as revealed by recent InvestingPro data. The company's market capitalization stands at a modest $8.41 million, reflecting its current struggles. InvestingPro Tips highlight that SANW is operating with a significant debt burden and may have trouble making interest payments, which could explain the need for this corporate action.
The company's financial health appears precarious, with InvestingPro data showing a negative operating income of -$14.59 million over the last twelve months as of Q3 2024. This aligns with an InvestingPro Tip indicating that SANW is not profitable over the last twelve months and is quickly burning through cash.
Investors should note that SANW's stock has taken a significant hit, with a one-year price total return of -74.21% as of the latest data. This poor performance is further emphasized by an InvestingPro Tip stating that the stock has fared poorly over the last month and has fallen significantly over the last year.
For those considering SANW's potential, it's worth noting that InvestingPro offers 14 additional tips for this stock, providing a more comprehensive analysis for investors looking to make informed decisions in light of the upcoming reverse stock split.
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