WINDSOR MILLS, MD - Connexa Sports Technologies Inc. (NASDAQ:YYAI), known for its brands Slinger Bag and Gameface, has announced a 1-for-20 reverse stock split of its common stock, which will be effective when the market opens on June 27, 2024.
The reverse split is expected to reduce the number of outstanding shares from approximately 40.85 million to approximately 2.04 million. The company's common stock will continue to trade on the Nasdaq under the ticker symbol YYAI, with a new CUSIP number of 831445408.
This corporate action follows the approval by Connexa's stockholders at the Annual Meeting on May 15, 2024, to authorize the Board of Directors to implement a reverse stock split by a ratio of between 1-for-10 and 1-for-100.
The Board opted for the 1-for-20 ratio with the aim of increasing the market price of Connexa's common stock. This is a strategic move to regain compliance with Nasdaq's minimum bid price requirement for continued listing. Still, it is not guaranteed that the reverse split will achieve this objective.
Every 20 shares owned by a shareholder will be automatically converted into one share, and no fractional shares will be issued. Instead, stockholders will receive a rounded up whole share in place of any fractional share that would have been created by the reverse split. ClearTrust, LLC will act as the exchange agent for the reverse split and will provide stockholders with a transaction statement that reflects their post-split shareholdings.
The company must maintain a closing bid price of at least $1.00 per share for at least ten consecutive trading days to meet Nasdaq's listing standards. Connexa's management has expressed that while they are actively addressing the compliance issue, there can be no assurance of regaining compliance. A delisting from Nasdaq could significantly affect the company's ability to raise capital and its overall business operations.
This strategic decision is part of Connexa's broader efforts to meet regulatory requirements and enhance shareholder value. The information provided in this article is based on a press release statement from Connexa Sports Technologies Inc.
In other recent news, Connexa Sports Technologies Inc. has announced a 1-for-20 reverse stock split, pending approval from Nasdaq, in an effort to meet Nasdaq's minimum bid price requirement.
This move comes in response to a Delisting Notice due to the company's failure to meet the minimum bid price. Concurrently, Connexa is undergoing a change in control with Yuanyu Enterprise Management poised to assume ownership, resulting in the Slinger Bag business becoming privately held.
Moreover, Connexa has gained shareholder approval for a significant corporate restructuring, including the acquisition of Yuanyu Enterprise Management Co., Limited (YYEM) and a subsequent change-in-control.
This strategic move, once approved by Nasdaq, will result in YYEM's operations becoming the new core operations of Connexa. The transaction also involves the divestiture of all Slinger Bag assets and liabilities to a privately held entity, indicating a major shift in Connexa's business focus.
As part of Connexa's strategy to expand into the emerging love & marriage sector, the company plans to acquire a 70% interest in YYEM, a company specializing in matchmaking services. The acquisition, valued at $56 million, will proceed in two stages, with the initial 20% stake acquired for $16.5 million in cash, and the remaining 50% to be obtained through the issuance of common stock.
For the fiscal year ending January 31, 2024, YYEM reported royalty revenues of approximately $1.9 million and has secured licensing agreements projected to generate over $70 million in the next three years.
InvestingPro Insights
In light of Connexa Sports Technologies Inc.'s (NASDAQ:YYAI) recent announcement of a 1-for-20 reverse stock split, a closer examination of the company's financial health and market performance is crucial. According to InvestingPro data, Connexa's market capitalization stands at a modest $17.05 million.
The company's Price / Book ratio as of Q3 2024 is at 4.22, which suggests that the market values the company significantly higher than its net asset value. This can often be the case for companies that are expected to grow or have valuable intangible assets. Still, the negative Revenue Growth of -15.93% over the last twelve months raises concerns about the company's sales trajectory.
Investors may also note the company's significant price volatility. Connexa's 1 Week Price Total Return as of mid-2024 shows a notable gain of 15.76%, yet the 1 Month Price Total Return reflects a sharp decline of -33.44%. These swings indicate a high level of risk, which could be attributed to market reactions to corporate actions like the reverse stock split or other external factors.
Among the InvestingPro Tips, it's noteworthy that Connexa Sports Technologies holds more cash than debt on its balance sheet, which can be a positive sign of financial stability. Moreover, the stock has seen a strong return over the last three months, with a Price Total Return of 95.8%. This could suggest a rebound or a positive market sentiment that might be temporary or the beginning of a longer-term trend.
For readers interested in a deeper analysis, there are 11 additional InvestingPro Tips available that could provide more context on Connexa's financial performance and stock behavior. These insights are accessible through the InvestingPro platform, which offers comprehensive tools and data for investors. To enhance your investment decisions, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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