BEIJING - ZW Data Action Technologies Inc. (NASDAQ:CNET), a company specializing in online advertising, precision marketing, and data analytics, announced a reverse stock split of its common stock, aiming to comply with Nasdaq's minimum bid price rule. The reverse stock split, set at a 1-for-4 ratio, is scheduled to take effect at the market open on September 30, 2024, pending Nasdaq approval.
The reverse stock split will reduce the number of ZW Data's authorized common shares from 50 million to 12.5 million, with a corresponding decrease in the issued and outstanding shares. Shareholders will see their holdings automatically converted to the new amount post-split, with fractional shares rounded up to the nearest whole share, ensuring that no fractional shares are issued and no cash or other consideration is provided for fractional shares.
This corporate action is intended to address the $1.00 minimum bid price requirement for continued listing on The Nasdaq Capital Market, as stipulated by Nasdaq Listing Rule 5550(a)(2). ZW Data's common stock will continue trading under the ticker symbol CNET, with a new CUSIP number of 98880R 307 after the reverse stock split.
Stockholders who hold their shares electronically through brokerage firms need not take any action, as the changes will be reflected automatically in their accounts. Those with paper certificates have the option, but are not required, to exchange their certificates for new ones representing the post-split share count through the company's transfer agent, Empire Stock Transfer.
The reverse stock split is not expected to affect the par value of ZW Data's common stock or its authorized preferred stock. Shareholders' percentage ownership and voting power in the company will remain relatively unchanged, except for minor adjustments due to the handling of fractional shares.
ZW Data, established in 2003 and headquartered in Beijing, provides a range of services to enterprise clients in China, including the development of blockchain and artificial intelligence-enabled applications. The information in this article is based on a press release statement from ZW Data.
In other recent news, ZW Data Action Technologies has been actively raising capital through equity sales and has regained compliance with NASDAQ's periodic filing requirements. The company has entered into separate securities purchase agreements with Optimal Success Investments Limited, Amber Strong International Limited, and Fryhigh Fintech Holdings Limited. Each agreement entails the sale of 358,424 shares of common stock at $0.001 per share, totaling an investment of $268,818 per agreement.
All parties involved have agreed to a six-month lock-up period for the shares acquired. The transactions are set to close upon satisfaction of the conditions outlined in the agreements. The equity sales, conducted under exemptions from registration under the Securities Act of 1933, are expected to provide ZW Data Action Technologies with additional resources to pursue its business objectives.
In addition, the company has addressed previous deficiencies in NASDAQ's filing requirements by submitting its overdue Form 10-K and Form 10-Q, thereby removing the risk of delisting and ensuring its continued listing on the NASDAQ Capital Market. These recent developments highlight the company's efforts to fortify its financial standing and maintain compliance with regulatory requirements.
InvestingPro Insights
In light of ZW Data Action Technologies Inc.'s (NASDAQ:CNET) recent announcement regarding a reverse stock split, investors may be evaluating the company's financial health and market performance. According to InvestingPro data, CNET's market cap stands at a modest $3.75 million, reflecting the market's current valuation of the company. With a price-to-earnings (P/E) ratio of -0.85 and an adjusted P/E ratio for the last twelve months as of Q2 2024 at -1.22, the figures suggest that the company is not currently profitable.
The gross profit margin for the same period is reported at a low 1.59%, indicating challenges in maintaining profitability at the gross level. Additionally, InvestingPro Tips highlight that ZW Data holds more cash than debt on its balance sheet, which could be a positive sign for investors looking for financial stability. However, another tip points out that the company is quickly burning through its cash reserves, which could raise concerns about its long-term financial sustainability.
For investors seeking a deeper understanding of ZW Data's financial metrics and market performance, InvestingPro offers additional tips. Currently, there are 13 more InvestingPro Tips available, which can provide further insights into the company's valuation, cash flow yield, and stock price trends. Interested readers can find these tips by visiting the InvestingPro platform for CNET at https://www.investing.com/pro/CNET.
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