LOUISVILLE, Colorado - CEA Industries Inc. (NASDAQ: CEAD), a provider of controlled environment agriculture solutions, has announced a 1-for-12 reverse stock split for its common stock and a corresponding adjustment to its publicly traded common stock purchase warrants. The reverse split will convert every twelve shares of existing common stock into one share, effective from Friday, June 7, 2024. The company's common stock purchase warrants will also be adjusted, with each set of 12 warrants entitling the holder to acquire one share of common stock at a revised price of $60.00 per share.
The reverse stock split is intended to maintain the listing of CEA Industries' common stock and warrants on the Nasdaq Capital Market. Tony McDonald, Chairman and CEO, stated that while the move aims to keep the company's securities listed, there is no assurance that the post-split stock price will reflect the reverse split ratio, maintain a certain price level, or exceed the pre-split trading price.
Shares of CEA Industries' common stock have received a new CUSIP number, 86887P309, while the common stock purchase warrants will keep their current CUSIP number. No fractional shares will be issued; any resulting fractional shares from the reverse stock split will be rounded up to the nearest whole share.
Investors holding shares through brokerage firms are advised to contact their brokers for account details, while those holding shares through the company's transfer agent will be mailed information about their accounts.
This restructuring comes as part of CEA Industries' ongoing efforts to support the development of the global ecosystem for indoor cultivation, offering a range of services to the controlled environment agriculture industry. The company, however, cautions that this press release contains forward-looking statements subject to uncertainties, and actual results could differ materially.
InvestingPro Insights
In light of CEA Industries Inc.'s (NASDAQ: CEAD) recent announcement of a 1-for-12 reverse stock split, a closer look at the company's financial health and market performance may offer additional insights. According to InvestingPro data, CEA Industries has a market capitalization of $6.16 million USD, reflecting its size in the industry. Furthermore, the company's recent price performance shows a significant return over the last week with an 8.7% increase, and an even stronger return over the last three months at 35.01%.
Despite the reverse split's intention to maintain Nasdaq listing standards, the company's financial metrics raise some concerns. The adjusted P/E ratio as of the last twelve months stands at -1.91, indicating that the company is not currently profitable. Additionally, the gross profit margin for the same period is -18.9%, underscoring challenges in profitability and cost management.
InvestingPro Tips highlight a couple of points that may be of particular interest to investors. CEA Industries holds more cash than debt on its balance sheet, which can be a positive sign of financial stability. Moreover, the company's liquid assets exceed its short-term obligations, suggesting a solid liquidity position. For investors looking for more detailed analysis and additional tips, there are 10 InvestingPro Tips available for CEA Industries at https://www.investing.com/pro/CEAD. These tips could provide valuable guidance in making informed decisions about the company's stock, especially in the context of the reverse stock split.
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