I’ve got some important news today regarding our favorite Human Augmentation play: Ekso Bionics Holdings Inc. (OTCMKTS: EKSO).
The company made a major announcement last week that’s proof positive Ekso is on track and progressing nicely as expected.
[ad#Google Adsense 336×280-IA]It’s also something I’m extremely excited to see, for reasons I’ll tell you about in a minute.
But first, I want to start by telling you what’s happened and what it means for your money.
Ekso Bionics announced Wednesday that the company is undertaking a 1-for-7 reverse stock split in preparation for a proposed listing on the Nasdaq Capital Market.
I told you this was probably in the cards a while back so this shouldn’t come as a surprise. It’s a great sign of things to come and an important development for both the company and your investing dollars.
What you need to do:
- Nothing. Everything I’m about to share with you happens behind the scenes.
What you will see on your brokerage statement:
- A new ticker: EKSO stock began trading under the temporary symbol EKSOD on Thursday, May 5 and will do so for the next 20 days. Then, it will revert back to EKSO.
- A new CUSIP number: There will be a new CUSIP number assigned to reflect the newly issued shares. That number for your records is 282644202. A CUSIP, if you’ve never heard the term before, is a nine-digit number that uniquely identifies a given security – in this case EKSO’s stock. It’s kind of like financial DNA, if that helps. CUSIPs are not used so much in stock trading because there are only around 20,000 unique stocks, but CUSIPs apply more to bond trading where they’re used to settle trades on more than 1 million listed issues.
What will happen to your shares, options, and warrants:
- Every seven shares of issued and outstanding Ekso common stock will be converted into a single share of issued and outstanding common stock. Fractional shares will be rounded up to the nearest whole share. If you had 700 shares of Ekso common stock on Wednesday trading under EKSO for example, you will now have 100 shares of Ekso common stock trading under EKSOD, the temporary 20-day symbol I just mentioned. The total value of your holdings will not change. You are not losing 600 shares worth of your money, a concern I hear a lot because the number of shares has gone down.
- If you own options and warrants, those will be adjusted by dividing the number of shares of common stock into which the options and warrants are exercisable by seven and multiplying the exercise price by seven.
- If you’ve got questions, you can contact your broker or Ekso’s transfer agent, VStock Transfer LLC.
What’s next:
- EKSO has to trade above a $4 minimum price per share for 30 consecutive trading days before it can apply for a listing on the Nasdaq Capital Market. Yesterday, it closed at $6.28 after a single-day appreciation of 6.17%, so things are off to a good start.
- Ekso also has to meet very specific corporate governance and specific financial hurdles in order to receive approval, which means that uplisting is not an automatically approved undertaking.
What this means for your money:
Uplistings and reverse splits for growing companies like Ekso are a fabulous development because they mean the company is taking the steps needed to attract not only more capital, but much bigger amounts of it. Both can be harbingers of higher prices ahead.
Let me explain.
Many institutional investors have specific price thresholds under which they cannot invest. So, despite the fact that they’ve got billions of dollars that need to be put to work, certain stocks are simply off limits if they’re too inexpensive.
However, when a stock uplists, the new price often exceeds the threshold, which means that previously off-limits capital is suddenly fair game because the new price now meets the minimum price standard.
The other thing to think about is that uplisting isn’t easy. That’s important because the uplisting process effectively sorts the cash from the trash by acting as a de facto filter. Better companies list on better, more recognized exchanges where there is significantly more liquidity and, generally speaking, a far broader potential shareholder base. Inferior companies typically remain on over-the-counter (OTC) exchanges.
And, finally, better exchanges and higher liquidity translates into superior price discovery and better trading action. That’s because a higher tier exchange makes it harder for day-traders, pump and dumpers, and other short-term penny bandits to ply their trade at your expense. Longer-term fundamentals, in other words, really start to matter.
— Keith Fitz-Gerald
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Source: Money Morning