DEF 14C: HWH International Inc. Announces Reverse Stock Split to Regain Nasdaq Compliance

HWH International Inc. will implement a 1-for-5 reverse stock split to meet Nasdaq's minimum bid price requirement, approved by majority stockholders on January 16, 2025.

Summary

• HWH International Inc. is implementing a 1-for-5 reverse stock split of its common stock.
• The decision was approved by the majority stockholders on January 16, 2025.
• The primary reason for the reverse stock split is to regain compliance with Nasdaq's minimum bid price requirement of $1.00 per share.
• The company received a notification from Nasdaq on September 4, 2024, stating that it no longer met this requirement.
• The company has until March 3, 2025, to regain compliance.
• The reverse stock split will consolidate every five shares of common stock into one.
• The board has the discretion to implement or abandon the reverse stock split.
• Stockholders will receive cash in lieu of fractional shares based on the closing price on the day preceding the effective time of the split.
• The reverse stock split is expected to be effective no sooner than February 18, 2025.
• As of the Record Date, we had 32,382,102 shares of common stock issued and outstanding.

Sentiment

Score: 4

Explanation: The sentiment is neutral to slightly negative. While the company is taking action to address a problem (low stock price), the reverse stock split itself carries risks and uncertainties.

Positives

• The reverse stock split aims to increase the stock price to meet Nasdaq's minimum bid price requirement, potentially avoiding delisting.
• The company is providing cash payments in lieu of fractional shares, simplifying the process for stockholders.
• The reverse stock split will not affect any stockholder's percentage ownership interests or proportionate voting power (except for fractional shares).

Negatives

• The reverse stock split may not increase the stock price in the long term.
• The reverse stock split could decrease the liquidity of the common stock.
• The reverse stock split may result in some stockholders owning odd lots, which may be more difficult to sell.
• The reverse stock split may lead to a decrease in the company's overall market capitalization.

Risks

• The reverse stock split may not achieve the desired increase in stock price.
• Delisting from Nasdaq could have a material adverse effect on the market liquidity of the company's common stock.
• The market may view the reverse stock split negatively, leading to a decrease in market capitalization.
• The company's business and financial performance, general market conditions, and prospects for future success could affect the stock price.

Future Outlook

The company hopes that the reverse stock split will increase the market price of its common stock and allow it to maintain its listing on Nasdaq. The Board of Directors will effect the Reverse Stock Split and cause a Certificate of Amendment to the Company's Amended and Restated Certificate of Incorporation to be filed with the Secretary of State of the State of Delaware only if the Board determines that the Reverse Stock Split would be in the best interests of the Company and our stockholders.

Management Comments

• The Board of Directors believes that there is a compelling need to secure approval of our stockholders to effect a reverse stock split to satisfy the Minimum Bid Price Requirement or if the Board should otherwise determine that it would be in the best interests of the Company and our stockholders to do so.
• The Board has concluded that, absent a significant market-driven increase in the price of our common stock, the best way for the Company to increase the closing bid price of our common stock to a level satisfactory for meeting the Minimum Bid Price Requirement would be to effect a reverse stock split.

Industry Context

Reverse stock splits are a common strategy for companies facing delisting from exchanges due to low stock prices. Other companies in similar situations may consider this approach to maintain their listing and improve investor perception.

Comparison to Industry Standards

• Many companies facing Nasdaq delisting have implemented reverse stock splits, such as Titan Machinery Inc. which implemented a 1-for-10 reverse stock split in 2020 to regain compliance.
• Other companies have chosen alternative strategies, such as raising capital or restructuring operations, to improve their stock price.
• The success of a reverse stock split depends on various factors, including the company's underlying financial health and market conditions.

Stakeholder Impact

• Shareholders will be affected by the reverse stock split, potentially seeing a change in the value and liquidity of their shares.
• Employees may be indirectly affected by the company's efforts to maintain its Nasdaq listing.
• Customers and suppliers may experience no direct impact from the reverse stock split.

Next Steps

• The Board of Directors will decide whether to implement the reverse stock split.
• If implemented, the company will file a Certificate of Amendment with the Secretary of State of Delaware.
• The company will notify Nasdaq of the effective date of the reverse stock split.
• Stockholders holding physical certificates will receive instructions on how to exchange their shares.

Key Dates

Keywords

reverse stock split, Nasdaq, minimum bid price, compliance, HWH International Inc., stockholders, common stock, delisting