JAWZ Inc. is asking shareholders to consider a share consolidation initiative to help prop up the value its equity, which has tanked in recent months.
Investors will vote March 14 in Toronto on whether to approve reducing the number of outstanding shares, with the consolidation proposed to range between a ratio of three old shares for one new share to a high of 10 to one.
Using a four to one exchange rate, an investor holding 10,000 shares worth 60¢ each would end up with 2,500 shares at $2.40 apiece. Investors would take a haircut, however, if the share value continued to erode after the consolidation.
The company said the move would help preserve its listing on the Nasdaq, the U.S.-based stock market dominated by technology players. The company’s stock price, which has fallen to about 7/16 (about 43 cents) this week, has jeopardized Jawz’s continued listing on the Nasdaq, a presence seen by some as vital to maintain investor interest. Share prices must climb above $1 or the company faces being de-listed from the stock exchange.
Reducing the number of shares would also allow Jawz to renegotiate its financial arrangements with Thompson Kernaghan and Cavallo Capital Corp. as well as to consider mergers or acquisitions, the firm said.
However, the plan is not a done deal for the provider of information and computer security. “If the company’s share price strengthens, management may elect to postpone or abandon the share consolidation plan,” Robert Kubbernus, chairman and chief executive officer, said in a statement.
Details of the consolidation proposal, which was unanimously approved by directors, have been filed with the U.S. Securities Exchange Commission.
