Expert Analysis: Class of October and September 2018 OTC Graduates
By: Joseph M. Lucosky, Managing Partner Lucosky Brookman LLP
While the month of September 2018 saw four companies migrate from the OTCQX, OTCQB and OTC Pink onto national securities exchanges, October 2018 was a slower month for uplists with only one company migrating from the OTCQX to the NYSE.
In September of 2018, two of those companies were small-cap companies operating in the biotech and technology fields. The third company was a “fallen angel” that was previously listed on the NYSE before falling to the OTC Pink for two years before uplisting back onto the NYSE again last month. The fourth company was a community bank. In October 2018 the lone company to uplist was a diversified cannabis company.
Below are brief descriptions of the companies and selected information and observations of the paths these companies pursued to achieve listing onto a national exchange. For more information about the uplisting process, or any other questions or analysis, please contact Joseph M. Lucosky (email@example.com) at Lucosky Brookman LLP or visit http://www.lucbro.com.
October 2018 Graduate
Aurora Cannabis Inc. (NYSE: ACB)(TSX:ACB)
On October 23, 2018, Aurora Cannabis Inc. (“Aurora”), a foreign private issuer based in Edmonton, Canada, uplisted from the OTCQX to the NYSE. Aurora is a diversified cannabis company with focuses on facility engineering and design, cannabis breeding and genetics research, cannabis and hemp production, and wholesale and retail distribution.
In preparation for its uplist to the NYSE, Aurora elected to convert certain convertible indentures (the “Debentures”) into common shares of the Company (the “Common Shares”). On Monday, November 19, 2018, the estimated remaining total of approximately $1.72 million of Debentures outstanding will be converted into approximately 265,692 Common Shares, and accrued interest will be paid.
On the day prior to listing, the Company’s opening and closing share prices were $10.15 and $8.13 respectively. On the day trading commenced on the NYSE, the Company’s shares opened at $7.51 and closed slightly down at $7.01. Approximately 39,714,980 shares traded on the opening day of the uplist nearly twice as many as the day prior to the uplist.
September 2018 Graduates
AudioEye, Inc. (Nasdaq: AEYE)
On September 4, 2018, AudioEye, Inc. (Nasdaq: AEYE), a technology company serving businesses committed to providing equal access to their digital content based in Tucson, Arizona, uplisted from the OTCQB to the Nasdaq Capital Market. In preparation for its listing on the Nasdaq, AudioEye, closed a $6,500,000 private placement offering consisting of 26,000,000 shares of common stock at $0.25 per share. B. Riley FBR, Inc. acted as sole placement agent for the offering. After having approximately $2,000,000 of stockholder’s equity as of June 30, 2018, the $6,500,000 capital raise allowed the Company to surpass the $4,000,000 of stockholders’ equity requirement – the minimum amount needed under the Nasdaq initial listing requirements. Prior to the uplist, the Company effected a 1-for-25 reverse stock split (which had the effect of causing the price of the company’s common stock to move from approximately $0.32 to $8.00) to achieve more than the $4.00 minimum bid price requirement for a Nasdaq listing.
On the day prior to listing, the Company’s price opened and close at $7.00. On the day trading commenced on the Nasdaq Capital Market, the Company’s shares opened at $7.00 and closed slightly up at $7.30. Approximately 3,000 shares traded on the opening day of the uplist and as many as 37,000 shares traded in one day the same week.
Hanger, Inc. (NYSE: HNGR)
Hanger, Inc. (NYSE: HNGR) based in Austin Texas, is a national provider of products and services that assist in enhancing or restoring the physical capabilities of patients with disabilities or injuries, relisted on the NYSE on September 12, 2018 after spending over two years quoted on the OTC Pink. This “fallen angel” was previously suspended and then subsequently delisted from the NYSE as a result of a failure to file its Annual Report on Form 10-K for the fiscal year ended December 31, 2014. Hanger traded on the OTC Pink for approximately two years after its delisting. On the day prior to trading on the NYSE, Hanger’s shares opened at $23.05 and closed at $23.78. On the day trading commenced on the NYSE, Hanger’s shares opened at $24.10 and closed at $23.65 – higher than the previous day’s closing price. On the day prior to the commencement of trading on the NYSE, the company had approximately 300,000 shares trade, while the very next day, the Company’s first day on the NYSE, approximately 1.9 million shares traded, likely because of investor and shareholder excitement related to Hanger returning to the NYSE.
Hanger is different from other uplist transactions because the company did not affect a reverse stock split or engage in a financing prior to listing on the NYSE, making it more analogous to an organic uplist or a relisting transaction.
BioSig Technologies, Inc. (Nasdaq: BSGM)
BioSig Technologies, Inc. (Nasdaq: BSGM) is a Los Angeles, California based medical technology company which uplisted from the OTCQB onto the Nasdaq Capital Market on September 21, 2018. BioSig develops proprietary biomedical signal processing platforms designed to improve the electrophysiology (EP) marketplace. In the year leading up to its uplist to the Nasdaq, BioSig completed a 1-for-2.5 reverse stock split (which had the effect of causing the price of the company’s common stock to move from approximately $1.70 to $4.25) which helped it achieve more than the $4.00 minimum bid price requirement of the Nasdaq listing standards. In addition, the company closed three private placement offerings which raised approximately $11,000,000. These private placement offerings, which included the issuance of shares of the company’s common stock and warrants, helped BioSig achieve the $4,000,000 minimum stockholders’ equity requirement for the Nasdaq. In the most recent private placement offering, Laidlaw & Co. (UK) Ltd. was the principle placement agent.
In connection with the uplsit to Nasdaq, BioSig saw its stock price open on the Nasdaq at $7.05, a $.55 increase from the prior day on the OTCQB. The stock price closed at $6.67 on the Nasdaq, a $.15 decrease from the day prior on the OTCQB. On the day trading commenced on the Nasdaq, BioSig had approximately 90,000 shares trade, an increase of approximately 50,000 shares just one day prior from being quoted on the OTCQB.
FVCBankcorp, Inc. (Nasdaq: FVCB)
FVCBankcorp first commenced operations in November of 2007 and is a Virginia-chartered community bank serving the banking needs of commercial businesses, nonprofit organizations, and professional service entities, as well as their owners and employees located in the greater Washington, D.C., metropolitan and Northern Virginia area. After it reported improved second quarter earnings in mid-July of this year, FVCB seized the opportunity to list onto a national securities exchange. In connection with its desire to uplist to Nasdaq, FVCBankcorp closed a $35,000,000 underwritten public offering of its common stock at a price of $20.00 per share. Sandler O’Neill + Partners, L.P. and Raymond James & Associates, Inc. acted as the joint book-running managers. FVCB engaged in a financing in connection with its uplist to the Nasdaq, but the company did not affect a reverse stock split.
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For more analysis on the UpListing process, or any other questions or analysis, please contact Joseph M. Lucosky (firstname.lastname@example.org) 732-395-4402 at Lucosky Brookman LLP or visit http://www.www.lucbro.com.