Expert Analysis: Class of December 2018 OTC Graduates
By: Joseph M. Lucosky, Managing Partner Lucosky Brookman LLP
Expert Analysis: Class of December 2018 OTC Graduates
The month of December saw a total of five companies uplist from the OTCQB onto national securities exchanges.
Below are brief descriptions of these companies and selected information and observations of the paths these companies pursued from the OTC to a senior exchange. For more information about the uplisting process, or any other questions or analysis, please contact Joseph M. Lucosky (jlucosky@lucbro.com) at Lucosky Brookman LLP or visit http://www.lucbro.com.
December 2018 Graduates
Wrap Technologies, Inc. (Nasdaq: WRTC)
On December 4, 2018, Wrap Technologies, Inc. (the “Company” or “Wrap 
Technologies”) (Nasdaq: WRTC), an innovator of non-lethal modern policing solutions based in Las Vegas, NV, uplisted from the OTCQB to the Nasdaq Capital Market.
In December of 2017, Wrap Technologies closed a self-underwritten initial public offering (“IPO”) of its common stock. Subsequent to the IPO, the Company was listed on the OTC Pink, upgraded to the OTCQB shortly thereafter and completed its uplisting to the Nasdaq Capital Market in just over six months, a relatively quick time frame by most uplistings standards.
Approximately one month prior to the uplist, Wrap Technologies closed a $13,680,000 private offering of the Company’s securities, consisting of 4,561,074 units (each, a “Unit”), at a price of $3.00 per Unit. Each Unit consisted of one share of common stock of the Company and one common stock purchase warrant entitling the holder to purchase an additional share of common stock. The warrants have an initial per share exercise price of $5.00, subject to adjustment, are exercisable immediately and will expire two years (2) from the date of issuance. Katalyst Securities, LLC acted as the lead placement agent for the offering. Chardan Capital Markets LLC acted as a co-agent for the offering.
At the time of the uplist, the Company’s share price was above $4.00, the Nasdaq Capital Market’s minimum bid price requirement, so the Company did not need to effect a reverse stock split in order to satisfy the Nasdaq Capital Market’s minimum bid price requirement.
In November of this year, in an effort to prepare for its uplist to the Nasdaq Capital Market and satisfy the listing requirements of the Nasdaq Capital Market which requires a company to have a majority of independent board members, Wrap Technologies had one member of its Board of Directors resign and simultaneously appointed two independent Board members. These appointments increased the total number of directors on the Board to five, including two executive directors and three independent directors.
On the trading day prior to listing on the Nasdaq Capital Market, the Company’s opening and closing share prices were $4.60 and $4.90 respectively. On the day trading commenced, the Company’s shares opened at $5.00 and closed slightly down at $4.75. Approximately 52,500 shares traded on the opening day of the uplist.
For more information about Wrap Technologies, please visit its website at https://wraptechnologies.com/press-releases/ or visit its Nasdaq profile at https://www.nasdaq.com/symbol/wrtc
DiaMedica Therapeutics Inc. (Nasdaq: DMAC)
On December 7, 2018, DiaMedica Therapeutics Inc. (the “Company” or “DiaMedica”) (TSX:
DMA) (Nasdaq: DMAC), a clinical stage biopharmaceutical company focused on developing novel treatments for neurological and kidney diseases, based in Minneapolis, MN, uplisted from the OTCQB to the Nasdaq Capital Market. In connection with its uplist to the Nasdaq Capital Market, DiaMedica closed a $4,100,000 underwritten initial public offering whereby the Company sold 1,025,000 shares of common stock at a public offering price of $4.00 per share. Craig-Hallum Capital Group LLC acted as the sole manager underwriter for this offering.
On November 15, 2018, the Company effected a 1-for-20 reverse stock split which had the effect of causing the price of the Company’s common stock to increase to over $5.00 in order to achieve the Nasdaq Capital Market’s initial listing requirement of a minimum $4.00 bid price.
At its annual shareholder meeting, on November 6, 2018, the Company’s shareholders ratified the Amended and Restated Stock Option Plan, under which the Company can award up to a maximum of 762,735 options to purchase shares of common stock to attract and retain personnel, and provide additional incentives to employees, directors and consultants.
On the trading day prior to listing on the Nasdaq Capital Market, the Company’s opening and closing share prices were $5.30 and $5.85, respectively. On the day trading commenced, the Company’s shares opened at $4.00 and closed at $3.10. Approximately 1,123,987 shares traded on the day of the uplist.
For more information about DiaMedica, please visit its website at https://ir.diamedica.com/press-releases or visit its Nasdaq profile at https://www.nasdaq.com/symbol/dmac
Enochian Biosciences, Inc. (Nasdaq: ENOB)
On December 10, 2018, Enochian Biosciences, Inc. (the “Company” or “Enochian
Biosciences”) (Nasdaq: ENOB), a biopharmaceutical company developing potentially curative and preventative gene-modified cell therapy platforms to transform the lives of persons living with HIV and cancer patients, based in Los Angeles, CA, uplisted from the OTCQB to the Nasdaq Capital Market.
At the time of the uplist to the Nasdaq Capital Market, the Company’s share price was above $4.00 without the need to affect a reverse split in order to satisfy the Nasdaq Capital Market’s minimum bid price requirement. This appears to be an organic uplist in nature.
In February and March of this year, Enochian Biosciences appointed three individuals to serve on its Board of Directors. In connection with these appointments, and aiming towards uplisting to a senior exchange, the Company established an audit committee, chaired by a financial expert, a nominating and corporate governance committee, and a compensation committee, each comprised solely of the independent directors of the Board.
On October 30, 2018, the Company increased the size of its Board of Directors from 6 members to 7 members and appointed another director whom the Company considers to be independent under the listing standards of the Nasdaq Capital Market. It appears that this appointment, coupled with those above, were made to satisfy the Nasdaq Capital Market listing rule which requires a company to have a majority of independent board members and an audit committee of the Board of Directors which is to include at least one “financial expert.”
On the trading day prior to listing on the Nasdaq Capital Market, the Company’s opening and closing share prices were $7.98 and $8.48, respectively. On the day trading commenced, the Company’s shares opened at $8.25 and closed slightly up at $8.40. Approximately 42,000 shares traded on the opening day of the uplist.
For more information about Enochian Biosciences, please visit its website at http://enochianbio.com/investors.html or visit its Nasdaq profile at https://www.nasdaq.com/symbol/enob
The Alkaline Water Company Inc. (Nasdaq: WTER)
On December 10, 2018, The Alkaline Water Company Inc. (the “Company” or “Alkaline
Water”) (Nasdaq: WTER) (TSX: WTER), a producer of premium bottled alkaline drinking water sold under the brand name Alkaline88® based in Scottsdale, AZ, uplisted from the OTCQB to the Nasdaq Capital Market.
In preparation for its uplist, and in order to meet certain Nasdaq Capital Market listing requirements, the Company closed a non-brokered private placement financing (the “Financing”) of 1,619,947 units (each, a “Unit”) at a price of CDN$2.50 per Unit for gross proceeds of CDN$4,049,867. Each Unit consists of one share of common stock of the Company (each, a “Share”) and one warrant (each, a “Warrant”), with each Warrant entitling the holder thereof to purchase one additional Share at a price of CDN$2.90 per Share for a period of two years. All securities issued in the Financing are subject to a Canadian hold period expiring January 28, 2019. The Company paid finder’s fees of $123,572 and issued 49,428 warrants.
At the time of the uplist, the Company’s share price was above $4.00, so the Company did not need to effect a reverse split in order to satisfy the Nasdaq Capital Market’s minimum bid price requirement.
On October 11, 2018, in order to meet the corporate governance requirement of Nasdaq Listing Rule 5620(c) which requires that a company that is not a limited partnership provide for a quorum specified in its by-laws for any meeting of the holders of common stock; provided, however, that in no case shall such quorum be less than 33 1/3 % of the outstanding shares of the company’s common voting stock, Alkaline Water’s board of directors amended and restated the Company’s bylaws to increase the quorum requirement for meetings of the Company’s stockholders to at least 33⅓% (previously 10%) of the Company’s stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy.
On the trading day prior to listing on the Nasdaq Capital Market, the Company’s opening and closing share prices were $4.33 and $4.60, respectively. On the day trading commenced, the Company’s shares opened at $5.15 and closed at $5.18. Approximately 710,226 shares traded on the day of the uplist.
For more information about Alkaline Water, please visit its website at http://thealkalinewaterco.com/ or visit its Nasdaq profile at https://www.nasdaq.com/symbol/wter
Datasea Inc. (Nasdaq: DTSS)
On December 19, 2018, Datasea Inc. (the “Company” or “Datasea”) (Nasdaq: DTSS), a
technology company engaged in the development of information technology systems and network security solutions. based in Beijing, China, uplisted from the OTCQB to the Nasdaq Capital Market. In connection with its uplist to the Nasdaq Capital Market, Datasea closed a $5,800,000 underwritten public offering whereby the Company sold 1,450,000 shares of common stock at a public offering price of $4.00 per share. ViewTrade Securities, Inc. acted as the sole underwriter and sole book-running manager for this offering.
In connection with the closing of the public offering, the Company appointed three individuals to serve as independent directors on the Company’s Board of Directors in order to satisfy the Nasdaq listing rule requirement which requires a company to have a majority of independent board members and an audit committee of the Board of Directors which is to include at least one “financial expert.” The Company also appointed a Chief Financial Officer at the close of the offering.
On May 1, 2018, in preparation for its uplist, the Company effected a 1-for-3 reverse stock split which had the effect of causing the price of the Company’s common stock to adjust from approximately $5.50 to $17.00. Although at the time the Company effected the reverse stock split, its share price was above $4.00, the minimum bid price to list on the Nasdaq Capital Market, it appears they elected to effect the reverse stock split to provide a buffer in case they were to consummate an underwritten offering at a price lower than what the Company’s stock was trading at, in order to achieve the Nasdaq Capital Market initial listing requirement of a minimum $4.00 bid price.
On August 22, 2018, the Company adopted its 2018 Equity Incentive Plan under which the Company may award up to a maximum of 4,000,000 shares of common stock to attract and retain personnel, and provide additional incentives to employees, directors and consultants.
On the day trading commenced on the Nasdaq Capital Market, the Company’s shares opened at $4.10 and closed slightly down at $3.90. Approximately 90,900 shares traded on the day of the uplist.
For more information about Datasea, please visit its website at http://www.datasea.com/index.html or visit its Nasdaq profile at https://www.nasdaq.com/symbol/dtss/stock-chart
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For more analysis on the uplisting process, or any other questions or analysis, please contact Joseph M. Lucosky (jlucosky@lucbro.com) 732-395-4402 at Lucosky Brookman LLP or visit http://www.www.lucbro.com.
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