Expert Analysis: Class of February 2019 OTC Graduates
By: Joseph M. Lucosky, Managing Partner Lucosky Brookman LLP
Expert Analysis: Class of February 2019 OTC Graduates
The month of February saw a total of five companies uplist from the OTC onto national securities exchanges.
One of these companies operates in the medical devices industry, two operate in the energy sector, one operates in the consumer products industry, while another is in the cannabis industry.
Below is a brief description of these companies and selected information and observations of the path 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.
February 2019 Graduates
Zynex, Inc. (NASDAQ: ZYXI)
On February 12, 2019, Zynex, Inc. (the “Company” or “Zynex”) (NASDAQ: ZYXI), an innovative medical technology company specializing in the manufacture and sale of non-invasive medical devices for pain management, stroke rehabilitation, cardiac monitoring and neurological diagnostics based in Englewood, CO, uplisted from the OTCQB to the Nasdaq Capital Market.
To better position itself to uplist to the Nasdaq Capital Market, Zynex’s Board of Directors approved a buy-back program of $2 million of the Company’s shares of common stock last year. The buy-back program commenced on May 14, 2018 and is scheduled to terminate upon the earlier of (i) May 13, 2019 or (ii) the $2 million buyback limit is reached. Zynex previously re-purchased 495,091 shares of its common stock under a prior buyback program which took place from December 6, 2017 through March 6, 2018.
During the months preceding its uplist the Company appointed three individuals to serve as independent directors on the Company’s Board of Directors in order to satisfy the Nasdaq Capital Market’s listing rules which require 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.”
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 minimum bid price requirement.
On the trading day prior to listing, the Company’s opening and closing share prices were $4.47 and $5.42, respectively. On the day trading commenced on the Nasdaq Capital Market, the Company’s shares opened at $5.25 and closed slightly down at $4.72. Approximately 43,805 shares traded on the day of the uplist.
For more information about Zynex, please visit its website at http://zynexmed.investorroom.com/news-releases?l=100 or visit its Nasdaq Capital Markets profile at https://www.nasdaq.com/symbol/zyxi
American Resources Corporation (NASDAQ: AREC)
On February 15, 2019, American Resources Corporation (the “Company” or “American Resources”) (NASDAQ: AREC), an extraction, processing, transportation and seller of metallurgical coal and pulverized coal injection (PCI) to the steel industry based in Fishers, IN, uplisted from the OTCPink to the Nasdaq Capital Market, and announced the pricing of an underwritten public offering of 1,000,000 shares of Class A common stock at a price to the public of $4.00 per share.
In November 2018, the Company appointed three individuals to serve as independent directors on the Company’s Board of Directors in order to satisfy the Nasdaq Capital Market listing rules which require 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 February 20, 2019, the Company closed its public offering of 1,000,000 Class A shares of common stock at a price of $4.00 per share for gross proceeds of $4.0 million before deducting underwriting discounts, commissions and other estimated offering expenses. American Resources has granted the underwriters a 45-day option to purchase up to 150,000 additional shares of common stock at the public offering price to cover over-allotments, if any. Maxim Group LLC acted as the sole book-running manager for the public offering. A registration statement relating to the offered securities was declared effective by the SEC on February 14, 2019.
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 minimum bid price requirement.
On the trading day prior to listing, the Company’s opening and closing share price was $11.80. On the day trading commenced on the Nasdaq Capital Market, the Company’s shares opened at $4.25 and closed slightly down at $4.24. Approximately 133,700 shares traded on the opening day of the uplist.
For more information about American Resources, please visit its website http://americanresourcescorp.com/investor-relations or visit its Nasdaq Capital Markets profile at https://www.nasdaq.com/symbol/arec/real-time
Epsilon Energy Ltd. (TSX: EPS; NASDAQ: EPSN)
On February 19, 2019, Epsilon Energy Ltd. (the “Company” or “Epsilon”) (NASDAQ: EPSN), a North American on-shore focused independent oil and natural gas company engaged in the acquisition, development, gathering and production of oil and gas reserves based in Houston, TX, uplisted from the OTCQB to the Nasdaq Capital Market.
According to the Company’s proxy circular dated June 4, 2018, in order to enhance the marketability of its capital stock and shareholder value over the long term, the Company approved a change of domicile from Canada to the State of Delaware.
On December 24, 2018, the Company effected a 1-for-2 reverse stock split which had the effect of causing the price of the Company’s common stock to increase to over $4.00 in order to achieve the Nasdaq Capital Market’s initial listing requirement of a minimum $4.00 bid price.
On the trading day prior to listing, the Company’s opening and closing share prices was $5.45, respectively. On the day trading commenced on the Nasdaq Capital Market, the Company’s shares opened and closed at $5.46. Approximately 900 shares traded on the day of the uplist.
For more information about Epsilon please visit its website at http://www.epsilonenergyltd.com/investor-center/news-and-presentations or visit its Nasdaq Capital Markets profile at https://www.nasdaq.com/symbol/epsn/real-time
Village Farms International, Inc. (TSX: VFF; NASDAQ: VFF)
On February 21, 2019, Village Farms International, Inc. (the “Company” or “Village Farms”) (NASDAQ: VFF), a vertically integrated greenhouse grower in North America based in Delta, Canada, uplisted from the OTCQX to the Nasdaq Capital Market.
At the time of its listing on the Nasdaq Capital Market, 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 minimum bid price requirement and this was an organic uplist in nature.
On the trading day prior to listing, the Company’s opening and closing share price were $8.16 and $8.78, respectively. On the day trading commenced on the Nasdaq Capital Market, the Company’s shares opened at $8.90 and closed at $9.85. Approximately 2,016,618 shares traded on the day of the uplist.
For more information about Village Farms, please visit its website http://villagefarms.com or visit its Nasdaq Capital Markets profile at https://www.nasdaq.com/symbol/vff
CannTrust Holdings Inc. (TSX: TRST; NYSE: CTST)
On February 25, 2019, CannTrust Holdings Inc. (the “Company” or “CannTrust”) (NYSE: CTST), a producer of medical and recreational cannabis in Canada, based in Ontario, Canada, uplisted from the OTCPink to the New York Stock Exchange.
On June 5, 2018, CannTrust closed a $100,395,000 offering of the Company’s securities (the “Offering”), consisting of 11,155,000 units (each, a “Unit”), at a price of $9.00 per Unit. Each Unit is comprised of one common share of the Company and one-half of one common share purchase warrant. Each warrant is exercisable to purchase one common share at an exercise price of $12.00 per share, subject to adjustment in certain events. The Units were offered and sold by way of a short form prospectus filed in each of the provinces of Canada, excluding Quebec, and offered and sold elsewhere outside of Canada on a private placement basis. The Offering was completed by a syndicate of underwriters co-led by Canaccord Genuity Corp. and GMP Securities L.P. This helped the Company meet the New York Stock Exchange’s stockholders’ equity requirement of $4,000,000.
At the time of the uplist, the Company’s share price was above $4.00, the New York Stock Exchange’s minimum bid price requirement, so the Company did not need to effect a reverse stock split in order to satisfy the minimum bid price requirement.
On the trading day prior to listing, the Company’s opening and closing share price were $9.46 and $9.60, respectively. On the day trading commenced on the New York Stock Exchange, the Company’s shares opened at $9.91 and closed slightly down at $9.06. Approximately 4,059,534 shares traded on the opening day of the uplist.
For more information about CannTrust, please visit its website https://canntrust.ca/investor-relations/ or visit its New York Stock Exchange profile at https://www.nyse.com/quote/XNYS:CTST
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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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