For every 10 shares held, Wave shareholders will receive one new share of Wave Systems common stock, the company said in a statement on Wednesday.
The split will help the company meet the $1 per share minimum closing bid price required to trade on the Nasdaq.
"However, there can be no assurance that this result will be achieved or that Wave will maintain the listing of its common stock on the Nasdaq Capital Market," the company added.
Shareholders' percentage ownership of the company will not be affected by the reverse split.
Based in Lee, MA, Wave Systems develops hardware-based computer security systems.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate WAVE SYSTEMS CORP as a Sell with a ratings score of E+. This is based on a variety of negative investment measures, which should drive this stock to significantly underperform the majority of stocks that we rate. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- WAVX's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 81.49%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- WAVX, with its decline in revenue, underperformed when compared the industry average of 16.7%. Since the same quarter one year prior, revenues fell by 40.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The gross profit margin for WAVE SYSTEMS CORP is currently very high, coming in at 92.23%. Regardless of WAVX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WAVX's net profit margin of -66.12% significantly underperformed when compared to the industry average.
- Net operating cash flow has increased to -$2.94 million or 29.27% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -8.40%.
- WAVE SYSTEMS CORP has improved earnings per share by 40.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, WAVE SYSTEMS CORP continued to lose money by earning -$0.31 versus -$0.72 in the prior year.
- You can view the full analysis from the report here: WAVX