urban-gro Inc. (UGRO) witnessed a dramatic increase in its stock value during after-hours trading, with shares surging by almost 78%. This significant uptick came on the heels of the company's announcement regarding the finalization of its merger with Flash Sports and Media, Inc. The acquisition is poised to enhance urban-gro's market standing and ensure adherence to Nasdaq's financial thresholds, signaling a new chapter for the firm.
The Colorado-based enterprise officially took ownership of all outstanding shares of Flash Sports and Media, Inc. on Tuesday. The merger agreement stipulates that Flash shareholders will be compensated with a predetermined amount of unregistered Common Stock. This arrangement is meticulously designed to remain below the 20% issuance threshold that would otherwise necessitate stockholder approval under Nasdaq Listing Rule 5635(d), which applies to non-public offering transactions at a price below the minimum. Additionally, Flash shareholders are slated to receive newly established non-voting preferred stock, which will convert into common stock once approved by stockholders. The total equity received by Flash shareholders, encompassing both the initially issued common stock and the convertible preferred stock, will be calculated by dividing Flash's agreed-upon equity valuation by UGRO's closing price on Tuesday, which stood at $3.23.
A critical aspect of this merger for urban-gro is its strategic alignment with Nasdaq compliance. The company explicitly stated that this consolidation elevates its stockholders' equity above the minimum $2.5 million requirement, as mandated by Nasdaq Listing Rule 5550(b)(2). Bradley Nattrass, urban-gro's CEO, conveyed optimism about the future, anticipating numerous transformative developments in the upcoming quarters. Echoing this sentiment, Anna G., President of Flash, highlighted that the merger empowers Flash with enhanced capital strength, credibility, and strategic maneuverability, paving the way for expanded scalability. Thunder Rock Capital LLC played a crucial role, serving as the exclusive mergers and acquisitions advisor throughout the process.
In terms of market performance and technical indicators, urban-gro's Relative Strength Index (RSI) was noted at 30.66. The integrated professional services consulting firm currently boasts a market capitalization of $2.43 million. Over the past 52 weeks, the company's shares have fluctuated significantly, reaching a high of $21.50 and a low of $2.84. Despite the recent surge, the stock had previously experienced a substantial decline of 83% over the last 12 months. Presently, the stock is trading approximately 2.1% above its 52-week low, indicating a position near the lower end of its trading range. This weak long-term trend and current market positioning suggest that any sustained recovery would require compelling evidence and clear confirmation before investors might consider making substantial new investments. Benzinga’s Edge Stock Rankings further corroborate this, indicating a negative price trend for UGRO across all timeframes.