SeaStar Medical receives Nasdaq public reprimand

SeaStar Medical (TASE:PMCN) Holding Corp (NASDAQ:ICU), a micro-cap medical instruments company with a market capitalization of $9.91 million, has been issued a public reprimand letter by The Nasdaq Stock Market LLC. According to InvestingPro data, the company’s stock has experienced significant volatility, declining over 91% in the past year. This notice, received on Monday, came as a result of the company’s failure to comply with Nasdaq Listing Rule 5635(d), which mandates shareholder approval for certain transactions.

The rule in question involves the issuance of shares amounting to 20% or more of the pre-transaction shares outstanding at a price below the minimum threshold, which SeaStar Medical may have violated in connection with the issuance of shares upon conversion of convertible notes and warrants to an institutional investor. The company’s financial position shows strain, with InvestingPro analysis indicating a weak overall Financial Health Score of 1.56 and current ratio of 0.54, suggesting potential liquidity challenges.

The company had initially sought shareholder approval for a transaction involving the sale of convertible notes and warrants on March 15, 2023. Shareholder consent was obtained on June 28, 2023, but subsequent amendments to the agreement on August 7, 2023, and December 11, 2023, led to the issuance of additional warrants and a reduction in the conversion price of the notes, which resulted in the issuance of approximately 625,722 shares beyond the approved amount.

Upon recognizing the oversight, SeaStar Medical took corrective action by repurchasing all remaining warrants for cash, leaving no additional warrants outstanding. Furthermore, at a special meeting on November 26, 2024, shareholders ratified the original transaction, including the amendments and additional warrants.

Nasdaq, upon review, decided against delisting the company’s common stock, opting instead for a public reprimand. The reprimand does not affect the listing of SeaStar Medical’s common stock, which continues to be traded on the Nasdaq Stock Market. The company had believed that the entire transaction was approved by shareholders at the time of the issuance and adjustments.

This information is based on a press release statement and highlights the importance of strict adherence to exchange listing requirements and the measures taken by SeaStar Medical to rectify the situation. InvestingPro subscribers have access to 12 additional investment tips for ICU, including detailed insights into the company’s valuation metrics and growth potential. The stock’s beta of -1.03 indicates it typically moves in the opposite direction of the broader market, potentially offering diversification benefits.

In other recent news, SeaStar Medical has secured approximately $6 million in a direct offering and concurrent private placement of warrants. The company has also been notified by Nasdaq about a potential delisting due to its market value falling below the required threshold, but SeaStar Medical intends to appeal this decision. H.C. Wainwright & Co. served as the exclusive financial advisor for the direct offering.

In addition, SeaStar Medical’s stockholders have approved a reduction in the number of authorized shares from 500 million to 450 million. The company has also received a Breakthrough Device Designation from the U.S. Food and Drug Administration for its Selective Cytopheretic Device, aimed at treating chronic systemic inflammation in patients requiring chronic hemodialysis.

Furthermore, SeaStar Medical has settled a dispute with Nuwellis over a distribution agreement for its pediatric SCD product, agreeing to pay Nuwellis $900,000. Finally, the company has seen significant board changes with the appointment of Jennifer A. Baird, Bernadette N. Vincent, and John Neuman.

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