Versus Systems Announces 1-For-16 Reverse Stock Split to Aid Compliance with Nasdaq Listing Requirements
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Insights
A reverse stock split, such as the 1-for-16 consolidation announced by Versus Systems Inc., is a strategic financial maneuver often employed by companies facing delisting threats due to their stock trading below the minimum price required by stock exchanges like Nasdaq. The immediate effect of this action is to elevate the market price of the remaining shares by reducing the number of shares outstanding, which in this case goes from approximately 40.1 million to about 2.5 million.
From an investor's perspective, the reverse split does not intrinsically alter the value of the company but can have psychological and market implications. A higher per-share price might attract institutional investors who are prohibited from investing in stocks below a certain threshold. However, it can also be viewed as a sign of distress, potentially leading to a negative perception among investors. The adjustment of equity awards and derivative securities is a standard procedure to ensure the consistency of existing agreements.
While the reverse split aims to comply with Nasdaq's listing requirements, it's critical to monitor the stock's performance post-consolidation to assess whether the strategy will have the desired effect of stabilizing the company's position in the market.
The reverse stock split by Versus Systems Inc. reflects a tactical response to regulatory compliance pressures, specifically Nasdaq’s minimum bid price rule. This rule mandates that the bid price of a company’s stock must not fall below $1.00 for a specified period and failure to meet this requirement can lead to delisting. The consolidation is intended to increase the stock price above this threshold.
However, it's important to note that reverse splits are not always successful in the long term. They do not address the underlying business challenges that may have led to the low stock price. Investors and analysts should evaluate the company's fundamental health, including revenue growth, profitability and market position, to determine the potential effectiveness of such financial engineering.
Moreover, the market's reception to the reverse split will be a key indicator of investor confidence. If the stock price fails to maintain the anticipated post-split levels, it could lead to further selling pressure. Conversely, maintaining compliance with Nasdaq’s listing requirements could open doors to new capital and partnerships, which can be beneficial.
Legally, the process of a reverse stock split involves several formalities, including board approval and adherence to both corporate bylaws and securities regulations. Versus Systems Inc. has followed these steps by announcing the reverse split and setting a definitive date for its effectiveness. Shareholders need to be aware of the administrative aspect of this change, such as the surrender and exchange of old share certificates for new ones, as detailed in the letter of transmittal they will receive.
The legal implications also extend to the proportionate adjustment of equity awards and other derivative securities, which must be handled meticulously to avoid disputes and ensure fairness among stakeholders. The change in CUSIP number, which is a unique identifier for the securities of North American companies, is a technical but necessary adjustment that facilitates tracking and trading of the stock post-consolidation.
Overall, while the reverse split is a financial tool, it is underpinned by a robust legal framework aimed at protecting the interests of shareholders and maintaining market integrity.
LOS ANGELES, Dec. 22, 2023 (GLOBE NEWSWIRE) -- Versus Systems Inc. (“Versus” or the “Company”) (Nasdaq: VS) announced today that its Board of Directors has approved a 1-for-16 reverse split of its common shares (the “Consolidation”) to comply with Nasdaq’s listing requirements. The Consolidation is effective as of the close of trading on December 28, 2023.
As a result of the Consolidation, every 16 common shares of the Company will be converted into one common share, reducing the number of issued and outstanding common shares from approximately 40.1 million to approximately 2.5 million. No fractional common shares will be issued in connection with the Consolidation, and any fractional shares created as a result of the Consolidation will be rounded to the nearest whole common share. The number of Versus’ common shares issuable upon vesting or the exercise of equity awards, such as stock options and other derivative securities, along with the corresponding exercise prices thereof, will each be proportionally adjusted.
Versus expects its common shares to commence trading on a split-adjusted basis as of the open of trading on December 29, 2023.
A letter of transmittal will be sent by mail to shareholders advising them that the Consolidation has taken effect and instructing them to surrender the certificates evidencing their common shares for replacement certificates representing the number of common shares to which they are entitled as a result of the Consolidation. Until surrendered, each certificate formerly representing common shares will be deemed for all purposes to represent the number of common shares to which the holder thereof is entitled as a result of the Consolidation.
The Company’s common shares will trade under a new CUSIP number 92535P873 following the effectiveness of the Consolidation.
About Versus Systems
Versus Systems Inc. is an engagement and rewards company that makes live events, games, shows, and apps more fun to watch and play. Versus adds interactive games, polling, trivia, predictive elements, and other win conditions to existing entertainment - whether in-venue or online - making the content more contextual, personal, and rewarding. Versus works with world class sports teams, leagues, venues, entertainment companies, advertisers, and other content creators to make engaging, rewarding experiences for fans all over the world. For more information, visit www.versussystems.com or the official Versus Systems YouTube channel.
Investor Contact:
Cody Slach and Jackie Keshner
Gateway Group, Inc.
949-574-3860
IR@versussystems.com
or
press@versussystems.com
Disclaimer for Forward-Looking Information
This news release contains certain forward-looking information and forward-looking statements within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward looking statements. These forward-looking statements are based on reasonable assumptions and estimates of management of the Company at the time such statements were made. Actual future results may differ materially as forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to materially differ from any future results, performance or achievements expressed or implied by such forward-looking statements. Although the forward-looking statements contained in this news release are based upon what management of the Company believes, or believed at the time, to be reasonable assumptions, the Company cannot assure shareholders that actual results will be consistent with such forward-looking statements, as there may be other factors that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking statements and information. There can be no assurance that forward-looking information, or the material factors or assumptions used to develop such forward-looking information, will prove to be accurate. The Company does not undertake any obligations to release publicly any revisions for updating any voluntary forward-looking statements, except as required by applicable law.
FAQ
What is the reason for Versus Systems Inc.'s (Nasdaq: VS) reverse split of its common shares?
When will the reverse split of Versus Systems Inc.'s (Nasdaq: VS) common shares be effective?
How many common shares will be outstanding after Versus Systems Inc.'s (Nasdaq: VS) reverse split?
When will Versus Systems Inc.'s (Nasdaq: VS) common shares commence trading on a split-adjusted basis?
What will happen to the exercise prices of equity awards after Versus Systems Inc.'s (Nasdaq: VS) reverse split?
