DEF: Beyond Air Seeks Stockholder Approval for Reverse Stock Split to Regain Nasdaq Compliance

Beyond Air is asking stockholders to approve a reverse stock split, ranging from 1:10 to 1:50, to meet Nasdaq's minimum bid price requirement and avoid delisting.

Summary

• Beyond Air is holding a special meeting on June 20, 2025, to seek stockholder approval for a reverse stock split of its common stock.
• The proposed reverse stock split would allow the Board of Directors to implement a split ratio between 1-for-10 and 1-for-50 at their discretion, anytime before the one-year anniversary of the special meeting.
• The primary reason for the reverse stock split is to increase the per share market price of Beyond Air's common stock to meet Nasdaq's minimum bid price requirement of $1.00 per share.
• Beyond Air received a notification from Nasdaq in August 2024, stating that it did not meet the minimum bid price requirement.
• The company was initially given until February 4, 2025, to regain compliance and was later granted an extension until August 4, 2025.
• If the reverse stock split is not approved and the company fails to regain compliance by August 4, 2025, Beyond Air's common stock may be delisted from the Nasdaq Capital Market.
• Delisting could limit the company's ability to raise additional equity capital and may lead to a restructuring of liabilities, potentially resulting in a total loss for stockholders.
• The Board of Directors recommends that stockholders vote in favor of the reverse stock split proposal and a proposal to adjourn the special meeting if necessary to solicit additional proxies.
• As of April 23, 2025, there were 86,369,869 shares of Beyond Air's common stock outstanding.
• The company is also seeking approval to adjourn the Special Meeting to a later date or dates, if necessary or appropriate, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Reverse Stock Split Proposal.

Sentiment

Score: 4

Explanation: The document is primarily factual and procedural, outlining the need for a reverse stock split to avoid delisting. While the company expresses optimism about regaining compliance, the risks associated with delisting and potential restructuring temper the overall sentiment.

Positives

• A successful reverse stock split could increase the per share price of Beyond Air's common stock, potentially attracting a broader range of investors.
• Maintaining a Nasdaq listing could improve the company's access to capital and overall financial stability.
• The Board's discretion in setting the reverse stock split ratio allows for flexibility in responding to market conditions.
• The company has been granted an extension to regain compliance with Nasdaq listing requirements until August 4, 2025.

Negatives

• There is no guarantee that the reverse stock split will increase the stock price or maintain compliance with Nasdaq listing requirements.
• Delisting from Nasdaq could negatively impact the company's ability to raise capital and may lead to a restructuring of liabilities.
• The reverse stock split could decrease the liquidity of the common stock.
• The reverse stock split may lead to a decrease in the company's overall market capitalization.

Risks

• The reverse stock split may not increase the stock price over the long term or maintain compliance with Nasdaq rules.
• The reverse stock split may decrease the liquidity of the common stock.
• The reverse stock split may result in some stockholders owning odd lots that may be more difficult to sell or require greater transaction costs per share to sell.
• The reverse stock split may lead to a decrease in the company's overall market capitalization.
• Failure to maintain compliance with Nasdaq's continued listing requirements could result in the delisting of the common stock.
• If the reverse split is effected and then the market price of the common stock will decline and will fail to meet the continued Nasdaq listing requirement for the minimum bid price, the company may not be eligible for any compliance period.

Future Outlook

The company aims to regain compliance with Nasdaq's minimum bid price requirement through a reverse stock split, but there is no guarantee of success. Failure to comply could lead to delisting and potential restructuring.

Management Comments

• The Board believes that maintaining the current number of authorized shares of our Common Stock, irrespective of the Reverse Stock Split, is necessary to provide us with the flexibility to act in the future with respect to raising additional financing, potential strategic collaborations and other corporate purposes without the delay and expense associated with obtaining special stockholder approval each time an opportunity requiring the issuance of shares of Common Stock may arise.

Industry Context

Reverse stock splits are a common strategy for companies facing delisting from major exchanges due to low stock prices. The success of a reverse stock split depends on various factors, including the company's underlying financial performance and market conditions.

Comparison to Industry Standards

• Many companies in similar situations, such as those in the biotechnology and pharmaceutical sectors, have used reverse stock splits to maintain exchange listings.
• The effectiveness of a reverse stock split varies, with some companies experiencing a sustained increase in stock price while others see only a temporary effect or further decline.
• Comparable companies that have recently undertaken reverse stock splits include [hypothetical company A] and [hypothetical company B], with mixed results in terms of long-term stock price performance.

Stakeholder Impact

• Shareholders face the risk of dilution and potential loss of investment if the company is delisted and needs to restructure.
• Employees may be affected by potential restructuring or reduced access to capital.
• The company's ability to execute its business plan and deliver value to stakeholders is contingent on maintaining its Nasdaq listing.

Next Steps

• Stockholders will vote on the reverse stock split proposal at the Special Meeting on June 20, 2025.
• The Board of Directors will determine the specific reverse stock split ratio and whether to implement the split based on market conditions and other factors.
• If the reverse stock split is approved and implemented, the company will notify stockholders about the exchange of stock certificates.
• The company must regain compliance with Nasdaq's minimum bid price requirement by August 4, 2025, to avoid delisting.

Key Dates

Keywords

reverse stock split, Nasdaq, delisting, compliance, common stock, stockholders, bid price, Beyond Air