8-K: Tivic Health Systems Announces 1-for-17 Reverse Stock Split to Regain Nasdaq Compliance

Tivic Health Systems, Inc. will implement a 1-for-17 reverse stock split effective March 7, 2025, to regain compliance with Nasdaq's minimum bid price requirement.

Summary

• Tivic Health Systems, Inc. has announced a 1-for-17 reverse stock split of its common stock.
• The reverse stock split is intended to increase the company's stock price to meet Nasdaq's minimum bid price requirement of $1.00 per share.
• The reverse stock split will be effective on March 7, 2025.
• The company's stock will continue to trade on the Nasdaq under the symbol TIVC.
• The new CUSIP number for the common stock will be 888705308.
• Every 17 shares of common stock will be reclassified into one new share.
• Adjustments will be made to outstanding preferred stock, warrants, equity awards, and options.
• No fractional shares will be issued; instead, they will be rounded up to the nearest whole share.
• The company received a delisting notification from Nasdaq in December 2024 due to non-compliance with the minimum bid price and minimum stockholders' equity requirements.
• Tivic Health appealed the delisting and had a hearing on February 18, 2025.
• The company believes the reverse stock split will allow it to regain compliance with Nasdaq listing requirements.

Sentiment

Score: 4

Explanation: The sentiment is slightly negative due to the reverse stock split being a measure to avoid delisting, indicating underlying issues with the company's stock performance. However, the company is taking proactive steps to address the issue.

Positives

• The reverse stock split is a proactive measure to regain compliance with Nasdaq listing requirements.
• The company believes the reverse stock split will enable it to maintain its Nasdaq listing.
• Existing stockholders' percentage ownership and voting power will remain materially unchanged, except for adjustments from rounding fractional shares.
• The company has already received stockholder approval for the reverse stock split at a special meeting held on January 31, 2025.

Negatives

• The company received a delisting notification from Nasdaq in December 2024.
• The company has not been in compliance with the minimum bid price requirement.
• The reverse stock split may be perceived negatively by some investors.
• There is no guarantee that the reverse stock split will be successful in increasing the stock price or maintaining the Nasdaq listing.

Risks

• The company may not be able to regain compliance with Nasdaq's minimum bid price requirement even after the reverse stock split.
• The stock price may not increase sufficiently to meet the $1.00 threshold.
• The company's appeal to the Nasdaq hearings panel may not be successful.
• The company's stock could be delisted from Nasdaq if it fails to regain compliance.
• Rounding up fractional shares could result in dilution.
• The company's financial condition could impact its ability to maintain its Nasdaq listing.

Future Outlook

The company anticipates that the reverse stock split will increase the closing bid price of its common stock above $1.00 per share, enabling it to regain compliance with Nasdaq's minimum bid price requirement and maintain its Nasdaq listing, although no assurances can be provided.

Management Comments

• The purpose of the reverse stock split is to bring the Company into compliance with the minimum bid price requirement for continued listing on the Nasdaq Capital Market (Nasdaq), and is part of the Company's Compliance Plan, as presented to Nasdaq on February 18, 2025.
• Although no guarantees can be offered, the Company believes that this reverse stock split will allow it to regain compliance with the Nasdaq continued listing requirements and will enable the Company to maintain its Nasdaq listing.

Industry Context

Reverse stock splits are a common strategy for companies facing delisting from exchanges due to low stock prices. Many companies in similar situations, particularly smaller cap companies, have used this method to maintain their listing status. The success of the reverse split depends on various factors, including market conditions and investor sentiment.

Comparison to Industry Standards

• Reverse stock splits are a relatively common practice among companies facing delisting from exchanges like Nasdaq or NYSE.
• Comparable companies that have recently undertaken reverse stock splits include those in the biotechnology and pharmaceutical sectors facing similar compliance issues.
• The typical range for reverse stock splits varies, but a 1-for-17 split is within the range of actions taken by other companies to address minimum bid price requirements.
• The success of such splits in maintaining listing and improving stock price performance varies widely and depends on company-specific factors and overall market conditions.

Stakeholder Impact

• Shareholders will see their number of shares reduced by a factor of 17, but their percentage ownership will remain materially unchanged.
• Employees may be concerned about the company's financial stability and future prospects.
• Customers and suppliers may be impacted if the company's financial situation deteriorates further.
• Creditors may be concerned about the company's ability to repay its debts.

Next Steps

• The company will implement the reverse stock split on March 7, 2025.
• The company will await a decision from the Nasdaq hearings panel regarding its appeal.
• The company will monitor its stock price to ensure compliance with Nasdaq's minimum bid price requirement.

Key Dates