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Meta Materials (NASDAQ:MMAT) stock is down by about 8% after the company announced that it would enact a 1-for-100 reverse split, effective as of the market open on Jan. 29. The reverse split was approved at the company’s last annual meeting of stockholders.
As part of the reverse split, each 100 shares of MMAT stock will be converted into one share, while the price of MMAT stock will increase by a factor of 100. Total ownership of the company will not be affected.
“No fractional shares will be issued in connection with the Reverse Stock Split,” explained Meta. “Any fractional shares of common stock resulting from the Reverse Stock Split will be rounded up to the nearest whole post-split share and no stockholders will receive cash in lieu of fractional shares.”
After the reverse split, shares outstanding will decrease to 5.64 million from 564 million. The number of authorized shares of common stock will decrease to 10 million from 1 billion.
MMAT Stock: Meta Materials Announces 1-for-100 Reverse Split
Meta will enact the reverse split in order to regain compliance with Nasdaq’s minimum $1 rule. Nasdaq first notified the company of its noncompliance on March 20, 2023 and provided the company with 180 calendar days, or until Sept. 18, to regain compliance.
However, MMAT was not able to regain compliance by Sept. 18, which is defined as having a closing price of $1 or more for at least 10 consecutive trading days. On Sept. 19, Nasdaq notified Meta that it had provided it with another 180-day grace period, or until March 18, 2024.
The noncompliance issues didn’t end there. On Nov. 27, Nasdaq made a determination to delist MMAT stock due to its shares closing at 10 cents or less for 10 consecutive trading days. The next day, Meta submitted a hearing request in front of the Nasdaq Hearings Panel, which was accepted and scheduled for March 21, 2024. In the meantime, MMAT stock will continue to trade on the Nasdaq pending a decision from the hearing.
“There is no assurance that a favorable decision will be obtained from the Panel at the hearing,” warned Meta.
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.