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OXIS Conducting a Reverse Split to Meet NASDAQ Listing Requirements? Wishful Thinking!

May 21, 2015 • 5:45 PM EDT
3 MIN READ  •  By Michael Berger
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Yesterday, Oxis International Inc. (OXIS) filed an information statement stating that its shareholders approved a reverse stock split at a ratio to be decided by the company’s board of directors. The reverse split will not be less than 1-for-50 and it will not be more than 1-for-250. The company’s primary reason for the reverse split is to become listed on the NASDAQ

  • OXIS’s board of directors believe that a reverse split could help the company meet the initial requirements for listing on the NASDAQ by raising OXIS’s bid or closing price. The NASDAQ requires companies to meet a minimum bid or closing price in the $2-$4 range.
  • The company believes that a reverse split could increase OXIS’s market bid price to at least the amount required for initial listing by the NASDAQ.

What are the NASDAQ’s listing requirements for all companies?

There are three sets of listing requirements for the NASDAQ and each company must meet at least one of the three sets to be listed on the exchange. Depending on the company’s underlying fundamentals, there are three ways to become listed on the NASDAQ. If a company does not meet the requirements of one set, such as the minimum operating income, it would need to qualify in other areas such as revenue, cash flow, or market capitalization.

The NASDAQ requires every company must meet these requirements:

  1. Each company must have at least 1,250,000 publicly-traded shares upon listing. These shares exclude those held by officers, directors or any beneficial owners of more than 10% of the company.
  2. The bid price at the time of listing must be at least $4.00 and the company must have at least 3 market makers. A company, however, may qualify under a closing price alternative of $3 or $2 if it meets other requirements.
  3. Each listed company must comply with NASDAQ corporate governance rules 4350, 4351 and 4360.
  4. Companies must have at least 450 round lot (100 shares) shareholders, 2,200 total shareholders, or 550 total shareholders with 1.1 million average trading volume over the past 12 months.

In addition to these requirements, companies must meet ALL of the criteria under at least ONE of the following standards.

  1. For the prior three years, the company must have aggregate pre-tax earnings of at least $11 million. The company must have at least $2.2 million in the prior two years, and cannot have operated at a net loss in any of the prior three years.
  2. For the prior three years, the company must have a minimum aggregate cash flow of at least $27.5 million (no negative cash flow in any of those three years). Also, the company’s average market capitalization over the past 12 months must be at least $550 million, and it needs to have generated at least $110 million in revenue during the previous fiscal year.
  3. Companies can be removed from the cash flow requirement of Standard No. 2 if the average market capitalization over the past 12 months is at least $850 million and it generated at least $90 million in revenue during the previous fiscal year.

Wishful thinking for OXIS

In late March, OXIS reported its 2014 operating results. During the year, the company generated $61,000 in revenue and recorded a $23,849,000 net loss. As of March 31, 2015, OXIS had a working capital deficit of $5,893,000 and an accumulated deficit of $133,472,000.Due to the NASDAQ’s initial listing requirements we do not expect OXIS to be approved any time soon. 

Even if the reverse split lifts OXIS’s stock price above the NASDAQ’s minimum requirement, their market capitalization will not change. A reverse split has no effect on a company’s market capitalization.  OXIS is a developmental company that has TWO full time employees. The company is simply not NASDAQ ready.


In an interview earlier this year, Anthony Cataldo, CEO of OXIS, said that he would not conduct a reverse split unless it was coupled with a large institutional capital raise and/or an up-listing to a major exchange. Clearly that statement was just another example of the comapny’s senior management “blowing smoke”.  

We will continue to publish reports which highlight companies that could meet the NASDAQ’s initial listing requirements in the near future. These reports can be accessed by Mushroomstocks premium members! Sign up today here

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners, LLC and Founder of Prior to entering the cannabis industry, Michael was an Equity Research Analyst at Raymond James Financial covering the Energy Sector. Michael has been featured in publications such as The Street, Bloomberg, US Money News, and hosts various cannabis events across North America.


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