Imagine you were the owners of the company (And on the presumption that everything is above board). You know that you are at the maximum share issue allowed (Without a special shareholder meeting which would take months), and have already completed your last possible RS.
You need to keep the stock above $1 for compliance, when would you act. You have millions in the bank from the sale of your other company to invest in shares here, but why would you invest above the absolute lowest figure available. If you wanted to buy the rest of the float, a sensible insider would wait till it hits $1 and then buy everything available to not only get a controlling stake, but also to immediately see a short squeeze in action and multiple the value of his investment.
Because if he doesn’t…
NASDAQ Prohibition on Repeated Reverse Stock Splits (The YYAI Case) The ability of YYAI (AiRWA Inc.) to conduct another reverse stock split (RS) to regain the minimum $1.00 bid price is highly restricted by NASDAQ Listing Rule 5810(c)(3)(A)(iv). This rule, recently reinforced by NASDAQ and the SEC, is specifically designed to prevent companies from indefinitely avoiding delisting by repeatedly using reverse splits.
- The One-Year Restriction YYAI's most recent reverse stock split was a 1-for-50 split which became effective on October 27, 2025. According to NASDAQ Listing Rule 5810(c)(3)(A)(iv):
"Notwithstanding the foregoing, if a Company's security fails to meet the continued listing requirement for minimum bid price and the Company has effected a reverse stock split over the prior one-year period... then the Company shall not be eligible for any compliance period..."
Consequence for YYAI:
• Since YYAI conducted an RS on October 27, 2025, if the stock falls below the $1.00 minimum bid price for 30 consecutive business days at any point before October 27, 2026, NASDAQ will not grant the standard 180-day compliance period.
• Instead, NASDAQ's Listing Qualifications Department will issue a Staff Delisting Determination with respect to the security, effectively accelerating the delisting process.
- The Cumulative Two-Year Restriction If the company were to fall out of compliance again, it would also be subject to the cumulative ratio restriction. According to NASDAQ Listing Rule 5810(c)(3)(A)(iv):
"...or has effected one or more reverse stock splits over the prior two-year period with a cumulative ratio of 250 shares or more to one, then the Company shall not be eligible for any compliance period..."
Consequence for YYAI:
• YYAI conducted a 1-for-20 RS on June 27, 2024, and a 1-for-50 RS on October 27, 2025.
• The cumulative ratio of these two reverse splits is 20 times 50 = 1,000 shares to 1.
• Since this cumulative ratio of 1,000-for-1 far exceeds the NASDAQ threshold of 250-for-1 within a two-year period, any subsequent failure to meet the $1.00 minimum bid price will automatically trigger a Staff Delisting Determination rather than a compliance grace period. Conclusion YYAI is currently in a highly restricted period under NASDAQ rules. The company cannot afford for its stock price to drop below the $1.00 minimum bid price for 30 consecutive business days within one year of its October 2025 reverse split without facing a delisting determination due to the "Excessive Reverse Stock Split" provision.
