Red Cat Holdings Inc (RCAT)

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Why did Ondas Holdings perform the reverse split in 2020 ?

Ondas Holdings carried out the 1-for-3 reverse split in 2020 primarily to facilitate a public equity offering and strengthen its capital structure, rather than for a listing-compliance issue like avoiding a sub-$1 share price. The reverse split reduced the number of outstanding common shares while keeping the authorized share count high enough to support additional capital raising and corporate purposes.

Capital-raising considerations
Around that time, Ondas was issuing Series A preferred stock and then conducting a public equity offering to raise several million dollars of new capital for working capital, technology development, and general corporate purposes.

A higher per-share price and lower share count made the company’s common stock more suitable for that offering structure and for institutional investors, while still leaving enough authorized shares available for future issuance.

Share structure and marketability
The reverse split consolidated existing shares so that each investor held fewer shares at a higher price, which can improve perceived marketability and reduce very low per-share prices that some investors avoid.

Following the split, Ondas had a substantially reduced number of shares outstanding but maintained a large authorized share pool, giving the company flexibility to issue additional equity for financing, incentives, or strategic transactions without immediately increasing the authorized share count again.