FAQ: SHARE CONSOLIDATION

What is a “share consolidation” or “reverse split”?

A “share consolidation” or “reverse split” decreases the total number of Valens’ shares trading in the market, with each post consolidation share increasing in value proportionate to the reduction in the total number of shares.

Why is Valens doing it?

Valens is undertaking the share consolidation in connection with its application to list its common shares on the Nasdaq Capital Market (“Nasdaq”). Among other requirements, in order to qualify for listing on Nasdaq, the Company’s share price must be greater than US$3.00 for a specified period prior to the date of acceptance of the Nasdaq listing application.

Valens believes that listing on the Nasdaq will provide the Company with enhanced liquidity while attracting larger institutional investors. In particular, large institutional investors such as mutual funds and active/passive ETFs have minimum bid and liquidity requirements in order to be able to invest. By listing on the Nasdaq and effecting a 3:1 share consolidation, Valens believes that it will be an attractive target for these funds. By affecting a 3:1 consolidation, it is expected that the share price will remain at a reasonable level immediately post consolidation to give every shareholder easier access to buy even a small amount of shares.

What does this mean for investors?

Valens will effect a 3:1 share consolidation. As a result of the share consolidation, Valens’ share price will increase while the number of shares an investor holds will decrease proportionally, but the net impact on total value as a result of the share consolidation is $0. In other words, the total value of all the shares an investor holds will not change as a result of the share consolidation.

By way of example only:

(1) Valens share price at November 12, 2021; based on a 1.26 USD/CAD FX rate.

For more information on NASDAQ listing requirements, please click here.