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Frequently Asked Questions
  When an issuance includes common stock (or the equivalent) and warrants, is it necessary to attribute a value to warrants for purposes of determining whether the common stock portion is at a discount?
Identification Number 279

Yes. A value of $0.125, plus any amount that the warrant is currently in the money or could be in the money due to adjustments, such as for price protection, is attributed to each warrant. For example, consider a company with a market value of common stock of $10 per share. In the transaction, the company will issue units consisting of one share of common stock and one warrant exercisable for one share at $10 per share. Nasdaq will consider the common stock to be issued at a discount unless the issuance price of the units is at least $10.125. Increasing the exercise price of the warrants by $0.125 does not satisfy this pricing requirement. If, in the above example, a company issues a convertible instrument rather than common stock, Nasdaq will consider the common stock issuable in such transaction to be at market price if the conversion price is at least $10.125 and warrant exercise price is at least $10.

This analysis is without regard to whether the warrants are immediately exercisable because delay in the exercisability of the warrant does not render it without value.

Note that the determination as to whether the warrant is at a discount may differ for insiders (officers, directors, employees and consultants) and all other investors. See FAQ #271.

Publication Date*: 10/10/2018 Mailto Link Identification Number: 279
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