8-K: FiscalNote Announces 1-for-12 Reverse Stock Split

FiscalNote Holdings, Inc. will implement a 1-for-12 reverse stock split for its Class A and Class B common stock, effective August 29, 2025, with adjusted trading beginning September 2, 2025.

Summary

• FiscalNote Holdings, Inc. will effect a 1-for-12 reverse stock split for its Class A and Class B common stock.
• The reverse stock split will become effective at 4:30 p.m. Eastern Time on August 29, 2025.
• Trading on a reverse stock split-adjusted basis on the NYSE is expected to begin on September 2, 2025.
• Every twelve pre-split shares of common stock will be combined into one post-split share, without changing the par value per share.
• No fractional shares will be issued; stockholders entitled to fractional shares will receive cash in lieu thereof, rounded down to the nearest whole number.
• The company's trading symbol will remain "NOTE," and the new CUSIP number for Class A Common Stock will be 337655 302.
• The reverse stock split will also apply to outstanding stock awards, warrants, stock options, and other convertible/derivative securities, with proportionate adjustments to exercise and/or conversion prices.

Sentiment

Score: 3

Explanation: The reverse stock split is a defensive corporate action, typically undertaken to avoid delisting due to a low share price. While it addresses a critical compliance issue, it reflects poorly on the company's past stock performance and market perception. The action itself is neutral to slightly positive in terms of corporate governance (addressing a problem), but the underlying reason is negative.

Positives

• The reverse stock split is a corporate action to potentially increase the per-share trading price, which can help meet minimum bid price requirements of stock exchanges like the NYSE, preventing delisting.
• Maintaining listing on a major exchange can enhance liquidity and investor confidence.
• Each stockholder's percentage ownership interest and proportional voting power are expected to remain virtually unchanged, except for minor adjustments from rounding fractional shares.
• The rights and privileges of common stock holders will be substantially unaffected.

Negatives

• Reverse stock splits are often perceived negatively by the market as they typically follow a significant decline in share price, indicating underlying business challenges or poor market performance.
• The rounding down of fractional shares means some stockholders may lose a small portion of their equity and receive cash instead, which might not be ideal for long-term investors.
• While the total price for exercising warrants/options remains the same, the per-share exercise price will be higher, meaning holders will acquire fewer shares for the same total investment.

Risks

• Minor changes and adjustments to stockholders' percentage ownership interest and proportional voting power may result from rounding fractional shares into whole shares.
• The reverse stock split may not achieve its intended effect of increasing the stock price or maintaining it above exchange minimums, and the stock price could continue to decline.
• Market perception of a reverse stock split can be negative, potentially leading to further selling pressure.

Future Outlook

The company expects the Class A Common Stock to begin trading on a reverse stock split-adjusted basis on the NYSE on September 2, 2025. It also anticipates that each stockholder's percentage ownership interest and proportional voting power will remain virtually unchanged, aside from minor adjustments due to fractional share rounding.

Management Comments

• "Each stockholders percentage ownership interest in the Company and proportional voting power is expected to remain virtually unchanged as a result of the Reverse Stock Split, except for minor changes and adjustments that will result from rounding fractional shares into whole shares."
• "The rights and privileges of the holders of shares of Common Stock will be substantially unaffected by the Reverse Stock Split."

Industry Context

Reverse stock splits are a common corporate strategy employed by companies whose stock price has fallen significantly, often below the minimum bid price required by major stock exchanges (e.g., NYSE typically requires a $1.00 minimum). By reducing the number of outstanding shares and proportionally increasing the share price, companies aim to regain compliance with listing standards, improve stock market perception, and potentially attract institutional investors who may have policies against investing in "penny stocks." This action by FiscalNote suggests it is addressing a low share price, a trend seen across various industries for companies facing market pressures or underperformance.

Comparison to Industry Standards

• Reverse stock splits are a standard mechanism used by companies across various industries (e.g., technology, biotech, energy) to maintain stock exchange listing compliance. For example, companies like Rite Aid (RAD) or Hertz (HTZ) have executed reverse splits in the past to address low stock prices and avoid delisting.
• The 1-for-12 ratio is within the typical range for reverse splits, which can vary widely from 1-for-2 to 1-for-100 or more, depending on the extent of the price adjustment needed.
• The practice of rounding down fractional shares and providing cash in lieu is also standard industry practice, as exchanges and transfer agents generally do not handle fractional shares.
• The proportionate adjustment of warrants, options, and convertible securities is a standard procedure to ensure the economic terms of these instruments remain consistent post-split.

Corporate Governance

Stakeholder Impact

• Shareholders: Will own fewer shares but with a proportionally higher per-share value. Fractional shares will be cashed out. Percentage ownership and voting power are expected to remain virtually unchanged, except for minor rounding adjustments. The goal is to maintain NYSE listing, which benefits shareholders by preserving liquidity and market access.
• Warrant/Option Holders: Will be able to purchase fewer shares upon exercise/conversion, but at a proportionally higher per-share price, maintaining the same total exercise/conversion value.

Next Steps

• The Class A Common Stock is expected to begin trading on a Reverse Stock Split-adjusted basis on the NYSE at the opening of the market on September 2, 2025.
• The company's transfer agent will aggregate and sell fractional shares, and stockholders will receive cash in lieu of such fractional interests.

Key Dates

Recommendation

While the reverse stock split addresses a critical issue of maintaining exchange listing, it does not inherently improve the company's operational or financial fundamentals. The need for such an action often signals underlying challenges that led to a depressed stock price. A "hold" recommendation is appropriate to observe whether the company can leverage the increased share price to attract new investors, improve liquidity, and demonstrate a turnaround in its core business performance. A "buy" would be premature without evidence of fundamental improvement, and a "sell" would be warranted only if there's a strong conviction that the company's challenges are insurmountable or that the split will not prevent further price erosion.

Keywords

FiscalNote, reverse stock split, stock split, corporate action, NYSE, common stock, Class A common stock, Class B common stock, CUSIP, warrants, stock options, corporate governance, SEC filing, 8-K