Algorhythm Holdings, Inc. (NASDAQ:RIME), a company specializing in phonograph records and prerecorded audio tapes and disks, has announced a reverse stock split and an increase in authorized shares. The announcement comes as the company's stock trades at $0.04, having lost 95% of its value over the past six months.
According to InvestingPro analysis, the stock currently trades below its Fair Value. The Board of Directors has determined to effectuate the reverse stock split at a ratio of 1-for-200, following the authorization received from the stockholders at the annual meeting held on Sunday.
The reverse stock split, which has not yet taken effect in the public markets, was approved alongside an amendment to increase the number of authorized common stock from 100,000,000 to 800,000,000 shares. The decision was made on Monday, and the Certificate of Amendment was promptly filed with the Secretary of State of Delaware.
The move comes as a strategic step to adjust the number of shares available and outstanding, a common practice among publicly traded companies for various corporate purposes. The reverse split will consolidate multiple existing shares into one new share, potentially impacting the stock's market price. With a current market capitalization of just $4 million and a weak financial health score according to InvestingPro, the company faces significant challenges, including a concerning current ratio of 0.87.
Investors and market watchers should note that the reverse stock split is yet to be reflected in the market and the timing of when this will occur has not been disclosed. The Certificate of Amendment, which includes the details of the reverse stock split and the increase in authorized shares, is attached as Exhibit 3.1 to the company's recent 8-K filing.
This announcement is based on the information provided in the latest 8-K filing by Algorhythm Holdings, Inc. with the Securities and Exchange Commission. For deeper insights into RIME's financial health and future prospects, InvestingPro subscribers can access 15 additional ProTips and a comprehensive Pro Research Report, helping investors make more informed decisions during this critical corporate transition.
In other recent news, Algorhythm Holdings has made significant strides in its financial and operational planning. The company expanded its authorized common stock from 100 million to 800 million shares and received shareholder approval for a potential reverse stock split.
Furthermore, Algorhythm Holdings recently announced a direct offering of its common stock expected to generate $2 million in gross proceeds and priced a public offering projected to yield approximately $9.5 million. Univest Securities acted as the exclusive placement agent for both offerings.
Additionally, the company secured roughly $2 million through a Securities Purchase Agreement, issuing 2,300,000 shares of common stock. Algorhythm Holdings also successfully regained compliance with Nasdaq's minimum stockholders' equity requirement through a compliance plan that included an At-The-Market Issuance Sales Agreement with Ascendiant Capital Markets and the acquisition of SemiCab, Inc.
However, the company is facing potential delisting from the Nasdaq Stock Market due to non-compliance with the Bid Price Rule. Algorhythm Holdings plans to request a hearing before the Nasdaq Hearings Panel to delay any delisting actions.
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