Algorhythm Holdings, Inc., previously known as Singing Machine Co Inc, has regained compliance with the Nasdaq's minimum stockholders' equity requirement, according to a recent communication from the stock market.
The Fort Lauderdale-based company, specializing in phonograph records and prerecorded audio tapes and disks, was previously notified of non-compliance due to its stockholders' equity falling below the required $2.5 million threshold as reported in its Form 10-Q for the period ending June 30, 2024.
In response to the initial non-compliance notification received on August 26, 2024, Algorhythm Holdings submitted a plan within the stipulated 45-day period to address the shortfall. Following the company's efforts to regain compliance, detailed in a Form 8-K filed on November 13, 2024, Nasdaq has now confirmed that Algorhythm Holdings meets the listing rule 5550(b)(1) based on the corrective actions outlined in their report.
The company was informed of this positive outcome through a letter from Nasdaq dated November 22, 2024. However, Nasdaq has cautioned that if Algorhythm Holdings does not demonstrate continued compliance in its next SEC periodic report, it may face delisting. In such an event, the company would receive written notice and have the opportunity to appeal the decision to a Nasdaq listing panel.
This development is significant for Algorhythm Holdings, as maintaining compliance with Nasdaq's listing requirements is crucial for its continued presence on the Capital Market. The company's CEO, Gary Atkinson, signed off on the SEC filing dated today, affirming the report's validity.
The business address for Algorhythm Holdings is 6301 NW 5th Way, Suite 2900, Fort Lauderdale, FL, 33309, with the company incorporated in Delaware and its fiscal year ending on December 31.
This news is based on a press release statement and reflects the company's current status with respect to Nasdaq's listing requirements.
In other recent news, Algorhythm Holdings has regained NASDAQ compliance, following a period of uncertainty due to failure to meet the exchange's minimum equity requirement.
The company's successful compliance plan included an At-The-Market Issuance Sales Agreement with Ascendiant Capital Markets, LLC and the acquisition of SemiCab, Inc. This resulted in the issuance of over 4 million shares of common stock, contributing to the required equity threshold.
Algorhythm Holdings has also secured approximately $2 million in funding through a Securities Purchase Agreement, issuing 2,300,000 shares of common stock. The net proceeds are planned for working capital and other general corporate purposes.
The company has entered into a partnership with Apollo Tyres (NS:APLO), India's largest tire manufacturer, through its subsidiary SemiCab India, aiming to optimize freight logistics with an AI-powered platform.
Despite a decrease in net sales and gross profit, Algorhythm Holdings has announced a strategic shift towards the automotive and connected TV sectors. These are the recent developments for Algorhythm Holdings.
InvestingPro Insights
While Algorhythm Holdings has regained compliance with Nasdaq's minimum stockholders' equity requirement, recent InvestingPro data suggests the company still faces significant challenges. The company's market capitalization stands at a modest $3.6 million, reflecting its small-cap status.
InvestingPro Tips indicate that Algorhythm Holdings is "quickly burning through cash" and has "short term obligations exceed liquid assets," which could pose risks to its newly regained compliance status. Additionally, the company was "not profitable over the last twelve months," with an operating income margin of -33.56% for the last twelve months as of Q3 2024.
On a positive note, InvestingPro Tips suggest that analysts predict the company will be profitable this year, which could help maintain its Nasdaq listing. However, investors should be aware that the stock "generally trades with high price volatility" and has "fared poorly over the last month," with a one-month price total return of -33.94% as of the most recent data.
For a more comprehensive analysis, InvestingPro offers 14 additional tips for Algorhythm Holdings, providing deeper insights into the company's financial health and market performance.
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