Auddia Announces Reverse Stock Split
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Insights
A reverse stock split is often a strategy employed by companies to bolster their stock price, particularly to meet listing requirements such as Nasdaq's Minimum Bid Price Rule. In the case of Auddia Inc., the 1-for-25 reverse stock split aims to consolidate shares and elevate the stock price above the $1.00 threshold. This is a significant ratio, indicating the company is taking assertive action to address its stock price. Investors should note that while the reverse split does not inherently change the company's market capitalization, it can affect investor perception and potentially improve the stock's marketability.
Moreover, the adjustment of the exercise prices of warrants and stock options, as well as the proportional change in the number of shares these securities represent, is a standard procedure in reverse splits. This ensures that the intrinsic value of these derivatives remains unchanged post-split. However, investors should be aware that such corporate actions can sometimes lead to short-term volatility as the market adjusts to the new share structure. In the long term, the success of the reverse split in achieving its intended effects will largely depend on the company's operational performance and its ability to sustain a higher stock price.
The reverse stock split by Auddia Inc. is indicative of a company striving to maintain compliance with Nasdaq's listing standards. From a market research perspective, the reduction in shares from approximately 20.47 million to 818,000 will result in a more exclusive stock, which can sometimes appeal to certain institutional investors. However, it is critical to observe market reaction once the split-adjusted trading commences as it will provide insights into investor confidence in Auddia's future prospects.
While the reverse stock split does not directly impact the company's fundamental value, it is often perceived as a signal of potential issues, such as a lack of positive growth catalysts. Therefore, it's important to monitor the company's subsequent operational announcements and performance metrics closely. If Auddia can demonstrate improved financial health and growth prospects following the reverse split, it may regain investor confidence and stabilize its position on the exchange.
From a legal standpoint, the reverse stock split process involves amending the company's Certificate of Incorporation, which requires shareholder approval and a filing with the Secretary of State in Delaware. The legal formalities, including the issuance of a new CUSIP number, are standard procedures to ensure regulatory compliance and proper tracking of the new share structure. It is important for shareholders to follow the instructions provided by the transfer agent to exchange their shares to avoid any discrepancies in their holdings.
Additionally, the rounding up of fractional shares to the nearest whole share is a shareholder-friendly move, as it avoids the need to cash out small shareholders and instead gives them a stake, albeit small, in the post-split company. This action can be seen as a measure to maintain good shareholder relations during the transition period. However, shareholders with less than 25 shares will be significantly affected, as their ownership percentage will be drastically reduced. This aspect of the reverse split could have implications for shareholder sentiment and should be considered when evaluating the company's post-split performance.
BOULDER, CO, Feb. 23, 2024 (GLOBE NEWSWIRE) -- via NewMediaWire – Auddia Inc., (“Auddia” or the “Company”) (Nasdaq: AUUD, AUUDW), a proprietary AI platform for audio identification and classification and related technologies, that is reinventing how consumers engage with AM/FM radio, podcasts, and other audio content, today announced that effective before market open on Tuesday February 27, 2024, it will complete a 1-for-25 reverse stock split of its common stock.
On December 29, 2023, the Company’s stockholders approved an amendment to the Company’s Certificate of Incorporation to affect a reverse stock split with the exact ratio to be set by its Board of Directors. The Board resolved to set the reverse stock split at the ratio of 1-for-25. The Company filed an amendment to its Certificate of Incorporation with the Secretary of State in Delaware effective February 26, 2024, at 5:00 p.m. Eastern Time. As a result, every twenty five (25) issued shares of common stock will automatically be combined into one share of common stock.
The Company believes that affecting the reverse stock split will assist in its efforts to meet the Nasdaq continued listing standards and to continue to have its common stock remain listed and traded on Nasdaq. In particular, the Company expects the reverse stock split to increase the per share price and bid price of its common stock above the
Shares of the Company’s common stock will be assigned a new CUSIP number (05072K 206) and are expected to begin trading on a split-adjusted basis on Tuesday, February 27, 2024.
The reverse stock split will not change the authorized number of shares of the Company’s common stock. No fractional shares will be issued and any fractional shares resulting from the reverse stock split will be rounded up to the nearest whole share. Therefore, stockholders with less than 25 shares will receive one share of stock.
The reverse stock split will apply to the Company’s outstanding warrants, stock options and restricted stock units. The number of shares of common stock into which these outstanding securities are convertible or exercisable will be adjusted proportionately as a result of the reverse stock split. The exercise prices of any outstanding warrants or stock options will also be proportionately adjusted in accordance with the terms of those securities and the Company’s equity incentive plans.
Once the reverse stock split becomes effective, stockholders holding shares through a brokerage account will have their shares automatically adjusted to reflect the 1-for-25 reverse stock split. Existing stockholders holding common stock certificates will receive a letter of transmittal from Auddia’s transfer agent, Vstock Transfer, with specific instructions regarding the exchange of shares.
The Company expects to have its issued and outstanding common shares decrease from approximately 20.47 million pre-split shares to approximately 818,000 post-split shares outstanding as a result of the reverse stock split.
About Auddia Inc.
Auddia, through its proprietary AI platform for audio identification and classification and related technologies, is reinventing how consumers engage with AM/FM radio, podcasts, and other audio content. Auddia’s flagship audio superapp, called faidr, brings two industry firsts to the audio-streaming landscape: subscription-based, ad-free listening on any AM/FM radio station and podcasts with interactive digital feeds that support deeper stories and open untapped revenue streams to podcasters. faidr also delivers exclusive content and playlists, and showcases exciting new artists, hand-picked by curators and DJs. Both differentiated offerings address large and rapidly growing audiences with strong purchase intent. For more information, visit: www.auddia.com
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 about the Company's current expectations about future results, performance, prospects and opportunities. Statements that are not historical facts, such as "anticipates," "believes" and "expects" or similar expressions, are forward-looking statements. These forward-looking statements are based on the current plans and expectations of management and are subject to a number of uncertainties and risks that could significantly affect the Company's current plans and expectations, as well as future results of operations and financial condition. These and other risks and uncertainties are discussed more fully in our filings with the Securities and Exchange Commission. Readers are encouraged to review the section titled "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, as well as other disclosures contained in the Prospectus and subsequent filings made with the Securities and Exchange Commission. Forward-looking statements contained in this announcement are made as of this date and the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Investor Contacts:
Kirin M. Smith
PCG Advisory, Inc.
646.823.8656
ksmith@pcgadvisory.com
FAQ
What is the reason behind Auddia Inc.'s (AUUD) reverse stock split announcement?
How will the reverse stock split impact Auddia Inc.'s (AUUD) outstanding shares?
What happens to fractional shares resulting from Auddia Inc.'s (AUUD) reverse stock split?
How will Auddia Inc.'s (AUUD) outstanding warrants and stock options be affected by the reverse stock split?
When will Auddia Inc.'s (AUUD) split-adjusted shares begin trading?
