Calabasas, CA—Children’s apparel and cataloger/retailer The Right Start (Nasdaq: RTST) faces delisting from the Nasdaq National Market for failing to comply with the minimum requirements for market value of public float and net tangible assets. The company has appealed the determination by requesting a hearing.
On Sept. 5, The Right Start plans to sell $20 million of its equity to private investment group Waterton Management. That’s the same day that The Right Start expects to close its acquisition of toy retailer Zany Brainy. Holders of $3.5 million of The Right Start’s convertible debt have indicated their willingness to convert their debt to common stock in connection with the investment. Finally, with the Zany Brainy acquisition, The Right Start will issue 1.1 million shares of its common stock currently valued at approximately $4.2 million. Together, these events, the company says, would increase its stockholders’ equity by over $27 million, which it believes would satisfy Nasdaq’s requirements.