It was a rough week in the micro-cap trenches. When companies aren't busy evaporating their remaining equity via 1-for-150 reverse splits, they're handing the keys to their creditors, or executing complete strategic 180s that leave common shareholders clinging to a mere 6% of the economic interest. If you want a masterclass in how fast capital can disappear when liquidity dries up and Nasdaq comes knocking, the last five days delivered. Here is the wreckage.
Faraday Future (FFAI): The 1-for-150 Capitulation
The Filing: Faraday Future held its annual meeting on May 22, and the proxy approvals read like a distressed bingo card. Shareholders greenlit a massive 45% authorized share increase, dilutive issuances to clear out notes and preferred stock, and the pièce de résistance: a reverse stock split up to 1-for-150. With warrants already boasting a comical $110,400 exercise price from past reverse splits, the cap table is a graveyard of retail capital. Oh, and the Series A preferred holds 10 billion votes, meaning insiders push through whatever they want despite a pitiful 42% quorum.
What Happened Since: The stock is languishing around $0.32, down nearly 70% year-to-date, carrying $113 million in debt against a sub-$100 million market cap. They’re claiming the massive share authorizations are to fund a pivot to "Embodied AI (EAI) robotics" and pump out 1,500 units this year. Because when your EV pipe dream stalls out, you might as well pivot to AI robots. The 1-for-150 split is lingering like a guillotine—management says they'll only drop the blade if the stock stays below $0.10 or Nasdaq officially threatens the boot.
Tempest Therapeutics (TPST): The Boardroom Exodus
The Filing: On May 22, Tempest disclosed a brutal Nasdaq deficiency notice. They are required to hold $2.5 million in stockholders' equity. They have $822,000. That is a rounding error, not a balance sheet. Worse, they fail all three alternative listing standards, meaning there is no easy mathematical trick to stay listed. To compound the misery, two independent directors walked out the door simultaneously, instantly violating four different Nasdaq governance rules. Tempest has until July 6 to beg the panel for a compliance plan extension.
What Happened Since: The stock continues to trade under the TPST ticker, but management’s own forward-looking statements are waving the white flag, explicitly citing the need to raise capital just to operate as a going concern. Given the depleted equity, any raise here will be highly dilutive. The dual-departure of the directors strips them of standard automatic cure periods. It's a race against the clock to find a very forgiving financier before Nasdaq pulls the plug.
Sachem Capital (SACH): The Trojan Horse REIT Conversion
The Filing: Sachem effectively ceased to be a specialty mortgage lender on May 18. They signed a Contribution Agreement with Industrial Realty Group Global (IRG) to absorb a $2.9 billion gross industrial real estate portfolio. The cost? Sachem common shareholders get diluted down to a 5.9% economic interest in the new Operating Partnership. IRG takes 94.1% of the economics, 51% of the voting power via Class B shares, and fills 4 of 7 board seats. Then Sachem will redomesticate to Delaware, rebrand to IRG Realty Trust, and execute a 20-to-1 reverse split.
What Happened Since: Sachem’s Q1 earnings dropped the same week, revealing a $7.2 million net loss and spiking credit costs from a restructured legacy real estate loan in Florida. Against that grim backdrop, the IRG deal looks less like a strategic merger and more like a rescue operation. The deal ostensibly values SACH at $2.00 per share—a 90% premium to its battered trading price—but existing shareholders are essentially giving away control of the company to escape their toxic loan book.
CervoMed Inc. (CRVO): Running on Fumes
The Filing: CervoMed buried a ticking time bomb in an 8-K on May 18. Regulation FD disclosures revealed they are down to $12.9 million in cash and marketable securities as of March 31. Management flatly stated this runway only gets them to September 2026. For a clinical-stage biotech burning cash on R&D, four months of runway is a five-alarm fire. The CFO is also the General Counsel, which tells you everything you need to know about how lean this operation is running.
What Happened Since: Earnings confirmed the bleeding. They torched $5.14 million on R&D alone in Q1. Analysts are pointing out the obvious: the company has formally warned of substantial doubt regarding its ability to continue as a going concern without new financing. They need a capital injection immediately, but with the stock reacting to the widened quarterly losses, any equity raise will be punishing.
Bitcoin Depot (BTM): The ATM Gets Unplugged
The Filing: Bitcoin Depot and 16 subsidiaries filed for Chapter 11 bankruptcy on May 17. This isn’t a reorganization where creditors get a haircut and everyone goes back to work. It’s a full liquidation. The filing triggered an automatic default on their Term Loan with Silverview Credit Partners. The company issued WARN Act notices to all employees, including executives, effective July 17. The 8-K bluntly warns equity holders to expect a "significant or complete loss."
What Happened Since: Bitcoin Depot took its entire North American Bitcoin ATM network offline and is winding down operations. Trading in BTM shares is highly speculative, with recovery dependent on the bankruptcy outcome. The wind-down is moving fast, and Silverview is first in line to pick the bones clean.
What to Watch Next Week: Look for the ripple effects of the FFAI and SACH proxies—can they actually execute these extreme structural changes before the market or the exchanges reject them? Keep an eye out for an emergency S-1 or toxic pipe from CRVO and TPST as they scramble for liquidity. And if you're trading BTM equity, remember that the equity sits at the absolute bottom of the capital stack in a liquidation. Stop buying bankrupt companies.