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  Listing Council Decision 2023-3
Identification Number 1871

Stockholders' Equity

Rule 5550: Continued Listing of Primary Equity Securities

A Company that has its Primary Equity Security listed on the Capital Market must continue to meet all of the requirements set forth in Rule 5550(a) and at least one of the Standards set forth in Rule 5550(b).

(b) Continued Listing Standards for Primary Equity Securities:

(1) Equity Standard: Stockholders’ equity of at least $2.5 million;
(2) Market Value of Listed Securities Standard: Market Value of Listed Securities of at least $35 million; or
(3) Net Income Standard: Net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the three most recently completed fiscal years.

Issue:  At issue is whether the Listing Council should grant the Company an exception where it is noncompliant with Nasdaq Listing Rule 5550(b).

Determination:  Affirm the decision to delist the Company.

The Company was unable to meet the continued listing requirement to have a market value of listed securities (“MVLS”) of at least $35 million over the 13 months leading up to the appeal. The Company received from the Panel the full 180-day exception period within which to regain compliance. The Council determined that the Panel appropriately delisted the Company’s securities.

The Listing Council also found that the Company’s plan to increase its MVLS was not sufficiently definitive. The Company continued to be out of compliance as of the date of the Council’s deliberations. Through its submissions to the Listing Council, the Company described some positive developments towards raising additional equity and entering a commercialization deal with a strategic partner. However, none of the avenues were definitive in nature or sufficient to allow the Listing Council to conclude that the Company would be able regain compliance with the MVLS standard, or maintain compliance with MVLS standard going forward. Despite the Company’s efforts to raise additional capital and expectation to enter into an agreement that would provide a significant cash infusion and an opportunity for future milestone payments, the Listing Council found that there was not enough certainty to assume that the agreement would in fact be completed in a timely manner or raise the Company’s MVLS to $35 million. Adding to the Listing Council’s concerns was the fact that the Company had historically missed projected milestones.

Publication Date*: 5/22/2024 Mailto Link Identification Number: 1871
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