Rule 4310(c)(2)(B): For continued inclusion on The NASDAQ Capital Market, the issuer shall maintain:
(i) stockholders’ equity of $2,500,000; (ii) market value of listed securities of $35,000,000; or (iii) net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal
years.
Issue: At the time of the Panel’s decision, the company did not meet the minimum stockholders’ equity requirement or its alternatives for continued listing on The NASDAQ Capital Market. The company’s plan of compliance included a projected
increase in stockholders’ equity to $2,874,000 at June 30, 2005. However, at the time of its decision, the Panel had not received any information from the company indicating it had achieved this projection or that it planned to report stockholders’ equity
in compliance when it reported its second quarter earnings.
Determination: The company was properly delisted because at the time of the Panel’s decision the company was not able to demonstrate compliance with the minimum stockholders’ equity requirement or its alternatives, and its plan to regain
compliance was not sufficiently definitive. At the time of the Listing Council’s deliberations, the company had been non-compliant for more than ten months and had still not provided any public filing which demonstrated compliance with the rule.
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Rule 4310(c)(14): The issuer shall file with NASDAQ three (3) copies of all reports and other documents filed or required to be filed with the Commission. This requirement is considered fulfilled for purposes of this paragraph if the issuer
files the report or document with the Commission through the Electronic Data Gathering, Analysis, and Retrieval system. An issuer that is not required to file reports with the Commission shall file with NASDAQ three (3) copies of reports required to be filed
with the appropriate regulatory authority. All required reports shall be filed with NASDAQ on or before the date they are required to be filed with the Commission or appropriate regulatory authority. Annual reports filed with NASDAQ shall contain audited financial
statements.
Issue: The company’s March 31, 2005 Form 10-Q contained financial statements that were not reviewed by independent auditors in conformance with SAS 100, as required by SEC Rule 10-01(d) of Regulation S-X. As such, the company did not comply
with the filing requirement contained in Listing Rule 4310(c)(14).
Determination: The company was properly delisted because at the time of the Panel’s decision the company was not current in all required public filings. Even though the company became current shortly before the Listing Council’s deliberations,
investors had been without access to current financial information for a period of nine months. The Listing Council takes seriously the requirement to file accurate and reliable financial statements and the concomitant purpose to provide investors with current
information regarding the company. Investors in securities listed on NASDAQ are entitled to assume that issuers of those securities will promptly and accurately comply with their reporting obligations under the Securities Exchange Act of 1934. The Listing
Council noted that in the absence of accurate and reliable financial statements, Staff was unable to determine if the company was in compliance with all of the Capital Market continued listing requirements.