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. The company argued that it would demonstrate in excess of $2,500,000 in stockholders’ equity when it
filed its Form 10-K for the fiscal year ended June 30, 2006. When the Form 10-K was filed late, without an auditors opinion, and reported a stockholders’ (deficit) of ($3,985,558), the Panel suspended, pending delisting, the company’s securities.
Determination: The company was properly suspended, pending delisting, 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.
At the time of the Listing Council’s deliberations, the company had been deficient with the stockholders’ equity requirement for more than nine months, there was nothing in the public record which demonstrated compliance, and there was no evidence that the
company had regained compliance on a pro-forma basis.
Furthermore, the company’s plan to increase its stockholders’ equity was not sufficiently definitive at the time of the Panel decision. The company did not provide any definitive documentation regarding potential increases of equity that could be accomplished
in the short-term that would enable the company to demonstrate compliance or to maintain compliance with the stockholders’ equity requirement over the long term. Accordingly, after a review of the record in this matter, the Listing Council affirmed the Panel’s
decision to delist the company’s securities for failure to demonstrate compliance with the minimum stockholders’ equity requirement or its alternatives, as set forth in Rule 4310(c)(2)(B) for continued listing on the Capital Market.
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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 Securities and Exchange Commission (“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: As a separate and additional ground for affirming the Panel’s decision, the Listing Council noted that the company had not followed through on its plans to file its delinquent September 30, 2006 Form 10-Q “within five business days
after filing its Form 10-K”, and was still delinquent in its periodic reporting obligation.
Determination: As an additional ground for affirming the delisting, the Listing Council found that the company had not demonstrated
compliance with the filing requirement and thus, was not in compliance with Listing Rule 4310(c)(14).