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Libraries:
Listing Council Decisions
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Filters:
All Years; Continued Listing; All
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Identification Number
1789
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Filing Delinquency
Rule 5250(c)(1): A Company shall timely file all required periodic financial reports with the Commission through the EDGAR System or with the Other Regulatory Authority. A Company that does not file through the EDGAR System shall supply to Nasdaq two (2) copies of all reports required to be filed with the Other Regulatory Authority or email an electronic version of the report to Nasdaq at continuedlisting@nasdaq.com. All required reports must be filed with Nasdaq on or before the date they are required to be filed with the Commission or Other Regulatory Authority. Annual reports filed with Nasdaq shall contain audited financial statements.
Rule 5820(d)(4): In the case of a Company that fails to file a periodic report (e.g., Form 10-K, 10-Q, 20-F, 40-F, or N-CSR), the Listing Council may grant an exception for a period not to exceed 360 days from the due date of the first such late periodic report. The Company can regain compliance with the requirement by filing that periodic report and any other delinquent reports with due dates falling before the end of the exception period. In determining whether to grant an exception, and the length of any such exception, the Listing Council will consider the Company's specific circumstances, including the likelihood that the filing can be made within the exception period, the Company's past compliance history, the reasons for the late filing, corporate events that may occur within the exception period, the Company's general financial status, and the Company's disclosures to the market. This review will be based on information provided by a variety of sources, which may include the Company, its audit committee, its outside auditors, the staff of the SEC and any other regulatory body.
Issue: At issue is whether a company regains compliance with the Listing Rules when it files its delinquent periodic financial report with the SEC, but the report filed is materially incomplete.
Determination: Affirm the decision to suspend and delist the Company.
The Listing Council agrees with the Hearings Panel, and with Staff, that the delinquent Form 20-F that the Company filed with the SEC was materially incomplete and thus inadequate to cause the Company to regain compliance with Listing Rule 5250(c)(1). The audit work was incomplete as to subsidiaries which accounted for an overwhelming portion of the Company’s income and assets and which constitute the core of its business operations. As such, the Form 20-F, as filed, provided little meaningful information to investors about the financial status of the Company. The mere fact that the Company itself disclosed the limitations of the audit work in the Form did not suffice to cure the Form’s inadequacy. If the Council was to decide otherwise, then it would effectively enable a listed company to cure any periodic filing deficiency by simply filing a perfunctory disclosure which states that required information will be produced at a later date. Such a result would be clearly inconsistent with the purpose of Listing Rule 5250(c)(1), which is to ensure that listed companies provide timely and complete information about their financial conditions to investors.
Insofar as the Company required additional time to complete its audit and to file an amendment to its Form 20-F to regain compliance with the Listing Rules, then the Listing Council had no choice but to affirm the Hearings Panel’s decision to delist the Company’s securities. Listing Rule 5815(c)(1)(F) provides that the extent of the Hearings’ Panel’s discretion to grant a company an exception to Rule 5250(c) is 360 calendar days following the due date of a company’s first delinquent periodic report, and that a company may regain compliance with the Listing Rule only by filing its delinquent reports before the end of the exception period. In this instance, the Company already received from the Panel the full 360 day exception period within which to regain compliance. Pursuant to Listing Rule 5280(d)(4), the scope of the Listing Council’s discretion to grant an exception to the Company is co-extensive with that which was available to the Panel under Rule 5815(c)(1)(F). As such, the Listing Council had no discretion to grant a further exception to the Company to regain compliance.
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Publication Date*:
4/21/2021
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Identification Number:
1789
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Identification Number
1781
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Filing Delinquency
Rule 5250(c)(1): A Company shall timely file all required periodic financial reports with the Commission through the EDGAR System or with the Other Regulatory Authority. A Company that does not file through the EDGAR System shall supply to Nasdaq two (2) copies of all reports required to be filed with the Other Regulatory Authority or email an electronic version of the report to Nasdaq at continuedlisting@nasdaq.com. All required reports must be filed with Nasdaq on or before the date they are required to be filed with the Commission or Other Regulatory Authority. Annual reports filed with Nasdaq shall contain audited financial statements.
Rule 5820(d)(4): In the case of a Company that fails to file a periodic report (e.g., Form 10-K, 10-Q, 20-F, 40-F, or N-CSR), the Listing Council may grant an exception for a period not to exceed 360 days from the due date of the first such late periodic report. The Company can regain compliance with the requirement by filing that periodic report and any other delinquent reports with due dates falling before the end of the exception period. In determining whether to grant an exception, and the length of any such exception, the Listing Council will consider the Company's specific circumstances, including the likelihood that the filing can be made within the exception period, the Company's past compliance history, the reasons for the late filing, corporate events that may occur within the exception period, the Company's general financial status, and the Company's disclosures to the market. This review will be based on information provided by a variety of sources, which may include the Company, its audit committee, its outside auditors, the staff of the SEC and any other regulatory body.
Issue: At issue is whether the Listing Council has discretion to allow a company to remain listed notwithstanding that it has been and remains delinquent in filing its periodic financial reports for more than a year.
Determination: Affirm the decision to suspend and delist the Company.
In light of the facts and circumstances of this matter, which include the fact that the Company has been delinquent in filing its periodic financial reports with the SEC for more than a year, in violation of Rule 5250(c), and that it has failed to regain compliance with the Rule notwithstanding its receipt from the Staff and the Hearing Panel of multiple extensions of time within which to do so, the Listing Council finds that it lacks discretion under Rule 5820(d)(4) to grant any further compliance extensions, and that delisting of the Company’s securities is required.
Delisting does not bar the Company from applying to relist on Nasdaq, or another U.S. exchange. In this regard, should the Company resolve the issues that give rise to this matter it may reapply to list on Nasdaq.
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Publication Date*:
2/1/2021
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Identification Number:
1781
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Identification Number
1728
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Filing Delinquency
Rule 5250(c)(1): A Company shall timely file all required periodic financial reports with the Commission through the EDGAR System or with the Other Regulatory Authority. A Company that does not file through the EDGAR System shall supply to Nasdaq two (2) copies of all reports required to be filed with the Other Regulatory Authority or email an electronic version of the report to Nasdaq at continuedlisting@nasdaq.com. All required reports must be filed with Nasdaq on or before the date they are required to be filed with the Commission or Other Regulatory Authority. Annual reports filed with Nasdaq shall contain audited financial statements.
Rule 5820(d)(4): In the case of a Company that fails to file a periodic report (e.g., Form 10-K, 10-Q, 20-F, 40-F, or N-CSR), the Listing Council may grant an exception for a period not to exceed 360 days from the due date of the first such late periodic report. The Company can regain compliance with the requirement by filing that periodic report and any other delinquent reports with due dates falling before the end of the exception period. In determining whether to grant an exception, and the length of any such exception, the Listing Council will consider the Company's specific circumstances, including the likelihood that the filing can be made within the exception period, the Company's past compliance history, the reasons for the late filing, corporate events that may occur within the exception period, the Company's general financial status, and the Company's disclosures to the market. This review will be based on information provided by a variety of sources, which may include the Company, its audit committee, its outside auditors, the staff of the SEC and any other regulatory body.
Issues: Was the Hearings Panel correct to delist the Company under Rule 5250(c) due to its failure to timely file its periodic financial reports?
Determination: Affirm the decision to suspend and delist the Company.
As of the date of the Panel’s decision, the Company was indisputably delinquent in filing its periodic financial reports, in violation of Rule 5250(c)(1). The Listing Council noted that even if it was sympathetic to the Company’s plight and wished to credit the Company with its success in filing the delinquent reports after the Panel reached its delisting decision, the Listing Council simply lacked authority under the Listing Rules to do so. The Listing Council concurred with Staff that Rule 5820(d)(4) – which authorizes the Listing Council to grant an exception to Rule 5250(c) for up to 360 calendar days from the due date of the earliest delinquent filing – precluded the Council from reinstating trading of the Company’s securities on Nasdaq. October 9, 2019 – the date on which the Company filed its delinquent Annual Report for the fiscal year ended June 30, 2018 –indisputably exceeded 360 days from the initial due date of the first of the Company’s delinquent filings. As such, the Listing Council stated that it had no choice in this instance but to affirm the Panel’s decision and delist the Company’s securities.
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Publication Date*:
1/30/2020
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Identification Number:
1728
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Identification Number
1664
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Rule 5250(c)(1). Obligation to File Periodic Financial Reports A Company shall timely file all required periodic financial reports with the Commission through the EDGAR System or with the Other Regulatory Authority. A Company that does not file through the EDGAR System shall supply to Nasdaq two (2) copies of all reports required to be filed with the Other Regulatory Authority or email an electronic version of the report to Nasdaq at continuedlisting@nasdaq.com. All required reports must be filed with Nasdaq on or before the date they are required to be filed with the Commission or Other Regulatory Authority. Annual reports filed with Nasdaq shall contain audited financial statements. Issue: At issue is whether the Listing Council has discretion to allow a company to remain listed notwithstanding that it has been and remains delinquent in filing its periodic financial reports. Determination: Affirm the decision to suspend and delist the Company. The Listing Council finds that delisting the Company is appropriate due to the Company's non-compliance with Nasdaq Listing Rule 5250(c). Although the Company regained partial compliance during the pendency of the appeal, it remains delinquent as its most recent Quarterly Report on Form 10-Q. Even if the Company had regained compliance fully with Rule 5250(c), the Listing Council would have still concluded, consistent with its discretion under Rule 5101, that the continued listing of its securities on Nasdaq would be inadvisable. While the Company has made significant strides to date to reform its corporate culture, these strides are insufficient to overcome the Listing Council's concerns about whether the Company – whose Board of Directors and executive management team were almost entirely re-constituted only a few months ago – has regained its proper footing.
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Publication Date*:
11/29/2018
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Identification Number:
1664
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Identification Number
1473
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Filing Delinquency
Rule 5250(c)(1): A Company shall timely file all required periodic financial reports with the Commission through the EDGAR System or with the Other Regulatory Authority. A Company that does not file through the EDGAR System shall supply to Nasdaq two (2) copies of all reports required to be filed with the Other Regulatory Authority or email an electronic version of the report to Nasdaq at continuedlisting@nasdaq.com. All required reports must be filed with Nasdaq on or before the date they are required to be filed with the Commission or Other Regulatory Authority. Annual reports filed with Nasdaq shall contain audited financial statements.
Issue: May the Company remain listed notwithstanding is the fact that: (1) it was, until August 31, 2017, delinquent in filing its Quarterly Reports on Form 10-Q for the quarters ended September 30, 2016 and December 31, 2016, in violation of Nasdaq Listing Rule 5250(c); and (2) it was, until August 25, 2017, delinquent in filing its Annual Report on Form 10-K for the fiscal year ended June 30, 2016, in violation of Nasdaq Listing Rule 5250(c)?
Determination: Overrule the Hearing Panel decision to suspend and delist the Company.
The Hearing Panel in this case had previously granted the Company extensions to regain compliance with the Rule – until July 30, 2017 to file its delinquent Form 10-K and until August 31, 2017 to file its delinquent Form 10-Qs – but it revoked those extensions when the Company failed to provide the Panel, as directed, with a specific update from its auditor as to the anticipated schedule for completion of the audit. Although the Council agreed with the Panel that the Company should have been more forthcoming and specific about the status of the audit work, the Council concluded that the Company's update was not so inadequate as to warrant the Panel revoking its extensions. To the extent that the Panel was concerned that Company's status report was too vague, it could have and should have requested clarification from the Company and/or its auditor before it took the drastic step that it did. In sum, the Council concluded that the Panel acted too hastily and should have given the Company a chance to complete its work to regain compliance with the Rule.
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Publication Date*:
12/6/2017
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Identification Number:
1473
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Identification Number
1367
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Filing Delinquency
Rule 5250(c)(1): A Company shall timely file all required periodic financial reports with the Commission through the EDGAR System or with the Other Regulatory Authority. A Company that does not file through the EDGAR System shall supply to Nasdaq two (2) copies of all reports required to be filed with the Other Regulatory Authority or email an electronic version of the report to Nasdaq at continuedlisting@nasdaq.com. All required reports must be filed with Nasdaq on or before the date they are required to be filed with the Commission or Other Regulatory Authority. Annual reports filed with Nasdaq shall contain audited financial statements.
Issue: At issue is whether the company should remain listed notwithstanding that it has been and remains delinquent in filing its annual report and quarterly filings notwithstanding its receipt of several prior periods of exemption from Rule 5250(c).
Determination: Affirm the decision to suspend and delist the Company.
In light of the facts and circumstances of this matter, which include the fact that the Company has been delinquent in filing its periodic financial reports with the SEC for a prolonged period of time, in violation of Rule 5250(c), and that it has failed to regain compliance with the Rule notwithstanding its receipt from the Hearing Panel of multiple extensions of time within which to do so, the Listing Council finds that the Company’s vague projections as to when it will regain compliance with the Rule lack credibility, that its request for a further extension is unwarranted, and that delisting of the Company’s securities is appropriate, pursuant to Rule 5820(d)(4).
Delisting does not bar the Company from applying to relist on Nasdaq, or another U.S. exchange. In this regard, should the Company resolve the issues that give rise to this matter it may reapply to list on Nasdaq.
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Publication Date*:
5/3/2017
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Identification Number:
1367
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Identification Number
1288
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Public Interest Concern, Filing Delinquency, and Failure to Pay Fees
Rule 5101: Staff has raised public interest concerns over the degree of control the Company has over subsidiary.
Rule 5250(c)(1): A Company shall timely file all required periodic financial reports with the Commission through the EDGAR System or with the Other Regulatory Authority. A Company that does not file through the EDGAR System shall supply to Nasdaq two (2) copies of all reports required to be filed with the Other Regulatory Authority or email an electronic version of the report to Nasdaq at continuedlisting@nasdaq.com. All required reports must be filed with Nasdaq on or before the date they are required to be filed with the Commission or Other Regulatory Authority. Annual reports filed with Nasdaq shall contain audited financial statements.
Rule 5250(f): A Company is required to pay all applicable fees as described in the Rule 5900 Series.
Issue: At issue is whether the company should remain listed notwithstanding that it is delinquent in filing its annual report, failed to publicly disclose material information timely, and public interest concerns raised by Nasdaq's Staff.
Determination: Affirm the decision to suspend and delist the Company.
In light of the facts and circumstances of this matter, including but not limited to, the conduct of the Company and its board of directors with respect to the Company's independent auditor, the Company's independent counsel, and Nasdaq in the delisting proceeding, particularly including: the events giving rise to the resignation of the Company's independent auditor, which concluded that it could no longer accept the representations of the Company's Chairman and CEO, and determined that it could not continue as the Company's auditor unless he was separated from the Company; the independent auditor's finding that the Company does not appear to have an effective board with the ability to discharge its responsibilities; and evidence from the Company's independent counsel that the Company made misrepresentations to Nasdaq in its effort to remain listed; the the Listing Council finds that delisting the Company is appropriate, pursuant to Rules 5101, 5250(c)(1), and 5250(f).
The Listing Council conducts a de novo review of matters before it and, accordingly, it may consider issues not raised in the matter before the Panel or relied on by the Panel as a basis for its decision.
Rule 5101 provides Nasdaq with broad discretionary authority over the listing of securities on Nasdaq in order to maintain the quality of and public confidence in the market, to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade and to protect investors and the public interest. The importance of timely filing of financial statements, as required by Rule 5250(c)(1), cannot be understated. Moreover, the Listing Council notes that the Company failed to pay its annual listing fees, as required by Rule 5250(f). Taken together, the Listing Council concludes that the Company does not fully understand the obligations of a public company. Based on the facts and circumstances of this matter and for the reasons stated above, the Listing Council determined to delist the Company's shares from Nasdaq. Delisting does not bar the Company from applying to relist on Nasdaq, or another U.S. exchange. In this regard, should the Company resolve the issues that give rise to this matter it may reapply to list on Nasdaq.
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Publication Date*:
11/28/2016
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Identification Number:
1288
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Identification Number
1134
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Bid Price and Stockholders' Equity
Rule 5505: Initial Listing of Primary Equity Securities
A Company applying to list its Primary Equity Security on the Capital Market must meet all of the requirements set forth in Rule 5505(a) and at least one of the Standards in Rule 5505(b).
(a) Initial Listing Requirements for Primary Equity Securities:
(1) (A) Minimum bid price of $4 per share
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). Failure to meet any of the continued listing requirements will be processed in accordance with the provisions set forth in the Rule 5800 Series.
(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 in this matter is whether the Company should remain listed, yet suspended from trading, notwithstanding that the Company has not received approval of its listing application for listing of the newly-merged company, which was treated as a change of control for purposes of Rule 5110(a), and because the Company does not comply with the Capital Market $4 bid price initial listing requirement of Rule 5505(a)(1)(A). Moreover, it is unclear whether the Company meets all other initial listing standards for listing on the Capital Market.
Prior to its merger, the Company did not comply with Rule 5550(b)(1), which requires a Capital Market company to maintain a minimum of $2.5 million in stockholders’ equity for continued listing.
Determination: Reverse the Panel decision to delist the Company.
It is clear from the record, the Company has had difficulty in resolving what it believes to be the only Capital Market initial listing requirement that it does not meet, namely the $4 bid price requirement. Although it appears that there is some disagreement over whether the Company meets all other listing standards other than bid price, the Listing Council need not settle this factual issue. The Listing Council notes that the Company received approval of, and implemented, a stock split as it had committed to do. The Company requested an extension until September 30, 2014 to evidence compliance with all Capital Market initial listing standards. In light of the brief nature of the extension and because the Company’s securities are currently suspended from trading on Nasdaq, the Listing Council is willing to grant the Company a brief extension to evidence compliance with all initial listing requirements for listing on the Capital Market and to receive approval of an application for listing thereon from Staff.
Accordingly, the Listing Council reverses the Panel decision to delist the Company and grants the Company through September 30, 2014 to inform the Listing Council that it has achieved compliance with all requirements for initial listing on the Capital Market and received approval of an initial listing application for listing thereon. Should the Company fail to meet the terms of this decision, the Company’s securities will be delisted from Nasdaq.
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Publication Date*:
11/19/2014
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Identification Number:
1134
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Identification Number
1133
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Disclosure, Filing Delinquency, and Public Interest Concern
Rule 5101: Nasdaq has broad discretionary authority over the initial and continued listing of securities in Nasdaq in order to maintain the quality of and public confidence in its market, to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and to protect investors and the public interest.
Rule 5250(b)(1): Except in unusual circumstances, a Nasdaq-listed Company shall make prompt disclosure to the public through any Regulation FD compliant method (or combination of methods) of disclosure of any material information that would reasonably be expected to affect the value of its securities or influence investors’ decisions.
Rule 5250(c)(1): A Company shall timely file all required periodic financial reports with the Commission through the EDGAR System or with the Other Regulatory Authority. A Company that does not file through the EDGAR System shall supply to Nasdaq two (2) copies of all reports required to be filed with the Other Regulatory Authority or email an electronic version of the report to Nasdaq at continuedlisting@nasdaq.com. All required reports must be filed with Nasdaq on or before the date they are required to be filed with the Commission or Other Regulatory Authority. Annual reports filed with Nasdaq shall contain audited financial statements.
Issue: At issue in this matter is whether the Company should remain listed, yet suspended from trading, notwithstanding that it is delinquent in filing its annual report, failed to publicly disclose material information timely, and public interest concerns have been raised based on the Company’s bankruptcy.
Determination: Affirm the decision to suspend and delist the Company.
In light of the facts and circumstances of this matter, including the Company’s failure to file its Form 10-K by its stated deadline, the Listing Council finds that delisting for failure to file its Form 10-K for the fiscal year ended December 31, 2013 is a valid basis under Rule 5250(c)(1) for delisting the Company.
The Listing Council conducts a de novo review of matters before it and, accordingly, it may consider issues not raised in the matter before the Panel or relied on by the Panel as a basis for its decision. One such issue, which was raised by Staff yet not noted as a basis for delisting in the Panel decision, is Staff’s determination that delisting the Company was warranted given it had violated Rule 5250(b)(1). Rule 5250(b)(1) states, in part, that a “Nasdaq-listed Company shall make prompt disclosure to the public through any Regulation FD compliant method (or combination of methods) of disclosure of any material information that would reasonably be expected to affect the value of its securities or influence investors’ decisions.” Staff argues that the Company violated Rule 5250(b)(1) when it failed to disclose the loss of control of a subsidiary. The record shows that, as of November 22, 2013, the Company knew that the former CEO possessed the subsidiary’s chops and had advised the Company that he would not return them. Furthermore, the Company was aware on November 27, 2013 that the former CEO had threatened the validity of the VIE structure of the Company. By the Company’s own admission, it realized on November 27, 2013 that there was a potentially serious challenge to the structure of the enterprise, yet waited until December 11, 2013 to disclose the issue. Staff believes, and the Listing Council agrees, that the Company had an obligation to disclose these issues pursuant to Rule 5250(b)(1) far sooner than when the Company ultimately disclosed the issues in December 2013. To argue that an investor would not find these developments material information that would reasonably be expected to affect the value of its securities or influence investors’ decisions, is nonsensical.
Rule 5101 provides Nasdaq with broad discretionary authority over the listing of securities on Nasdaq in order to maintain the quality of and public confidence in the market, to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade and to protect investors and the public interest. The importance of timely filing of financial statements, as required by Rule 5250(c)(1), cannot be understated. Moreover, the Listing Council notes that the Company was slow, or failed altogether, to disclose material information that would reasonably be expected to affect the value of its securities or influence investors’ decisions, as required by Rule 5250(b)(1). Taken together, the Listing Council concludes that the Company does not fully understand the obligations of a public company. Based on the facts and circumstances of this matter and for the reasons stated above, the Listing Council has determined to delist the Company’s shares from Nasdaq. Delisting does not bar the Company from applying to relist on Nasdaq, or another U.S. exchange. In this regard, should the Company resolve the issues that give rise to this matter it may reapply to list on Nasdaq.
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Publication Date*:
11/19/2014
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Identification Number:
1133
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Identification Number
1112
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Quantitative Listing Standards
Rule 5505(a)(3): a company must meet have at least 300 Round Lot Holders to list on the Capital Market.
Rule 5505(b): a company must meet one of the following standards to list on the Capital Market:
(1) Equity Standard
(A) Stockholders' equity of at least $5 million;
(B) Market Value of Publicly Held Shares of at least $15 million; and
(C) Two year operating history.
(2) Market Value of Listed Securities Standard
(A) Market Value of Listed Securities of at least $50 million (current publicly traded Companies must meet this requirement and the price requirement for 90 consecutive trading days prior to applying for listing if qualifying to list only under the Market Value of Listed Securities Standard);
(B) Stockholders' equity of at least $4 million; and
(C) Market Value of Publicly Held Shares of at least $15 million.
(3) Net Income Standard
(A) Net income from continuing operations of $750,000 in the most recently completed fiscal year or in two of the three most recently completed fiscal years;
(B) Stockholders' equity of at least $4 million; and
(C) Market Value of Publicly Held Shares of at least $5 million.
Prior to its conversion from a special purpose acquisition company ("SPAC") to an operating company, the Company did not comply with:
Rule 5550(a)(3): which requires a company to have a minimum 300 public holders for continued listing on the Capital Market.
Rule 5550(a)(4): which requires a company to have a minimum 500,000 publicly held shares on the Capital Market.
Issue: Should the Company, which is a SPAC, be granted an extension to remain listed on Nasdaq, notwithstanding a Panel decision that affirmed Staff’s determination to delist the Company based on its non-compliance with the Capital Market continued listing standards, and which, post-acquisition, does not meet Capital Market initial listing standards? [1]
Determination: Affirm the decision to suspend and delist the Company.
The Company has not complied with continued, and now initial, listing standards. It has repeatedly requested extensions of time to conclude transactions to regain compliance with continued listing standards or to meet initial listing standards, yet each time failed to fully carry out what was promised to regain compliance. Now the Company requests that the Listing Council grant it additional time to regain compliance with initial listing standards. For the reasons stated below, the Listing Council denies the Company’s request.
Companies applying for listing on Nasdaq must meet initial listing standards before being approved. For the vast majority of companies, Staff’s denial of initial listing may be appealed and the company remains unlisted on Nasdaq during the appellate process. SPACs, by contrast, may remain listed on Nasdaq while pending an appellate review of Staff and subsequent Panel determinations regarding such a company’s eligibility for initial listing. The Company does not dispute that it is currently ineligible for initial listing and it has not presented any compelling reason to grant it continued listing until such a time that it can meet initial listing standards. As noted by Staff in its brief to the Listing Council, the Company’s solution remains unchanged, namely that it is working diligently to complete transactions that will allow it to meet Nasdaq’s initial listing standards. The Listing Council does not find the Company’s plan of compliance adequately definitive to find that compliance is imminent. The Listing Council notes that the Company is not precluded from reapplying to list on Nasdaq once it determines that it meets initial listing standards.
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[1]A SPAC must meet continued listing standards upon listing on NASDAQ. Once the SPAC completes its conversion to an operating company, it must meet initial listing standards.
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Publication Date*:
5/6/2014
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Identification Number:
1112
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Identification Number
601
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Rule 5550(b): For continued listing of a Company’s Primary Equity Security on the Capital Market, a Company shall maintain: (1) Stockholders’ equity of at least $2.5 million; (2) Market Value of Listed Securities of at least $35 million; or (3) 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: In November, 2010, the Hearings Panel placed the company on a one-year monitor pursuant to Listing Rule 5815(d)(4)(A), which obligated the company to proactively inform the Hearings Panel of potential non-compliance with continued listing requirements. The company had a record of non-compliance with the stockholders’ equity continued listing standard. In May 2011, the company filed its Form 10-Q for the quarter ended March 31, 2011, which evidenced that the company was no longer in compliance with NASDAQ’s stockholders’ equity requirement at the close of the quarter. The company had not informed the Hearings Panel of the deficiency at any point prior to the filing of the Form 10-Q. The Hearings Panel determined to delist the company for the stockholders’ equity deficiency and for violating Rule 5815(d)(4)(A) by not proactively informing the Hearings Panel of the deficiency. The company appealed the Hearings Panel decision to the Listing Council.
Determination: Remand. The Listing Council agrees with the Hearings Panel that the company should have been delisted based on the facts and circumstances before the Hearings Panel at the time of its determination. The company has been unable to maintain adequate stockholders’ equity over the past year, and has ignored the Hearings Panel’s direction to keep it proactively informed of potential non-compliance. Adding to the Listing Council’s concerns is the fact that the company has historically missed projected milestones.
Through its submissions to the Listing Council, the company has described some positive developments concerning the sale of assets and the potential acquisition of others. As result of closing a transaction for the sale of a company asset, the company now has stockholders’ equity in excess of continued listing requirements and, based on the pro forma burn rate projection provided by the company, it will continue to have stockholders’ equity in excess of the continued listing requirements for at least a full year.
The Listing Council continues to have concerns regarding the company’s ability to maintain compliance with NASDAQ’s listing standards, and is therefore directing the Hearings Panel to place the company under a Hearings Panel monitor for one year from the date of this decision. A Hearings Panel monitor will allow NASDAQ to quickly address any deficiencies that arise, while also allowing the company’s stock to trade as normal. The Listing Council stresses in the strongest terms that, while it is subject to the Hearings Panel monitor, the company has an obligation to promptly notify the Hearings Panel in the event its stockholders’ equity falls below $2.5 million and in the event the company falls out of compliance with any other applicable listing requirement. The Listing Council may not object to the Hearings Panel delisting the company based solely on non-compliance with this notice obligation. Accordingly, the Listing Council finds that the company has regained compliance with NASDAQ’s continued listing requirements and remands this matter to the Hearings Panel for a one year monitor pursuant to Listing Rule 5815(d)(4)(A).
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Publication Date*:
7/31/2012
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Identification Number:
601
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Identification Number
602
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Rule 5250(c)(1): A company shall timely file all required periodic financial reports with the Commission through the EDGAR System or with the Other Regulatory Authority. A company that does not file through the EDGAR System shall supply to NASDAQ two (2) copies of all reports required to be filed with the Other Regulatory Authority or email an electronic version of the report to NASDAQ at continuedlisting@nasdaqomx.com. All required reports must be filed with NASDAQ on or before the date they are required to be filed with the Commission or Other Regulatory Authority. Annual reports filed with NASDAQ shall contain audited financial statements.
Rule 5101: NASDAQ is entrusted with the authority to preserve and strengthen the quality of and public confidence in its market. NASDAQ stands for integrity and ethical business practices in order to enhance investor confidence, thereby contributing to the financial health of the economy and supporting the capital formation process. NASDAQ Companies, from new public Companies to Companies of international stature, are publicly recognized as sharing these important objectives. NASDAQ, therefore, in addition to applying the enumerated criteria set forth in the Listing Rule 5000 Series, has broad discretionary authority over the initial and continued listing of securities in NASDAQ in order to maintain the quality of and public confidence in its market, to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and to protect investors and the public interest. NASDAQ may use such discretion to deny initial listing, apply additional or more stringent criteria for the initial or continued listing of particular securities, or suspend or delist particular securities based on any event, condition, or circumstance that exists or occurs that makes initial or continued listing of the securities on NASDAQ inadvisable or unwarranted in the opinion of NASDAQ, even though the securities meet all enumerated criteria for initial or continued listing on NASDAQ. In all circumstances where the Listing Qualifications Department (as defined in Listing Rule 5805) exercises its authority under Listing Rule 5101, the Listing Qualifications Department shall issue a Staff Delisting Determination under Listing Rule 5810(c)(1), and in all circumstances where an Adjudicatory Body (as defined in Listing Rule 5805) exercises such authority, the use of the authority shall be described in the written decision of the Adjudicatory Body.
Issue: The company was delisted by a Hearings Panel for public interest concerns, noting that the events that have occurred since the company’s independent public audit firm raised serious concerns do not instill confidence that the company is fully equipped for the rigors of the regulatory environment within which exchange-listed companies must operate. The Hearings Panel stated that the implementation of a remedial cash control plan had been, at best, poorly executed, with only $15 million of a purported $170 million transferred into the control of the Audit Committee. The Hearings Panel also cited concerns surrounding management’s leadership, noting the Acting CFO’s obstruction of the plan’s implementation by refusing to pay the advisors charged with its implementation and the CEO’s willingness to rehire her after her resignation. The Hearings Panel concluded that the CEO and the Acting CFO are equally responsible for the obstruction of the investigation and failure to implement the cash control plan. The Hearings Panel also found that the Board special investigative committee’s willingness to replace its counsel due to pressures apparently resulting from management’s distaste for the cash control plan and investigation, suggests an insufficiently empowered special committee. The Hearings Panel also described its serious concerns regarding the company’s disclosures regarding the recent events and the company’s inability to respond to the Hearings Panel’s questions regarding concerns that the company’s major equipment supplier is a related party, which, in its opinion, showed that the company is unprepared to meet the governance standards required by listed companies. Last, the Hearings Panel noted that the audit issues facing the company implicate substantial accounting, operational, and control failures that are likely to require significant time to resolve.
Determination: Affirmed. After a review of the record in this matter, the Listing Council affirms the Hearings Panel Decision. The facts and circumstances of this matter show a company faced with very serious allegations of potential illegal acts, severe failure of management to act aggressively to address those allegations, and an insufficiently strong Board to effectively control and remediate management’s failures timely. The independent investigation has been managed poorly at best, and clearly intentionally interfered with by management. The Listing Council takes very seriously the concerns of the audit firm surrounding the company’s inability to confirm bank account balances, accounts payable balances, sales amounts, sales terms and outstanding balances, and undisclosed related party transactions, all of which ultimately led the audit firm to conclude that an illegal act has or may have occurred. Coupled with the company’s failure to aggressively address these concerns and implement the audit firm’s recommendations, the Listing Council finds no reason to allow the company to remain listed. The Listing Council agrees with the Hearings Panel’s conclusion that the record shows the company is unprepared to meet the governance standards required by listed companies and that it is not fully equipped for the rigors of the regulatory environment within which exchange-listed companies must operate.
Pursuant to Listing Rule 5101, NASDAQ has “broad discretionary authority” over the listing of securities on the Global Market “in order to maintain the quality of and public confidence in the market, to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade and to protect investors and the public interest.” This authority stems directly from NASDAQ’s delegated responsibilities under the Securities Exchange Act of 1934. The Listing Council disagrees with the company’s assertion that allowing the company to remain listed, albeit suspended from trading, will balance the need to protect prospective investors and the integrity of NASDAQ with the need for fair treatment of the company and its shareholders. To the contrary, allowing the company to remain listed in light of the facts developed in this matter would signal to both current and prospective shareholders a level of comfort with the company that is simply not present. Sending such a signal would in no way serve to protect investors nor maintain the public confidence in the market.
Accordingly, the Listing Council affirms the Panel decision to delist the company’s securities based on the exercise of the broad discretionary authority of Listing Rule 5101.
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Publication Date*:
7/31/2012
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Identification Number:
602
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Identification Number
603
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Rule 5250(c)(1): A company shall timely file all required periodic financial reports with the Commission through the EDGAR System or with the Other Regulatory Authority. A company that does not file through the EDGAR System shall supply to NASDAQ two (2) copies of all reports required to be filed with the Other Regulatory Authority or email an electronic version of the report to NASDAQ at continuedlisting@nasdaqomx.com. All required reports must be filed with NASDAQ on or before the date they are required to be filed with the Commission or Other Regulatory Authority. Annual reports filed with NASDAQ shall contain audited financial statements.
Rule 5101: NASDAQ is entrusted with the authority to preserve and strengthen the quality of and public confidence in its market. NASDAQ stands for integrity and ethical business practices in order to enhance investor confidence, thereby contributing to the financial health of the economy and supporting the capital formation process. NASDAQ Companies, from new public Companies to Companies of international stature, are publicly recognized as sharing these important objectives. NASDAQ, therefore, in addition to applying the enumerated criteria set forth in the Listing Rule 5000 Series, has broad discretionary authority over the initial and continued listing of securities in NASDAQ in order to maintain the quality of and public confidence in its market, to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and to protect investors and the public interest. NASDAQ may use such discretion to deny initial listing, apply additional or more stringent criteria for the initial or continued listing of particular securities, or suspend or delist particular securities based on any event, condition, or circumstance that exists or occurs that makes initial or continued listing of the securities on NASDAQ inadvisable or unwarranted in the opinion of NASDAQ, even though the securities meet all enumerated criteria for initial or continued listing on NASDAQ. In all circumstances where the Listing Qualifications Department (as defined in Listing Rule 5805) exercises its authority under Listing Rule 5101, the Listing Qualifications Department shall issue a Staff Delisting Determination under Listing Rule 5810 (c)(1), and in all circumstances where an Adjudicatory Body (as defined in Listing Rule 5805) exercises such authority, the use of the authority shall be described in the written decision of the Adjudicatory Body.
Issue: The company was delisted by a Hearings Panel for public interest concerns based on: the resignations of the company’s auditors, Chief Financial Officer, and an independent Board member and the reasons stated for those resignations; the serious questions raised by the reports of forensic accountants that go to core issues regarding the integrity of the company’s finances and operations; the lack of audited financials on file for 2010, uncertainty as to the reliability of prior years financials, and the multiple obstacles to prompt compliance with filing obligations; and, finally, the pattern of the company’s responses to requests from accountants and NASDAQ as this matter has unfolded.
Determination: Affirmed. After a review of the record in this matter, the Listing Council affirms the Panel Decision. As noted by the Panel, NASDAQ Listing Rule 5101 grants NASDAQ broad discretion to delist the securities of a company in order to maintain the quality of and public confidence in the market, prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade and protect investors and the public interest. The bases noted by the Panel in its decision to delist the company fit squarely within the ambit of the rule. The serious allegations made against the company and its current management, supported by concerns noted by both its independent public auditor and independent investigator, together with the resignations of independent directors all support a determination to delist the company from NASDAQ. Furthermore, the Listing Council shares Staff’s concern regarding the feasibility of the company’s proposed timeline for compliance. The Listing Council notes that investigations concerning such serious allegations do not lend themselves to quick conclusion nor are the issues often identified easily resolved. Moreover, the Listing Council notes that the company has missed prior milestones it set for itself and has shown little demonstrable progress toward quick resolution of its deficiencies. Concerning to the Listing Council is that much of the delay in investigating and resolving the issues in this matter has been caused by the company, and not due to issues beyond the company’s control. As a self-regulatory organization, NASDAQ is charged with the protection of investors and the public interest. The Listing Council believes that allowing the company to remain listed on NASDAQ, whether halted or not, would be misleading to the investing public and signal a level of comfort with the company that is simply not present.
Accordingly, the Listing Council affirms the Panel decision to delist the company’s securities based on the exercise of the broad discretionary authority of Listing Rule 5101.
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Publication Date*:
7/31/2012
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Identification Number:
603
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Identification Number
605
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Rule 5550(a)(2): For continued listing, the minimum bid price per share for common stock shall be at least $1 per share.
Issue: The company was delisted by a Hearings Panel for failing to regain compliance with Listing Rule 5550(a)(2) after it was provided with the full extent of time available to do so by Staff and a Hearings Panel. The company appealed the Hearings Panel decision to the Listing Council.
Determination: Affirmed. The Hearings Panel was willing to grant the company an extension of time so that it could regain compliance with Listing Rule 5550(a)(2) because the company had committed to gaining shareholder approval of a stock split in a ratio sufficient to regain compliance with the rule. The company was unable to gain such approval in the time afforded. The Hearings Panel issued a second decision, which granted the company the full extent of time available under the rules contingent on the company gaining the required shareholder approval by a date sufficient for it to regain compliance with Listing Rule 5550(a)(2) prior to the expiration of the extension. The company failed to gain shareholder approval by the deadline, and the Hearings Panel issued a decision to delist the company’s shares.
In affirming the Hearings Panel decisions, the Listing Council finds that granting the company extensions to regain compliance with the $1 bid price requirement was reasonable and appropriate given the facts and circumstances presented by the record at the time the decisions were issued. In particular, it was reasonable for the Hearings Panel to rely on the company’s statements and commitments. It is incumbent on a company to provide NASDAQ accurate statements and to make commitments based on well-considered and reasonable assumptions. In the present case, it is not clear that the company’s failure to achieve the various commitments made to the Hearings Panel was due to a failure to consider all contingencies or was a result of unreasonable assumptions. In any event, the company failed to meet the most critical of those commitments, and the Listing Council finds no reason not to affirm the decision to delist the company’s securities.
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Publication Date*:
7/31/2012
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Identification Number:
605
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Identification Number
606
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Rule 5250(c)(1): A company shall timely file all required periodic financial reports with the Commission through the EDGAR System or with the Other Regulatory Authority. A company that does not file through the EDGAR System shall supply to NASDAQ two (2) copies of all reports required to be filed with the Other Regulatory Authority or email an electronic version of the report to NASDAQ at continuedlisting@nasdaqomx.com. All required reports must be filed with NASDAQ on or before the date they are required to be filed with the Commission or Other Regulatory Authority. Annual reports filed with NASDAQ shall contain audited financial statements.
Issue: The company was not able to file its delinquent periodic SEC reports due to an internal investigation of company practices relating to revenue recognition. The Panel granted the company an extension to file its delinquent reports, which was the full extent of the Panel’s discretionary authority. At the expiration of the extension, the company had not regained compliance. As a consequence, the Panel issued a decision to suspend the company’s securities. The company appealed the Panel decision to the Listing Council.
Determination: Affirmed. The Panel was willing to grant the company an extension of time because the company had demonstrated good faith efforts to regain compliance, and the Panel was not faced with any information particular to the company that would suggest that continued listing for a brief period would harm the investing public. In its July 20, 2009 decision, the Panel noted its concerns regarding the seriousness of the company’s revenue recognition issues, the large amount of revenues to be moved to subsequent periods and the fact that the company had no current audited financial statements on file for a significant time period. Notwithstanding, however, the Panel determined to allow the company to remain listed while it worked to file its delinquent reports and regain compliance with NASDAQ’s listing standards. In determining to grant the company an extension, the Panel noted that the company and its Audit Committee responded appropriately to indications of revenue recognition problems by undertaking a broad review of transactions dating back to 2004. Further, the Panel considered the company’s representation that it had identified the problems that caused the revenue recognition issues; that the responsible individuals are no longer with the company; that those currently responsible are trained and knowledgeable about revenue recognition issues; and that current management is fully committed to a wide range of remedial measures to preclude a recurrence of the problem. Importantly, the company informed the Panel that it expected to complete its revenue restatement and regain compliance with the filing requirement by September 30, 2009, and by no later than October 31, 2009.
In affirming the Panel decisions, the Council finds that granting the company the full extent of time available under the Listing Rules was reasonable and appropriate given the facts and circumstances presented by the record at the time the decision was issued. Pursuant to Listing Rule 5815(c)(1)(F), the Panel may grant a company delinquent in filing its periodic reports an extension of up to 360 days from the due date of the first such late periodic report. The company did not regain compliance with the Listing Rules by the expiration of the Panel extension, and as such, the Panel’s decision to suspend and delist the company’s securities was also reasonable and appropriate at the time of issuance.
The Listing Council notes that the company, as of the date of the Listing Council’s deliberations, had not regained compliance with the Listing Rules. The Listing Council has no authority under the Listing Rules to grant the company a further extension of time to regain compliance, if it were so inclined. Based on the foregoing, the Listing Council affirms the decisions of the Panel in this matter.
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Publication Date*:
7/31/2012
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Identification Number:
606
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Identification Number
607
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Rule 5250(c)(1): A company shall timely file all required periodic financial reports with the Commission through the EDGAR System or with the Other Regulatory Authority. A company that does not file through the EDGAR System shall supply to NASDAQ two (2) copies of all reports required to be filed with the Other Regulatory Authority or email an electronic version of the report to NASDAQ at continuedlisting@nasdaq.com. All required reports must be filed with NASDAQ on or before the date they are required to be filed with the Commission or Other Regulatory Authority. Annual reports filed with NASDAQ shall contain audited financial statements.
Issue: The company was not able to file its delinquent periodic SEC reports due to an internal investigation of company practices relating to stock option grants to officers and directors, and related matters. The Panel granted the company an extension to file its delinquent reports, which was the full extent of the Panel’s discretionary authority. The company appealed the Panel decision to the Listing Council, and by separate letter, the company requested that the Listing Council call for review the Panel decision with a stay of delisting. The Listing Council notified the company that it had called for review the Panel decision and issued a stay of delisting pending further Council action.
Determination: Affirmed. The decision of the Panel was appropriate at the time it was rendered. The Listing Council also exercised its discretionary authority to grant the company an additional extension of time to demonstrate compliance with the filing requirement, but not to the full extent of the Listing Council’s discretion.
In reaching its determination, the Listing Council applied a facts and circumstances analysis, and found that based on its analysis, this company should be given additional time to become compliant with NASDAQ’s filing requirement. The Listing Council considered many factors, including, but not limited to, the following:
- The company reacted quickly and took appropriate steps once the potential problem was identified. After the board of directors was informed of evidence indicating backdating issues, the board of directors appointed the Special Committee, which began an independent investigation, with the help of outside consultants, to determine the depth and breadth of the problem.
- The company cooperated with regulatory authorities and timely notified the investing public of its independent investigation and the need for a restatement of its financial statements.
- The company has agreed to adopt the remedial measures recommended by the Special Committee.
The Listing Council also considered that the company was not in any other distress and that, but for the options issue, the company was ready to remedy its filing delinquency and, based upon historical financial information, appeared to have the financial strength to continue to meet the maintenance standards of the Global Market. The Listing Council understands that the Committee’s investigation has been slowed by the magnitude of the problem and the company’s dependence on outside factors to complete the process. The Listing Council was also particularly cognizant, and considered, that the Panel had exhausted its ability to provide the company with an additional extension of time.
While the Listing Council takes seriously the requirement to file accurate and reliable financial statements and the concomitant purpose to provide investors with current information, when faced with similar cases historically, the Listing Council balanced its analysis with the extraordinary circumstances in which many companies found themselves. The Listing Council, however, believes that stock options backdating is not a novel issue at this point in time. As such, companies should have long ago taken appropriate action to determine whether their stock option grant practices are problematic, and to extent issues are found, restate any affected financial statements and remediate the issues, both expeditiously. Accordingly, the Listing Council is willing to grant a short extension of time pursuant to Listing Rule 5820(d)(4) to demonstrate compliance with NASDAQ’s filing requirement; however, the Listing Council is unwilling to grant the company the full extent of time available to it under NASDAQ’s rules.
The Listing Council also takes notice of the fact that the company has become deficient under Listing Rule 5620 because it did not solicit proxies for or hold its annual meeting by December 31, 2008. As such, the Listing Council finds that such failure to solicit proxies for and hold an annual meeting constitutes a new and separate deficiency. In order to assure that the company has an adequate opportunity to address this deficiency, the Listing Council remands this deficiency back to the Panel for further review and action if the company regains compliance with the filing requirement. Staff shall instruct the company to respond to the Panel with respect to this deficiency.
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Publication Date*:
7/31/2012
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Identification Number:
607
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Identification Number
608
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Rule 4450(a)(3): A company must have a minimum of $10,000,000 of stockholders’ equity for continued listing on The NASDAQ Global Market.
Issue: The company was properly delisted because at the time of the Panel decision, the company reported stockholders’ equity of $2,792,000. The company argued that it should be allowed to transfer to The NASDAQ Capital Market, which has a stockholders’ equity maintenance requirement of $2,500,000. The Panel denied the company’s request based on concerns regarding the company’s ability to maintain compliance with the Capital Market continued listing standards. The Panel determined to delist the company’s shares from The NASDAQ Global Market for failing to maintain stockholders’ equity of at least $10,000,000.
Determination: After a review of the record in this matter, the Listing Council affirms the Panel’s decision to delist the company’s securities. The company noted that it was pursuing multiple avenues by which it would be able to increase its stockholders’ equity; 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 Global Market continued listing standards, or maintain compliance with the Capital Market continued listing standards going forward.
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 was not able to file its delinquent periodic SEC reports because it had encountered a number of corporate issues that had strained resources and diverted attention from filing. The Panel determined to delist the company’s securities.
Determination: The company was properly delisted because at the time of the Panel decision the company was not current in all required public filings. The Listing Council notes that the company was current in filing its periodic reports at the time of the issuance of the Listing Council decision and the company believed it had remedied the issues that caused the company to become delinquent. 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.
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Publication Date*:
7/31/2012
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Identification Number:
608
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Identification Number
609
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Rule 4450(b)(3): An issuer must have a market value of publicly held shares of $15 million.
Issue: At the time of the Panel's decision, the company's market value of publicly held shares was below $15 million. The company did not provide a plan of compliance.
Determination: The decision of the Panel to delist the company’s securities was appropriate at the time it was rendered.
In reaching its determination, the Listing Council applied a facts and circumstances analysis. NASDAQ’s Hearings process is designed to allow both NASDAQ-listed companies and prospective NASDAQ companies a means by which they can appeal a Staff determination. For listed companies in jeopardy of delisting, the Hearings process affords these companies an automatic stay of delisting until a Panel issues a decision on the company’s case. Companies are given the opportunity to provide a Panel with a written submission detailing the specific grounds for its contention that the Staff’s determination was in error. In cases in which a company is deficient in NASDAQ’s continued listing standards, the submission should also provide a definitive plan for achieving compliance with NASDAQ standards within the near term, as well as maintaining compliance long term.
In the instant case, the company provided neither the Panel nor the Listing Council with a definitive plan to regain compliance with NASDAQ’s listing standards. Instead, the company provided a plan of merger. By its design, the plan of merger would not result in the company regaining compliance with the NASDAQ listing standards, but rather would result in the delisting of the company’s shares upon the consummation of the merger. By the company’s own admission, the Plan provided to the Panel was not a plan of compliance. The purpose of a plan of compliance is to provide the Panel and Listing Council with information sufficient to determine whether the deficient company has a reasonable chance to regain compliance with NASDAQ’s listing standards within the time afforded to the adjudicator under NASDAQ rules. The Panel correctly concluded that the plan provided to it was not a compliance plan and insufficient to determine whether the company would regain compliance within the discretion available to the Panel.
Based on the foregoing, the Listing Council affirms the decision of the Panel to suspend the company’s securities.
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Publication Date*:
7/31/2012
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Identification Number:
609
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Identification Number
622
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Rule 4340(a): An issuer must apply for initial listing in connection with a transaction whereby the issuer combines with a non-NASDAQ entity, resulting in a change of control of the issuer and potentially allowing the non-NASDAQ entity to obtain a NASDAQ Listing. In determining whether a change of control has occurred, NASDAQ shall consider all relevant factors including, but not limited to, changes in the management, board of directors, voting power, ownership, and financial structure of the issuer. NASDAQ shall also consider the nature of the businesses and the relative size of the NASDAQ issuer and non-NASDAQ entity. The issuer must submit an application for the post-transaction entity with sufficient time to allow NASDAQ to complete its review before the transaction is completed. If the issuer's application for initial listing has not been approved prior to consummation of the transaction, NASDAQ will issue a Staff Determination Letter as set forth in Listing Rule 4804 and begin delisting proceedings pursuant to the Listing Rule 4800 Series.
Issue: The Panel issued a decision that declined to determine whether Staff correctly concluded that the merger between a NASDAQ-listed company and a non-NASDAQ-listed company constituted a reverse merger for purposes of Listing Rule 4340(a). In issuing its decision, the Panel noted that the company had applied, and was approved, for initial listing.
Determination: The decision of the Panel was appropriate at the time it was rendered. The Listing Council also found that Staff’s conclusion that the transaction was a reverse merger was correct.
The company argued that the merger was not a reverse merger, but rather a merger of equals whereby there was no change of control. As such, the company believed that it was not required to apply for initial listing on NASDAQ. In support of their position, the company noted that the two companies’ businesses are similar and that the NASDAQ company was larger relative to the non-NASDAQ company both in staffing and manufacturing capabilities. The Listing Council notes, however, that similarity in business and relative size are but two factors Staff must consider and weigh in its reverse merger analysis. No one factor of all the factors to be considered by Staff in making its reverse merger determination is dispositive. Staff must make its determination considering the mix of factors required by the rule. Consistent with such an analysis, the Listing Council finds evidence supporting that a change of control had occurred based on applying the various factors in the rule to the facts and circumstances of this case. Post-merger, the non-NASDAQ company’s shareholders own 58% of the merged company’s outstanding voting shares, non-NASDAQ company officers represent 66% of the merged company’s officers, and although there is equal representation on the board of directors by both NASDAQ company- and non-NASDAQ company-affiliated directors, the chairman of merged company’s board of directors is the former non-NASDAQ company’s chairman. The Listing Council acknowledges that the company’s chief executive officer and chief financial officer have retained these positions in the merged company; however, in the aggregate, the facts and circumstances lead the Listing Council to find that it was reasonable to determine that a change of control had occurred. Last, the Listing Council notes that a significant change in financial structure had occurred as evidenced by the fact that the non-NASDAQ company was treated as acquiring the NASDAQ company for accounting purposes.
Based on the foregoing, the Listing Council affirms the decision of the Panel.
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Publication Date*:
7/31/2012
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Identification Number:
622
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Identification Number
624
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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 was not able to file its delinquent periodic SEC reports due to the need for additional time for the company to complete an on-going investigation into financial irregularities at a company subsidiary. Based on a Panel decision, the company was scheduled to be suspended, pending delisting, by the Panel, because the Panel was at the limit of its discretionary authority. The Listing Council exercised its discretionary authority to call the Panel’s decision for review and stay any future Panel determinations to suspend the company’s securities from trading, pending further action by the Listing Council.
Determination: The decision of the Panel was appropriate at the time it was rendered. The Listing Council also uses its discretionary authority to grant the company an additional 60 day extension of time to demonstrate compliance with all Global Select Market continued listing requirements.
In reaching its determination, the Listing Council applied a facts and circumstances analysis, and found that based on its analysis, that this company should be given additional time to become compliant with NASDAQ’s filing requirement.
The Listing Council considered many factors, including, but not limited to, the following:
- The company reacted quickly and took appropriate steps once the potential problem was identified, including initiating an independent investigation, hiring outside consultants to assist with the forensic analysis and to assist with bolstering the company’s internal controls, and terminating five employees who were determined to be the architects and implementers of the wrongdoing.
- There is no suggestion of wrongdoing by the company or any of its senior management.
- The company promptly notified the investing public of its inability to file its delinquent filings.
- The company has cooperated with regulators and federal authorities.
- The company has implemented the remedial measures recommended by its consultants.
The Listing Council also considered that the company was not in any other distress and that, but for the accounting issue, the company was ready to remedy its filing delinquency and, based upon historical financial information, appeared to have the financial strength to continue to meet the maintenance standards of the Global Select Market. The Listing Council understands that the accounting analysis has been slowed by the magnitude and complexity of the problem, and the company’s dependence on outside factors to complete the process. The Listing Council was also particularly cognizant, and considered, that the Panel had exhausted its ability to provide the company with an additional extension of time, and would have provided the company more time if available under the rules.
While the Listing Council takes seriously the requirement to file accurate and reliable financial statements and the concomitant purpose to provide investors with current information, the Listing Council balanced its analysis with the extraordinary circumstances in which many companies find themselves. In making its determination, the Listing Council undertakes a facts and circumstances analysis in each case to determine if additional remedies are appropriate.
Based upon the record, the Listing Council recognized that the company has been pro-active in trying to regain its status as a good corporate citizen, and believed that such diligence should be rewarded with an extension of time to demonstrate compliance.
As such, pursuant Listing Rule 4802(b), the Listing Council finds that it is appropriate in this instance to exercise its discretionary authority and provide the company with a short extension of time to demonstrate compliance with Listing Rule 4310(c)(14).
Based on the foregoing, the Listing Council affirms the decision of the Panel to suspend the company’s securities, and grants the company an exception of 60 days to file its delinquent periodic reports and restatements.
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Publication Date*:
7/31/2012
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|
|
Identification Number:
624
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|
|
|
|
Identification Number
625
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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 was not able to file its delinquent periodic SEC reports due to the need for additional time for company management to complete the assessment of the effectiveness of its internal control over financial reporting as of December 31, 2006 in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. Based on a Panel decision, the company was scheduled to be suspended, pending delisting, by the Panel, because the Panel was at the limit of its discretionary authority. The Listing Council exercised its discretionary authority to call the Panel’s decision for review and stay any future Panel determinations to suspend the company’s securities from trading, pending further action by the Listing Council.
Determination: The decision of the Panel was appropriate at the time it was rendered. The Listing Council also uses its discretionary authority to grant the company an additional 60 day extension of time to demonstrate compliance with all Global Market continued listing requirements In reaching its determination, the Listing Council applied a facts and circumstances analysis, and found that based on its analysis, that this company should be given additional time to become compliant with NASDAQ’s filing requirement.
The Listing Council considered many factors, including, but not limited to, the following:
- The company reacted quickly and took appropriate steps once the problem was identified.
- There is no suggestion of wrongdoing by the company or any of its senior management.
- The company promptly notified the investing public of its inability to file its Form 10-K for the fiscal year ended December 31, 2006, and kept the investing public informed of its financial results.
- The company has taken remedial action to bolster its internal control processes and to prevent the reoccurrence of events that led to the filing delinquencies.
- The company has filed its Form 10-K for the fiscal year ended December 31, 2006.
The Listing Council also considered that the company was not in any other distress, appeared positioned to promptly file its remaining delinquent reports and, based upon historical financial information, appeared to have the financial strength to continue to meet the maintenance standards of the Global Market. The Listing Council understands that the accounting analysis was, in part, slowed by issues at its former audit firm, who at the termination of the relationship did not have a disagreement on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. The Listing Council was also particularly cognizant, and considered, that the Panel had exhausted its ability to provide the company with an additional extension of time, and would have provided the company more time if available under the rules. While the Listing Council takes seriously the requirement to file accurate and reliable financial statements and the concomitant purpose to provide investors with current information, the Listing Council balances its analysis with the facts and circumstances of each case before it. The Listing Council is sympathetic to the company in that the issues surrounding its filing delinquencies arise from technical accounting issues not related to its operations and that the delays in meeting the Panel’s deadline were, in part, beyond the company’s control. Notwithstanding the unforeseen delays, the Listing Council notes that the company has filed its Form 10-K for the fiscal year ended December 31, 2006, and anticipates filing the delinquent 2007 Forms 10-Q by mid-January. Based upon the record, the Listing Council recognized that the company has been pro-active in trying to regain its status as a goodcorporate citizen, and believed that such diligence should be rewarded with an extension of time to demonstrate compliance.
As such, pursuant Listing Rule 4802(b), the Listing Council finds that it is appropriate in this instance to exercise its discretionary authority and provide the company with a short extension of time to demonstrate compliance with Listing Rule 4310(c)(14). Based on the foregoing, the Listing Council affirms the decision of the Panel to suspend the company’s securities, and grants the company an exception of 60 days to file its delinquent periodic reports and restatements.
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Publication Date*:
7/31/2012
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|
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Identification Number:
625
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|
|
Identification Number
626
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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.
Rule 4350(e): Each issuer listing common stock or voting preferred stock, and their equivalents, shall hold an annual meeting of shareholders no later than one year after the end of the issuer's fiscal year-end.
Rule 4350(g): Each issuer shall solicit proxies and provide proxy statements for all meetings of shareholders and shall provide copies of such proxy solicitation to NASDAQ.
Issue: The company was not able to file its delinquent periodic SEC reports due to an internal investigation of company practices relating to stock option grants to officers and directors, and related matters. Based on a Panel decision, the company was scheduled to be suspended, pending delisting, by the Panel, because the Panel was at the limit of its discretionary authority. The company appealed the Panel’s decision, and the Listing Council exercised its discretionary authority to call the Panel’s decision for review and stay any future Panel determinations to suspend the company’s securities from trading, pending further action by the Listing Council. Determination: The decision of the Panel was appropriate at the time it was rendered. The Listing Council also uses its discretionary authority to grant the company an additional 60 day extension of time to demonstrate compliance with all Global Market continued listing requirements and remands the Listing Rule 4350(e) and 4350(g) deficiencies to the Panel. In reaching its determination, the Listing Council applied a facts and circumstances analysis, and found that based on its analysis, that this company should be given additional time to become compliant with NASDAQ’s filing requirement.
The Listing Council considered many factors, including, but not limited to, the following:
· The company reacted quickly and initiated an inquiry into stock options issues of its own accord. After the board of directors was informed of evidence indicating backdating issues, the board of directors appointed an independent committee, which began an investigation, with the help of outside consultants, to determine the depth and breadth of the problem.
· The company timely notified the investing public of its independent investigation.
· The company adopted remedial measures and internal controls recommended by the committee.
· The company has been proactive in keeping investors informed by providing unaudited quarterly financial information.
· There was no evidence of intent to defraud by senior management at the company.
The Listing Council also considered that the company was not in any other distress and that, but for the options issue, the company was ready to remedy its filing delinquency and, based upon historical financial information, appeared to have the financial strength to continue to meet the maintenance standards of the Global Market. The Listing Council understands that the restatement process has been slowed by the magnitude of the problem and the company’s dependence on outside factors to complete the process. The Listing Council was also particularly cognizant, and considered, that the Panel had exhausted its ability to provide the company with an additional extension of time, and would have provided the company more time if available under the rules.
While the Listing Council takes seriously the requirement to file accurate and reliable financial statements and the concomitant purpose to provide investors with current information, the Listing Council balanced its analysis with the extraordinary circumstances in which many companies find themselves. The Listing Council is sympathetic to the company in that it is not the only company that is currently ensnared in the thorny issues surrounding the potential restatement of financial statements as a result of the accounting for stock option grants. The Listing Council has considered the extraordinary circumstances that many companies find themselves in and will undertake a facts and circumstances analysis in each case to determine if additional remedies are appropriate. Based upon the record, the Listing Council recognized that the company has been pro-active in trying to regain its status as a good corporate citizen, and believed that such diligence should be rewarded with an extension of time to demonstrate compliance. As such, pursuant Listing Rule 4802(b), the Listing Council finds that it is appropriate in this instance to exercise its discretionary authority and provide the company with a short extension of time to demonstrate compliance with Listing Rule 4310(c)(14). Based on the foregoing, the Listing Council affirms the decision of the Panel to suspend the company’s securities, and grants the company an exception of 60 days to file its delinquent periodic reports and restatements.
The Listing Council also takes notice of the fact that the company has become deficient under Rules 4350(e) and 4350(g) because it did not solicit proxies for or hold its annual meeting by no later than one year after the end of the company’s fiscal year-end. As such, the Listing Council finds that such failure to solicit proxies for and hold an annual meeting constitutes new and separate deficiencies. In order to assure that the company has an adequate opportunity to address these deficiencies, the Listing Council remands these deficiencies back to the Panel for further review and action if the company regains compliance with the filing requirement. Staff shall instruct the company to respond to the Panel with respect to these deficiencies.
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Publication Date*:
7/31/2012
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|
|
Identification Number:
626
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|
|
|
|
Identification Number
627
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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 was not able to file its delinquent periodic SEC reports due to the need for further analysis to support recognition of revenue from maintenance and support services provided as part of multiple element arrangements with respect to a business line. Based on a Panel decision, the company was scheduled to be suspended, pending delisting, by the Panel, because the Panel was at the limit of its discretionary authority. The Listing Council exercised its discretionary authority to call the Panel’s decision for review and stay any future Panel determinations to suspend the company’s securities from trading, pending further action by the Listing Council.
Determination: The decision of the Panel was appropriate at the time it was rendered. The Listing Council also uses its discretionary authority to grant the company an additional 60 day extension of time to demonstrate compliance with all Global Select Market continued listing requirements. In reaching its determination, the Listing Council applied a facts and circumstances analysis, and found that based on its analysis, that this company should be given additional time to become compliant with NASDAQ’s filing requirement.
The Listing Council considered many factors, including, but not limited to, the following:
- The company reacted quickly and took appropriate steps once the potential problem was identified, including hiring an outside consultant to assist with the accounting analysis.
- There is no suggestion of wrongdoing by the company or any of its senior management.
- The company promptly notified the investing public of its inability to file its Form 20-F for the fiscal year ended March 31, 2006. Also, the company informed the investing public of its financial results as computed under non-US GAAP.
- The company has adopted a number of remedial measures, including measures designed to enhance expertise in US GAAP within the company and to address weaknesses in internal controls.
The Listing Council also considered that the company was not in any other distress and that, but for the accounting issue, the company was ready to remedy its filing delinquency and, based upon historical financial information, appeared to have the financial strength to continue to meet the maintenance standards of the Global Select Market. The Listing Council understands that the accounting analysis has been slowed by the magnitude of the problem and the company’s dependence on outside factors to complete the process. The Listing Council was also particularly cognizant, and considered, that the Panel had exhausted its ability to provide the company with an additional extension of time, and would have provided the company more time if available under the rules. While the Listing Council takes seriously the requirement to file accurate and reliable financial statements and the concomitant purpose to provide investors with current information, the Listing Council balanced its analysis with the extraordinary circumstances in which many companies find themselves. The Listing Council is sympathetic to the company in that it is not the only company that is currently ensnared in the thorny issues surrounding its historical accounting policies. In making its determination, the Listing Council also considered the extraordinary circumstances that many companies find themselves in and will undertake a facts and circumstances analysis in each case to determine if additional remedies are appropriate. Based upon the record, the Listing Council recognized that the company has been pro-active in trying to regain its status as a good corporate citizen, and believed that such diligence should be rewarded with an extension of time to demonstrate compliance.
As such, pursuant Listing Rule 4802(b), the Listing Council finds that it is appropriate in this instance to exercise its discretionary authority and provide the company with a short extension of time to demonstrate compliance with Listing Rule 4310(c)(14). Based on the foregoing, the Listing Council affirms the decision of the Panel to suspend the company’s securities, and grants the company an exception of 60 days to file its delinquent periodic reports and restatements.
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Publication Date*:
7/31/2012
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|
|
Identification Number:
627
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|
|
|
|
Identification Number
628
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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 was not able to file its delinquent periodic SEC reports due to due to an internal investigation of company practices relating to stock option grants to officers and directors, and related matters. Based on a Panel decision, the company was scheduled to be suspended, pending delisting, by the Panel, because the Panel was at the limit of its discretionary authority. The Listing Council exercised its discretionary authority to call the Panel’s decision for review and stay any future Panel determinations to suspend the company’s securities from trading, pending further action by the Listing Council.
Determination: The decision of the Panel was appropriate at the time it was rendered. The Listing Council also uses its discretionary authority to grant the company an additional 60 day extension of time to demonstrate compliance with all Global Market continued listing requirements. In reaching its determination, the Listing Council applied a facts and circumstances analysis, and found that based on its analysis, that this company should be given additional time to become compliant with NASDAQ’s filing requirement.
The Listing Council considered many factors, including, but not limited to, the following:
-
The company reacted quickly and took appropriate steps once the potential problem was identified. Once the potential stock option problem was identified, management of the company began an internal review. After the Board was informed of evidence indicating backdating issues, the Board retained outside counsel, which began an independent investigation to determine the depth and breadth of the problem.
-
The company co-operated with regulatory authorities and timely notified the investing public of its independent investigation.
-
Upon the conclusion of the independent investigation, the company promptly notified the investing public of its need to restate its financial statements and cautioned investors not to rely on previously filed financial information.
-
The company has either adopted, or committed to adopt, a range of remedial measures recommended by the independent investigation committee, including reformation of tainted stock option agreements and changes to procedures for options grants.
-
The company has been proactive in keeping investors informed by providing unaudited financial information.
The Listing Council also considered that the company was not in any other distress and that, but for the options issue, the company was ready to remedy its filing delinquency and, based upon historical financial information, appeared to have the financial strength to continue to meet the maintenance standards of the Global Market. The Listing Council understands that the restatement process has been slowed by the magnitude of the problem and the company’s dependence on outside factors to complete the process. The Listing Council was also particularly cognizant, and considered, that the Panel had exhausted its ability to provide the company with an additional extension of time, and would have provided the company more time if available under the rules.
While the Listing Council takes seriously the requirement to file accurate and reliable financial statements and the concomitant purpose to provide investors with current information, the Listing Council balanced its analysis with the extraordinary circumstances in which many companies find themselves. The Listing Council is sympathetic to the company in that it is not the only company that is currently ensnared in the thorny issues surrounding the potential restatement of financial statements as a result of the accounting for stock option grants. The Listing Council has considered the extraordinary circumstances that many companies find themselves in and will undertake a facts and circumstances analysis in each case to determine if additional remedies are appropriate.
Based upon the record, the Listing Council recognized that the company has been pro-active in trying to regain its status as a good corporate citizen, and believed that such diligence should be rewarded with an extension of time to demonstrate compliance. As such, pursuant Listing Rule 4802(b), the Listing Council finds that it is appropriate in this instance to exercise its discretionary authority and provide the company with a short extension of time to demonstrate compliance with Listing Rule 4310(c)(14). Based on the foregoing, the Listing Council affirms the decision of the Panel to suspend the company’s securities, and grants the company an exception of 60 days to file its delinquent periodic reports and restatements.
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Publication Date*:
7/31/2012
|
|
|
Identification Number:
628
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|
|
|
|
Identification Number
629
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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.
Rule 4350(e): Each issuer listing common stock or voting preferred stock, and their equivalents, shall hold an annual meeting of shareholders no later than one year after the end of the issuer's fiscal year-end.
Rule 4350(g): Each issuer shall solicit proxies and provide proxy statements for all meetings of shareholders and shall provide copies of such proxy solicitation to NASDAQ.
Issue: The company was not able to file its delinquent periodic SEC reports due to due to an internal investigation of company practices relating to stock option grants to officers and directors, and related matters. Based on a Panel decision, the company was scheduled to be suspended, pending delisting, by the Panel, because the Panel was at the limit of its discretionary authority. The Listing Council exercised its discretionary authority to call the Panel’s decision for review and stay any future Panel determinations to suspend the company’s securities from trading, pending further action by the Listing Council.
Determination: The decision of the Panel was appropriate at the time it was rendered. The Listing Council also uses its discretionary authority to grant the company an additional 60 day extension of time to demonstrate compliance with all Global Market continued listing requirements and remands the Listing Rule 4350(e) and (g) deficiencies to the Panel.
In reaching its determination, the Listing Council applied a facts and circumstances analysis, and found that based on its analysis, that this company should be given additional time to become compliant with NASDAQ’s filing requirement.
The Listing Council considered many factors, including, but not limited to, the following:
- The company reacted quickly and took appropriate steps once the potential problem was identified. After the board of directors was informed of evidence indicating backdating issues, the board of directors appointed a committee of independent directors, which began an investigation, with the help of outside consultants, to determine the depth and breadth of the problem.
- The company co-operated with regulatory authorities and timely notified the investing public of its independent investigation.
- Upon the conclusion of the independent investigation, the company promptly notified the investing public of its need to restate its financial statements and cautioned investors not to rely on previously filed financial information.
- The company has either adopted, or committed to adopt, a range of remedial measures recommended by the independent committee, including changes to procedures for options grants.
- The company has been proactive in keeping investors informed by providing unaudited quarterly and year end financial information.
- Certain officers involved in the backdating have resigned from the company.
The Listing Council also considered that the company was not in any other distress and that, but for the options issue, the company was ready to remedy its filing delinquency and, based upon historical financial information, appeared to have the financial strength to continue to meet the maintenance standards of the Global Market. The Listing Council understands that the restatement process has been slowed by the magnitude of the problem and the company’s dependence on outside factors to complete the process. The Listing Council was also particularly cognizant, and considered, that the Panel had exhausted its ability to provide the company with an additional extension of time, and would have provided the company more time if available under the rules.
While the Listing Council takes seriously the requirement to file accurate and reliable financial statements and the concomitant purpose to provide investors with current information, the Listing Council balanced its analysis with the extraordinary circumstances in which many companies find themselves. The Listing Council is sympathetic to the company in that it is not the only company that is currently ensnared in the thorny issues surrounding the potential restatement of financial statements as a result of the accounting for stock option grants. The Listing Council has considered the extraordinary circumstances that many companies find themselves in and will undertake a facts and circumstances analysis in each case to determine if additional remedies are appropriate.
Based upon the record before it, the Listing Council finds no reason not to conclude that the company has been pro-active in trying to regain its status as a good corporate citizen, thereby warranting an extension of time to demonstrate compliance. As such, pursuant to Rule 4802(b), the Listing Council finds that it is appropriate in this instance to exercise its discretionary authority and provide the company with a short extension of time to demonstrate compliance with Listing Rule 4310(c)(14). Based on the foregoing, the Listing Council affirms the decision of the Panel to suspend the company’s securities, and grants the company an exception of 60 days to file its delinquent periodic reports and restatements. The Listing Council also takes notice of the fact that the company has become deficient under Rules 4350(e) and 4350(g) because it has not yet solicited proxies for or held its annual meeting. The Listing Council finds that such failure to solicit proxies for and hold an annual meeting constitutes new and separate deficiencies. In order to assure that the company has an adequate opportunity to address these deficiencies, the Listing Council remands these deficiencies back to the Panel for further review and action if the company regains compliance with the filing requirement. Staff shall instruct the company to respond to the Panel with regard to this deficiency.
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Publication Date*:
7/31/2012
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|
|
Identification Number:
629
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|
|
|
|
Identification Number
630
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|
|
Rule 4450(b)(1): For continued listing on The NASDAQ Global Market, an issuer must demonstrate either: (A) a market value of listed securities of $50 million; or (B) total assets and total revenue of $50 million each for the most recently completed fiscal year or two of the last three most recently completed fiscal years.
Rule 4350(i)(1)(D)(i): Requires shareholder approval in connection with a transaction other than a public offering involving the sale, issuance or potential issuance by the issuer of common stock (or securities convertible into or exercisable for common stock) at a price less than the greater of book or market value which together with sales by officers, directors or substantial shareholders of the company equals 20% or more of common stock or 20% or more of the voting power outstanding before the issuance.
Issues: At the time of the Panel’s decision, the company did not meet the market value of listed securities/total assets and total revenue requirement for continued listing on The NASDAQ Global Market. In addition, the company violated NASDAQ’s shareholder approval rules by entering into transactions designed to positively impact the company’s market value of listed securities shortfall. As a result, the Panel transferred the company’s securities to The NASDAQ Capital Market, granted the company a short extension to cure the shareholder approval rule violation by gaining shareholder approval for the transactions, and issued a letter of reprimand to the company for the shareholder approval rule violation. The company appealed and requested to be allowed to relist on The NASDAQ Global Market under the less stringent continued listing requirements, and not the more stringent initial listing standards.
Determination: The Listing Council affirms the Panel’s decision and denies the company’s request for an exception to The NASDAQ Global Market continued listing standards. In reaching its determination, the Listing Council applied a facts and circumstances analysis. Based upon its analysis, the Listing Council found that the Panel properly determined that the company did not comply with all of the requirements for continued listing on the Global Market and as a consequence should be delisted from The NASDAQ Global Market. The Listing Council notes that the initial inclusion requirements are the appropriate standards to apply when a company has been delisted from a NASDAQ market. In determining whether to grant an exception to the initial listing requirements, the Listing Council considered, among other things, the company’s behavior before being delisted.
The Listing Council notes that Staff was concerned that the transaction originally contemplated to enable the company to regain compliance with Listing Rule 4450(b)(1) would require shareholder approval, based on the limited information available to Staff at the time. As such, the company was put on notice of staff’s concerns when it received the staff’s Hearing Memo. The Listing Council further notes that the issue of whether shareholder approval was necessary, as a result of the aggregation of the two offerings subsequently contemplated by the company, was raised at the Panel Hearing, and the company stated that it would consult with staff. There is no evidence in the record that the company was proactive in consulting Staff on either occasion. Thereafter, the company completed the offerings and, as a consequence, violated the shareholder approval rules. It was only after staff’s notice of violation of the shareholder approval rules that the company contacted staff. The Panel concluded that the company’s violation of the shareholder approval rule was the result of insufficient attention to its obligations under the rules. The Listing Council also notes that the amount raised through the transactions was less than discussed at the Panel Hearing, and the company did not provide the Panel with a calculation of the transaction’s impact on market capitalization or projections of continued compliance.
After an examination of the facts and circumstances surrounding this case, the Listing Council denies the company’s request for an exception to list on The NASDAQ Global Market and finds the Panel’s decision to allow the company the opportunity to list on The NASDAQ Capital Market was appropriate at the time it was rendered. Based on the foregoing, the Listing Council affirms the Panel’s decision to transfer the listing of the company’s securities from The NASDAQ Global Market to The NASDAQ Capital Market.
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Publication Date*:
7/31/2012
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|
|
Identification Number:
630
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|
|
|
|
Identification Number
631
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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.
Rule 4350(e): Each issuer listing common stock or voting preferred stock, and their equivalents, shall hold an annual meeting of shareholders no later than one year after the end of the issuer's fiscal year-end.
Rule 4350(g): Each issuer shall solicit proxies and provide proxy statements for all meetings of shareholders and shall
provide copies of such proxy solicitation to NASDAQ.
Issue: The company was not able to file its delinquent periodic SEC reports due to an independent investigation of company practices relating to stock option grants to officers and directors, and related matters. Based on a Panel decision, the company was scheduled to be suspended, pending delisting, by the Panel, because the Panel was at the limit of its discretionary authority. The Listing Council exercised its discretionary authority to call the Panel’s decision for review and stay any future Panel determinations to suspend the company’s securities from trading, pending further action by the Listing Council.
Determination: The decision of the Panel was appropriate at the time it was rendered. The Listing Council also uses its discretionary authority to grant the company an additional 60 day extension of time to demonstrate compliance with all Global Market continued listing requirements and remands the Listing Rule 4350(e) and (g) deficiencies to the Panel.
In reaching its determination, the Listing Council applied a facts and circumstances analysis, and found that based on its analysis, that this company should be given additional time to become compliant with NASDAQ’s filing requirement.
The Listing Council considered many factors, including, but not limited to, the following:
- The company reacted quickly and took appropriate steps once the potential problem was identified. Once the potential stock option problem was identified, management of the company began an internal review. After the Board was informed of evidence indicating backdating issues, the Audit Committee began an independent investigation, with the help of outside consultants, to determine the depth and breadth of the problem.
- The company co-operated with regulatory authorities and timely notified the investing public of its independent investigation.
- Upon the conclusion of the independent investigation, the company promptly notified the investing public of its need to restate its
- financial statement and cautioned investors not to rely on previously filed financial information.
- The company expanded the number of directors from six to eight and then appointed two new independent directors.
- The company has either adopted, or committed to adopt, all other remedial measures recommended by the Audit Committee.
- The company continues to issue on a timely basis all required Forms 8-K and 12b-25 and has been proactive in keeping investors informed by providing unaudited quarterly and year end financial information.
The Listing Council also considered that the company was not in any other distress and that, but for the options issue, the company was ready to remedy its filing delinquency and, based upon historical financial information, appeared to have the financial strength to continue to meet the maintenance standards of The NASDAQ Stock Market. The Listing Council understands that the restatement process has been slowed by the magnitude of the problem and the company’s dependence on outside factors to complete the process. The Listing Council was also particularly cognizant, and considered, that the Panel had exhausted its ability to provide the company with an additional extension of time, and would have provided the company more time if available under the rules.
While the Listing Council takes seriously the requirement to file accurate and reliable financial statements and the concomitant purpose to provide investors with current information, the Listing Council balanced its analysis with the extraordinary circumstances in which many companies find themselves. The Listing Council is sympathetic to the company in that it is not the only company that is currently ensnared in the thorny issues surrounding the potential restatement of financial statements as a result of the accounting for stock option grants. The Listing Council has considered the extraordinary circumstances that many companies find themselves in and will undertake a facts and circumstances analysis in each case to determine if additional remedies are appropriate. Based upon the record, the Listing Council recognized that the company has been pro-active in trying to regain its status as a good corporate citizen, and believed that such diligence should be rewarded with an extension of time to demonstrate compliance.
As such, pursuant Listing Rule 4802(b), the Listing Council finds that it is appropriate in this instance to exercise its discretionary authority and provide the company with a short extension of time to demonstrate compliance with Listing Rule 4310(c)(14). Based on the foregoing, the Listing Council affirms the decision of the Panel to suspend the company’s securities, and grants the company an exception of 60 days to file its delinquent periodic reports and restatements. The Listing Council also takes notice of the fact that the company has become deficient under Rules 4350(e) and 4350(g) because it did not solicit proxies for or hold its annual meeting by no later than one year after the end of the company’s fiscal year-end. As such, the Listing Council finds that such failure to solicit proxies for and hold an annual meeting constitutes new and separate deficiencies. In order to assure that the company has an adequate opportunity to address these deficiencies, the Listing Council remands these deficiencies back to the Panel for further review and action if the company regains compliance with the filing requirement. Staff shall instruct the company to respond to the Panel with respect to these deficiencies.
(Note: The NASDAQ board of directorsors called the Listing Council decision for review and issued a stay of delisting; however, the board of directorsors withdrew its call for review and stay, subsequently noting that the company had been non-compliant with NASDAQ Rule 4310(c)(14) for a period of one year from the final due date of its annual report on Form 10-K.).
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Publication Date*:
7/31/2012
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Identification Number:
631
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Identification Number
632
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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: The company was not able to file its delinquent periodic SEC reports due to an internal investigation of company practices relating to stock option grants. Being at the limit of its discretionary authority, the Panel determined to suspend, pending delisting, the company’s securities for failure to file its delinquent periodic reports. Subsequently, the Listing Council exercised its discretionary authority to call for review an earlier decision of the Panel in this matter and stay the suspension.
Determination: The decision of the Panel was appropriate at the time it was rendered. The Listing Council also used its discretionary authority to grant the company an additional 60 day extension of time to demonstrate compliance with all Global Market continued listing requirements In reaching its determination, the Listing Council applied a facts and circumstances analysis, and found that based on its analysis, that this company should be given additional time to become compliant with NASDAQ’s filing requirement.
The Listing Council considered many factors, including, but not limited to, the following:
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The company reacted quickly and took appropriate steps once the potential stock option problem was identified. The management of the company began an internal review. After the Board was informed of evidence indicating backdating issues, the Audit Committee and later a Special Committee, began an independent investigation, with the help of outside consultants, to determine the depth and breadth of the problem.
-
The company co-operated with regulatory authorities and timely notified the investing public of its independent investigation.
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After the investigation was concluded, the company took steps to remove the culpable individuals; to that end, the company’s former CEO, CFO and Treasurer were all asked to resign from their respective positions.
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The company added two new independent board members to provide additional expertise.
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The company adopted all other remedial measures recommended by the Special Committee.
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Upon the conclusion of the independent investigation, the company promptly notified the investing public of its need to restate its financial statement and cautioned investors not to rely on previously filed financial information.
The Listing Council also considered that the company was not in any other distress and that, but for the options issue, the company was ready to remedy its filing delinquency and, based upon historical financial information, appeared to have the financial strength to continue to meet the maintenance standards of the Global Market. The Listing Council understands that the restatement process has been slowed by the magnitude of the problem and the company’s dependence on outside factors to complete the process. The Listing Council was also particularly cognizant, and considered, that the Panel had exhausted its ability to provide the company with an additional extension of time, and would have provided the company more time if available under the rules.
While the Listing Council takes seriously the requirement to file accurate and reliable financial statements and the concomitant purpose to provide investors with current information, the Listing Council balanced its analysis with the extraordinary circumstances in which many companies find themselves. The Listing Council is sympathetic to the company in that it is not the only company that is currently ensnared in the thorny issues surrounding the potential restatement of financial statements as a result of the accounting for stock option grants. In making its determination, the Listing Council also considered the extraordinary circumstances that many companies find themselves in and will undertake a facts and circumstances analysis in each case to determine if additional remedies are appropriate. Based upon the record, the Listing Council recognized that the company has been pro-active in trying to regain its status as a good corporate citizen, and believed that such diligence should be rewarded with an extension of time to demonstrate compliance. As such, pursuant Listing Rule 4802(b), the Listing Council finds that it is appropriate in this instance to exercise its discretionary authority and provide the company with a short extension of time to demonstrate compliance with Listing Rule 4310(c)(14).
Based on the foregoing, the Listing Council affirms the decision of the Panel to suspend the company’s securities, and grants the company an exception of 60 days to file its delinquent periodic reports and restatements.
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Publication Date*:
7/31/2012
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Identification Number:
632
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Identification Number
633
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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: The company was not able to file its delinquent periodic SEC reports due to an internal investigation of company practices relating to stock option grants to officers and directors, and related matters. Being at the limit of its discretionary authority, the Panel determined to suspend, pending delisting, the company’s securities for failure to file its delinquent periodic reports. Subsequently, the Listing Council exercised its discretionary authority to call the decision for review and stay the suspension.
Determination: The decision of the Panel was appropriate at the time it was rendered. The Listing Council also used its discretionary authority to grant the company an additional 60 day extension of time to demonstrate compliance with all Global Market continued listing requirements. In reaching its determination, the Listing Council applied a facts and circumstances analysis, and found that based on its analysis, that this company should be given additional time to become compliant with NASDAQ’s filing requirement.
The Listing Council considered many factors, including, but not limited to, the following:
-
The company reacted quickly and took appropriate steps once the potential stock option problem was identified. The management of the company began an internal review. After the Board was informed of evidence indicating backdating issues, the Audit Committee and later a Special Committee, began an independent investigation, with the help of outside consultants, to determine the depth and breadth of the problem.
-
The company co-operated with regulatory authorities and timely notified the investing public of its independent investigation.
-
Upon the conclusion of the independent investigation, the company promptly notified the investing public of its need to restate its financial statement and cautioned investors not to rely on previously filed financial information.
-
After the investigation was concluded, the company took steps to remove the culpable individuals; to that end, the company’s former CFO and Chief Accounting Officer were asked to resign from their respective positions, and have been replaced.
-
The company added two new independent board members to provide additional expertise and reconstituted its compensation committee.
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The company has either adopted, or committed to adopt, all other remedial measures recommended by the Special Committee.
-
The company has been proactive in keeping investors informed by providing unaudited quarterly and year end financial information and holding investor calls covering earnings.
The Listing Council also considered that the company was not in any other distress and that, but for the options issue, the company was ready to remedy its filing delinquency and, based upon historical financial information, appeared to have the financial strength to continue to meet the maintenance standards of the Global Market. The Listing Council understands that the restatement process has been slowed by the magnitude of the problem and the company’s dependence on outside factors to complete the process. The Listing Council was also particularly cognizant, and considered, that the Panel had exhausted its ability to provide the company with an additional extension of time, and would have provided the company more time if available under the rules. While the Listing Council takes seriously the requirement to file accurate and reliable financial statements and the concomitant purpose to provide investors with current information, the Listing Council balanced its analysis with the extraordinary circumstances in which many companies find themselves. The Listing Council is sympathetic to the company in that it is not the only company that is currently ensnared in the thorny issues surrounding the potential restatement of financial statements as a result of the accounting for stock option grants. The Listing Council has considered the extraordinary circumstances that many companies find themselves in and will undertake a facts and circumstances analysis in each case to determine if additional remedies are appropriate.
Based upon the record, the Listing Council recognized that the company has been pro-active in trying to regain its status as a good corporate citizen, and believed that such diligence should be rewarded with an extension of time to demonstrate compliance. As such, pursuant Listing Rule 4802(b), the Listing Council finds that it is appropriate in this instance to exercise its discretionary authority and provide the company with a short extension of time to demonstrate compliance with Listing Rule 4310(c)(14). Based on the foregoing, the Listing Council affirms the decision of the Panel to suspend the company’s securities, and grants the company an exception of 60 days to file its delinquent periodic reports and restatements.
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Publication Date*:
7/31/2012
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Identification Number:
633
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Identification Number
634
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Rule 4450(a)(3): To continue its listing on the NASDAQ Global Market, the issuer must maintain stockholders’ equity of at least $10 million.
Issue: The company reported a stockholders’ equity (deficit) of ($5,148,000) at December 31, 2005. Furthermore, the company’s plan to increase its stockholders’ equity was not sufficiently definitive at the time of the Panel or Listing Council’s decisions.
Determination: The company was properly suspended, pending delisting because it had violated the $10,000,000 minimum stockholders’ equity requirement, as set forth in Listing Rule 4450(a)(3), and its plan to regain compliance was not sufficiently definitive. The Listing Council finds that the Panel appropriately delisted the company’s securities from the Global Market because at the time of the Panel decision, the company reported stockholders’ equity (deficit) of ($5,148,000). Furthermore, the company’s plan to increase its stockholders’ equity was not sufficiently definitive at the time of the Panel decision. The Listing Council noted that the company has been deficient with the stockholders’ equity requirement for more than twelve months, was not in compliance as of the date of these deliberations, and has not provided any definitive documentation regarding potential increases of equity which could be accomplished in the short-term.
Although the company has argued that the trial against the U.S. for the taking of the business of its subsidiary has been completed, the company has not provided any evidence of: (i) a decision in favor of the company, (ii) the amount of any potential award, or (iii) a timetable as to when any potential award would be paid. With regards to the company’s alternative plan of compliance, the settlement of real estate claims, again, there is no public information that supports a settlement has been reached. Absent, information that a settlement had been reached with a sum certain, the Listing Council cannot provide the company with relief. Even if the company was successful in its settlement and was able to reverse the $8,000,000 in charges, the company would still not be able to demonstrate compliance with the $10,000,000 stockholders’ equity requirement.
The Listing Council finds that there is too little information to assume that the two alternatives presented by the company would in fact be completed in a timely manner, if at all. Given that the settlement alone is insufficient for the company to be able to demonstrate compliance, the Listing Council is not willing to provide the relief that the company is requesting.
The Listing Council also considered, and was: (i) concerned about by the company’s argument at the Panel level that its generally accepted accounting principles based historical financial statements were prepared on conservative basis, and (ii) concerned about the recent resignation of the company’s independent auditors. As such, the Listing Council affirms the Panel’s decision to suspend and delist the company’s securities because it has not demonstrated the ability to regain compliance in the near term or maintain compliance over the long term with stockholders’ requirement as set forth in Listing Rule 4450(a)(3), and has not presented a definitive plan that will allow it to regain compliance with this requirement in the near term or maintain compliance over the long term.
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Publication Date*:
7/31/2012
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Identification Number:
634
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Identification Number
636
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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.
* * *
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).
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Publication Date*:
7/31/2012
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|
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Identification Number:
636
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|
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|
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Identification Number
637
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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: The company was not able to file its delinquent periodic SEC reports due to its own stock option backdating investigation and the investigation of its former parent company.* Based on a Panel decision, the company was scheduled to be suspended, pending delisting, by the Panel, because the Panel was at the limit of its discretionary authority. The Listing Council exercised its discretionary authority by calling for review the Panel’s decision, and by also determining to stay any future Panel determinations to suspend the company’s securities from trading, pending further action by the Listing Council.
Determination: The company was suspended, pending delisting, by the Listing Council because the company was not current in all required public filings. Furthermore, in its submission to the Listing Council, the company noted that it was dependent on its former parent to complete its financial restatements. Given that the former parent company could not demonstrate compliance within 60 days, the company would also not be able to demonstrate compliance within the limits of the Listing Council’s discretion of 60 days. The Listing Council has considered the extraordinary circumstances that many companies find themselves in and has undertaken a facts and circumstances analysis in this case to determine if additional remedies are appropriate.
The Listing Council considered many factors, including, but not limited to, the following:
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The company took appropriate steps once the potential stock option problem had been identified. The company informed its Audit Committee, who, in turn, directed management to conduct a review of the company’s stock option issuance practices since the date of the company’s initial public offering. The company’s investigation was concluded in a month’s time.
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Upon the conclusion of the company’s internal investigation, even though no material exceptions were identified, the company adopted remedial measures that strengthened the stock options granting process to avoid a re-occurrence of this problem.
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Once the preliminary results of the former parent’s Special Committee were discussed with the company’s Board, the company promptly notified the investing public of its need to restate its financial statement and cautioned investors not to rely on previously filed financial information.
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Once the preliminary results of the former parent’s Special Committee were discussed with the company’s Board, the company removed those Board members implicated in the investigation.
The Listing Council was also particularly cognizant, and considered, that the Panel had exhausted its ability to provide the company with an additional extension of time, and would have provided the company more time if available under the rules. Accordingly, the Listing Council finds that the Panel’s determination to delist the company’s securities for failure to comply with the filing requirement, but staying the suspension pending further action by the Listing Council, was appropriate at the time of the decision. However, after a review of the record in this matter, the Listing Council notes that the company is wholly dependent on receiving information from its former parent company before it can move forward and finalize its restatements. When asked by the Listing Council for a definitive date when the company could demonstrate compliance, the company noted that it was unable to provide a specific date when it could file its delinquent periodic reports so as to demonstrate compliance with Listing Rule 4310(c)(14). While the Listing Council is extremely sympathetic to the company’s plight, the Listing Council sees no reason to exercise its discretionary authority to provide additional time for compliance. The Listing Council finds that the company’s plan of compliance is not sufficiently definitive and the company has not provided adequate assurances that the delinquent periodic reports could be filed within the next 60 days, the limit of the Listing Council’s discretion. Based on the foregoing, the Listing Council has determined to suspend, pending delisting, the company’s securities from The NASDAQ Stock Market because the company does not comply with the filing requirement of Listing Rule 4310(c)(14).
* Prior to its initial public offering, the company was a wholly owned subsidiary of its former parent company.
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Publication Date*:
7/31/2012
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Identification Number:
637
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Identification Number
638
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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 was not able to file its delinquent periodic SEC reports due to its own stock option backdating investigation and the investigation of its parent company. Based on a Panel decision, the company was scheduled to be suspended, pending delisting, by the Panel, because the Panel was at the limit of its discretionary authority. The Listing Council exercised its discretionary authority by calling for review the Panel’s decision, and by also determining to stay any future Panel determinations to suspend the company’s securities from trading, pending further action by the Listing Council.
Determination: The company was suspended, pending delisting, by the Listing Council because the company was not current in all required public filings. Furthermore, in its submission to the Listing Council, the company noted that it was dependent on the completion of financial restatements by its parent company. Given that the parent company could not demonstrate compliance within 60 days, the company would also not be able to demonstrate compliance within the limits of the Listing Council’s discretion of 60 days. The Listing Council has considered the extraordinary circumstances that many companies find themselves in and has undertaken a facts and circumstances analysis in this case to determine if additional remedies are appropriate.
The Listing Council considered many factors, including, but not limited to, the following:
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The company took appropriate steps once the potential stock option problem was identified when its Audit Committee, engaged an outside law firm, who in turn engaged independent forensic accountants to assist in conducting an internal investigation of the company’s option grant practices.
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The company promptly self-reported to the appropriate regulatory authorities when it contacted the SEC Division of Enforcement
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The company has frozen all stock option exercises until its restated financial statements are filed.
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Once the internal investigation was completed, the company adopted remedial measures that strengthened the stock options granting process to avoid a re-occurrence of this problem.
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Once the preliminary results of the parent’s Special Committee were discussed with the Board, the company removed those Board members implicated in the investigation.
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Once the preliminary results of the parent’s Special Committee were discussed with the company’s Board, the company promptly notified the investing public of its need to restate its financial statements and cautioned investors not to rely on previously filed financial information.
The Listing Council was also particularly cognizant, and considered, that the Panel had exhausted its ability to provide the company with an additional extension of time, and would have provided the company more time if available under the rules. Accordingly, the Listing Council finds that the Panel’s determination to delist the company’s securities for failure to comply with the filing requirement, but staying the suspension pending further action by the Listing Council, was appropriate at the time of the decision. However, after a review of the record in this matter, the Listing Council notes that the company is wholly dependent on receiving information from its parent company before it can move forward and finalize its own restatements. When asked by the Listing Council for a definitive date when the company could demonstrate compliance, the company noted that it was unable to predict when it could file its delinquent periodic reports so as to demonstrate compliance with Listing Rule 4310(c)(14). As such, the Listing Council sees no reason
to exercise its discretion, to provide additional time for compliance, in this particular instance. The Listing Council finds that the company’s plan of compliance is not sufficiently definitive and the company has not provided adequate assurances that the delinquent periodic reports could be filed within the next 60 days, the limit of the Listing Council’s discretion. Based on the foregoing, the Listing Council has determined to suspend, pending delisting, the company’s securities from The NASDAQ Stock Market because the company does not comply with the filing requirement of Listing Rule 4310(c)(14).
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Publication Date*:
7/31/2012
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Identification Number:
638
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Identification Number
639
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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 was not able to file its delinquent periodic SEC reports due to a stock option backdating investigation. Based on a Panel’s decision, the company was scheduled to be suspended, pending delisting, by the Panel, because the Panel was at the limit of its discretionary authority. The Listing Council exercised its discretionary authority by calling for review the Panel’s decision, and by also determining to stay any future Panel determinations to suspend the company’s securities from trading, pending further action by the Listing Council.
Determination: The company was suspended, pending delisting, by the Listing Council because the company was not current in all required public filings. Furthermore, in its submission to the Listing Council, the company noted that it could not demonstrate compliance within 60 days, which was outside the limits of the Listing Council’s discretion. The Listing Council has considered the extraordinary circumstances that many companies find themselves in and has undertaken a
facts and circumstances analysis in this case to determine if additional remedies are appropriate.
The Listing Council recognizes that the company:
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Reacted quickly and took appropriate steps once the potential stock option problem was identified. The company moved quickly to inform its Audit Committee, who, in turn, immediately began an internal investigation, with the help of outside consultants, to determine the depth and breadth of the problem.
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Promptly notified regulatory authorities and the investing public of its internal investigation and the investigation of the SEC and the Department of Justice.
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Removed and replaced its Chairman of the Board, CFO, and Senior General Counsel, once the preliminary results of the Special Committee were discussed with the Board.
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Adopted remedial measures recommended by the Special Committee such as freezing all stock option exercises until restated financial statements are filed.
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Promptly notified the investing public of its need to restate its financial statements and cautioned investors not to rely on previously filed financial information.
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Recently engaged five new, independent, outside directors.
The Listing Council was also particularly cognizant, and considered, that the Panel had exhausted its ability to provide the company with an additional extension of time, and would have provided the company more time if available under the rules.
Accordingly, the Listing Council finds that the Panel’s determination to delist the company’s securities for failure to comply with the filing requirement, but staying the suspension pending further action by the Listing Council, was appropriate at the time of the decision. However, after a review of the record in this matter, the Listing Council notes that Listing Rule 4802(b) only allows the Listing Council the discretion to grant exceptions for a period not to exceed 60 days from the date of the Listing Council Decision or 180 days from the date of the Panel Decision with respect to the deficiency for which the exception is granted. However, the company, in its supplemental submission to the Council, stated that it did not expect to be able to complete its “new” investigation until the second quarter of 2007, which also contemplates that the company would not be able to demonstrate compliance with Listing Rule 4310(c)(14) until some unknown time thereafter.
Consequently, the Listing Council finds that even if it determined to exercise the full extent of its discretion on behalf of the company, by the company’s own admission, such time would still not be enough to demonstrate compliance with Listing Rule 4310(c)(14). As such, the Listing Council sees no reason to exercise its discretion in this particular instance. The Listing Council finds that the company’s plan of compliance is not sufficiently definitive and does not appear to be able to be executed in the near term. Based on the foregoing, the Listing Council has determined to suspend, pending delisting, the company’s securities from The NASDAQ Stock Market because the company does not comply with the filing requirement of Listing Rule 4310(c)(14).
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Publication Date*:
7/31/2012
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Identification Number:
639
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Identification Number
640
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Rule 4350(i)(1)(D)(ii): Each issuer shall require shareholder approval or prior to the issuance of securities…in connection with a transaction other than a public offering involving…(ii) the sale, issuance or potential issuance by the company of common stock (or securities convertible into or exercisable common stock) equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the stock.
Issue: The company failed to obtain shareholder approval before issuing Series E preferred stock that was convertible into the common stock. The company had previously completed two series of similar financings. After analysis, Staff determined to aggregate the three financings. As such, when aggregated with the prior financings, the Series E preferred stock transaction required shareholder approval because it was issued at a discount to market value and its issuance could potentially exceed greater than 20% of the company’s pre-transaction total shares outstanding. The Panel delisted the company’s securities based on a violation of the shareholder approval rules.
Determination: The company was properly suspended because it had violated the shareholder approval requirements, as set forth in Rule 4350(i)(1)(D)(ii). NASDAQ shareholder approval requirements are designed to provide shareholders with a meaningful voice in significant transactions and in transactions where they may face significant dilution, such as in the current case before the Listing Council. The Listing Council believes that this voice, mandated by NASDAQ rules, is a basic tenet of the NASDAQ corporate governance rules. The NASDAQ shareholder approval requirements are also designed to provide shareholders with notice prior to the consummation of the transaction so that they have the opportunity to sell their shares. In this case, there was no shareholder vote or advance notice of the consummation of this transaction. The Listing Council agrees with the Panel’s assessment that because the Series E documents do not by their terms preclude an issuance without shareholder approval; there exists a theoretical possibility that the company could be compelled to issue the securities. The Listing Council also considered the company’s argument that it would either restructure the transaction with investors unrelated to the Series C, D, and E transactions in an effort to craft a re-financing plan that would allow the company to unwind the Series E transaction, or move forward with a shareholder vote for approval of the Series E transaction. To date the company has done neither. As such, the company is still in violation of the shareholder approval rules. At the time of its deliberations, the Listing Council noted that: (i) there have been no Form 8-K filings with announcements regarding a re-financing plan that would allow the company to unwind the Series E transaction, (ii) the company’s recently filed definitive proxy statement for its annual meeting of stockholders and did not include any proposals to obtain shareholder approval of the Series E transaction, and (iii) the company did not provide an update as to the status of its previously filed amended proxy statement and notice of a special meeting of shareholders, in which the company was seeking shareholder approval for the Series E financing. The Listing Council does not disagree with the company’s assessment that its imperfect efforts to file completed Listing of Additional Shares Notifications should be the cause of its delisting. However, the Listing Council notes that the company was effectively put on notice by staff’s letter, regarding its, first of three, Listing of Additional Shares Notification violations. The Listing of Additional Shares program is used by NASDAQ to monitor compliance with listing rules governing shareholder approval, public interest concerns, reverse mergers, and voting rights. As such, the Listing Council views compliance with the Listing of Additional Shares program as essential in order to protect investors in securities listed on The NASDAQ Stock Market.
The Listing Council is aware that the company is a repeat offender of both the filing of Listing of Additional Shares Notifications and the shareholder approval requirements. If the company was a first time offender, the Listing Council may have been more sympathetic, such is not the case here. In its deliberations, the Listing Council considered that: (i) there is a large amount of easily accessible information on the NASDAQ Legal and Compliance website regarding staff’s views as to when shareholder approval for transactions is required and when a Listing of Additional Shares Notification must be filed; (ii) Staff stands ready to offer informal guidance to assist issuers in structuring transactions so that there will not be violations of the Marketplace Rules; and (iii) there is a process pursuant to Rule 4550, which requires the payment of a fee, for formal guidance regarding shareholder approval interpretations. As such, the company’s argument that once its senior management and Board learned of the repeated Listing of Additional Shares violations they acted promptly and decisively to ensure that no similar violations would occur in the future, was not persuasive. Management should have been on notice with the staff’s warning letter to become more actively engaged and should have taken proactive steps at that time in an effort to prevent future violations. Based on the foregoing, the Listing Council affirms the Panel’s decision to delist the company’s securities from The NASDAQ Stock Market.
* * *
Rule 4310(c)(4): For continued inclusion, the minimum bid price per share for common stock shall be $1.
Issue: At the time of the Listing Council’s deliberations, the bid price of the company’s common stock was below $1.
Determination: As an additional and separate ground for its decision, the Listing Council finds that the company fails to comply with the $1.00 minimum bid price requirement contained in Listing Rule 4310(c)(4). The Listing Council notes that although the company was provided an opportunity to address its non-compliance with this rule, the company declined to do so. Given that at the time of the Listing Council’s deliberations the company’s bid price as quoted on the OTC Bulletin Board was $0.57, the Listing Council finds this violation of Listing Rule 4310(c)(4) as a separate and additional basis for affirming the company’s suspension and delisting from The NASDAQ Stock Market.
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Publication Date*:
7/31/2012
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Identification Number:
640
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Identification Number
641
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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: The company stated that its filing of the Form 10-K for the fiscal year ended December 31, 2005 would be delayed to allow for the completion of an ongoing internal investigation, by a Special Committee of its board of directors, of company practices related to stock option grants to officers and directors, and related matters. The Panel delisted the company’s securities based on a filing delinquency.
Determination: The Listing Council has considered that the Panel discretion under Listing Rule 4802(b) is limited to 90 days from the date of the Panel’s original decision, not to exceed 180 days from the date of the staff’s determination, and that such limit of discretion, did not allow this Panel the ability to provide the company with additional relief. Accordingly, the Listing Council finds that the Panel’s determination to delist the company’s securities from The NASDAQ Stock Market, for failure to comply with the filing requirement of Rule 4310(c)(14), was appropriate at the time of the decision. However, after a review of the record in this matter, the Listing Council has determined to exercise its discretionary authority, under Rule 4802(b)*, to: (i) remove the suspension of trading, and (ii) grant the company a 60 day exception period to demonstrate compliance with all of the Global Market continued listing requirements. In reaching its determination, the Listing Council applied a facts and circumstances analysis, and found that based on its analysis, that this company should be given additional time to become compliant with NASDAQ’s filing requirement.
The Listing Council considered many factors, including, but not limited to, the following:
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The company reacted quickly and took appropriate steps once the potential stock option problem was identified. The company informed its Audit Committee, who, in turn, immediately began an internal investigation, with the help of outside consultants, to determine the depth and breadth of the problem.
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The company promptly notified regulatory authorities and the investing public of its internal investigation. Once the preliminary results of the Special Committee were discussed with the Board, the company removed and replaced its Chairman of the Board and CFO.
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After the investigation was concluded, the company adopted all remedial measures recommended by the Audit Committee. Upon the conclusion of the internal investigation, the company promptly notified the investing public of its need to restate its financial statement and cautioned investors not to rely on previously filed financial information.
The Listing Council also considered that the company was not in any other distress and that, but for the options issue, the company was ready to remedy its filing delinquency and, based upon historical financial information, appeared to have the financial strength to continue to meet the maintenance standards of the Global Market. The Listing Council understood that the restatement process had been slowed by the perceived lack of guidance, but that the SEC’s Office of Chief Accountant had recently provided interpretive guidance on the matter. The company has already provided the SEC’s Office of Chief Accountant with an opportunity to preview its analysis and disclosure for stock options, before the company will issue its restatements.
The Listing Council was also particularly cognizant, and considered, that the Panel had exhausted its ability to provide the company with an additional extension of time, and would have provided the company more time if available under the rules. While the Listing Council takes seriously the requirement to file accurate and reliable financial statements and the concomitant purpose to provide investors with current information, the Listing Council balanced its analysis with the extraordinary circumstances in which many companies find themselves. The Listing Council is sympathetic to the company in that it is not the only company that is currently ensnared in the thorny issues surrounding the potential restatement of financial statements as a result of the accounting for stock option grants. The Listing Council has considered the extraordinary circumstances that many companies find themselves in and will undertake a facts and circumstances analysis in each case to determine if additional remedies are appropriate. Based upon the record, the Listing Council recognized that the company has been pro-active in trying to regain its status as a good corporate citizen, and believed that such diligence should be rewarded with an extension of time to demonstrate compliance. As such, pursuant Listing Rule 4802(b), the Listing Council finds that it is appropriate in this instance to exercise its discretionary authority and provide the company with a short extension of time to demonstrate compliance with Listing Rule 4310(c)(14).
* Listing Rule 4802(b) allows the Listing Council to grant exceptions for a period not to exceed 60 days from the date of the Listing Council Decision or 180 days from the date of the Panel Decision with respect to the deficiency for which the exception is granted, in each case where it deems appropriate. If Staff determines that there are no public interest concerns that would preclude the company from rejoining the Global Market, the Listing Council finds that the company should be immediately re-instated to trading and shall be provided with a 60 day extension, to become current in its periodic reporting obligation pursuant to Listing Rule 4310(c)(14). If by the end of the exception period, the company has not complied with Listing Rule 4310(c)(14), the company’s securities will be resuspended at the opening of business the following day, and a Form 25, notification of removal from listing, will then be filed with the SEC as required by SEC Rule 19d-1. If, at any time during the exception period, the company becomes deficient in a continued listing requirement of the Global Market, other than the filing requirement, the company will not be given an opportunity to be heard, its securities will be re-suspended, and a Form 25 will be filed with the SEC.
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Publication Date*:
7/31/2012
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Identification Number:
641
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Identification Number
642
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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: The company was unable to timely file its Form 10-K for the year ended December 31, 2005, because management required additional time to complete its assessment of the effectiveness of its internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002. The Panel delisted the company’s securities based on a filing delinquency.
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. As of the date of the Listing Council’s consideration of this matter, the company had filed its delinquent 10-K for the year ended December 31, 2005; however, the company had not filed its Form 10-Q for the quarter ended March 31, 2006. 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. The Listing Council finds that investors in securities listed on The NASDAQ Stock Market 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. In this case, however, even though as of the date of the Listing Council’s deliberations, the company had filed its delinquent Form 10-K for the year ended December 31, 2005, it has still not filed its delinquent Form 10-Q for the quarter ended March 31, 2006. As such, investors did not have access to accurate financial information regarding the company from October 1, 2005 until July 7, 2006, or a period of approximately nine months, and still do not have complete accurate financial information. At the time of the Panel’s decision, the company was not current in all required public filings. Furthermore, in the absence of accurate and reliable financial statements, Staff is unable to determine if the company is in compliance with all of the National Market continued listing requirements.
The Listing Council also denies the company’s request for a 60-day exception to re-list its securities upon becoming current with its periodic reporting obligation. While the Listing Council has the requisite discretionary authority under Listing Rule 4802(b) to entertain such request, the Listing Council finds that it was not appropriate in this instance, given that: (i) the company is a recent repeat offender of the filing requirement. The company’s late filings were the third and fourth consecutive late filings for the company in the past year; (ii) the company has not provided current accurate financial information, and it is unclear to the Listing Council whether the company currently meets either the initial or continued listing requirements for the National Market, (iii) the company’s current filing delinquencies are directly related to many of the issues resulting in its prior delinquency and appearance before a Panel in November 2005, and (iv) the Listing Council’s concurrence with the Panel’s assessment that “multiple deadlines set by the company itself were unmet.” In fact, the Listing Council noted that the company filed its December 31, 2005 Form 10-K on July 7, 2006, one month after the June 5, 2006 extension date it had assured the Panel it could file by, and one week after the June 30, 2006 date it promised in its submission to the Listing Council. The Listing Council notes that Listing Rule 4802(f)* provides, in part, that a security that has been delisted shall be required, prior to reinclusion, to comply with the requirements for initial inclusion. As such, because the Panel appropriately delisted the company’s securities from the National Market, the initial listing requirements provide the correct standard for a review of the company’s listing qualifications. The Listing Council finds that the company will need to file a new listing application together with all applicable initial fees with the Listing Qualifications Department, and the review of such application should be handled in the same manner as any new application to trade.
* Listing Rule 4802(f) replaced former Listing Rule 4430(e). See SR-NASD-2004-125, which was effective August 26, 2005.
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Publication Date*:
7/31/2012
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Identification Number:
642
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Identification Number
643
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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: The company was unable to timely file its Form 10-K for the fiscal year ended September 30, 2005, due to accounting issues identified after the company moved its corporate headquarters and changed auditors. Thereafter, the company failed to timely file Forms 10-Q for the quarters ended December 31, 2005 and March 31, 2006. Additionally, the company determined that its previously filed financial statements from September 2002 forward should not be relied upon. The Panel delisted the company’s securities based on a filing delinquency.
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. As of the date of the Listing Council’s consideration of this matter, the company had still not filed its Form 10-K for the fiscal year ended September 30, 2005, Forms 10-Q for the quarters ended December 31, 2005 and March 31, 2006, or any prior period restatements. 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. The Listing Council finds that investors in securities listed on The NASDAQ Stock Market 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. In this case, however, investors have not had access to accurate financial information regarding the company from July 1, 2005 through the present, a period of over 12 months. At the time of the Panel’s decision, the company was not current in all required public filings. Furthermore, in the absence of accurate and reliable financial statements, Staff is unable to determine if the company is in compliance with all of the National Market continued listing requirements.
The company also requested that the Listing Council grant the company an expedited re-listing on upon becoming current with its periodic reporting obligation. The Listing Council denies this request and believes that the exception is not appropriate in this instance. The Listing Council notes that the independent Investigation began in December 2005; however, it was not until mid-May 2006, a period of over five months, before the Panel was provided with any indication that the company was also dealing with signs of earnings management, possible CEO involvement, or tone at the top issues. The Listing Council views the Panel’s behavior as sympathetic to the company’s situation; particularly, after the company’s previous independent auditors advised the company’s management and the Audit Committee of a material weakness related to insufficient personnel resources and the technical accounting expertise within the company's accounting function, and thereafter when concerns regarding the accuracy of the work of the company’s independent
consultant further delayed the company meeting its deadlines. While the Listing Council finds that the Panel was generous, it does not find fault with the Panel’s judgment, in affording the company the multiple extensions and opportunities to achieve the company-proffered and, subsequently missed, designated milestones. The Panel appeared to provide the company with every opportunity to cure its “accounting issues”; however, the results of the Audit Committee Investigation clearly indicated there were other than accounting issues that plagued the company. The Listing Council also recognizes that it was not until late May 2006, five months after the company attended a Panel Hearing and disclosed the ongoing Investigation, before the company was finally delisted. The Listing Council notes that Listing Rule 4802(f)* provides, in part, that a security that has been delisted shall be required, prior to reinclusion, to comply with the requirements for initial inclusion. As such, because the Panel appropriately delisted the company’s securities from the National Market, the initial listing requirements provide the correct standard for a review of the company’s listing qualifications. The Listing Council finds that the company will need to file a new listing application together with all applicable initial fees with the Listing Qualifications Department, and the review of such application should be handled in the same manner as any new application to trade.
* Listing Rule 4802(f) replaced former Listing Rule 4430(e). See SR-NASD-2004-125, which was effective August 26, 2005.
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Publication Date*:
7/31/2012
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Identification Number:
643
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Identification Number
644
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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: The company was unable to timely file its Form 10-Q for the quarter ended September 30, 2005, due to the resignation of their auditors. Additionally, the company’s new auditors questioned the company’s accounting for tax expense and deferred tax assets for 2003 and 2004. At the time of the Panel’s decision, the company had still not filed its Forms 10-Q for the quarters ended September 30, 2005 and March 31, 2006 or Form 10-K for the year ended December 31, 2005. The Panel delisted the company’s securities based on a filing delinquency.
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. As of the date of the Listing Council’s consideration of this matter, the company had still not filed its delinquent periodic reports. 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 The NASDAQ Stock Market 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. In this case, investors did not have access to accurate financial information regarding the company, for over eleven months, from June 30, 2005 through the date of the Listing Council’s deliberations. The Listing Council notes that in the absence of accurate and reliable financial statements, Staff is unable to determine if the company was in
compliance with all of the Capital Market continued listing requirements. The Listing Council denies the company’s request for a 60-day exception to re-list its securities on the Capital Market upon becoming
current with its periodic reporting obligations. The Listing Council finds that it is not appropriate in this instance, given that the company was a recent repeat offender of the filing requirement, had not provided accurate financial information for over eleven months, and it was unclear to the Listing Council whether the company met either the initial or continued listing requirements for the Capital Market. The Listing Council also denies the company’s request that it be allowed to re-list under the continued listing requirements on the Capital Market upon becoming current with its periodic reporting obligations. The Listing Council notes that Listing Rule 4802(f)* provides, in part, that a security that has been delisted shall be required, prior to re-inclusion, to comply with the requirements for initial inclusion. As such, because the Panel appropriately delisted the company’s securities from the Capital Market, the initial listing requirements provide the correct standard for a review of the company’s listing qualifications. The Listing Council finds that the company will need to file a new listing application together with all applicable initial fees with Listing Qualifications, and the review of such application should be handled in the same manner as any new application to trade on The NASDAQ Stock Market.
*Rule 4802(f) replaced former Listing Rule 4430(e). See SR-NASD-2004-125, which became effective on August 26, 2005.
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Publication Date*:
7/31/2012
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Identification Number:
644
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Identification Number
645
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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: The company was unable to timely file its Form 10-Q for the quarter ended June 30, 2005, due to an audit committee investigation into inventory invoices that had not been properly accounted for on the company’s December 31, 2004 year-end financial statements. The Panel delisted the company’s securities based on a filing delinquency. Subsequent to its delisting, but before the Listing Council’s deliberations, the company became current in its periodic reporting obligations.
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. 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. The Listing Council finds that investors in securities listed on The NASDAQ Stock Market 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. In this case, however, even though as of the date of the Listing Council’s consideration of this matter, the company was current in its periodic reports obligations with the SEC, investors did not have access to accurate financial information regarding the company from August 17, 2005 until February 3, 2006, or a period of approximately five and one-half months. The Listing Council notes that the Panel provided the company with two extensions, in addition to its original extension of time, to become compliant with the filing requirement. The Listing Council observes that the Panel, in looking to provide the company with reasonable extensions, looked to the company for assistance in setting the prescribed deadlines. The Listing Council finds that the company was given every opportunity to regain compliance and notes that the company argued that it was on the “cusp of compliance” each time the Panel provided the company with an additional extension. While the Listing Council was sympathetic to the company’s argument that the timing of the filing was outside the company’s control, the Listing Council concurs with the Panel’s assessment that the company is solely responsible for compliance with the marketplace rules.
The Listing Council also denies the company’s request that the company be allowed to re-list under the continued listing requirements on the Capital Market upon becoming current with its periodic reporting obligation. The Listing Council notes that Listing Rule 4802(f)* provides, in part, that a security that has been delisted shall be required, prior to re-inclusion, to comply with the requirements for initial inclusion. As such, because the Panel appropriately delisted the company’s securities from the Capital Market, the initial listing requirements provide the correct standard for a review of the company’s listing qualifications. The Listing Council finds that the company will need to file a new listing application together with all applicable initial fees with Listing Qualifications, and the review of such application should be handled in the same manner as any new application to trade on The NASDAQ Stock Market.
* Listing Rule 4802(f) replaced former Listing Rule 4430(e). See SR-NASD-2004-125, which became effective on August 26, 2005.
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Publication Date*:
7/31/2012
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Identification Number:
645
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Identification Number
684
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Rules 4450(b)(4) and 4450(a)(5): $3, or its alternative $1, minimum bid price requirement for continued listing on the National Market.
Issue: The company's bid price was below $1. The company did not submit a plan to regain compliance, but requested additional time to meet the continued listing requirements following its recapitalization.
Determination: The company was properly delisted for failure to comply with the minimum bid price requirement. Approximately four months had elapsed since the completion of the recapitalization, and the company had not regained compliance. Additionally, the company did not provide a definitive plan to regain compliance in the near term or maintain compliance over the long term with the minimum bid price requirement. The company also did not comply with the alternative requirements for continued listing on the National Market or for continued listing on the SmallCap Market.
* * *
Rule 4450(b)(3): Market value of publicly held shares of $15,000,000 for continued listing on the National Market.
Issue: The market value of publicly held shares of the company's common stock was below $15,000,000.
Determination: The company was properly delisted for failure to comply with the market value of publicly held shares requirement. The company did not provide any information indicating how it planned to regain compliance with the market value of publicly held shares requirement or maintain compliance over the long term.
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Publication Date*:
7/31/2012
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Identification Number:
684
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Identification Number
646
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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 included an asset sale, which would allow it to demonstrate compliance. However, after the sale, the company was not able to publicly announce that the transaction had increased its stockholders’ equity to $2,500,000. The Panel delisted the company’s securities.
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 twelve months, had still not provided any public filing which demonstrated compliance with the rule, and had not provided any definitive documentation regarding potential increases of equity which could be accomplished in the short-term and would allow the company to achieve and sustain compliance.
* * *
Rule 4310(c)(4): For continued inclusion, the minimum bid price per share for common stock shall be $1.
Issue: The bid price of the company’s common stock was below $1 for approximately nine months.
Determination: The company was properly delisted for failure to comply with the minimum bid price requirement. At the time of the Listing Council’s deliberations, the company’s bid price was still under $1, and the company had not proffered a plan to remedy its deficiency.
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Publication Date*:
7/31/2012
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Identification Number:
646
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Identification Number
647
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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: The company disclosed it would not timely file its March 31, 2005 Form 10-Q because it needed to restate all of its financial statements between the periods of January 1, 2003 through December 31, 2004, due to revisions in the valuation methodologies used in securitization transactions. The Panel delisted the company’s securities based on a filing delinquency.
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. As of the date of the Listing Council’s consideration of this matter, the company had still not filed its restated financial statements or Forms 10-Q for the quarters ended March 31, June 30, and September 30, 2005. 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 The NASDAQ Stock Market 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. In this case, however, investors did not have access to accurate financial information regarding the company from January 1, 2002 through the date of the Listing Council’s deliberations. Furthermore, in the absence of accurate and reliable financial statements, Staff is unable to determine if the company was in compliance with all of the National Market continued listing requirements.
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Publication Date*:
7/31/2012
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Identification Number:
647
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Identification Number
648
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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: The company was unable to timely file its Form 10-K for the year ended December 31, 2004, due to an audit committee investigation into the company’s internal controls relating to travel and entertainment expenses. At the time of the Panel’s decision, the company had filed its December 31, 2004 year-end Form 10-K and March 31, 2005 Form 10-Q, but had not filed its Forms 10-Q for the quarters ended June 30 and September 30, 2005. The Panel delisted the company’s securities based on a filing delinquency.
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. As of the date of the Listing Council’s consideration of this matter, the company had still not filed its Forms 10-Q for the quarters ended June 30 and September 30, 2005. 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 The NASDAQ Stock Market 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. In this case, investors did not have access to accurate financial information regarding the company, for over nine months, from April 1, 2005 through the date of the Listing Council’s deliberations. The Listing Council notes that in the absence of accurate and reliable financial statements, Staff is unable to determine if the company was in compliance with all of the National Market continued listing requirements. The Listing Council denies the company’s request for a 60-day exception to re-list its securities on the National Market upon becoming current with its periodic reporting obligation. The Listing Council finds that it is not appropriate in this instance, given that the company had not provided accurate financial information for over nine months, and it was unclear to the Listing Council whether the company met either the initial or continued listing requirements for the National Market.
The Listing Council also denies the company’s request that the company be allowed to re-list under the continued listing requirements on the National Market upon becoming current with its periodic reporting obligations. The Listing Council notes that Listing Rule 4802(f)& provides, in part, that a security that has been delisted shall be required, prior to re-inclusion, to comply with the requirements for initial inclusion. As such, because the Panel appropriately delisted the company’s securities from the National Market, the initial listing requirements provide the correct standard for a review of the company’s listing qualifications. The Listing Council finds that the company will need to file a new listing application together with all applicable initial fees with Listing Qualifications, and the review of such application should be handled in the same manner as any new application to trade on The NASDAQ Stock Market.
* Rule 4802(f) replaced former Listing Rule 4430(e). See SR-NASD-2004-125, which became effective on August 26, 2005.
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Publication Date*:
7/31/2012
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Identification Number:
648
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Identification Number
649
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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 year ended December 31, 2004 Form 20-F was delinquent due to a change of independent auditors and internal accounting staff, the delayed receipt of financial information from a significant investment, and the delayed receipt of accounting information related to the company’s other investments.
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. As of the date of the Listing Council’s deliberations, the company had still not filed its delinquent December 31, 2004 Form 20-F. 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. The Listing Council finds that investors in securities listed on The NASDAQ Stock Market 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 notes that in the absence of accurate and reliable financial statements, Staff is unable to determine if the company was in compliance with all of the Capital Market continued listing requirements.
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Publication Date*:
7/31/2012
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Identification Number:
649
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Identification Number
610
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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: In connection with a periodic review of the company's filings, the Commission questioned the company's accounting for development costs and advances related to Indian casinos.
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. As of the date of the Listing Council's consideration of this matter, the company still had not filed its Form 10-K for the fiscal year ended January 2, 2005 or Forms 10-Q for the quarters ended April 3 and July 3, 2005. 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.
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Publication Date*:
7/31/2012
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Identification Number:
610
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Identification Number
611
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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.
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Publication Date*:
7/31/2012
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Identification Number:
611
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Identification Number
612
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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: In connection with a periodic review of the company’s filings, the Commission questioned the company’s allocation to goodwill of customer related intangibles that were obtained through the acquisition of other businesses. Thereafter, the company disclosed that its audit committee concluded the previously issued financial statements for fiscal years 2000, 2001, 2002 and 2003 and each of the four quarters of fiscal 2003 and the first three quarters of fiscal 2004 would need to be restated. The Panel delisted the company’s securities based on a filing delinquency.
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. As of the date of the Listing Council’s consideration of this matter, the company had still not filed its Form 10-K for the year ended December 26, 2004, Forms 10-Q for the quarters ended March 31 and June 26, 2005 or any prior period restatements. 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. In this case, however, investors did not have access to accurate financial information regarding the company from December 26, 1999 through the date of the Listing Council’s deliberations. Furthermore, in the absence of accurate and reliable financial statements, Staff was unable to determine if the company was in compliance with all of the National Market continued listing requirements.
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Publication Date*:
7/31/2012
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Identification Number:
612
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Identification Number
613
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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: At the Panel hearing, the company represented that it would file its delinquent December 31, 2004 Form 10-K later that day, and its delinquent March 31, 2005 Form 10-Q within 45 days. The company did not file its delinquent Form 10-K as promised and did not update the Panel as to the reasons until prompted by Panel staff. The Panel delisted the company’s securities based on a filing delinquency, after the company filed its delinquent Form 10-K, because the company had not filed its Form 10-Q for the quarter ended March 31, 2005 and had not demonstrated the ability to maintain compliance with the filing requirement over the long term.
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. The Listing Council found that the Panel relied on the veracity of the company’s representations at the hearing that the company would file its Form 10-K later that day. The company’s acts of not filing its Form 10-K, failing to contact the Panel to correct its representations, and not informing the Panel as to the reasons for the failure to file, were significant events that the company knew, or should have known, were “material” to the Panel’s ultimate decision in this case. Given the Panel’s reliance on the company’s assurance that the Form 10-K filing would be made that day, the Listing Council found that the company should have reported these material events to the Panel immediately.
The Listing Council also found it reasonable, based upon all the facts and circumstances, including the company’s inability to file its Form 10-K on a timely basis, the lack of disclosure to the Panel, and recent history of delinquent filings, that the Panel questioned the company’s ability to maintain compliance with the filing requirement over the long term.
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Publication Date*:
7/31/2012
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Identification Number:
613
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Identification Number
614
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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.
Rule 4300*: NASDAQ, in addition to applying the enumerated criteria set forth in the Listing Rule 4300 and 4400 Series, will exercise broad discretionary authority over the continued inclusion of securities in NASDAQ in order to maintain the quality of and public confidence in its market. Under such broad discretion, NASDAQ may apply additional or more stringent criteria for the continued inclusion of particular securities or suspend or terminate the inclusion of particular securities based on any event, condition, or circumstance which exists or occurs that makes continued inclusion of the securities in NASDAQ inadvisable or unwarranted in the opinion of NASDAQ, even though the securities meet all enumerated criteria for continued inclusion in NASDAQ.
Issue: The Panel gave the company an extension to file its delinquent Form 10-Q for the quarter ended September 30, 2004. Pursuant to Listing Rule 4300, the Panel also exercised its discretionary authority and applied additional and more stringent criteria, whereby the Panel provided for a monitoring period of the company, which required the company to timely file all periodic reports ending on or before December 31, 2005. The company did not file the Form 10-Q within the original extension period and subsequently received additional extensions. The company also did not timely file its Form 10-K for the fiscal year ended December 31, 2004. The Listing Council called the Panel's decision to determine if the additional extensions were appropriate.
Determination: The Panel's decision was reversed because, after citing Rule 4300 and applying additional and more stringent criteria, the Panel did not hold the company to the heightened standard. When the company missed its Panel imposed deadlines, the Panel provided the company with additional time. At the time of the Listing Council's consideration, the company still had not filed its delinquent December 31, 2004 Form 10-K. Consequently, the Listing Council determined, as a policy, to limit the discretion that Panels could exercise and found that exceptions granted by the Panel should not be greater than 90 days from the date of issuance of the Panel's decision.
* Please note that Listing Rule 4300 was re-codified and changed in August 2005. NASDAQ also added interpretative material regarding the use of its discretionary authority. For the current version of the rule, see Marketplace Listing Rule 4300 and IM-4300.
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Publication Date*:
7/31/2012
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Identification Number:
614
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