According to an Aug. 12 8-K filing with the U.S. Securities and Exchange Commission (SEC), Industrial Services of America Inc. (ISA), Louisville, Kentucky, received written notification Aug. 6 from The Nasdaq Stock Market LLC that the company was not in compliance with the minimum closing bid price requirement set forth in Nasdaq Rules for continued listing on the Nasdaq Capital Market.
Under Nasdaq Listing Rule 5550(a)(2), listed securities must maintain a minimum bid price of $1 per share, while Listing Rule 5810(c)(3)(A) states that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days, the SEC filing notes. Based on the closing bid price of ISA’s common stock for the 30 consecutive business days from June 20 to Aug. 5, ISA no longer meets the minimum bid price requirement.
The notice will not result in the immediate delisting of the company; rather, the SEC filing states: “Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the company has been granted a 180-calendar-day compliance period, or until Feb. 3, 2020, to regain compliance with the minimum bid price requirement. During the compliance period, the company's shares of common stock will continue to be listed and traded on the Nasdaq Capital Market. To regain compliance, the closing bid of the company's shares of common stock must meet or exceed $1 per share for a minimum of 10 consecutive business days during the 180-calendar-day grace period.”
If ISA’s bid price does not meet or exceed the $1 per share price, it could be granted a second 180-calendar-day grace period, the SEC filing says, as long as it meets “the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the minimum bid price requirement.” ISA also would need “to provide written notice to Nasdaq of its intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary.”
If ISA is unable to comply with the minimum bid price, Nasdaq will notify the company that its common stock is subject to delisting. At that point, ISA could appeal the delisting determination and its common stock would remain listed until the appeal process is completed, according to the SEC filing.
“The company intends to monitor its closing bid price for its common stock between now and Feb. 3, 2020, and will consider any such available options to resolve the company's noncompliance with the minimum bid price requirement as may be necessary,” the SEC filing states. “The company has made no determination regarding any action or response to the notice at this time. There can be no assurance that the company will be able to regain compliance with the minimum bid price requirement or will otherwise be in compliance with other Nasdaq listing criteria.”
The company also filed a NT 10-Q form with the SEC Aug. 15 noting that it would be late in reporting its quarterly financials on Form 10-Q for the period June 30 “because the compilation, dissemination, review and finalization of the information required to be presented in the report could not be completed within the prescribed time period without unreasonable effort or expense.”
ISA goes on to state in the filing: “As previously reported, in September 2018, the company’s board of directors formed a special committee to evaluate growth and strategic options. The company’s management has devoted substantial attention to the efforts and process of the special committee, including preparation of materials for the special committee. As a result of the increased burdens on the company’s management and accounting staff, which require additional time to finalize financial statement amounts and disclosures necessary for the completion of the financial statements to be included in the quarterly report on Form 10-Q for the quarterly period ended June 30, 2019, the company is unable to file the Form 10-Q within the prescribed time period without unreasonable effort or expense.”
For the first quarter of 2019, ended March 31, ISA reported a 2.1 percent revenue decrease compared with the same period in 2018. ISA also reported a net loss of $441,000 for the quarter compared with net income of $36,000 for the three months ended March 31, 2018. Its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $239,000 for the first quarter of 2019 compared with $816,000 during the same quarter in 2018.
ISA said its first-quarter results were negatively affected by lower margins resulting from market conditions that were less favorable than in the same period of 2018. Although volumes increased in its ferrous and nonferrous operations, average selling prices were lower by 3 percent for ferrous and 16.9 percent for nonferrous during the quarter when compared with the same period in 2018, ISA said.