Nasdaq warned it could drop shares of Cinedigm on January 3 after the company failed to meet the exchange’s requirement that it achieve a public valuation of at least $15 million for 10 consecutive business days, the digital programmer said today in an SEC filing.
Nasdaq put Cinedigm on notice on June 23, but gave the company 180 days to meet the threshold. It was unable to do so by December 2o, when the period ended. The exchange wrote a letter saying that it plans to delist Cinedigm — but also said that the company could request a hearing to lay out plans to comply.
Cinedigm says it has done that and will offer a proposal that “may include plans for strategic transactions and issuances of common stock, and request a further extension of time.” NASDAQ’s panel could grant an additional 180 days, starting from December 22.
“Although there can be no assurance that the Panel will ultimately grant an extension of the compliance period, the Company believes that the extension will be granted,” Cinedigm says.
If it’s wrong, then Cinedigm shares could be traded in over the counter markets, known as “pink sheets,” or possibly the OTC Bulletin Board.
Still, it has a lot riding on Nasdaq’s decision.
A delisting “could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the loss of confidence in our financial stability by suppliers, customers and employees.” it says in a new prospectus to sell 1.54 million shares on behalf of some current owners.
Following a 1-for-10 reverse stock split in May, Cinedigm shares traded as high as $2.69 in mid August. They closed today at $1.38, down 1.4%, giving it a market value of $12.4 million.