The stage is now set for delisting of Echo Therapeutics Inc. (NASDAQ: ECTE) from the Nasdaq Stock Market (Nasdaq). The move is expected to be effective on Tuesday, July 12. ECTE struggled for months to maintain listing on Nasdaq but all its efforts failed to bear fruits. The stock will drop down to trade on the OTCQB Venture Market, but the move will significantly impact its profile and attractiveness as an investment.
Echo Therapeutics Inc. (NASDAQ: ECTE) announced that Nasdaq informed it through a letter that trading on its stock will be suspended on July 12. The reason ECTE is being dropped down from Nasdaq is that it failed to meet the minimum stockholder equity required for continued listing on the stock market.
Echo Therapeutics Inc. (NASDAQ: ECTE) runs out of options
Companies whose stockholder equity falls below the acceptable minimum are given some time to regain compliance. ECTE had its chance but still couldn’t get to the level required. The company tried to buy more time so it could regain the stockholder equity requirement by taking the issue before the Nasdaq Hearing Panel. It was lucky that the panel decided in favor of its continued listing while allowing it time to regain compliance by July 5. But the company still failed to beat the deadline and it has now run out of options to maintain listing on Nasdaq.
Companies need to maintain a minimum of $2.5 million in stockholder equity to continue listing on Nasdaq market.
Downgrading to OTCQB
Echo Therapeutics Inc. (NASDAQ: ECTE) has opted to list on OTCQB after it is delisted from Nasdaq. While listing on OTCQB means that the public will continue to trade on the stock, the listing will limit the company’s exposure to large investors.
Echo Therapeutics Inc. (NASDAQ: ECTE) posted EPS loss of $0.23 in 1Q2016, which was a remarkable improvement from EPS loss of $0.72. The company funneled $0.7 million to R&D in the latest quarter compared to $0.8 million a year earlier.
ECTE raised about $5.15 million through the sale of convertible notes.