Marrone Bio Innovations Inc. (NASDAQ: MBII) has been warned that its lower share price could cause it to be delisted from Nasdaq Stock Market. The company has until October 31 to comply with the minimum requirement for continued listing on Nasdaq. The management has said that it is making efforts to ensure that Marrone retains its listing, but what are those efforts and can they lead to success?
The issue of delisting
First, it is important to know how Marrone Bio Innovations Inc. (NASDAQ: MBII) got to this point where its stock listing on Nasdaq is now threatened. All used to be well with Marrone until a scandal was revealed in the company. It turned out that the company’s former chief operating offer was engaged in some form of fraud where he inflated sales to boosting his bonuses. Marrone had to part with $12 million to settle a lawsuit brought up by shareholders after the scandal erupted.
Though Marrone Bio Innovations Inc. (NASDAQ: MBII) as a company was not found guilty of any wrongdoing, the scandal damaged its stock price immensely. Shares of Marrone have never recovered from the shock after losing nearly 90% of their value.
With shares currently trading below $1, Marrone’s stock is out of compliance with Nasdaq requirement of minimum bid price of a share. Additionally, the company’s market cap has declined below $50 million minimum required to maintain listing on the Nasdaq Global Market.
What’s the remedy?
According to Marrone’s CEO, Pam Marrone, the long-term solution to the problem the company is facing is to grow sales. Marrone believes that improving sales will attract investors to the company and increase the demand for the stock, thus pushing up share price. That should help Marrone maintain its listing on Nasdaq. The recent approval of at least two of Marrone’s bio-based pesticides in Canada has increased hope of the company boosting sales as the approval widens its addressable market. The company is also working to secure approvals to market its products in more international markets with Indonesia, Philippines and China being the immediate targets.
What if sales approach doesn’t work Marrone Bio Innovations Inc. (NASDAQ: MBII)?
In the event that Marrone Bio Innovations Inc. (NASDAQ: MBII)’s efforts to boost sales don’t lead to a rise in share price to the level that is acceptable for continued listing on Nasdaq Global Market, the management is open to drop listing to the Nasdaq Capital Market. Listing requirements for Nasdaq Capital Market are a bit relaxed.