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Emcore, Biolase get Nasdaq warning letters

25 Aug 2010

The two US companies are told that they are not complying with the stock market's regulations.

Photonics companies Emcore and Biolase have both received warning letters from the Nasdaq stock exchange, advising that they are not complying with the exchange’s strict rules and regulations at present.

Ultimately, the two companies could be threatened with expulsion from the Nasdaq exchange, although in reality that will not happen for many months, if at all.

Solar cell and fiber-optic component manufacturer Emcore has been warned because it failed to issue its latest quarterly financial results on time. In its most recent financial conference call, Emcore said that the filing had been delayed because it needed additional time to complete a review of the accounting for certain inventory write-downs.

This is not believed to be a major issue, and the likelihood is that Emcore will become compliant with the Nasdaq regulations before long. The company has until October 18 to submit a plan indicating how it intends to regain compliance.

Meanwhile, dental laser specialist Biolase has been similarly warned, although for completely different reasons. The Californian firm is in breach of rules that require stockholders' minimum equity in a Nasdaq-listed company to be $2.5 million.

Net loss
In the latest quarterly report from Biolase, in which it posted a net loss of $9.5 million, the company indicated that its stockholder equity figure was negative $1.3 million – meaning that its liabilities currently outweigh its assets.

Since then, the company's CFO has resigned just less than a year into the job, while cost-cutting measures saw a significant reduction in the Biolase workforce.

Biolase chairman and CEO David Mulder said that revenues in the first half of 2010 had been hit by a change in its relationship with key North American distribution partner Henry Schein. However, Mulder also indicated that things should improve in the second half of the year, saying:

"We believe we are now on the cusp of announcing a new long-term distribution model and look forward to taking advantage of the economic recovery that we believe is beginning to provide some lift in both domestic and international markets end user sales."

The Nasdaq letter to Biolase says that the company may return to compliance if it can satisfy the listing requirements regarding market value of listed securities, or net income from continuing operations, which stand as alternatives to the minimum stockholders' equity continued listing requirement.

Alternatively, Biolase will need to submit a plan of compliance by October 4.

At the time of writing, the stock price of both Emcore and Biolase was below $1, something that may prompt another warning letter from the Nasdaq exchange if the valuations remain low for a prolonged period.

Image credit: iStockphoto

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