Under fire from Nasdaq, Utah's Dynatronics plans 1-for-5 reverse split
Dynatronics Corp., a Utah-based company that makes medical equipment used by physical therapists, chiropractors and sports medicine practitioners, said it has received a letter from Nasdaq indicating that it has not complied with the stock market's $1 minimum bid rule and faces delisting on Nov. 16.
The company, however, said it plans file an appeal that could stave off the delisting while that appeals process runs its course.
As part of that appeals process, though, Dynatronics will be required to provide a plan to regain compliance with the rule that requires companies maintain a $1 minimum bid for its shares in order to continue to be listed on the Nasdaq exchange.
Kelvyn H. Cullimore Jr., Dynatronic's chairman and president, said in a statement the company already has formulated a plan that includes a commitment for a reverse split of the company's shares.
"We have filed a definitive proxy statement requesting shareholder approval for a one-for-five reverse stock split to regain compliance," Cullimore said.
A reverse split is designed to reduce the number of shares a company has outstanding, while proportionally increase the stock price. For example, if a shareholder owns 5,000 shares of a company's stock worth $1 each and it decides to declare a one-for-five reverse split, the stockholder would end up owning 1,000 shares valued at $5 each.
He said with several positive developments recently having taking place at the company, including the recently announced introduction of two new product lines, Cullimore said he believes the company has a strong future and will be granted the time to effect its reverse split.
Dynatronics faced a similar challenge in late 2010 after its share price had been trading below a $1 minimum bid for most of the previous year. The company, however, soon saw its share rise above that minimum.
At that time, Cullimore noted that Dynatronics had been on Nasdaq since 1984.
"During those years, we faced similar challenges several times, but we were always able to maintain our listing. And we fully expect that will continue to be the case," he said at the time.
Dynatronics' currently are trading for approximately 50 cents.