Strata Skin Sciences shares plummeted 49% in after-hours trading Wednesday following the medical technology firm's announcement that it will suspend Nasdaq operations on Feb. 19. The company intends to deregister its stock to eliminate the high costs of public compliance and focus on stabilizing its balance sheet.
The sell-off drove the stock price down to 61 cents after Strata confirmed it would not appeal a Nasdaq delisting determination. Following the suspension, the company expects to file a Form 15 with the Securities and Exchange Commission on or about March 2 to formally commence the deregistration process.
This decision stems from an August notice regarding the company’s failure to meet the minimum stockholders' equity requirement. Despite an aggressive search for capital, including the engagement of two investment banks and dozens of investor meetings, Strata was unable to secure the funding necessary to maintain its listing status.
Management characterized the move to "go dark" as a necessary step to save significant time and financial resources. By removing the administrative burdens of an Exchange Act reporting company, Strata aims to redirect capital toward its core business operations and reduce its current cash burn.
Failed Compliance Measures
Before opting for delisting, the company attempted several strategies to remain on the exchange:
- Engagement of two investment banks to facilitate capital raises.
- Confidential submission of a registration statement for a new equity offering.
- Numerous presentations to potential institutional investors.
According to the company, the streamlined cost profile resulting from this transition will ultimately provide a future benefit to stockholders by allowing for more focused internal investment.
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